Tag: street authority

Don't Let Fear of a 'Grexit' Keep You Out of European Stocks

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By: Joseph Hogue of Street Authority

After nearly three years of extremely weak economic growth, the European Central Bank is finally delivering on Mario Draghi's pledge to do "whatever it takes" to get the region back on track.

The central bank is set to pump $64 billion into the economy through monthly bond purchases through September 2016. The quantitative easing program, alluded to in September, formally announced in January and started on March 9, may already be having an effect on the economy in terms of sentiment.

Q4 GDP growth of 0.3% beat expectations, and manufacturing data showed signs of life in March. Exports to the United States could get a big boost this year on a massive depreciation in the euro versus the U.S. dollar.

All things considered, I would say it could be a very good year for European stocks, and possibly most of 2016 as well.

There is one fly in the ointment. Greece is back in the headlines as officials were said to have informally approached the IMF to delay repayment on the country's debt but were denied. Thanos Vamvakidis, head of European G10 FX strategy at BofA Merrill Lynch Global Research, said the country may run out of money if a reprieve is not granted at the meeting of eurozone finance ministers on April 24.

How do we act on what could be a great opportunity in European stocks without running the risk that a "Grexit" wipes out returns? Continue reading "Don't Let Fear of a 'Grexit' Keep You Out of European Stocks" →

Investors: Prepare For A Bumpy Earnings Season

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By: David Sterman of Street Authority

The chickens are coming home to roost. After a remarkable eight-month rally in the dollar, many U.S. firms are finally feeling the pinch.

In the near-term, investors need to brace for a cautious earnings season. Yet, as I'll explain in a moment, there are still ample reasons for long-term optimism, especially when the dollar loses momentum and/or the global economy starts to rebound in earnest.

The strong dollar, which blunts the competitiveness of American firms, both at home and abroad, will have a clear impact on first-quarter results and forward outlooks. According to FactSet Research, 85 companies in the SP 500 have already warned of a Q1 profit shortfall, while just 16 companies have pre-announced that results will be better than expected. If that figure of 16 holds, it will be the lowest number since the first quarter of 2006. Continue reading "Investors: Prepare For A Bumpy Earnings Season" →

Are You Prepared For Negative Interest Rates?

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By:Tim Begany of Street Authority

Last Tuesday, all eyes were on Federal Reserve Chief Janet Yellen. In prepared testimony, she offered a few hints that interest rate increases may begin this summer.

While the crowd is thinking about rate hikes, few are thinking about U.S. interest rates heading lower, or possibly even turning negative.

The idea may seem absurd, but is it? Continue reading "Are You Prepared For Negative Interest Rates?" →

This Forgotten Icon is About to Make a Big Comeback

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By: Joseph Hogue of Street Authority

No matter how well run a company is, sometimes there is nothing management can do to avoid steep losses. Sometimes these outside forces are so strong that investors write a stock off altogether and wonder if the industry will ever be profitable again.

Few industries were hit as hard by the Great Recession as recreational vehicles. The plummeting stock market could not have come at a worse time for baby boomers approaching retirement, and fear over retirement savings caused motorhome shipments to drop more than 50% between 2007 and 2009. Even when gasoline prices fell during the recession, they quickly recovered, making cross-country trips unrealistic for many Americans.

One company has been a symbol of the industry for more than 50 years, but it came close to bankruptcy during the recession. Now shares look ready to move higher as some of the forces that worked against it change in its favor. Continue reading "This Forgotten Icon is About to Make a Big Comeback" →

4 Reasons Oil Could Drop Further

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By: Tim Begany of Street Authority

 

Right around the time analysts gave up trying to predict the bottom for oil prices, the all-important commodity mounted a strong comeback.

In fact, oil's recent reversal is leading to predictions that the commodity has finally bottomed and is poised for a "V-shaped recovery," which means it could rise so fast that its price chart forms the letter V.

What's more, many asset managers have started to say it's safe to go back into oil stocks and, in some cases, are forecasting such stocks will be 2015's best investments.

Those are bold claims, and they could be right. But I doubt it.

Simply put, the fundamentals behind the bear market in oil haven't changed much: there are still too many factors that could weigh on oil prices in coming months. Indeed, there are at least four reasons why it's probably far too soon to call a bottom in oil and why prices could still set new lows before heading consistently higher. Continue reading "4 Reasons Oil Could Drop Further" →