It’s all about the big bad banks and their earnings this morning, but let’s not forget about sectors where suits aren’t required.
Our call of the day touts quirkier corners of the market. It comes from Neuberger Berman’s Erik Knutzen, who is worried that many of the usual plays look, well, played out.
“When the world is struggling to generate a growth lift-off, when many markets are priced for perfection but supported by low inflation and still-abundant central-bank liquidity, investors may want to focus on idiosyncratic and relative-value opportunities,” writes Knutzen, NB’s chief investment officer for multi-asset class portfolios.
And where exactly are those opportunities?
Investors should tilt their portfolios toward U.S. small- and mid-cap stocks, foreign developed markets’ equities and emerging markets’ stocks and debt, according to Knutzen and his colleagues. At the same time, dial back on U.S. big-cap stocks, plus go overweight with “lower-volatility hedged strategies,” they say in their latest 12-month outlook, illustrated in the graphic below.
Here’s why NB has a problem with American large-cap stocks: “High valuations are combined with concern over where the next earnings-growth catalyst will come from, given falling commodity prices and uncertainty around legislative progress in Washington.”
However, the possibility of a comeback for the reflation trade, “together with a feeling that their recent underperformance could be due for some mean-reversion,” leads NB’s to keep an overweight rating for U.S. small caps.
EM stocks and debt look promising in part because “economic growth remains respectable and valuations are still recovering from their 2011-15 bear market.”
Go here to read Knutzen & Co.’s full missive.
Key market gauges
Futures for the Dow
and S&P 500
are roughly flat, while those for the Nasdaq-100
That’s after the Dow
inched up to a record close yesterday, as the S&P
and Nasdaq Composite
also gained. The three gauges are on track for weekly advances that range from 0.7% to 2%.
is mixed, after Asia mostly closed higher. Oil
are gaining, as the dollar
See the Market Snapshot column for the latest action.
J.P. Morgan Chase’s
profit and revenue topped forecasts, Citi’s
results also came in above expectations, and Wells Fargo’s
earnings beat but revenue missed.
Read: Expect a weak quarter for banks as hopes for a ‘Trump bump’ fizzle
And see: The buzz over banks is fizzling out with earnings on tap
has sprung a leak in premarket action. The maker of security software lowered its guidance late yesterday.
could gain under the new Republican health bill, but there’s a catch, says a Wall Street Journal report.
Vanguard CEO Bill McNabb is stepping down.
Roku, which makes gadgets for streaming video, is looking into an IPO.
A GOP operative reportedly committed suicide days after revealing he had worked with Russian hackers to acquire Hillary Clinton’s missing emails.
There is buzz over this chart showing how many hours of work it takes to buy the S&P — both appreciative chatter and flak along these lines:
Just when you think you’ve seen the most irrelevant chart you’ve ever seen pic.twitter.com/tbbamHCN9E
— Jake (@EconomPic) July 13, 2017
A product tied to the cryptocurrency ethereum just raised $30K in 30 minutes via an Initial Coin Offering, according to a Motherboard report.
The product’s name is “the queen-mother of dirty words.”
An ICO is a new, unregulated fundraising method that has no connection to Wall Street and is based in the world of cryptocurrencies, as a Journal report has put it.
Solar stocks “flew too close to the sun” a couple of years ago, but they’ve now executed a “significant base breakout,” says MKM Partners chartist Jonathan Krinsky, who provides our chart of the day.
The Guggenheim Solar ETF
looks to be in the “early innings of a significant bearish-to-bullish reversal after a 67% decline from the 2015 highs,” MKM’s chief market technician writes.
“Common sense, for instance, dictates that close family members be defined to include grandparents. Indeed grandparents are the epitome of close family members.” —U.S. District Judge Derrick Watson ordered a loosening of President Donald Trump’s travel ban late Thursday.
See: Federal judge in Hawaii eases ban to allow grandparents, other relatives
Are you ready for some data? Reports on inflation and retail sales showed no change and a dip, respectively, and a reading on industrial production also has hit. Figures for consumer sentiment and business inventories are on tap for 10 a.m. Eastern Time.
Check out: MarketWatch’s Economic Calendar
On the Federal Reserve front, the Dallas Fed’s Robert Kaplan is due to speak in Mexico City at 9:30 a.m. Eastern.
It’s Bastille Day! France last guillotined someone in 1977 and other holiday facts here.
“You’re in such good shape,” Trump said to Madame Macron.
Is our national philosophy now “we do these things because they’re easy”?
Beyoncé shared the first photos of her newborn twins last night.
How a Chinese newspaper says RIP: Nobel laureate “led astray by West.”
“Slime eels” covered an Oregon road and cars after a truck overturned.
The dominant currencies throughout history — in one handy chart here.
Key for a tech investment? “A gigantic total addressable market,” Ashton Kutcher says here:
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