Weekly Investor – April 20, 2015
Some Bright Spots
U.S. equity markets ended the week down. Markets retreated on Friday when U.S. inflation concerns and declining global equity markets frightened investors and the S&P 500® Index fell nearly 1%. Stocks retreated on news that the year-over-year Consumer Price Index increased more than expected heightened concern that the Federal Reserve may increase interest rates sooner than anticipated. Oil provided a bright spot in the week and closed up 8%, hitting a calendar year high of $56.71 on Thursday. Finally, earnings season continued and JP Morgan Chase (JPM) announced earnings and revenue above analyst expectations. JPM’s stock rose 1.9%, a 15 year high. Looking ahead to this week, earnings season will accelerate as 144 S&P 500 companies are set to announce earnings. Investors will be paying close attention to what Corporate America has to say.
The S&P 500® was down 1.0% for the week. The top-performing sectors in the S&P 500® Index included Energy (2.1%) and Basic Materials (-0.1%), while bottom-performing sectors included Consumer Discretionary (-1.9%) and Industrials (-2.2%). In the fixed-income market, the 10-year Treasury yield was down during the week, ending at 1.9%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Upside Surprise
JP Morgan Chase & Co. (JPM) is a financial holding company that provides various financial services worldwide. Founded in 1823 and headquartered in New York, New York, JPM operates it business in several segments including investment banking, commercial banking, asset management services, retail finance services, as well as credit card and auto services.
JPM emerged from the financial crisis as one of the few financial institutions with a solid balance sheet. JPM demonstrated its superior financial position by passing the Federal Reserve stress tests and also obtaining approval to buyback shares and increase its dividend. Despite the headwinds of a low interest rate environment and a more onerous regulatory landscape, JPM is poised to gain market share as its weaker peers consolidate their businesses to improve their balance sheets. We believe JPM has the potential to surprise on the upside as economic conditions continue to improve for the banking industry. For these reasons we have added JPM to our portfolio and believe it represents favorable odds for our clients.
Top 10 Equity Holdings
| . | |
|---|---|
| Skyworks Solutions | 5.4% |
| Electronic Arts, Inc. | 5.3% |
| Google, Inc. | 4.9% |
| Teva Pharmaceutical | 4.7% |
| CBS Corporation | 4.0% |
| Post Holdings, Inc. | 3.9% |
| Danaher Corp. | 3.7% |
| Broadcom Corporation | 3.6% |
| Lincoln National | 3.5% |
| Mallinckrodt plc | 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.
