Hot Start to 2018 Pushes Markets Higher

U.S. equities pushed confidently higher on Tuesday, the first trading day of the new year, resulting in the best kickoff for the tech-heavy Nasdaq since 2013. Bitcoin was hot. Gold well bid. But bonds were slammed, pushing up yields, in a possible sign that inflation and economic growth expectations are rising and will put further pressure on the fixed-income market.

In the end, the Dow Jones Industrial Average gained 0.4%, the S&P 500 gained 0.8%, the Nasdaq Composite gained 1.5% and the Russell 2000 gained 0.9%. Treasury bonds declined, the dollar weakened again, gold gained 0.5% for its eighth consecutive gain and crude oil lost 0.1% after a run of strength.

Energy stocks led the way, in what could be possible sector rotation as crude oil tests above the $60-a-barrel threshold for the first time since 2015. Utilities were the laggards on yield pressure, falling 0.9%.

Netflix, Inc. (NASDAQ:NFLX) gained 4.8% after being upgraded by analysts at Macquarie noting changing consumer preferences to ad-free television and the impact of a second round of price increases. Citigroup analysts believe there is a 40% chance the company is acquired by Apple Inc. (NASDAQ:AAPL).

Nordstrom, Inc. (NYSE:JWN) gained 3.7% on an upgrade at JPMorgan on expected tailwinds from stock market gains and tax cut stimulus. On the downside, Sirius XM Holdings Inc. (NASDAQ:SIRI) lost 2.9% on a downgrade from JPMorgan on increased royalty costs.

On the economic front, the Market U.S. Manufacturing PMI came in slightly better than the flash reading, indicating the strong pace of factory activity in 11 months. Job growth was at the strongest since September 2014. And Eurozone activity increased to its best level since the survey began in June 1997.


With the books closed on 2017, the die has been cast: It was a record year, with stocks rising on a total return basis in each and every month for the first time in history.

For now, the consensus on Wall Street is that the uptrend will continue.

Goldman Sachs is looking for “rational exuberance” in 2018 on a combination of strong GDP growth, low and slowly rising interest rates, and profit growth driven by the recently passed GOP tax cut legislation. JPMorgan says investors should “Eat, drink, and be merry” in the new year on higher consumer spending and an even tighter labor market.

The latter, courtesy of strategist Michael Hartnett, fears a 1987/1994/1998-style “flash crash” within the next three months caused by rising interest rates.

Checking in with seasonality, the folks at the Almanac Trader note that January has had a volatile reputation since 2000, with 10 of the last 18 years featuring nasty declines starting with the 5.1% pullback that kicked off the dot-com collapse. January 2009 featured a 8.6% loss that was the worst January on record going back to 1930.

Mid-term election year performances were also tepid, as shown above. SentimenTrader notes that options traders are betting heavily on a spike in volatility in the coming weeks. And these folks tend to be right at extremes.  

  [FREE REPORT] Options Income Blueprint: 3 Proven Strategies to Earn More Cash Today Discover how to grab $577 to $2,175 every 7 days even if you have a small brokerage account or little experience... And it's as simple as using these 3 proven trading strategies for earning extra cash. They’re revealed in my new ebook, Options Income Blueprint: 3 Proven Strategies to Earn Extra Cash Today. You can get it right now absolutely FREE. Click here right now for your free copy and to start pulling in up to $2,175 in extra income every week.

Source: Investors Place

3 Threats to Amazon You Must Own Today

I love it when a plan comes together.

In early November, I wrote about Brazil’s airplane maker, Embraer (NYSE: ERJ), and its promising lineup of defense and civilian aircraft manufacturing contracts.

Separately, in December, I said: “If you’re looking for the best place to invest in 2018, one of your best bets is to put on your investment banker’s hat and bet on ‘M&As’ — mergers and acquisitions.”

Both predictions converged just before Christmas. Embraer’s shareholders reaped an instant 30% windfall when Boeing announced it was in talks for a “potential combination” with the company.

It’s not a done deal, of course.

As Embraer’s largest shareholder, Brazil’s government may only want to sell a big piece, not the entire company. Or perhaps it demands onerous financial terms.

But the point is, in a wide swath of industries — not just aerospace, but pharmaceuticals, chip manufacturing, packaging, chemicals, consumer goods, media, telecommunications and more — the game of M&A “musical chairs” is already underway.

And no one wants to be left without a seat when the music stops.

Amazon Competitors to Invest In

Another sector where I expect to see a lot of M&A activity this year? The U.S. retail sector.

A major theme I expect to emerge this year are Amazon competitors pairing off with the goal of better competing against Inc. (Nasdaq: AMZN).

For instance, eBay Inc. (Nasdaq: EBAY) is a likely buyout candidate.

A major theme I expect to emerge this year are Amazon competitors pairing off with the goal of competing better against

Potential buyers? Google, among many possible suitors. It desperately needs an internet retail arm of its own if it wants to go head to head as one of the Amazon competitors.

EBay, as one of the most venerable internet retail brand names, and with an existing network of fulfillment warehouses, would be a good place to start.

The Kroger Co. (NYSE: KR) is another buyout possibility for Amazon competitors. Its stock is down 35% from last year’s highs owing to worries about whether it can compete with Amazon — an overblown fear as far as I’m concerned.

The grocer has nearly 3,000 stores around the U.S. Its success in selling organic foods is a major reason Whole Foods leaped into the arms of Amazon to begin with.

Kroger is no laggard in “retail tech” either — a few days ago, the chain said it will roll out “cashierless” checkout technology in its stores this year.

W.W. Grainger Inc. (NYSE: GWW) is yet another candidate for a merger deal, in my opinion.

Grainger isn’t usually thought of as a retailer. It’s considered an “industrial supply” business, selling everything under the sun — cleaning products, paper clips, shelving systems, you name it — to other businesses.

Like Kroger, the stock was knocked down last year as investors fled in fear of Amazon. But Grainger’s network of warehouses and distribution centers are ready-made assets for any company hoping to “bulk up” and compete effectively against Amazon.

Best of all, these three companies aren’t fixer-uppers. They’re already successful, profitable companies.

Together, they’ll report $15 a share in profits in 2018. Two of the three pay dividends of around 2% as well.

Kind regards,

Jeff L. Yastine

Editor, Total Wealth Insider

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill