Weekly Investor – June 18, 2018
Mixed Results Tied to Tariffs
Stocks were mixed for the week because of increased trade tensions with China and a slightly more hawkish stance by the Federal Reserve. The Trump administration enacted $50 billion in tariffs on imports from China and, in response, China plans to charge a 25% tariff on roughly the same dollar amount of goods from the U.S.
Investors also digested a widely expected rate increase on Wednesday. However, in a less expected move, the Fed increased its forecast from three rate hikes to four for 2018 because of an uptick in inflation and low unemployment.
Meanwhile, a federal judge ruled in favor of AT&T’s planned acquisition of Time Warner Inc., rebuffing the Justice Department’s assertion the deal would be anti-competitive for the TV industry. The deal has far-reaching implications and the ruling could lead to multiple mergers within paid TV. Comcast Corp. increased its unsolicited bid for Twenty-First Century Fox assets as it tries to out-bid Walt Disney Co. and convince the Fox board the deal will pass regulatory hurdles.
Despite potential headwinds from trade wars and higher interest rates, the U.S. economy looks to be on strong footing and in better shape than foreign peers. While earnings season is nearly a month away, S&P 500® Index corporate profits are expected to show another strong quarter.
The S&P 500 was steady for the week. Its top-performing sectors included Utilities (2.6%) and Consumer Discretionary (2.2%), while bottom-performing sectors included Telecommunications (-2.0%) and Energy (-3.1%). In the fixed-income market, the 10-year Treasury yield was unchanged, ending at 2.93%.
We continue to seek companies that reflect our Change Based InvestingSM approach.
JP Morgan Remains Solid
JP Morgan Chase & Co. (JPM) is a financial holding company that provides financial services worldwide. Founded in 1823 and headquartered in New York, JPM operates in several segments: investment banking, commercial banking, asset management, retail finance and credit card and auto finance.
JPM emerged from the U.S. financial crisis with a solid balance sheet that provided its management team the opportunity to execute their business plan. As a result, JPM was able to gain market share and improve its profitability. We believe JPM is well-positioned to take advantage of a gradually improving interest rate environment, a robust U.S. economy and an improving European business environment. Because of this, JPM fits Argent’s change-based investment process.
Top 5 Equity Holdings
Large Cap Growth
| Alphabet Inc. | 7.6% |
| Baxter International | 4.9% |
| Marvell Technology | 4.4% |
| Mastercard Inc. | 4.1% |
| Fortive Corporation | 4.0% |
Small Cap Core
| Fortinet Inc. | 3.2% |
| Wintrust Financial | 3.1% |
| Mastec Inc. | 2.5% |
| Carbonite Inc. | 2.2% |
| Pacific Premier Bancorp | 2.1% |
Dividend Select
| JP Morgan Chase & Co. | 5.5% |
| Occidental Petroleum | 4.5% |
| Las Vegas Sands Corp. | 4.1% |
| ConocoPhillips | 4.0% |
| Marvell Technology Group | 3.9% |
Mid Cap
| NVIDIA Corporation | 3.5% |
| NVR Inc. | 3.1% |
| Cintas Corporation | 3.1% |
| CDW Corporation | 3.1% |
| NetApp Inc. | 3.1% |
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.
