Weekly Investor – March 28, 2016
A Rate Hike in April?
U.S. equity markets ended the holiday-shortened week lower, breaking a streak of five weekly consecutive gains. Markets rallied early in the week but fell after St. Louis Federal Reserve President James Bullard commented that an interest rate hike is possible in April if economic conditions continue to improve. While the Fed halved its projection for 2016 rate increases during last week’s meeting, a more upbeat tone since the meeting from many Fed officials drove a recovery in the dollar and a broad based sell-off in the commodity market. In economic news, existing home sales fell more than forecasted in February as limited supply, weather and higher asking prices curbed demand. However, initial jobless claims came in slightly better than economist forecasts. Looking ahead to this week, investors prepare to close out the first quarter of 2016 and will keep ears open and focus on global economic data and any Fed updates.
The S&P 500® Index was down 0.7% for the week. The top-performing sectors in the S&P 500® Index included Health Care (0.6%) and Utilities (0.5%), while bottom-performing sectors included Financials (-1.9%) and Energy (-2.4%). In the fixed-income market, the 10-year Treasury yield was even during the week, ending at 1.9%.
We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.
Attractive Risk/Reward Profile
Lowe’s Companies, Inc. (LOW) operates as a home improvement retailer. The company offers a range of products for repair, remodeling, home decorating and property maintenance.
LOW has recently implemented a new strategy that focuses on slowing store growth and improving store productivity and margins. LOW’s also plans to return capital back to investors through substantial share buyback offers. We believe the new strategy will be successful and offers an attractive risk / reward profile for our portfolio.
Top 10 Equity Holdings
| . | |
|---|---|
| Alphabet, Inc. (Google, Inc.) | 7.2% |
| Post Holdings, Inc. | 5.8% |
| Danaher Corp. | 4.4% |
| Masco Corporation | 4.3% |
| ConAgra Foods, Inc. | 4.2% |
| Baxter International Inc. | 3.9% |
| CBS Corporation | 3.7% |
| Skyworks Solutions, Inc. | 3.6% |
| Red Hat, Inc. | 3.5% |
| C.H. Robinson Worldwide | 3.5% |
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.
