Week in Review: Stocks Ignore Political Noise and Continue Rebound

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The Dow Jones Industrial Average emerged from correction territory this week, as investors applauded earnings in the financial sector. At the same time, markets chose to ignore the now record-long U.S. government shutdown and ongoing Brexit saga in the U.K.

Financials Start Earnings Season On Positive Note

Bank of America (BAC), Citigroup (C) and Goldman Sachs (GS) all traded higher this week, after posting solid quarterly results. The earnings news was not all rosy however, as Morgan Stanley (MS) fell short of expectations on Thursday. Outside of the financial sector, Ford Motor (F) also cut profit expectations this week.

As the following chart shows, quarterly reporting activity will continue to pick up next week and the floodgates really open in February.… Read more

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Investors stepped in this week to do some value shopping, leading to the longest winning streak for the S&P 500 since last September.

The minutes from the December FOMC meeting were released on Wednesday, suggesting a more patient outlook for future interest rate increases. In fact, Fed funds futures are now pricing in just a 19.2% probability of an interest rate hike in 2019, compared with a 10.4% chance of a rate cut.

According to Bespoke Investment Group, energy names and other cyclical groups have been behind the market’s recent winning streak, which are precisely the names that were a drag in 2019.… Read more

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In late 2007, Citigroup (C) insiders – who should have known better – comforted themselves with a security blanket that, in hindsight, was better fit for a Goodwill donation.

“The dividend’s as safe as the next board meeting,” they told themselves as the yield on their shares climbed well above 10%. On a trailing basis, that is.

Next board meeting, their payout was chopped – and their shares dropped more than 90%.

Stock yields of 10%, 11%, 12% or more are usually too good to be true. Citigroup reminded us why ten years ago, and telecom disaster Frontier Communications (FTR) reinforces the point today.…
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About Author

Brett

Hi, I’m Brett Owens – and I’m a financial junkie. My “problem” started incollege, when I got a little dose of the stock market – man, was I hooked…in no time, I was reading the Wall Street Journal religously.

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