Dec. 11, 2013, 2:59 PM
- The two worst-performing sectors on a down day are industrials (XLI -1.4%) and homebuilders (XHB -1.5%), (ITB -1.9%).
- Industrials are taking a hit after Joy Global (JOY -6.3%) missed earnings estimates and provided disappointing guidance. "With a limited number of projects that can book in time to help 2014, we continue to see both the need and opportunity to lower the cost base in our business," says the company. Caterpillar (CAT -1.2%).
- Homebuilders continue to digest Toll Brothers' (TOL -1.8%) "leveling in demand" comments from yesterday's earnings results - in the 19 weeks since August 1, business has been flat vs. last year, and in the first 5 weeks of FQ1 (beginning Nov. 1) business has also been flat from 2012 (though Hurricane Sandy makes a tricky comparison).
- CEO Doug Yearley on the earnings call (transcript): "There's just not a lot of action [this time of year]. We still feel like pent-up demand is building, demographics are on our side, affordability is in place, and we are cautiously optimistic about the spring season, which begins the end of January."
- Lennar (LEN -2.3%), D. R. Horton (DHI -3%), KB Home (KBH -3.1%), Hovnanian (HOV -3.3%)
Dec. 11, 2013, 10:02 AM
- "Warehouses over townhouses" is one of BAML's ten themes for 2014 - highlighting a potential shift away from consumer-driven stocks to industrial and commercial names.
- "If revenue growth continues to accelerate as we expect, corporations are likely to invest in their businesses by spending some of the cash accumulated on their balance sheets. This capex cycle, combined with improving global economic growth, is likely to benefit stocks in more industrial and cyclical parts of the economy over those that are more dependent on the consumer. In our view, this has already started, but probably is in its early stages."
- An attached chart shows this outperformance beginning to creep in in Q3.
- If the thesis is correct, investors may want to be sellers of Consumer Discretionary (XLY), Health Care (XLV), and Financials (XLF), and buyers of Tech (XLK), Energy (XLE), Industrials (XLI), and Materials (XLB).
- Related ETFs: FAS, XLF, IYH, FAZ, XLE, XLV, ERX, XLI, XLY, XLB, OIH, VHT, VDE, ERY, UYG, DIG, DUG, VFH, VCR, UYM, VAW, IYE, CURE, VIS, IGE, IYM, IYF, RXL, FXH, SEF, SMN, PXJ, IYG, PXI, IYJ, FXO, PFI, PSCH, KBWB, PSCE, FXD, UXI, MATL, PYZ, PRN, FXN, FXZ, RYE, RWW, FINU, FHLC, RYH, DDG, FXR, RCD, RTM, RYF, FIDU, SBM, SIJ, PSCF, PTH, FDIS, FENY, RGI, FNCL, RXD, PEZ, PSCD, PSCI, PSCM, FMAT, FINZ
Nov. 21, 2013, 8:50 AM
- Multiple expansion was behind stock gains this year, but next year it'll have to be earnings and money flow rather than further valuation re-rating, says Goldman's David Kostin, reiterating his cautious 1,900 end-of-2014 target for the S&P 500 (SPY).
- Margins are key, and Goldman's forecast is the "greatest investable gap relative to consensus expectations.” The bank expects 8.9% in 2014 and 9% in 2015 vs. the Street at 9.5% and 10.1%, respectively. Every 50 basis point swing in margins translates into a swing of about $5 per share in EPS.
- Four recommended strategies: Pick growth (IWF) over value (IWD), firms investing in capex, companies with high buyback yields (seems contradictory with previous), and stocks with high operating leverage.
- As for sectors, Goldman is favoring IT (VGT), consumer discretionary (XLY), and industrials (XLI) vs. underweighting consumer staples (XLP), utilities (XLU, IDU), and telecom (IST).
- S&P 500 ETFs: SPY, SH, SSO, SDS, IVV, SPXU, UPRO, VOO, RSP, RWL, EPS, BXUB, TRND, SFLA, BXUC, BXDB
Nov. 15, 2013, 8:18 AM
- Paul Tudor Jones' Tudor Investment in Q3 greatly boosted its holdings in the Consumer Discretionary Select SPDR (XLY), purchasing 3.6M shares to bring the total owned to 4.1M. The firm also opened a 2.8M share holding in the iShares MSCI Emerging Markets ETF (EEM).
- No longer a part of the portfolio are the Financial SPDR (XLF), Industrial SPDR (XLI), and the Energy SPDR (XLE).
- It's probably not too financially healthy to read a ton into these moves, as the ETF holdings could be hedges against other positions as easily as outright bets.
- Q3 13-F
- Q2 13-F
Oct. 22, 2013, 1:25 PM
- The mutual fund giant greatly boosts its ETF presence, rolling out 10 sector ETFs on Thursday, with BlackRock (BLK) - whose iShares has its own suite of sector ETFs - as the funds' sub-advisor. State Street (STT), though, is better-known for its sector offerings. Launching on Thursday - and popular existing State Street SPDR ETFs they'll be competing with:
- Fidelity MSCI Consumer Staples Index ETF (FSTA) - XLP.
- Fidelity MSCI Consumer Discretionary Index ETF (FDIS) - XLY.
- Fidelity MSCI Energy Index ETF (FENY) - XLE.
- Fidelity MSCI Financials Index ETF (FNCL) - XLF.
- Fidelity MSCI Health Care Index ETF (FHLC) - XLV.
- Fidelity MSCI Industrials Index ETF (FIDU) - XLI.
- Fidelity MSCI Information Technology Index ETF (FTEC) - XLK.
- Fidelity MSCI Materials Index ETF (FMAT) - XLB.
- Fidelity MSCI Telecommunications Services Index ETF (FCOM) - XTL.
- Fidelity MSCI Utilities Index ETF (FUTY) - XLU.
Sep. 30, 2013, 12:55 PM
- Among BAML's Ten Reasons to Buy Industrials, most interesting is the team's argument for a P/E re-rating for the sector because of earnings stability. Industrials have the most stable earnings of all ten major market sectors - even against defensive areas like Consumer Staples - yet they're still penalized for being too cyclical. "There is a glaring mis-pricing of risk."
- Another reason is the charts: Industrials have quietly broken out relative to the S&P 500 - a bullish trend for those liking to buy relative strength.
- Relevant ETFs: FXR, IYJ, PRN, XLI, VIS, RGI, PSCI, UXI, SIJ.
Sep. 9, 2013, 12:23 PM
- Bullish on the economy, Goldman's David Kostin says investors should favor those firms with high fixed costs as they'll benefit most from margin expansion. This leads him to pick industrials (XLI) and financials (XLF) as his favorite sectors.
- Industrials ETFs: FXR, IYJ, PRN, XLI, VIS, RGI, PSCI, UXI, SIJ.
- Financials ETFs: XLF, IYF, PFI, VFH, RYF, RWW, FAS, UYG, FAZ, SKF, SEF, IAI, FXO, PSCF, KBWD, KBWB, IYG, FINU, FINZ.
- Goldman's got a basket of 50 names set to benefit most from stronger GDP growth. Included are ANF, WFM, APC, R, X. More names as we get them.
Aug. 2, 2013, 5:05 PM
Jun. 19, 2013, 10:53 AM"Sell in May and go into cyclicals," says Ralph Acampora after the last month. He reminds of an old adage saying sectors going down the least during a selloff become the new market leaders. During SPY's 5.2% decline from May 22-June 6, the best performers were Tech (XLK) and Industrials (XLI). The worst were Telecommunications (IYZ) and Utilities (XLU). This "rolling rotation" between sectors is necessary, he says, to give further life to the secular bull market begun in March 2009. | Jun. 19, 2013, 10:53 AM | 3 Comments
May 31, 2013, 7:50 PM
Look for any piece of news that smacks of an improving economy to send stocks falling next week, warns CNBC's Jim Cramer. Why? Big money investors will interpret any positive economic signs as a signal that the Fed is about to pull back economic stimulus rather than risk runaway inflation. Still, he says, there may be opportunities in the pullback, particularly in the bank, tech and industrial spaces. Just says away from anything with a higher yield, like utilities and MLP's.| May 31, 2013, 7:50 PM | 37 Comments
May 21, 2013, 8:49 AMExponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways," is #4 of Bob Farrell's "Market Rules to Remember." Channeling that, BAML's Steve Suttmeier sees stocks continuing their run with risks of a topping-out not arriving unti late summer. He's most bullish on industrials (XLI) - particularly "oversold" EXPD, DE, CAT, FDX - and also thinks financials (XLF) will remain market leaders. | May 21, 2013, 8:49 AM | 4 Comments
May 6, 2013, 7:27 AMThe S&P 500 (SPY) is fairly valued, says Goldman, but opportunity lies in cyclicals (XLY, XLE, XLI, XLB) which are more undervalued vs. defensives (XLU, XLP, XLV, XTL) than at any time in the last 15 years. "Given the 4 P/E multiple point head start, even a slight valuation normalization should translate into outperformance of cyclicals over defensives during the next 12 months." | May 6, 2013, 7:27 AM | 1 Comment
May 3, 2013, 12:54 PMStocks remain sharply higher midday (SPY +1.2%), with the year's leaders - healthcare (XLV +0.7%), utilities (XLU +0.2%), and staples (XLP +0.7%) - lagging, and the year's laggers - industrials (XLI +2.1%), tech (XLK +1.1%), and energy (XLE +1.9%) - leading. Treasurys (TLT -2.1%) are suffering one of their worst days of the year, and broader fixed income (AGG -0.3%). | May 3, 2013, 12:54 PM | 1 Comment
May 3, 2013, 8:00 AM
"We don't want to sell in May and we continue to prefer cyclicals (XLY, XLI, XLB, XLE) ," says JPMorgan's Tom Lee, fully returned to his normal bullish stance. He notes client positioning is "dramatically different" from the heavily long stance of the last 3 years at this time. More, the downturn in gasoline prices could ad 50 bps to GDP in Q2, and the rally in high-yield suggests the economy is set to get stronger.| May 3, 2013, 8:00 AM | 1 Comment
Apr. 3, 2013, 8:00 AMSomething for the technicians to have a look at is this chart from ukarlewitz noting small-caps (IWM) have joined the industrials (XLI) and semiconductors (SMH) in slipping below their long-term uptrend line. Oversold in an uptrend tends to get bought, he says. It's a key time. | Apr. 3, 2013, 8:00 AM | 3 Comments
Mar. 8, 2013, 2:59 PMA check of sector performance YTD finds financials (XLF), consumer discretionary (XLY), healthcare (XLV), consumer staples (XLP), energy (XLE), and industrials (XLI) all ahead of SPY's 9% gain. Utilities (XLU) are lagging just a bit, but the biggest drag is tech (XLK), up 4.9%. Not bad considering Apple's 19% decline. | Mar. 8, 2013, 2:59 PM
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