Salient to Investors: Goldman Sachs, Visa, and Nike will replace Bank of America, Hewlett-Packard, and Alcoa in the Dow Jones Industrial Average – the biggest reshuffling since April 2004 – boosting the influence of banking and computer companies. Dow proportions are determined by stock price and not market value, so
READ MORE... →Salient to Investors: Uche Orji at Nigerian Sovereign Investment Authority said: Many asset classes are richly valued, including developed market equities. The DJIA has gained each year since 2009 and Europe is recovering, so equity values may rise further amid Fed tapering. Nobody knows what tapering is and nobody has
READ MORE... →Salient to Investors: Greg Jackson at Jackson Park Capital looks for any size stocks of companies with: A shareholder-oriented management team, with CEOs owning stock in their companies. Strong insider buying and buying in the open market with cash that’s at least six figures in value, not acquiring shares through
READ MORE... →Salient to Investors: Michael Gurka at Spectrum Asset Mgmt says the market should be considerably lower. The first clue is market resistance at the 3% yield. Gurka sees a lot of overlaps with the 1987 crisis, while today’s jobs number does not make sense and shows what a tangled web we
READ MORE... →Salient to Investors: Higher debt costs will reduce buybacks and dividend increases. Borrowing costs for S&P 500 companies fell to 1.4 percent of sales the last 12 months, a record low in 11 years of data. Corporate bond yields are increasing the most since 2009 and are at 4.3 percent
READ MORE... →Salient to Investors: Mohamed El-Erian at Pimco said: Weakening emerging-market growth and spiraling currencies risk creating headwinds for a recovering US economy. Longer-term, we should care due to the feedback loop to the US. We will see a tightening of financial conditions to markets, with growth more challenged and the ability of
READ MORE... →Salient to Investors: Adrian Miller at GMP Securities said 2 weeks of Fed-speak have laid the foundation for a September tapering. Bill Gross at Pimco said no more QE mean no more bull markets. The 30-year bond yield was 3.91 percent on August 19, the most since August 2011. Vincent Chaigneau at Societe Generale said 10-year
READ MORE... →Salient to Investors: US companies have issued $241 billion in junk bonds this year, more than twice the amount during the same period in 2007. US stocks are near record highs. Investors’ use of borrowed money to buy stocks is up one-third in the past year to a near record. Housing prices are surging in
READ MORE... →Salient to Investors: David Kostin at Goldman Sachs said the S&P 500 will climb to 1,750 at year-end, to 1,825 in the next 12 months and 1900 at year-end 2014, as economic growth gains momentum, and recommends companies that generate most of their revenue domestically. Kostin said the real issue is that rising interest
READ MORE... →Salient to Investors: The Euro Stoxx 50 Index is at 12.5 times projected earnings, versus 15.3 times projected earnings for the S&P 500 and 14.2 times income for the Topix. Bulls say European stocks are cheap as the first expansion for euro-area manufacturing in 2 years helps drive forecasts for profit growth of more
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