EQM Capital Blog

EQM Capital LLC – Weekly Market Recap 2/27/15 NASDAQ 5K – Soooo Very Close!

Posted by on Feb 28, 2015 in EQM Capital Blog

nasdaq_1910x1000

NASDAQ nears record territory

Most of the major equity indices established record highs on Friday, before selling off at the close. At its peak on Friday, the NASDAQ came within roughly 2.8% of the all-time intraday high established in March of 2000. The small-cap Russell 2000 Index also rallied this week and ended up ahead of the large cap benchmarks YTD—a notable reversal from last year.  And check out Mid Caps!  The S&P 400 MidCap Index is bested only by the NASDAQ in YTD performance.

Dovish Fed boosts market sentiment

The S&P 500 Index saw its biggest gains on Tuesday, after Fed Chair Janet Yellen’s testimony before Congress. Her comments seemed to support a continued accommodate stance of low interest rates, therefore justifying higher stock price multiples (P/E’s). Investors were encouraged to hear Yellen’s assurances that a rate increase was not imminent.

Oil prices tumble again

Energy stocks again performed poorly this week, due mainly to a sharp drop in oil prices on Thursday. A rise in U.S. inventories sent the price of  WTI crude down over 5% for the day.  Global oil prices held on to recent gains due to reports of declining production in Iraq, Libya, and elsewhere. Overall U.S. production has remained fairly strong, even with many producers taking rigs offline.

Business spending up, but all eyes still on the consumer

The week’s economic data was mixed. The government announced Friday that the economy had grown a little less than first estimated Q4 2014, even with consumer spending increasing at its fastest pace in nearly four years. A decline in inventory build was largely to blame for the downward revision.  As an offset, business capital spending increased considerably more than first estimated.  But most economists still believe that consumer spending will still be the key growth driver in 2015.

U.S. Stocks1
Index Friday’s Close Week’s Change % Change
Year-to-Date
DJIA 18,132.70 -7.74 1.74%
S&P 500 2104.50 -5.80 2.21%
NASDAQ Composite 4963.53 7.56 4.80%
S&P MidCap 400 1507.44 -7.40 3.79%
Russell 2000 1235.16 5.15 2.53%
This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.

1Source of data Reuters, obtained through Yahoo! Finance Closing data as of 4 p.m. ET.

The opinions expressed above should not be construed as investment advice. This article is not tailored to specific investm
ent objectives. Reliance on this information for the purpose of buying the securities to which this information relates may expose a person to significant risk. The information contained in this article is not intended to make any offer, inducement, invitation or commitment to purchase, subscribe to, provide or sell any securities, service or product or to provide any recommendations on which one should rely for financial, securities, investment or other advice or to take any decision. Readers are encouraged to seek individual advice from their personal, financial, legal and other advisers before making any investment or financial decisions or purchasing any financial, securities or investment related service or product. Information provided, whether charts or any other statements regarding market, real estate or other financial information, is obtained from sources, which we and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing in this post should be interpreted to state or imply that past results are an indication of future performance.

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EQM Capital LLC – Weekly Market Recap for 2/20/15 – Next Stop NASDAQ 5,000?

Posted by on Feb 20, 2015 in EQM Capital Blog

nasdaq5000

Stocks hit record highs, NASDAQ tests 5,000 

This was a short week for the market thanks to the President’s Holiday, but the major equity indices saw strong gains, establishing all-time or multiyear highs. The NASDAQ Composite Index was the best performer, continuing its streak of eight consecutive daily gains through Friday.  According to Thomson Reuters, that’s its best such run in a year, but not quite enough to push it over the elusive 5,000 mark last seen 15 years ago in March of 2000.

Investors eyes on Greek debt negotiations

Traders kept a watchful eye on Greek debt negotiations this week. European markets fell Thursday after Germany said “nein” to a 6-month extension of Greece’s rescue package which is set to expire at the end of this month. Many had viewed Greece’s request for an extension, as opposed to a forgiveness of its debt, as a significant concession on Greece’s part. By Friday,  officials finally settled on a 4-month extension plan—while appearing too late for European markets—this helped to drive a late-day rally on Wall Street.

More good earnings reports!

Investors were also focused on those last few 4Q earnings reports. The tone of the reports continues to improve. FactSet raised its tally of overall earnings growth for the S&P 500 Index in the fourth quarter to 3.5%, from the upwardly revised 3.1% last week.

Retail outlook disappoints

Retail giant Wal-Mart reported an increase in 4Q profits but lowered its future guidance for earnings and revenue. The company did announce however that it would raise the minimum wage it pays employees to $9 an hour and invest more in training.

Finally some wage inflation

Rising wages may put pressure on record-high corporate profit margins this year, but their positive impact on consumer spending and thus corporate revenues should ultimately be a positive. As long as wage costs increase at a manageable pace, corporations should find other ways to control expenses. Consumer spending should also receive a boost from lower gas prices. The decline in energy costs has acted like a flat tax cut for Americans, providing a particular boost to the purchasing power of lower-income consumers who have seen minimal wage growth in recent years.

U.S. Stocks1
Index Friday’s Close Week’s Change % Change
Year-to-Date
DJIA 18,140.44 121.09 1.78%
S&P 500 2110.30 12.31 2.50%
NASDAQ Composite 4955.97 62.13 4.64%
S&P MidCap 400 1514.84 12.02 4.30%
Russell 2000 1230.01 6.46 2.10%
This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.1Source of data Reuters, obtained through Yahoo! Finance Closing data as of 4 p.m. ET.
The opinions expressed above should not be construed as investment advice. This article is not tailored to specific investm
ent objectives. Reliance on this information for the purpose of buying the securities to which this information relates may expose a person to significant risk. The information contained in this article is not intended to make any offer, inducement, invitation or commitment to purchase, subscribe to, provide or sell any securities, service or product or to provide any recommendations on which one should rely for financial, securities, investment or other advice or to take any decision. Readers are encouraged to seek individual advice from their personal, financial, legal and other advisers before making any investment or financial decisions or purchasing any financial, securities or investment related service or product. Information provided, whether charts or any other statements regarding market, real estate or other financial information, is obtained from sources, which we and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing in this post should be interpreted to state or imply that past results are an indication of future performance.

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EQM Capital LLC – Weekly Market Recap 2/13/15 Can U.S. Earnings Counter Global Ills?

Posted by on Feb 14, 2015 in EQM Capital Blog

Globe-in-hand

Stocks rally on earnings and Ukraine cease fire

Stocks posted their second week of gains as investors rewarded positive earnings reports and grew more optimistic about a resolution of the Ukraine situation.  Also helping this week was a slight rebound in oil which pushed those shares higher. Both the S&P 500 and S&P MidCap 400 Indices hit new highs by the end of the week and the NASDAQ saw its best level since 2000.  Even the small cap Russell 2000 Index which has lagged in recent months, established a new high and moved into positive territory for the year.

Greek’s renegotiating their debt

Stocks got off to a shaky start at the beginning of the week thanks to news that the Greek government was trying to renegotiate the terms of its bailout package and scale back on its austerity measures.  By Tuesday, it looked like progress was being made in talks between Greek and European Union officials.  Finally, on Friday Greece’s new Prime Minister Alexis Tsipras pledged to do “whatever we can” to reach an agreement with the nation’s creditors.  Greece faces an end-of-month deadline to extend the €240 billion bailout from EU lenders and the International Monetary Fund.

Ukraine cease-fire boosts market sentiment

Hope that the crisis in Ukraine might be improving also appeared to improve investor sentiment. Stocks rallied on Thursday following the announcement of a cease-fire between Ukrainian government forces and Russia-backed rebels.  The cease fire is set to take effect on Sunday.

Fourth-quarter earnings continue to surprise on upside

Despite bleak initial estimates, a continued flow of mostly positive 4Q earnings reports confirmed that companies are managing to increase their earnings even against the headwind of a strong U.S. dollar and falling oil prices.  FactSet once again raised its tally of overall earnings growth in the S&P 500 to 3.1% with over 75% of companies managing to beat analyst estimates. But FactSet also reported though that the overall tone of earnings guidance for the current quarter was pretty negative,  due mostly to the poor outlook for energy.

Apple grows to $700 billion market cap

Apple became the first US company to reach a market capitalization of $700 billion. The firm, with a share price of $122, is now worth roughly twice as much as any of the next three largest companies in the S&P 500 Index:  Exxon Mobil, Berkshire Hathaway and Microsoft.  Steve Jobs would be proud!

U.S. Stocks1
Index2 Friday’s Close Week’s Change % Change
Year-to-Date
DJIA 18,019.35 195.06 1.10%
S&P 500 2096.99 41.52 1.85%
NASDAQ Composite 4893.84 149.44 3.33%
S&P MidCap 400 1502.82 27.67 3.47%
Russell 2000 1223.55 18.77 1.56%
This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.1Source of data Reuters, obtained through Yahoo! Finance Closing data as of 4 p.m. ET.

 

The opinions expressed above should not be construed as investment advice. This article is not tailored to specific investment objectives. Reliance on this information for the purpose of buying the securities to which this information relates may expose a person to significant risk. The information contained in this article is not intended to make any offer, inducement, invitation or commitment to purchase, subscribe to, provide or sell any securities, service or product or to provide any recommendations on which one should rely for financial, securities, investment or other advice or to take any decision. Readers are encouraged to seek individual advice from their personal, financial, legal and other advisers before making any investment or financial decisions or purchasing any financial, securities or investment related service or product. Information provided, whether charts or any other statements regarding market, real estate or other financial information, is obtained from sources, which we and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing in this post should be interpreted to state or imply that past results are an indication of future performance.

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EQM Capital LLC – 2014 Market Year in Review

Posted by on Jan 9, 2015 in EQM Capital Blog

A Good Year for the Market, but not Diversification

2014 was another good year for the U.S. stock market, but most investors were not able to fully participate in the market’s gains. The S&P 500 Index was up more than 13% for the year, but according to a study from SigFig, the median investor’s investment account rose only 4% last year.

sigfig

The U.S. stock market was the place to be in 2014. While U.S. large cap stocks achieved double-digit returns, bonds and small cap stocks were only up in the single digits, and international stocks were actually down for the year.

Asset Class Index 2014 Total Return
Large Cap S&P 500 13.7%
Small Cap Russell 2000 4.9%
Bonds Barclay’s Aggregate Bond 6.0%
International MSCI EAFE -7.4%
Emerging Markets MSCI Emerging Markets -4.6%

Source: Morningstar
Performance Disclosure:  The performance data quoted represents past performance and does not guarantee future results.

In short, 2014 was a year that did not reward diversification. However, we know that over the long-term, portfolio diversification is very important in order to maximize return and minimize risk. Putting all your eggs in one basket may pay off in the short-term, but it is not a prudent long-term strategy.
Why is it important to be diversified? It is all about correlation. If all your portfolio assets move in the same direction in relation to each other, if they are “correlated”, then you are not sufficiently diversified. What diversification provides in essence is an “insurance policy” in down markets.

Year in Review

As anticipated, the U.S. economy showed marked improvement this year. Employment levels and new job creation are strong. Wages are finally starting to move up. And the latest quarterly GDP number came in at a very robust 5%. Most recently, low energy prices have provided a nice tailwind for the economy particularly in consumer-related areas like retail. Thanks to lower prices at the pump, consumers have more cash in the wallets to spend.

But there were also some big surprises last year.

• Whereas the U.S. economy has been steadily improving, Europe, Asia, and many other economies have not kept pace. Their recovery has stalled and as a result, international markets and investments have significantly lagged the U.S. markets.
• For most of the year, the big winners of 2013, small cap stocks have not kept up with the overall market and are up only marginally for the year.
• Interest rates have NOT moved higher! This was one of the biggest surprises of this year. Despite progress in the U.S. economy, slow economic growth overseas and declining energy prices are keeping interest rates low.

Outlook for 2015

What’s in store for the markets next year? Here’s what most market strategists expect:
• Interest rates will rise - At some point, given the current strength of the economy, the Fed will begin slowly raising interest rates.
• Non-U.S. markets should improve – International growth should begin to recover as other countries implement stimulus measures similar to what succeeded in the U.S.
• Oil price will stabilize – Oil prices should begin to stabilize as supply-demand imbalances finally work themselves out.
• U.S. still strong – U.S. companies should continue to hire and invest in their future growth, which is good for stocks, corporate earnings and the general health of the economy.
• Housing recovery continues – Despite higher interest rates, the housing recovery should continue given strength in the job market and improved consumer confidence.
• More of the same in the first half – During the first half of the year, the U.S. continues to look like the place to be, but opportunities may emerge outside the U.S. by the second half of next year.

Here’s to a happy, healthy and prosperous 2015!

The opinions expressed above should not be construed as investment advice. This article is not tailored to specific investment objectives. Reliance on this information for the purpose of buying the securities to which this information relates may expose a person to significant risk. The information contained in this article is not intended to make any offer, inducement, invitation or commitment to purchase, subscribe to, provide or sell any securities, service or product or to provide any recommendations on which one should rely for financial, securities, investment or other advice or to take any decision. Readers are encouraged to seek individual advice from their personal, financial, legal and other advisers before making any investment or financial decisions or purchasing any financial, securities or investment related service or product. Information provided, whether charts or any other statements regarding market, real estate or other financial information, is obtained from sources, which we and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing in this post should be interpreted to state or imply that past results are an indication of future performance.

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15 Investing Ideas for 2015

Posted by on Dec 17, 2014 in EQM Capital Blog

Here are some investing ideas for 2015 from US News and World Report.

I am quoted on investing in regional banks.

Bank on regional banks.

Within the banking sector, look beyond the big players. “Shares of regional banks are particularly leveraged to rising interest rates,” says Jane Edmondson, founder and CEO of EQM Capital, a wealth management firm in San Diego. She’s also portfolio manager of the EQM Capital Mid Cap Quant on Covestor, an online investing marketplace. “The ongoing housing recovery has improved the quality of their balance sheets, positioning them for growth,” she says.

Click here to read the full article

 

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Year-End Market Outlook: Lots of Presents or a Lump of Coal?

Posted by on Dec 1, 2014 in EQM Capital Blog

Click here for my latest article published on The Street.

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