The misery index goes up when there is an outside supply-side shock to the economy such as the oil supply shortages of the mid 70s and early 80s. It goes down when things are good. Supply-side effects, either from policy or from happenstance, now dominate the business cycle. For example, during the Clinton administration there was first a large tax increase and military expenditure cuts and Republicans swept into Congress, there were also large cuts to social programs. The resulting budget surplus was contractionary on the expenditure side (tax increases and expenditure decrease) but the increased utilization of computers in offices and low oil prices created dominate supply-side effects that produced a business cycle upturn. Unemployment and inflation, that is the misery index, went down and things were good.

These days we have to worry about the mix of government policies leading to an increase in the misery index and causing a recession. Protectionist trade policies slow production in the 30 to 40 percent of our economy engaged in international trade. All tariff costs have been forward shifted into US consumer prices which is inflationary. Less investment decreases growth in labor productivity which is also inflationary. It also limits future capital expansion and associated job growth which will eventually contribute to increases in unemployment. The Feds dovish accommodation of protectionist trade policies are inflationary, and because they push interest rates down stocks look overly attractive causing the stock market to overheat. The slowdown in trade related economic activity such as in transportation, sea port activity, and trucking and transportation will also lead to increased unemployment. The misery index, which will be creeping slowly upwards, will shoot up rapidly and a recession will ensue when the stock market crashes.

In the meantime, the market is still relatively safe and one can consider (that is, research) the following stocks for growth: MX, PERI, EVRI, FRTA, KBH, OESX, ARAY, TNDM, VCEL, TRUP, and ICHR. For dividend growth, take a look at: BMA, APAM, CMRE, BHP, CVX, GLP, MBT, SNR, PDCO, RCII, SPH, and WES. AS for the best ETFs, consider IVG, XLK, VGT, FTEC, and IYW. Of course if you want CEFs for income, then look at those in my previous spread sheets and pick only those selling at a market price that is less than their net asset value. You can find current NAV and price information on the Fidelity web site. Good investing!

The post February Stock and Fund Picks first appeared on MarchéEconomics.

The post February Stock and Fund Picks appeared first on MarchéEconomics.

April is starting off well.  Still have doubts about Trump’s trade policies, especially towards Mexico.  The China problem centers around forced technology transfer, or simply technology theft by a communist government.  We should never have let any of that happen.  But Mexico is simply a producer with higher bang- per- buck labor resources.  Any resources value per dollar is its productivity or value added divided by its price.  That’s the same principle as when we expect consumers to spend their next dollar on the highest bang- per- buck items defined as marginal utility divided by price.  Producers are doing the same or getting the most for their money with Mexico’s labor.  Mexican value added by labor is at least as good or higher than that of  UAW workers and the wage rate is lower.  Its a competitive market place and we should expect producers to try and beat their competition by as much as possible by allocating their productive resources so as to reduce costs and make the most money.  There is absolutely no reason not to recognize the comparatively greater value of Mexican labor in the auto industry.  To not recognize the efficiency gains and instead threaten tariffs on Mexico is completely missing the point about allocative efficiency gains from foreign production and trade.  This is not presidential behavior, but the kind of mediocre intellect expected of those without any education . . . which are also Trump’s constituents.  Not being able to separate Trump from the intellectual depravity of his non-competitive and isolationist constituents is troubling.

With that said, the coming election in 2020 places political constraints on upsetting the market with more tariffs or failing to finalize a trade deal with the Chinese that addresses intellectual property theft.  Thus, there is hope for market stability and for the bull market to continue.  Assuming we can stay long, consider FSUGY, HSII, KMDA, and KLYCY for growth.  Dividend growth stocks include AVH, CAPL, AYR, IMBBY, IPG, and LKSD.  ETFs to consider are PSJ, PXMG, XSW, and IGN.  Good investing!

Week 2 – 3:

Trump still doesn’t understand the economics of trade any more than Obama understood the nature of a market economy. Trump is ruining our economy through tariffs just like Obama ruined our economy with too many socialist based market regulations. If and when there is a recession, it will probably occur through negative effects on trade, just as we were heading into a recession at the end of Obama’s eight years. A Trump recession is not hard to see. Trump’s tariffs have already made it impossible for the Fed to reduce its balance sheet any further, leaving us vulnerable to the next economic downturn. The mechanics of a trade related recession occur through reducing economic activity because of new tariffs. Less economic activity will occur both domestically and abroad. Eventually jobs will be lost globally and domestically. Once that gains momentum, nothing will stop it from becoming worse, especially not the Fed. Of course, Trump will be pointing fingers at the Fed for reducing its balance sheet and raising rates, but the whole problem will be Trump.

Enter the socialist Bernie Sanders, probably after the next election. Bernie should write a book about why socialism doesn’t work. He clearly doesn’t understand why competitive market economies do work. He is not academically qualified to tell anybody anything about comparative economic systems. He just has a big ego and wants followers to drown in a sewer of poverty after succumbing to his sweet song of how everything we want will fall out of the sky at no cost. In reality, you have to give up something to get anything that is real. What will be given up to fund universal healthcare or Medicare for all and free college? Bet will be very vulnerable to attack because of a deeply weakened military at the very least. What about the wasted resources of free college which allows more students to complete valueless degrees. There goes a bunch of human capital down the drain. Moreover, what jobs will these students be able to get from a ruined market economy that is racked by higher taxation and socialist regulation? Will we have to go to guaranteed government jobs? If so, how much well will be lost overall? Bet everyone will love socialism then.

In the meantime, we still have a little room left in the bull market run, but probably not too much. Growth stocks to look at include AVID, EZPW, GIII, and CRMT. Dividend growth stocks include BKE, CAPL, PSXP, and WPP. The best ETFs are IGN, PXMG and FXL.

As for current market strategy. The market is again toping out in most sectors. Look for another pullback like at the end of 2018. I was 100% cash during that time and had money for the recovery that started at the very end of 2018. I’ll be looking to do that again, and fairly soon . . . say 3 – 5 months or so. In the mean time, good Investing!

The post April Stock and Fund Picks first appeared on MarchéEconomics.

The post April Stock and Fund Picks appeared first on MarchéEconomics.

The October sell-off has created opportunities for stock pickers.  On the other hand, Friday’s hot inflation read means the market is now sure of a Dec. Fed rate hike.  As Warren Buffet warns,  “Interest rates are like gravity to stocks.”  A more mechanical rationale for this phenomenon is that the higher the interest rate the higher is the discount rate on expected future earnings for stocks.  This simply lowers their present values.

If you’re cautious like me, simply hold cash or near cash funds that pay a dividend tied to short-term interest rates.  Cash isn’t going to change its value much, if at all.  The dividends, however, will increase along with Fed rate hikes.  This will also tend to increase the value of these funds over time.  For example, you can hold JPST, ICSH, USFR, and FLOT and be safe given the markets increased volatility.  Moreover, a severe sell-off leaves you holding money that you can then convert into opportunities in much lower stock prices.

In the meantime, some growth stocks you might want to consider are ARC, CRC, MOS, and USAK.  Growth oriented ETFs to look at include JJOFF, BJO, HDV, XLV, IHI, DGRO, and MGV.  Two good dividend growth stocks are AUO and MCY.  Good investing!

Week 2 (Nov. 12 – 16):

When you don’t like the market, be defensive.  In other words, making money requires positioning for the prospect of belter opportunities.  I am holding only ICSH, JPST, and FLRN.  If the market improves and doesn’t crash I will look at SPHD, PEY, and BST.  The main problem is that tariffs will drive the global economy into a recession and take the US with it.  The Fed can only accelerate this process by raising interest rates too fast.  They probably won’t though as they are aware of the global economic slowdown caused by tariffs.  However, failing to raise rates as expected will send a bad signal to the markets.  A crash might follow.  If you expect a crash, be in cash!  Good investing!

Week 3 (Nov. 19 – 23):

The market will either get better, get worse, or stay the same.  To end getting worse, there must be large volume and disorganized or panic driven sell-off.  Until then you must wait by holding cash in the form of ICSH, FLRN, JPST, USFR, and TFLO.  The Fed looks only at the economy to see if tightening and unloading its balance sheet assets continue to make sense.  To the stock market it looks like the Fed is taking the punch bowl away from market partiers.  That’s why you continue to hear from brokers things like, “. . . the Fed knows nothing!”  I’d ignore that.  The Fed must dampen inflation expectations by being a bit overly aggressive, not invert the yield curve, and sell its financial assets to keep the economy from overheating in the short-run.  It’s only the short-run that it can manage. So ignore that noise about the Fed.

The real problem is that Trump’s tariff policies are probably going to cause a global recession from which the US can not escape.  Dealing with the Chinese is required, but be done differently so as not to adversely effect our main trading partners in the EU.  Having the Congress take away  Chinese most favored nation (MFN) status would be a better strategy.  Prohibiting our companies from engaging in joint venters with the Chinese would be another.  Incentivizing companies to move their international operations to countries other than China is yet another strategy.  One could go on but you get the point.

If you want to consider a short-run growth stock try CONN.  Another thing to consider is the iShares Evolved Health care staples ETF which uses the symbol IEHS.  Otherwise, hold cash.  In the long-run, interest rates may continue an upward trend as the Federal budget will soon be comprised of only nondiscretionary entitlement expenditures such as Social Security.  All discretionary expenditures such as military funding will then require additional borrowing.  If a socialist is elected president, then there will be even more discretionary expenditures associated with government income redistribution that will require even more borrowing.  Moreover, the supply side of our economy will be destroyed and this represents our tax base.

This will put us in a situation like Greece.  Already, our gross national debt is above 100% of our economy’s GDP.  Before Obama, it was only 50%.  Naturally, Obama’s Keynesian fiscal stimulus expenditures not only failed to pay themselves back, they made everything worse.  Because of the rise of socialists, this situation is more likely to repeat itself than not.  Thus, you might want to just hold cash forever.  On the other hand, if the stock market gets low enough opportunities may once again appear.  Until then, good investing!

Week 4 (Nov. 26 – 30):

The Fed has softened up and considers the secular decline in the neutral discount and Federal funds rate targets as near.  That leaves the problem of trade protectionism of the Trump administration as the remaining headwind and major global problem.  Markets are on edge as the G-20 summit begins.  If China and the US have a more or less pleasant meeting, then the market should react positively.  Still, don’t expect a deal.  Eventually, trade protectionism that continues  will lead to a world-wide economic collapse.  Already the negative effects of employment loss in export industries and higher production and consumer costs (inflation) are showing up in the US.  Things can get much worse as continued protectionism will simply support a continuation of this trend.

In the meantime, those that want to be in the market might look at TITN and ABG as potential growth stocks to add.  A good dividend paying ETF is HDV.  Some defensive oriented ETFs that pay monthly are SPHD and PEY.  I also like JRO, DHS, and PDT for dividends and growth.   Three good dividend growth stocks are VLO, MO, and T.    A defensive but growth oriented ETF is IEHS.  The preferred stock LDP is now at a substantial discount to NAV and pays over 8%.  I would continue to hold cash or near cash funds like TFLO, JPST, ICSH, and USFR as the largest part of your portfolio.  These will reduce portfolio volatility and produce monthly dividends.  Good investing!

The post November Stock and Fund Picks first appeared on MarchéEconomics.

The post November Stock and Fund Picks appeared first on MarchéEconomics.

Fed interest rate hikes are the new source of market volatility.  Cramer says that he doesn’t like this market.  Given his experience, that’s a big red flag.  Cramer also suggests that the sell-off has begun.  Another red flag.   Generally, stocks do well during rising rates until, of course, the Fed goes too far.  Right now the Fed is still below a neutral discount rate or Fed funds rate target.  Thus, while the Fed is still accommodative, at some point the sell-off will be overdone and buying will once again dominate.  Once the Fed hits neutral, which shouldn’t be for about a year or so, then you will want to be much more wary.

I will only recommend a few stocks under these circumstances.  BPT is still going up strongly so you might just ride that for a while.  Others worth holding are near money’s such as MINT, USTB, FLTR, and ICSH.  These last ones pay 2 – 3% and are tied, more or less, to the Fed funds rate.  Thus they will pay more when the Fed increases rates.  BPT is an oil royalty trust and pays about 16% as a dividend.  You can still get that for October.  Moreover, it is going up along with expectations for higher oil and gas prices.  Leveraged inverses like TVIX and TZA are also possible as long as you are around to keep an eye on them.  That’s all I have for now.  Good investing!

Week 2 (Oct 8 – 12):

The selling is over or nearing an end.  Wednesday and Thursday created opportunities in my view.  If you think that buying a whiskey distillery just before the end of prohibition would have made you rich, then buying marijuana stocks now should also make sense.  October 17 and November 1 open the scope of the pot markets substantially.  During the sell off on Wednesday and Thursday I started positions in two ETFs,  HMLSF and MJ, which increased on Friday by 4.26% and 4.92% respectively.   I also bought the companies ACBFF, CGC, MMNFF, and TGODF which had respective Friday increases of 8.13%, 5.62%, 29.44%, and 8.94%.  I’d say that was pretty good money for the week!  If any of these stocks or funds pull back next week, you may want to consider building similar positions.  I think the long-run potential includes returns of 50% – 500% through 2019.  That is my advice for this week.  Good investing!

Week 3 (Oct. 15 – 19):  

The market may still be setting up for more selling so be ware.  Can’t yet call the bottom because what selling is still going on is pretty tame and organized.  Sold my cannabis stocks into Monday’s early morning buying and realized about a years worth of gains in just a few days.  Once Canopy (CGC) gets down to around $40, I’ll probably start to buy back in.  In the meantime you might want to research some growth stocks such as ANDE, SNDR, ARCB, and GLP.  A good ETF for the long-run but that measures market sentiment in the short-run is IHI.  I am watching IHI for an indication of the market bottom.  Other ETFs for long-run growth are XLV and VHT.  Some good dividend growth stocks to consider are ENLK and ARLP.

If you start any new positions I’d move slowly until the market looks healthier.  That might be when people either get used to higher nominal interest rates which were held at zero for far too long.

The reason they were so low for so long was that market socialist policies on the supply side of the economy during the previous administration slowed economic growth which led the Fed to try stimulating the economy on the expenditure side.  We were heading into another recession before the last election.  If Hillary had won we’d be there now.  After the last election, we had two supplied side positives (tax cuts and less regulation).  Then we added a negative supply-side policy involving trade obstruction (i.e., tariffs or equivalently tax increases).  Now we have another negative effect due to Fed tightening that adds even more uncertainty.  Yet, the Fed cannot slow interest rate increases much because it still has to unwind its balance sheet to get back to normal.  Selling off its financial assets lowers there prices and increases market interest rates.  Unwinding will take quite a while.  Thus, get used to this situation and the market volatility it causes.  Once there is over selling among stocks, there will be opportunities.  I’d keep ICSH and MINT loaded up and used to take advantage of market opportunities like the previous few weeks among pot stocks.  In the meantime they will reward you with increasing dividends because their returns are directly related to the Fed Funds rate.  Be sure to buy them on their ex-dividend dates which are the first of each month so as to get more shares for your money and preserve your capital.  Good “opportunistic” investing!

Week 4 (Oct. 22 – 31):

Selling before the midterms in November has probably ended.  That is the only uncertainty handled.   The Fed and Tariff policy remains.  Because of this, I think the systemic risk in the market is the government.  It offsets deregulation and tax cuts so that there is nothing left to propel the market forward other than economic fundamentals and earnings.  These are still fine.  Technical analysis suggests that the market is 1) oversold and that money must be put to work and 2) that there is likely more severe selling that will occur in the near future.  This is not a clear message so beware!

Consider the growth stocks ENVA and HSII if you feel safe enough to invest.  ETFs to consider for dividend income are HDV and OUSA.  An ETF for growth in healthcare is XLV.  My personal preference is to just hold ICSH and wait for its dividends to increase along with short-term interest rates.  Once the Fed causes a market crash that is yet more severe than we experienced in October, start looking for stocks with PE multiples below 15 with good future earnings potential.  If we get a trade deal with the EU and China, start looking sooner.  Gee, what market uncertainty could there still be?  Good luck and good investing!

The post October Stock and Fund Picks first appeared on MarchéEconomics.

The post October Stock and Fund Picks appeared first on MarchéEconomics.

Trade is still a negative while just about everything else (eg., domestic economy and GDP growth, relatively low real interest rates, and company earnings) are positives.

On a different issue, I don’t get why the NFL allows anyone to take a knee during the national anthem.  There are a billion and one things to protest and every player can take a knee for one reason or another such that no one stands.  This disrespects the nation and that we have free speech.  In other words, protest is what our nation represents and kneeling merely protests your own right to protest.  Too many knocks to the head perhaps?

On to stocks and funds.  Buy ATEYY, CONN, and RNR for growth.  Check out OSB for dividend growth.  A great ETF to consider is JSMD.  If you want to put money into a monthly paying mutual fund that is highly ranked and that always pays its dividend then consider FLARX.  FLARX yields 3.85% and tends to hold its value.   Other monthly paying cash or near cash related funds to consider are BLW, USAIX, and ICSH.  Good investing.

Week 2 (Sept. 10 – 14):

Watching stock indexes turn red with more tariffs.  Will there be any more positive news on this front?  Probably a deal with Canada, and then maybe the EU.  Both would be a welcome relief. I don’t think it matters with China that we get a deal.  I’d like to see all our firms doing business in China reallocate entirely to anywhere else.

As for investments, consider GNRC, ATEYY, and OXINF for growth.  Recommended dividend growth stocks are BGCP, ARLP, BGSF, GES, MCY, GLNCY, and OSB.  Growth oriented ETFs are IHI, FXL, XLM, and VGT.  Dividend ETFs with payouts directly related to increasing short-term interest rates are BLW, BGT, FRA, EFT, JRO, and JFR.  Mutual funds with returns related to short-term interest rates are BLDRX and BFRKX.  Two high paying dividend growth stocks that hold up will under economic downturns are MO and PM.  That’s all for this week.  Good investing!

Week 3 (Sept. 17 – 21):

Between now and when the negative effects of trade obstruction show up in economic data there is only the midterm elections.  Election noise will lead to market volatility and opportunity.  There may also be a year-end Santa rally.  Without trade deals as promised, trade effects will manifest themselves as job losses and greater inflation.  This will happen about the time economic stimulus from de-regulation and tax cuts begin to fade and interest rates rise to higher levels.  Prepare to exit the market at that time.  Holding cash at higher interest rates will be increasingly popular and funds like MINT, ICHS, and EFT will help in that regard.

In the meantime, the market and the economy looks solid.  Consider the stocks CBD and RHHBY for growth.   For dividend growth look at MCY.  Excellent growth oriented ETFs include IHI and BBH.  For the increasing interest rate environment, start looking at the ETFs EFT, FLTR, PPR, ICHS, MINT, and VRP.  Alternatively, a good mutual fund for rising rates is EABLX.  Good Investing!

Week 4 (Sept. 24 -28):

Anybody question whether September is a typically slow month for the stock market?  Glad it’s over.  Looking ahead to October, consider ZUMZ, VRS, GES, and TITN for growth.  Dividend growth stocks to take a look at are XAN and PAGP.  Additional growth oriented ETFs you may want to consider are FXL, VONG, and SPYG. As for growth oriented mutual funds, consider AGOZX and NYSAX.  Good investing!

The post September Market Beating Stock Picks first appeared on MarchéEconomics.

The post September Market Beating Stock Picks appeared first on MarchéEconomics.

If Pres. Trump makes a trade deal to reduce tariffs (taxes on imports) it will be pro supply side along with the earlier tax cuts and deregulation.  If he stays protectionist, economic growth will slow, both domestically and globally.  The later problem may even lead to a recession.  Within that context of uncertainty, I’ll recommend the following growth stocks:  AY, GLNCY, GBX, MRO, NCS, CIVI, and CONN.  Strong dividend growth comes with GLNCY.  Also, EQIX offers strong dividend growth although it is relatively expensive.  Strong ETFs for long-run growth are RZG, JSML, and PSCH.  Good Investing!

Week 2 (July 9 – 13):

In the U.S., markets seem to have priced in the negative effects of the trade war versus the positive effects of earnings and economic growth.  This means that the overall market will end the year about where it is now.  Stock picking is even more important as only a handful of “other than average” stocks will handily beat the market.  For growth, consider ORN.  For dividend growth consider BHR, CQH, CNXM, and CLNY.  The best growth oriented ETFs include FDN, PSCH, and PNQI.  Good investing!

The post Free Market Beating Stock Picks for July first appeared on MarchéEconomics.

The post Free Market Beating Stock Picks for July appeared first on MarchéEconomics.

The economy is just right.  Short-term calm and low volatility usually create a “smart-money” outflow and a short-term dip that you should buy . . . maybe by tomorrow.  Consider the growth stocks GTES, and OFG.  Look at the ETFs:  XLI, PSCI, and XSD.   Good dividend growth stocks are CVRR, STX, HCLP and TRTN.  No one can predict the future or the next recession so all attempts to do so are merely noise.  Trump’s anti supply side trade policy will probably be the culprit for any economic slowdown or recession.  It is a job and growth killer and will eventually offset the supply side boosters of deregulation and tax cuts.  Just when that will occur is anybody’s guess.  Good Investing!

Week 2 (June 11 – 15):

The Fed raises the expected GDP growth rate and becomes more hawkish in terms of adding one more interest rate hike to the previous three it planned for the year.  Between the Fed getting ready for the next recession by raising short-term rates (the discount rate directly and the federal funds rate target rate range) and Trump trade tactics that may or may not produce results, the seeds are being sown that will lead to a recession, but one that is most likely far, far down the road.  With an unlikely near term recession as the background assumption, I’d consider growth stocks such as:  CVX, CVTI, SIM, MKSI, TALO, and TOELY.  Good dividend growth stocks include M, GIS, LYB, BXM, RMP, NEW, BGS, TRTN, and especially T.  Thanks to the reduced North Korean nuclear risk, an ETF you might want to consider is FKO.  Good investing!

Week 3 (June 18 – 22):

Trump trade tactics v everything else = increased volatility appears the theme.  Personally, I’d like to pull all our companies out of China before the steal all our technology.  Their command economy government doesn’t yet realize the extent of their unfair trade practices even though we have given them most favored nation status (MFN) in trade which eliminates trade barriers in exchange for an implied agreement that the Chinese behave like good trading partners.  Time for Congress to rescind MFN to the Chinese.  Trade talk still isn’t tough enough to get through to them.  Thus, this must continue and even escalate.  At some point the stock market will get used to it and simply price it in.

For growth, consider the stocks APC and DIOD.  APC also pays a dividend.  Dividend growth stocks to consider include BSM, CQH, CLNS, and NEE.  Strong growth ETFs are PSCH, FDN, FYC, and BTEC.  The best mutual funds are KSCOX and TEFQX.  Mutual funds require a substantial initial investment but ETFs do not.  Good investing!

Week 4 (June 25 – 29):

Traders that overreacted on Monday created opportunities for those with diversified portfolios  cash on hand.  This is likely to occur again so be ready.  I’d also have some TZA in my portfolio as a hedge.  In the meantime consider DLPH, PGR, ARCB, and ADBE for growth.  ETFs to take a look at include IHI, IGM, and FTEC.  Mutual funds are FBSOX and HCEGX.  Let us hope that June ends well.  Good investing!

The post Free Stock Picks for June 2018 first appeared on MarchéEconomics.

The post Free Stock Picks for June 2018 appeared first on MarchéEconomics.

Adjustment from April:  I recommended an Argentine utility company EDN that is very profitable and growing more so over time.  However, the Argentine currency problem continues to worsen which creates a currency translation problem for EDN.  Eventually, EDN will become very cheap and a great buy, but may continue to fall in value due to the weakening Argentine Peso in the nearer term.  Either get out of any position you have now and wait until the Peso stabilizes before going back in or wait to start a position in the future when EDN is a better buy.

Week 2 (May 7 – 11):

Money is coming back in.  The bull is once again ready to resume its run.  Buy JLL, GHDX, QNST, and CVRR as growth stocks.  CVRR is also a dividend growth stock.  Buy the ETF FTXL, but be ready for some volatility.  The best mutual fund is SMPSX.  I also have bught a little TVIX for assurance against future volatility as it is down into the $5’s.  Good Investing!

Week 3 (May 14 – 18):

The market seems to wake up and eat Korean fish snacks every morning for breakfast.  But then, after realizing it’s mistake, it recovers.  I’ll call that the state of the market for now.  Luckily, all things wear out:  Strong and steady gains, turn to a sell-off.  A sell-off turns to Korean fish snacks and volatility.  Korean fish snacks and volatility then turn into another leg up . . . eventually?  Be prepared.  That said, consider the ETF for small cap industrials PSCI.  Then consider the dividend growth stock PGR.  For a mutual fund, consider FKCSX for small cap growth.  If you want dividends and potential growth there is insider buying in GHY, which seems like a bet on interest rates going up.  Good investing!

Week 4 May (May 21 – 31):

I wanted to let market volatility play out a bit before making recommendations for this last period in May.  Buying the current dip should pay off.  Dividend growth stocks are AYR, BP, TEGP, and NRZ.  A good growth stock is HFC.  The ETF for growth is XLY.  The best mutual fund is TEFQX.  High yield junk bond funds and preferred CEFs have net asset values that move in the opposit direction of interest rates, just like with bonds.  At some point, interest rates will likely continue to increase which makes these funds risky.  With the exception of maybe BIT, I’d avoid those.  Good investing!

The post May Market Beating Stock and Fund Picks first appeared on MarchéEconomics.

The post May Market Beating Stock and Fund Picks appeared first on MarchéEconomics.

Markets are beginning to adapt to real growth less the uncertainty of trade-war possibilities.  The growth and earnings side are great while the trade-war issue will probably remain for some time before hopefully fading in importance.  With that I’ll recommend some stocks and funds to consider adding to your portfolio.  The Gary Cohn resignation may generate nothing more than a short-run buying opportunity.  I sympathize with Gary Cohn.  He is a free-trader, as am I.  Placing taxes on the seller side if any market doesn’t do anything to increase market activity or economic growth.  Basically, the Trump administration’s efforts to deal with China appear crude.  Not that China has ever played fair with trade and deserves a whack on the snout at the very least.  On the other hand, I can’t believe that if we can identify the source of a nuclear bomb from its radiation signature that we cannot identify or differentiate Chinese steel as well.  If we can, there is no need for the clumsy broad tariff approach that harms our allies more than they do China.

Consider the following stocks for your portfolios:  MT (steel), KELYA (staffing), PKG (packaging), AEL (life insurance), NTGR (computer networking), OZM (financial investment management).  ETFs to consider include:  FTXL, FBT, PSI, ITA, IAT, XLY, and KBWB.  I’d also recommend SOXX if you still don’t have it and KRE (although it is in the base stock portfolio already).  If you’re into mutual funds take a look at UGPIX, BFOCX, TEPIX, FSELX, and BGSAX.  These stocks, ETFs, and mutual funds will give you good diversification and long-run growth, unless of course a trade-war breaks out.  Good Investing and good luck!

Week 2/3 (March 12 – 23):  Markets continue to iterate into tighter bands (called flags).  After consolidation they tend to resume their earlier upward trends.  Moreover, having Larry Kudlow as the new Chief Economist is good news for the markets.  Buy now.  Consider again the ETF funds FBT, SOXX and ITA.  Add to them FTX and PSI.  If you still do not have KRE, buy it now.  Stocks to consider are HCCI, MCRN, and CPSS.  Good investing!

Week 4 (March 26 – 30):  

Although the new normal is “New Trump Trade Policies = Positive TVIX Correlation”, this is still just noise and not something you trade on.  Fundamentals for the intermediate and long-term still look good for earnings growth and the state of the economy.  True, a trade war could bring the bull market to an end, but this is only a theoretical possibility.  More likely negotiations will follow and there will be no trade war.  This is mostly because Trump’s emphasis on the state of the stock market is a limiting factor to his anti-trade policies.  In other words, anti-supply trade policies that contradict previous pro supply side policies also put Trump in the position where anti-trade noise leads to the reduction or reversal of anti-trade noise.  The market is “street smart” enough to adjust to this circumstance.

I am back from La La Land where I took my daughter and her friends to Laguna beach.

Unfortunately, it was too cold for them to swim.

I also helped a girl decide on a new swim suite . . . but, got in trouble with the wife for that one.

Still, gota like California.

Growth stocks to consider are KELYA, AEL, CC, PATK, SGH, and USAK.  A tech oriented ETF with growth prospects is ETV which yields 8.8%.  An oversold energy/utility stock is CRIUF which now yields about 11%.  Growth ETFs are FTXL, PSI, PPA, and XAR.  Mutual funds to consider include:  OPGSX, INIVX, BGETX, and VGPMX.  Good Investing!

The post March 2018 Market Beating Stock/Fund Picks first appeared on MarchéEconomics.

The post March 2018 Market Beating Stock/Fund Picks appeared first on MarchéEconomics.

The correction or pull-back of about 10% is running its course.  Much of the attention focused on headwinds created by higher interest rates (as the 10 year government bond heads for 2.9% is an overstated concern.  Imagine you are flying a small airplane into a headwind.  The FED has helped you (the stock market) fly faster by buying government bonds (and other dept) to keep interest rates lower.  This builds up the FEDs balance sheet.  Unwinding the balance sheet puts downward pressure on stock valuations and increases short-term interest rates.  This tends to also cause longer term rates to go higher, but more on the basis of expected growth rate increases and inflation.  The higher interest rates in turn, increase the headwinds for your airplane (stock market) making it fly slower.  Thus, the sell-off.

This type of “fiscal-drag” is not likely to become severe.  Our interest rates are greater than those in many other countries and the dollar has stabilized or even increased in value.  From a foreigner’s point of view, a higher dollar value plus higher US interest rates make for an attractive investment.  As foreign investment flows into the US it does two things:  1) It reduces our interest rates because foreigners are now playing the role of an accommodative FED by buying up our bonds.  2) It keeps the dollar from falling too much, or it causes it to increase in value.  This increases the return to foreign bond purchasers and attracts even more portfolio capital into the US.  In other words, the reduction in headwinds is due to foreign portfolio capital inflows.  This allows our small airplane (stock market) to continue flying faster.

Problems of increased headwinds are actually elsewhere.  Increased deficit financing for government infrastructure expenditure is a potential headwind increase because the increased supply of bonds will increase domestic demand for savings and thereby increase market interest rates even more.  Still, this would only attract more foreign savings in the form of portfolio capital inflows from foreign sources and offset interest rate headwinds.  Bigger problems are potential trade wars that lead to retaliation, reduced exports, and net job losses.  Trade restrictions also result in a loss of welfare to consumers through higher prices.  Moreover, losses of consumer welfare are always much greater (by a factor of 10 or more) relative to the value of the few jobs saved through trade protections.  Hurting the consumer and reducing national income will also hurt the overall economy and become a threat to economic growth.  This is the biggest head wind to worry about.  Luckily, offsetting this recessionary head wind s the supply side stimuluses of the tax cut and deregulation policies.

While it is a case of reading the macroeconomic tea leaves in order to interpret future economic growth and earnings potential, it seems that the balance of weight comes down on the side of continued bull-market forces without too much in the way of interest rate or other heads winds slowing down the stock market.

The post February 2018 Stock State first appeared on MarchéEconomics.

The post February 2018 Stock State appeared first on MarchéEconomics.