Affinity "Mark" et Minute - March 11, 2015

Affinity “Mark” et Minute – March 11, 2015

Investment Commentary – March 11, 2015

Dow – 17,662.94 (3/10/15 close)
S&P 500 – 2,044.16 (3/10/15 close)
Nasdaq – 4,859.79 (3/10/15 close)
10-year Treasury – 2.13% (3/10/15 close)

February’s jobs report last Friday confirmed the strength in the U.S. labor market. New jobs numbered 295,000, well above expectations, with gains particularly evident in cyclical sectors. Over the past 7 months, the U.S. has created 2 million net new jobs. While job creation is running at its best levels since the late 1990’s, structural issues persist and both labor force participation and hourly earnings fell last month.

All told, however, the employment picture is predominantly strong—strong enough to suggest a growing likelihood that the Fed will hike interest rates in June or September. The prospect for an earlier than expected hike pushed interest rates higher and stocks lower last Friday.

Historically, equity markets tend to outperform the bond markets in times of rising interest rates. Therefore, as we move towards the 1stinterest rate increase by the Fed in the U.S. sometime in 2015, analysts are more constructive on stocks.

There are plenty of U.S. businesses that are doing well and able to grow free cash flow and deploy capital towards growth – whether it is growth in share price, through share buybacks or mergers and acquisitions (M&A).

Rising dividends and increasing share buybacks among large multinational companies are another positive for stocks. Looking at the S&P 500, if you take the dividend yield along with the buyback yield, it’s around 4%. Which analysts believe is a pretty healthy number.

Analysts continue to like the following sectors: technology, healthcare, and consumer discretionary.

Analysts think that direct exposure in emerging markets remains unattractive for a few reasons. First of all, it’s very difficult to find specific companies that have clear and transparent corporate governance, good profitability and good business models and whose stocks sell at attractive prices. Instead, they are getting exposure to emerging markets through companies like Daimler, the parent of Mercedes-Benz; Diageo, the spirits company; and Richemont which owns luxury brands like Cartier, Piaget and JaegerLeCoultre. All of these companies are well exposed to the emerging-markets consumer, especially in Asia.

In fixed income, analysts believe that with attractive valuations and solid credit fundamentals, bank loans deserve consideration. The slowly improving U.S. economy has contributed to strong corporate earnings. This has allowed issuers to improve their balance sheets gradually over the course of the past year.

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Disclosures:
http://durableportfolios.com/dpc/1250209341675/Global+Network+News?M=0573F244-4724-4CF6-8EF5-DA742FCA2AEB
https://www.blackrock.com/investing/insights/weekly-commentary
https://www.lordabbett.com/en/perspectives/fixedincomeinsights/leveraged-loans-credit-where-credit-is-due.html

About the Author: Mark Roberts

In addition to managing clients’ money and giving investment and diversification advice, Mark offers something that “the other guys” don’t - a unique approach to Retirement Tax Strategies and distribution. Time and time again, Mark meets with new clients who tell him they have a great relationship with their financial advisor but have never been offered information on this kind of approach to securing their financial futures. Mark has taken this feedback to heart and works tirelessly to ensure that his strategies focus on taxes and distribution. Mark started selling insurance for a major insurance company right out of high school to help put himself through college. After graduating with a degree in finance, he dove into estate planning on the financial side to set himself apart from other financial advisors. However, as changes were made to estate tax laws over time, Mark shifted his focus to income tax strategies. Mark’s philosophy is “the blue prints are more important than the wall paper or carpet.” The wall paper and carpet represent products like investments and insurance policies, whereas the blue prints represent the strategies. Once strategies that truly fit the client’s needs are put in place, our focus can shift to providing you with the right products. According to Mark, “It doesn’t matter what carpet we use if the walls are not in the right place.” Our approach to money management is designed to generate the largest alpha (quality) with the lowest standard deviation and beta (risk). By doing this, we help provide clients with the highest return on the lowest risk. Generating income for our retirees is also very important. Because withdrawing money from your portfolio hurts the account rather than helping it, our goal is to design income strategies to harm the portfolio the least making the money last longer.

Affinity “Mark” et Minute – March 11, 2015

Affinity “Mark” et Minute – March 11, 2015

Share This Story, Choose Your Platform!

About the Author: Mark Roberts