Following sharp declines in longer-term interest rates over the past four and a half months, including the U.S. 10-year yield falling from 3.2% to 2.4%, our sense is that many investors have a renewed interest in dividend investing strategies. Over the near-term, we expect tailwinds to remain in place for yield-focused investors, as the global economy works through the current ‘soft patch’ in economic data and central bankers remain on the sidelines.
Search Coverage List, Models & Reports
Search Results1-10 out of 414
Increasingly, we’ve been focused on identifying potential short ideas and avoiding stock ‘blow-ups’. We use 10 screens, focused on metrics such as capital allocation, capital creation, earnings quality, sentiment, and valuation, to help identify future underperformers and potential ‘blow-ups’. These lists are also the backbone of the process that we use to identify potential shorts that warrant digging into deeper in order to find the most compelling short opportunities.
While we expect some near-term disappointments on the consumer spending front into soft tax refund trends, our sense is that capital spending is poised for a pick-up. More specifically, our favorite capex forward indicators, such as capacity utilization and corporate profits, are consistent with U.S. capex growth of roughly 8% in 2019. This compares to consensus calling for 3%-4%. Additionally, we expect improving business confidence on the back of a U.S.-China trade deal and the immediate expensing of capital investments under the ‘Tax Cuts & Jobs Act’ to provide additional capital spending tailwinds.
Yesterday afternoon (03/14/19), the IRS posted data from Week 6 of tax season (ending March 8nd). The release showed a decline in the average refund. We now believe that a positive turnaround in the data is very unlikely.
Management guidance since 4Q18 earnings season began has been weak, with only 23% of companies providing EPS guidance for the current quarter that was higher than consensus estimates. It’s a similar story looking at the negative-to-positive ratio, which is a little over 3x with the current quarter winding down. Given generally weak incoming economic data since the start of the year, we don’t expect these trends to meaningfully change before 1Q19 earnings season begins.
Our U.S. market cycle work is based on the Conference Board’s Leading Index. Our favorite forward indicators suggest that U.S. economic data is likely to remain soft over the next three to four months. As discussed in Wednesday’s Chart of the Day, we also see potential near-term downside given that many of our technical indicators (e.g., MACD) have started to ‘roll over’.
- 1 of 42
- next →