Five from 5i – Have S&P500 companies become less optimistic?

Michael Southern May 20, 2016

The biggest story this week was easily the Fed’s Wednesday meeting, which made it clear that another interest rate hike could be seen as early as June. The market-implied odds of a June hike are up to 32%. The immediate result was a selloff in both equity and bond markets, and a noteworthy cool down in gold prices. Only the dollar is up. Markets have bounced back somewhat as of this writing; however, the S&P 500 touched a two-month low on Thursday amid concern that higher borrowing costs will further burden a struggling global economy, following the Fed’s hawkish commentary in meeting minutes. 

  1. Companies slash buybacks by 38% from one year ago. 
  2. A minority of stocks accumulates a disproportionate amount of total return.
  3. Large-cap overweight from passive investing has been timely; will mean reversion support small-caps? 
  4. 3 factors that drive dividends in the long run; however, don’t forget to look back at management commitment.    
  5. Can low-volatility ETFs solve the biggest investing problem: buy low/sell high?
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