‘Yellen’ at You

Dan Stewart CFA®
President/Chief Investment Officer
NorAm Asset Management

Fed Chairwomen Janet Yellen took a barrage of questions by members of Congress yesterday regarding inflation, stimulus, unemployment, the faltering economy etc… – You name it, she was asked.  She conceded that many Americans are still unemployed who want jobs and there are still challenges facing our economy.  Thank you Janet for stating the obvious.

She went on to reiterate that any action by the Fed would be ‘data dependent.’  Boy, that always gives them an out, doesn’t it?

The takeaway is that she continued to stress than any actions, especially raising interest rates, would be fairly far off into the future.  She said the economy still needs a ‘High Degree’ of accommodation.  Translation, let the stimulus flow and the markets understood perfectly.

Right after those comments, the markets quickly reversed going from solid losses in a sea of red across the board to green lights flashing.  But there’s one big problem: growth didn’t follow suit.

The market is still bifurcated.  Most growth stocks took it on the chin while “safe” large companies seem to be doing well.  The big question is whether the more aggressive sectors firm up and reverse higher, thus joining their big brothers, or whether even the big strong companies finally succumb and roll over lower.

Don’t try to guess which is going to happen while we are in this no man’s land.  You can always go to Vegas for that.  Let the market decide which way it intends to go before you make a big commitment either way.

It is better to get in slightly behind the move with much more certainty and conviction than try to get ahead of the move by guessing.  The internals are still struggling to break higher to a new range even on the big cap companies.

The S&P 500 is just above its 50 day moving average (50 DMA) and it will be important to hold that line.  We have overhead resistance at 1885.  The past few months we have made many attempts to break above this level, but have been unable to do so (see S&P 500 YTD Graph).

Janet Yellen didn’t exactly exude confidence, it was more like a relief rally.  But she has another chance today in her day 2 of her 1st Humphrey Hawkins Testimony.

For a complimentary portfolio review, e-mail me at Dan.Stewart@NorAmAsset.com and we would be happy to review your positions.  We can evaluate your sector risk and individual exposure.

We have a few economic reports and they are listed below.  The markets, however, will once again be focusing on Janet Yellen’s 2nd day of testimony and Q&A before Congress.

We have 17 companies reporting on the S&P 500 and over 210 have in the broader markets.  Some notables are below.

Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW.  You can also listen via iHeart radio.

As a newsletter subscriber, you will receive short weekend video at 9:30 a.m. on Saturday so you can watch & then follow along on The Wall Street Shuffle radio show as we will be covering these topics specifically.

I hope you enjoy the show.  If you have any investment questions you would like discussed on the air or specific investment questions in which you would like personal advice, e-mail me at Dan.Stewart@NorAmAsset.com and I will be happy to respond.

Dan Stewart CFA®
Chief Investment Officer
NorAm Asset Management

Economic Reports Today:

Initial Jobless Claims
Bloomberg May US Economic Survey
Janet Yellen Day 2 before Congress (Joint Economic Committee)

Some Notable Earnings Reports Today:

Regeneron (REGN – before market)
Windstream (WIN – before market)
Priceline (PLCN)
Apache Energy (APA)
Monster Beverage (MNST – after market)
Louisiana Pacific (LPX – before market)
Wendy’s (WEN – before market)
DISH Networks (DISH – before market)
Breitburn Energy (BBEP – before market)
Nationstar Mortgage (NSM – before market)
Nuance Communications (NUAN – after market)
Jazz Pharmaceuticals (JAZZ – after market)
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