Donald Trump gave investors a road map to the administration.
The President-elect tweeted that the two simple rules of his administration are to buy American and hire American.
If trade and tax policies are supported by DJT's new directive, there could be some broad implications for certain stocks.
Companies like Target (NYSE:TGT), Kroger (NYSE:KR), AT&T (NYSE:T), Ulta Salon (NASDAQ:ULTA) and Cedar Fair (NYSE:FUN) could be in a decent position, while things get trickier for the likes of Nike (NYSE:NKE), Procter & Gamble (NYSE:PG), Ford (NYSE:F), Toyota (NYSE:TM) and a host of other multinationals.
There's also big players like Anheuser-Busch InBev (NYSE:BUD) and Intel (NASDAQ:INTC) that stand somewhere in the middle.
Add your own "buy American, hire American" stock picks in the comment stream.
As fears mount about the impacts of Zika, Canaccord's Tony Dwyer is warning that the health crisis (compounded with Italian bank issues, a more hawkish Fed and energy price weakness) could morph into the Ebola scare that enveloped the market two years ago.
The S&P 500 slipped 1.7% off its peak once the first U.S. Ebola case was reported in September 2014, and by the time the third American case was diagnosed, the market was already down 7%.
"Obviously, no two situations are exactly alike, but this is pretty close," concluded Dwyer. "I'm not looking for anything like a 10% decline... but this could be the catalyst we've been looking for."
Nomura's Bob Janjuah is out with another bearish note. He says rally off of the February lows in risk assets "has been marginally stronger than anticipated."
"My confidence on my negative views for global growth, on my belief in deflation over inflation and on the deeply negative outlook for earnings are now set even more in stone. The Fed has told me as much. In fact, I suspect that the Fed in private is far more concerned about these factors than it is currently willing to admit.
"The Fed’s change in March was all about weakening the USD, which in turn is designed to help the U.S. economy fight off imported deflation, instead of which the Fed hopes to import inflation into its economy.
"I am also even more convinced now that we are about 10 months through a multi-year bear market that likely won’t bottom until late 2017 or early 2018.
"The critical longer-term question to my mind is whether the Fed is going to re-introduce QE and/or cut rates ultimately into negative territory... My view is still that the Fed does not actually do anything more than jaw-bone until or unless the S&P500 cash index is into the 1500s and the outlook for growth, employment and inflation get significantly worse. In terms of credibility, while I think the ECB and the BOJ are scraping the barrel, the Fed still has the ability to influence things, at least for now.
"I also do not think that this current rally leg has much left in it – the power of Fedspeak without Fed action is already waning."
UBS technicians Michael Riesner and Marc Muller, who called both of the most recent selloffs, are out with a note telling clients to take profits on the S&P 500:
"Last week, we saw the suggested overshooting into expiration and the SPX reached the upper end of our projected late Q1/early Q2 target at 2050, which leaves the short-term picture in the U.S. unchanged as to what we highlighted last week. With the rally of the last few weeks and looking at our daily trend work, the SPX has reached its most overbought position since 2009!! Together with significant non-confirmations in our medium-term momentum work, and trading in the time window of our late Q1/early Q2 top projection, we see the market vulnerable for a significant reversal this week, which we would see as the beginning of a tactical top building process and subsequent correction into deeper Q2. We reiterate our last week’s comment and would not chase the market on current elevated levels.
"After being aggressively oversold, we saw the February 11th risk bottom as the basis for a multi-week bear market rally in global equities into the late March/early April timeframe with a price target 2000/2050 in the SPX before starting a new significant tactical down leg into deeper summer. Last week, we said that a final overshooting into expiration is still likely, but particularly in the week after triple witching we very often see important tactical trend reversals in the market.
"The February/March rebound was nearly vertical, which is not sustainable. With last week’s extension our daily trend work has reached its most overbought position since 2009. Together with our weekly momentum reaching overbought extremes we have a relatively high likelihood of seeing the market move into an important medium-term top followed by a significant setback. Even if our big picture market view (U.S. and global equity markets are in a cyclical bear market that we expect to continue into Q1 2017) proves to be too bearish, with such an indicator setup we should see the US market minimum ahead of a multi-week consolidation pattern, where we should see higher volatility and therefore a significant pullback."
It's no secret that value investing has lagged growth investing since the post-financial crisis bull market began, and it's all too predictable that investors would give up on the sector at just the wrong time. Indeed, the team at Morningstar discovered the flow of funds in value funds turned negative toward the end of 2015. Since, the iShares Russell 100 Value ETF (NYSEARCA:IWD) has outperformed the iShares Russell 1000 Growth ETF (NYSEARCA:IWF).
To review, there's plenty of academic research finding value stocks outperform growth over the long term - with the emphasis on long term. Morningstar: "Value exists because there are suckers on the other side of the poker table willing to take the flipside of the value bet."
The bulk of Bank of America Merrill Lynch's 2016 global outlook is a near-perfect extrapolation of current trends and themes - modest economic growth, a slow rise in U.S. rates diverging from other global central banks, commodities and credit under pressure, continued recovery in U.S. housing.
One standout line does interest however, and that's the team's expectation for value to make a comeback versus growth.
The research is fairly ample that value trumps growth, but it hasn't worked out that way for years. As measured by the Vanguard Value ETF (NYSEARCA:VTV) and the Vanguard Growth ETF (NYSEARCA:VUG), growth has trumped value by 690 basis points this year, and more than 2K basis points over the last five years.
It brings to mind another long period of growth beating value - the mid-to-late 1990s (how'd that one work out?).
November tends to be the busiest month for buybacks, according to Goldman Sachs, with 13% of annual repurchase spending occurring then. Not surprisingly, Q4 tends to be the busiest quarter for buybacks, with 30% of them coming then.
The Diamond Hill Valuation-Weighted 500 ETF (NYSEMKT:DHVW) is built to generate excess return relative to a comparable U.S. equity market capitalization-weighted strategy over long-term periods (5 years or longer).
As stated on the fund's homepage, "the Index uses a proprietary, patent-pending valuation methodology developed by Diamond Hill Capital Management, Inc. to evaluate the 700 largest U.S.-listed equity securities by market capitalization."
DHVW charges 0.10%, just 1 basis point more than the SPDR S&P 500 Trust ETF (NYSEARCA:SPY).
The percentage of companies lowering earnings forecasts during this reporting cycle has led those with upward revisions by 8.6 percentage points, the widest margin since Q4 2008, according to data compiled by the firm.
The consumer staples group has seen the highest percentage of companies lowering guidance at 37.5%, while 17%-20% of health care and consumer discretionary companies have lowered; surprisingly, energy is among the sectors that are cutting guidance the least.
The 10-year Treasury yield is quickly heading towards a "1" handle, off nine basis points this morning to just 2.11% after a trio of weak economic reports, led by core retail sales falling 0.2% in September vs. an expected gain of 0.3%.
There was also a big slump in the Empire State survey, and core PPI came in flat vs. an expected gain of 0.1%.
Down moderately earlier, S&P 500 (NYSEARCA:SPY) futures are now lower by 1.1%.