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The Tariff Debate

 March 23 2018     Anna Pfaehler
I’ve referenced my copy of Economics for Dummies twice this week. First, because I was discussing signed books and my copy is signed by the author, Sean Flynn, who was my Behavioral Economics professor at Vassar. The second time was to confirm my understanding that yes, tariffs are bad. To quote: “But such (protectionist) policies inevitably fail because any time you put up a tariff ...

Improved Earnings Growth Expectations Broadly Reduce PEG Ratios

 March 15 2018     David Templeton
Before passage of The Tax Cuts and Jobs Act in December, earnings growth for the S&P 500 was expected to be low double digits in calendar year 2018. Since passage of tax reform, a significant improvement in earnings growth expectations has occurred. The below table shows I/B/E/S earnings growth expectations in October by sector and for the S&P 500 Index compared to expectations as of the end of la...

Near Record Small Business Optimism

 March 13 2018     David Templeton
Today the National Federation of Independent Business (NFIB) reported small businesses are showing unprecedented optimism. The NFIB Small Business Optimism Index was reported at 107.6, the second highest reading in the 45-year history of the Index. The highest reading recorded was 108.0 in 1983.According to NFIB's President and CEO, Juanita Duggan,“When small business owners have confidence and ce...

Bond Yield To Stock Yield Spread Sufficiently Wide To Challenge Stock Returns

 March 12 2018     David Templeton
A little over a year ago I noted the yield on the 10-year Treasury surpassed the dividend yield of the S&P 500 Index. With rising bond yields, there becomes a point when the bond yield is sufficiently high relative to the yield on stocks that bonds can challenge stock returns. In that earlier article I referenced a research article written by CFRA Research's Sam Stovall and titled, Rising Prices, ...

Individual Investors Favoring Technology Stocks

 March 11 2018     David Templeton
Periodically I review the most active stocks individual members of Better Investing indicate they are purchasing. A notable feature on the current list is the fact technology related stocks are dominating member purchases.Full File (xls)Additionally, after the market's close on Friday, I posted a tweet noting Fidelity customers' top purchases. Again, technology stocks are gaining the interest of F...

Leveraging Charity

 March 9 2018     Anna Pfaehler
It is more expensive for me to donate to charity now than it was last year. The Tax Cuts and Jobs Act made a slight, favorable change to the deduction of charitable contributions. For donations to public charities, you can now deduct contributions up to 60% of your adjusted gross income. The limit was 50%. Most Americans will not directly benefit from this because to do so requires you to itemiz...

Sentiment And Economic Data Laying The Foundation For Higher Stock Prices

 March 9 2018     David Templeton
The headline number of an increase of 313,000 in February's non-farm payrolls this morning was big. This is the largest monthly increase since July 2016. The high end of consensus estimates was for a 230,000 increase in payrolls. December and January reports were also revised higher.In addition to the strong payroll report, estimated 12-month forward earnings growth is anything but disappointing. ...

Trade Deficit And Tariffs: It Is Complicated

 March 8 2018     David Templeton
President Donald Trump's announcement that he is instituting tariffs on imported steel and aluminum came as a surprise to some although reducing the trade deficit was one of his campaign promises. Dealing with the trade deficit issue is a complicated one since no one factor impacts trade. What is complicating a necessary discussion at the moment is the vitriol in which President Trump's tariff pro...

Rising Interest Rates A Headwind For Dividend Paying Stocks

 March 4 2018     David Templeton
Since July 2016 the yield on the 10-year US Treasury Note has increased from 1.32% to nearly 3% today. This doubling of longer term interest rates is creating a headwind for dividend paying stocks resulting in their underperformance versus their non-dividend paying counterparts as well as the broader S&P 500 Index.The maroon line in the below chart represents the total return for the S&P 500 Index...

Sentiment And Economic Data Mostly Positive

 March 3 2018     David Templeton
A colleague and I just returned from a week long trip in south Florida visiting some of our clients on both the east and west coast of the state. One notable factor was the very high level of activity everywhere we visited. Restaurants were all packed, road traffic was unbelievably jam packed and the number of semis on the road seemed higher than usual, and usually those trucks do not drive around...
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