Record Summer Travel Signals Economic Optimism: EcoPulse – Bloomberg 09-04-14

Salient to Investors:

  • Jan Freitag at STR said from May through July, the most hotel room nights were sold since they began tracking the data in 1987, while reservations for Saturday nights, at almost 83% occupancy in July, is an indication of the healthy return of leisure travel. STR predicts revpar will increase 6.9% in 2014 and 5.2% in 2015. Freitag said the limited stock of new rooms in the US until at least 2016 along with rising demand enables hotels to boost prices.
  • AAA said the most Americans since 2008 took trips of 50 miles or more from their homes during the Labor Day weekend.
  • Russell Price at Ameriprise Financial said AAA’s forecasts are consistent with other measures of discretionary spending that also have improved, including new auto sales, while broader hiring has gained along with a higher level of comfort in Americans’ personal financial situations from stock gains. Price said increased leisure-hotel demand is fueled primarily by middle- and upper-income Americans, who are disproportionately helped by the stock market’s positive wealth effect.
  • Bill Crow at Raymond James said consumer travel makes up 30% of total US hotel bookings and economic growth in other countries has been a tremendous benefit to the industry, and hoteliers have been able to raise prices by 4% this year.  Crow does not see a material slowdown from healthy levels this year or next as consumers have been undaunted by geopolitical headlines or other economic challenges.
  • John Hach at TravelClick said bookings for Q3 and Q4 are accelerating, putting 2014 on track to be the strongest year since 2007, while recent gains have been buoyed in part by group travel which had been slow to rebound as the industry recovered from the recession.  Hach cautions that unforeseen events, such as continuing conflicts worldwide, could cause momentum to contract rather quickly. Hach said  tighter supply means hoteliers can be more opportunistic and optimistic than in the past.
  • Most FRB districts are optimistic, with Boston, Richmond and San Francisco seeing strong advance hotel bookings through the fall.

Read the full article at http://www.bloomberg.com/news/2014-09-04/record-summer-travel-signals-economic-optimism-ecopulse.html

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Goldman Sees S&P 500 Falling 10% Next Year Before Rally to 1,900 – Bloomberg 11-26-13

Salient to Investors:

David Kostin at Goldman Sachs said:

  • The S&P 500 will fall 10 percent in the next 12 months before rebounding to end 2014 at 1,900, end 2015 at 2,100 and end 2016 at 2,200.
  • The overall market should rise because the US economy will be getting better.
  • Buy tech, industrial and consumer discretionary companies as they will benefit the most from an improving economy.
  • Buy shares of companies that are increasing capital spending or repurchasing stock, and companies with above-average operating leverage.

S&P said the 25 months since the S&P 500’s last 10 percent drop is the longest stretch without such a decline since 2007.

Economists expect US economic growth to rise to 2.6 percent in 2014 and 3 percent in 2015 versus 1.7 percent expansion in 2013.

Read the full article at http://www.bloomberg.com/news/2013-11-26/goldman-sees-s-p-500-falling-10-next-year-before-rally-to-1-900.html

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Confidence in U.S. Consumer Stocks Seen at UBS: Chart of the Day – Bloomberg 05-28-13

Salient to Investors:

Jonathan Golub at UBS recommends overweighting consumer-discretionary stocks. Golub said consumer strength will have a positive impact on a host of industries, whereas businesses remain hesitant to put cash to work. Golub is neutral on industrial and tech stocks.

The consumer-discretionary index is the top performer among the S&P 500’s 10 broadest industry groups since stocks began climbing in March 2009, and outperforming the S&P 500 in 2013.

The Conference Board said consumers were the most confident in April since February 2008, whereas Chief Executive magazine cited a slump in sentiment among business leaders in a May survey.

Read the full article at http://www.bloomberg.com/news/2013-05-29/confidence-in-u-s-consumer-stocks-seen-at-ubs-chart-of-the-day.html

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New Critical Warning as 2013 shocker looms – MarketWatch 03-25-13

Salient to Investors:

Paul Farrell writes:

We are at a market top and an economic turning point.

Bernanke’s non-stop cheap-and-easy-money printing presses are loved by Wall Street banks but are bad for the rest of America. His reappointment – certain to become Obama’s greatest domestic blunder – so shocked Nassim Taleb that he went into isolation. Taleb says Bernanke doesn’t even know that he doesn’t understand how things work.

Bernanke has repeated the same ideological mistakes as Greenspan and made the economy worse, created a new bubble, making the next crash ever bigger. Fed chairman believe their own press and believe they alone have the answers. 

We will get a “black swan” before year-end, the big shocker expected by Gary Shilling who says investors are paying little attention to weak and declining global economies and concentrating on the flood of money being created by central banks. Shilling’s 11 sectors to avoid: commodities, developed-country stocks. home builders, your own home, big-ticket consumer-discretionary equities, consumer lender stocks, selected bank stocks, junk securities, developing-country bonds, developing-country stocks and old-tech capital-equipment producers.

Read the full article at http://www.marketwatch.com/story/new-critical-warning-as-2013-shocker-looms-2013-03-23

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U.S. Stocks Advance Amid Better-Than-Estimated Reports – Bloomberg 02-26-13

Salient to Investors:

Brad Sorensen at Charles Schwab said the economic numbers are holding up really well, and housing rebounding will continue, feeding into consumer confidence.

74 percent of S&P 500 companies so far reporting quarterly results have beat estimates. The index is at 14.8 times reported earnings versus the average since 1954 of 16.4.

Jonathan Golub at UBS said retail sales are rising fast enough to dismiss the effects of tax-law changes and gas price increases on consumer spending. Golub says the general trend is healthy despite the end of a payroll-tax break, a delay in income-tax refunds and higher gas prices, and recommends makers of food, beverages and other staples, and companies most dependent on consumers’ discretionary spending.

David Bianco at Deutsche Bank reaffirmed underweight ratings on staples companies and retailers due to the continuing struggle of low to middle-income households to make ends meet.

Read the full article at http://www.bloomberg.com/news/2013-02-26/u-s-stock-futures-advance-before-house-sales-report.html

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Consumer Stocks Challenged Even With Solid U.S. Spending – Bloomberg 01-15-13

Salient to Investors:

James Paulsen at Wells Capital Mgmt said job creation, tame inflation and rising home prices support solid retail spending in 2013, but consumer cyclicals may underperform the market because these positive economic trends are already discounted – the S&P 500 GICS Consumer Discretionary Sector Index has outperformed the broader market by 58 percent since 2008, the longest streak since 1990 but is overextended and trading at a 27 percent premium to the industrials versus a 20-year historical average of 13 percent.

Paulsen said the S&P 500 industrials offer better values, boosted by re-accelerating emerging-world economies. Paulsen said consumer discretionary stocks started outperforming the market in 2008, before retail spending began improving and prior to the stock market bottom in March 2009, a sign of the disconnect between Wall Street investing and Main Street activity.

Quincy Krosby at Prudential Financial said industrial companies have been beaten down amid debt concerns about Europe spreading and about slowing growth in China, but these economies appear to be stabilizing. Krosby said money managers can’t wait until everything is perfect to beat the market, and will focus on large-caps with international exposure like Caterpillar because they are a good barometer of the industry. Krosby said sector outperformance is born in the worst of times and dies in the best of times.

Eric Teal at First Citizens BancShares said investors will start rotating out of consumer discretionary stocks before any negative earnings results, and the fiscal deal may be a drag on the industry. Teal said the fiscal cliff is much more broad-based and can impact consumer spending at all different levels. Teal said industrials still need to demonstrate better earnings growth to merit an above market weighting.

Read the full article at http://www.bloomberg.com/news/2013-01-16/consumer-stocks-challenged-even-with-solid-u-s-spending.html.

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Berkshire Buys Deere Stake for Buffett Aides’ Portfolios – Bloomberg 11-15-12

Salient to Investors:

Berkshire Hathaway disclosed a stake in Deere, Precision Castparts, and Wabco Holdings and cut consumer products stocks including Johnson & Johnson and Procter & Gamble in Q3. Berkshire has been reducing holdings of consumer-products stocks in 2012.

Eli Lustgarten at Longbow Research  said there is a massive need to increase productivity in the world’s farm belts – Deere is the global leader with best technology, best-management.

Stephen Volkmann at Jefferies Berkshire already have a toe in the farm pond.

Read the full article at http://www.bloomberg.com/news/2012-11-15/berkshire-takes-deere-stake-as-buffett-deputies-build-portfolios.html

 

Scots Money Managers Like Regional Banks Whether Obama or Romney – Bloomberg 11-05-12

Salient to Investors:

Scottish money managers, including Aberdeen Asset Mgmt and Scottish Widows Investment Partnership, are investing in US regional banks.

James Kinghorn at Scottish Widows Investment said regional banks are more leveraged to benefit from an improving economy than the larger banks, better relative to European banks, and attractively valued. Kinghorn said the US economy has much more scope to surprise positively than many other regions.

Paul Atkinson at Aberdeen Asset Mgmt said regional banks have the ability to surprise and move forward in terms of earnings – if the market does run next year, you will need to be in financials. Atkinson favors consumer-related stocks, which are able to benefit from higher spending Asian consumers, and energy services companies. Aberdeen prefers building materials suppliers.

Read the full article at http://www.bloomberg.com/news/2012-11-06/scots-money-managers-like-regional-banks-whether-obama-or-romney.html

Best Performing Russell 3,000 Stocks And Sectors In 2012 – Seeking Alpha 09-24-12

Salient to Investors:

Smaller stocks are outperforming larger stocks in 2012.

Top sector is healthcare, followed by consumer discretionary, telecom and financials.

Bottom is utilities, followed by energy, industrials, technology, consumer staples and materials.

Read the full article at http://seekingalpha.com/article/884011-best-performing-russell-3-000-stocks-and-sectors-in-2012?source=intbrokers_regular