Weekly Investor – July 21, 2014
Tragedy Overseas
Market Summary:
U.S. equity market performance was mixed for the week as large cap stocks posted gains and small caps lost ground. Geopolitical fears overshadowed the start to earnings season. The crisis in Ukraine intensified after a surface-to-air-missile struck a Malaysian Airlines passenger jet, resulting in a tragic loss of life to all on board. The Ukrainian government accused pro-Russian rebels for the incident, while separatists denied being involved. Tension in the Middle East also escalated as Israel launched a ground offensive against Hamas and other Palestinian militants to stop missile strikes against their country. At home, remarks by Federal Reserve Chairwoman, Janet Yellen lowered shares of small caps, biotechnology and social media stocks after she commented that valuations in these areas seem stretched. Corporate America began reporting earnings and within the technology sector, heavyweight Google (GOOG) beat top line expectation. Looking forward, investors will continue to closely monitor earnings reports.
The S&P 500® was up 0.5% for the week. The top-performing sectors in the S&P 500® Index included Technology (1.5%) and Financials (1.0%), while bottom-performing sectors included Consumer Staples (-0.2%) and Health Care (-0.3%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 2.5%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Favorable Odds
CBS Corporation (CBS) operates a worldwide mass media company and is headquartered in New York, New York. Founded in 1927, CBS has operations in every field of media including broadcast television, cable television, radio, outdoor advertising, publishing, interactive media, and entertainment.
Recently, a structural change between content providers, such as CBS, and distributors, such as cable and satellite operators, has provided additional profitability for CBS. CBS now has the ability to leverage the value of its content when negotiating retransmission fees. In addition, increased demand for online content from video distributors such as Netflix provide a new and meaningful growth source for CBS. We expect CBS will successfully continue to generate value from its content, therefore creating favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Google, Inc. | 6.1% |
| CBS Corp. | 4.4% |
| Electronic Arts Inc. | 3.9% |
| Suntrust Banks, Inc. | 3.8% |
| Schlumberger LTD | 3.7% |
| Danaher Corp. | 3.7% |
| The Dow Chemical Co. | 3.6% |
| Lincoln National | 3.6% |
| Qualcomm Inc. | 3.5% |
| Quanta Services, Inc. | 3.4% |
U.S. Equity Indices
| Index | 07/18/14 | Week % Chg | YTD % Chg |
|---|---|---|---|
| DJIA | 17,100.2 | 0.9% | 3.2% |
| NASDAQ | 4,432.1 | 0.4% | 6.1% |
| S&P 500 | 1,978.2 | 0.5% | 7.0% |
| Russell 1000 G | 915.4 | 0.2% | 6.0% |
U.S. Credit Rates
| Index | 07/18/14 | 07/11/14 | 12/31/13 |
|---|---|---|---|
| 3 Month T-Bill | 0.1% | 0.1% | 0.1% |
| 5 Year T-Note | 1.7% | 1.6% | 1.8% |
| 10 Year T-Note | 2.5% | 2.5% | 3.0% |
| 30 Year T-Bond | 3.3% | 3.3% | 4.0% |
| Prime Rate | 3.3% | 3.3% | 3.3% |
This newsletter presents selected recommendations from portfolio managers of Argent Capital Management LLC, a registered investment advisor. Opinions reflect the portfolio manager’s judgment on the date above and are subject to change. A list of stocks recommended by Argent is available upon request. You should not assume that these recommendations are or will be profitable. In the course of it’s business, Argent’s client accounts may be buying and selling these stocks.
