We’re inching toward earnings season: Do investors dare to get excited?
When it arrives, first quarter earnings season is going to be spectacular. At least that’s what Wall Street is now expecting. The consensus analyst estimate points to 16.9% year over year jump in earnings for the first quarter. (According to Wall Street estimates, the story for earnings growth in 2018 only gets better from there with 19.6%, 21.6% and 17.6% year over year earnings growth projected for the second, third, and fourth quarters of 2018, respectively.
Trick or trend: The danger would be if financial markets take Republican calls for another round of tax cuts seriously
With newly appointed chief White House economic advisor Larry Kudlow acting as a front man, Republicans in Congress are talking about another round of tax cuts to follow on the December Tax Cuts and Jobs Act. What Kudlow has called “Phase Two” would include making the individual tax cuts due to expire in 2025 permanent and reducing the capital gains tax rate.
Rethinking 2018: Growth looks marginally slower, risk higher even in first half
It’s only March but I’m rethinking my take on 2018.When the calendar pages turned over into 2018, my take on the year was that for stocks the first half would be much like 2017: Despite rising interest rates from the Federal Reserve, there was enough earnings growth to move stocks up even from near record highs. The bond market would be more problematic with those interest rate increases keeping downward pressure on bond prices and upward pressure on bond yields. With inflation still relatively quiescent, though, the downward trend in bond prices would be relatively gradual. It was the second half of the year that investors had to worry about, I thought then.
Extend your timeline for this rally a little on the surge in buybacks funded by tax cuts
Share buybacks surged to hit record levels in the fourth quarter of 2017. U.S. companies announced $178 billion in buybacks in the quarter. That’s the largest total announcement of share buybacks in a single quarter on record, according to Birinyi Associations. Wall Street analysts are projecting that 2018 as a whole will set a record for buybacks in a year.
This is as good as it gets, says Goldman Sachs: Why that’s important to you in thinking about the next leg in this stock market
On Thursday February 22, Goldman Sachs said in a note to clients that the economic macro data as likely to be “as good as it gets.” This isn’t, in my opinion, a call for an immediate plunge in the markets. But with U.S. stocks trading near all time highs, I think the Goldman note is something all investors need to take seriously. Or at least the question it raises needs to be taken seriously. Here’s the question: If stocks are at all time highs and the economic data on economic growth, inflation, interest rates, etc. are as good as they’re going to get for this cycle, why should stocks move higher?
Adding Boeing to Jubak Picks on weak dollar, strong global economy, tax cuts
Shares of Boeing (BA) have tumbled from $351.01 on January 17 to close at $334.69 today. I'm using the pull back to add shares to my Jubak Picks portfolio tomorrow, January 25. The Boeing story right now is one of multiple tailwinds pushing the stock higher. A weak...
Adding Caterpillar to my Jubak Picks and Volatility Portfolios ahead of earnings tomorrow
Caterpillar (CAT) looks to be a major beneficiary of the lower tax rates in the Tax Cuts & Jobs Act and for a lower U.S. dollar. (See today's Morning Briefing on the lower dollar.) Not that Caterpillar sales are exactly struggling. The company reported today a 34%...
What will the tax cut bill do to house prices in 2018 and beyond? That’s a big deal for your portfolio
There is a possibility that the recently passed tax cuts will depress housing prices or at least the rate of growth in housing prices. That’s a big deal for any discussion of asset allocation in our portfolios because for most of us our house is by far our biggest asset since many of us are counting on the growth of value in our homes to fund part or all of our retirement.
Set up for earnings season: Reaction to bank earnings today shows market doesn’t care about one-time tax bill hits
Going into earnings this morning from JPMorgan Chase (JPM) and Wells Fargo (WFC) what I wanted was an indication as to whether or not the stock market would care about the billions in one-time write offs that these banks would report for the fourth quarter due to the recently passed tax bill. That’s important because this one-time charge will show up on the earnings reports of other banks, of technology companies, and of big drug makers. On the early evidence today, the market doesn’t and won’t care.
The challenges to rebalancing a portfolio in 2018–and some suggestions
2017 left investors with a huge challenge as we all move into 2018. After a 21.6% return on the Standard & Poor’s 500 stocks in 2017, do we let the money ride for 2018 or move it into other assets? Some stocks had almost unbelievable years in 2017. Amazon (AMZN) was up 56% for the year an Facebook (FB) climbed 53%. But those gains were left in the dust by the 96% gain on Alibaba (BABA) and the 115% racked up by Tencent Holdings (TCEHY). And even stocks seem to be standing still in comparison to biotech such as Madrigal Pharmaceuticals (MDGL), up 510% in 2017 or Sangamo Therapeutics (SGMO) ahead by 466%. For 2018 should you leave your money in those big winners from last year? Take some of it off the table and put it into laggards? Move some of it to cash?
Apple gets a two-pronged roasting and the stock stumbles
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