Apparently, the stock market didn’t agree with Wall Street’s consensus opinion that increasing the Fed Funds rate was already ‘discounted into the market.’ Instead, that quarter percentage rise has had markets seesawing since the announcement.
In hindsight, it seems somewhat clear that perhaps the economy wasn’t in a good enough state to shoulder the beginning of rate hikes.
Earnings are certainly tepid. So far, 63% of the companies in the S&P 500 have reported their fourth-quarter 2015 results, with 70% coming in above the mean estimate, and 48% surpassing sales estimates. That is good news, but the downside is that the blended earnings decline was negative, at -3.8%. That’s been the trend for the past few quarters, and shouldn’t be too surprising given the continuing drop in oil prices that is affecting the prosperity of thousands of energy and energy-related companies.
But on the positive side, the unemployment rate continues to decline, and now stands at 4.9%—less than half the rate during the depths of the 2007–2009 recession. And new job openings rose to 5.607 million from 5.346 million a month ago. I think that indicates that the economy continues to improve—just at a slow pace.
Market sentiment is fairly evenly divided—about a third bulls, a third bears and a third neutral. Our contributors follow that pattern, but the good news is that most of the bearish views are for the short-term, as you’ll see in our Market Views section.
There are still plenty of great investing ideas out there, but this is an environment that begs for expertise, from advisors with decades of experience and proven track records—advisors like the more than 200 contributors who generously provide us with their stock and market opinions. And they are certainly independent thinkers, as you’ll see in the variety of investment ideas they offer this month.
Beginning with our Spotlight Stock—a Real Estate Investment Trust that is defying the popular notion that all REITs suffer when rates begin rising. The company continues to increase its occupancy rates, has a very attractive dividend, and as you’ll read in my Feature, it operates in the commercial office space, which tends to do very well in periods of increasing rates.
Next, our contributors offer four stocks in the Growth & Income arena from the tech, industrial and medical supply sectors. We also have four additional REITs for your review.
And in a period where appreciation has been challenging, our advisors recommend a telecom, refiner and resource business whose shares all pay high yields. And speaking of high yields, this issue also offers a couple of Preferred Shares with very attractive yields. Utilities are becoming more interesting, and we have two new selections for you in this sector.
The contingent of discounted companies continues to rise, and our offerings this month include stocks from the commodities, railroad, retail and chemical industries. We also include two small banks in our Financials section. I just caution you that these are small-cap companies, which tend to be not as liquid as their blue-chip brethrens, as well as more volatile. Lastly our contributions in the Funds and ETFs section are focused on market movements and volatility.
I hope to see you at the World Money Show in Orlando next month. It will be held March 3–5 at Disney’s Contemporary Resort. I will be speaking on Friday, March 4, at 8:00 a.m. and 1:30 p.m., so please stop by to say hello.
