While worries around Nafta and the bond market might be fading a bit, earnings season is ramping up.
Buying the financial sector’s stocks right now makes sense to Above the Market’s Bob Seawright.
“This trade doesn’t seem ‘past it,’” writes Seawright, chief investment officer at Madison Avenue Securities, for our call of the day.
The big financials ETF XLF, +0.19% remains below its 2007 peak, and the sector’s 10-year return lags the S&P 500’s, he notes. Plus, banks and their ilk are cheaper than the broad market.
As the Trump administration hands out reprieves to banks, Seawright gives a related reason why Wall Street bosses are smiling.
New Federal Reserve chief Jerome Powell “will likely be inclined toward less regulation, another reason to favor financials in 2018,” Seawright says.
Rising rates and tax cuts should provide a boost, too, with the latter described by other pundits as nice for banks in the long run, after some short-term pain.
“Financials should be helped by higher interest rates (and thus higher profits), corporate tax relief (banks are some of the nation’s highest corporate taxpayers), and an economy growing by nearly 3 percent annualized,” Seawright says.
That might help cheer up a Bernstein analyst who has been highlighting how financial types fritter their lives away on spreadsheets and hanging around airports.
Key market gauges
Futures for the Dow YMH8, +0.36% , S&P 500 ESH8, +0.23% and Nasdaq-100 NQH8, +0.07% are slightly higher, after the Dow DJIA, +0.46% , S&P SPX, +0.36% and Nasdaq Composite COMP, +0.38% inched back yesterday from all-time highs.
See the Market Snapshot column for the latest action.
The dollar surges against Mexico’s peso, then eases.
“The news may quote the wrong source of information, or it may be fake news.” — China’s foreign-exchange regulator is pooh-poohing yesterday’s big news that Beijing may halt or slow its purchases of Treasurys.
That spokesman is not alone in playing down the recent buzz around the bond market. “Although it is tempting to jump aboard the Gundlach/Gross/China bond bear trade, given the extended sold-off nature of U.S. fixed income, there are better trades,” writes The MacroTourist’s Kevin Muir.
President Trump has said it’s “unlikely” he will talk with Special Counsel Robert Mueller, as he argued there has been “no collusion” between his presidential campaign and Russia.
The death toll from Southern California’s mudslides has jumped to 17, and the number of people missing also has climbed to 17.
The lights went out yesterday at CES, the nation’s premier consumer-tech conference.
Did Costco give a full refund on Jan. 4 for a dead Christmas tree?
“None of this was what I thought was going to happen,” says the woman who drew up a list of media men to guard against.
On a related note: Harvey Weinstein was slapped at an Arizona restaurant.
U.S. ambassador gets heat from the Dutch media for his 2015 remarks about “no-go zones.”
A cryptocurrencies fan visits a central bank to make a PSA:
There’s a bloke standing outside the Bank of England with a megaphone telling people the pound is finished and offering to give away crypto pic.twitter.com/memaPzJTSl
— Ranko Berich (@monexeurope) January 11, 2018
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