A Week's Worth of Analysts, Stock Picks and Economics in 5 Minutes

Jon C. Ogg

After the markets came roaring back a week earlier, the end result if you only look at weekly stock index changes for the week of June 14, 2019 might have made you wonder if anything even happened. After a 4 point drop on Friday to 2,866.98, the S&P 500 closed up less than 0.5% for the week of June 14; and the Dow’s 17 point drop on Friday made for a 0.4% gain in the Dow for the week. It would seem like not that much happened, but the reality is that a lot happened. The “Sell in May and go away” turning into “Hold you nose and buy in June” lost some steam. There are 7 Dow stocks holding the market down so far in 2019, and many of them are surprising.

Before getting into business sectors, stock picks and other personal finance issues, investors need to be considering the Federal Reserve’s anticipated interest rate cuts. It still feels too soon right now to expect a cut at the coming June 18-19 FOMC meeting, but the market is thinking that the July 30-31 meeting is now “live” (68% chance) of a rate cut and as of Friday the CME FedWatch Tool even has a 55% chance that Fed Funds will be cut again at the September 17-18 meeting.

Goldman Sachs and UBS both are telling customers to temper their rate cut expectations for now. And new economic data came out positive this last week — and the impact of tariffs and other trade war responses are not really going to felt until July and August after hey have gotten to work into the system.

As far as the better economic readings, these may need more attention at a time the media wants you to think a recession is imminent. It turns out that retail sales rose in May, and a weak April reading was also revised higher from a loss to a small gain. This matters as 70% of GDP is tied to consumer activity. Inflation is also tame, but it’s also closer to the Fed’s annual targets than you might think. By the end of the week of June 14, there were two Federal Reserve models which have actually raised their second quarter GDP forecasts.

Plunging mortgage rates may be a summer gift for homebuilders. Meanwhile, the flat to inverted yield curve is crushing custodial banks.

There was a rather large bit of news this week that didn’t garner enough attention. It might not impact natural gas and oil yet, but green (clean and renewable) energy has now surpassed coal in total electric capacity in the US. SunTrust also has several contrarian energy picks for an expensive and nervous market as the price of oil remains low. Investors keep flocking to utilities for safety, but there are now only 3 which I would consider as “cheap with enough upside” and with above-market dividend yields.

Health care is perhaps the biggest fight in America these days as there is a push for limitless care without a care of how to pay for it. It may not be a shock that the increase in $1 million medical claims for individuals is rising. What is a shock is that there are big increases in individual health insurance claims running in the $1.5 to $3.0 million level. For context, just one of those levels of claims may require thousands of healthy individuals with no claims at all to offset the expense. A new sickle cell disease treatment could be the next $1 billion drug if it get approved.

The top analyst Upgrades & Downgrades from Friday (June 14) were in Apple, Broadcom, Charter, Comcast, CommScope, ConEd, Next Era, Rockwell, Transocean and many more.

Thursday’s top analyst upgrades and downgrades included Abbott Laboratories, CenterPoint Energy, Dominion Energy, Delphi Technologies, Dollar General, Lennar, Lululemon Athletica, Visa, Walt Disney, Zillow and many more.

Also, here are 5 stocks to buy under $10 where analysts see huge implied upside.

24/7 Wall St. identified 10 old-school technology dividend payers that may have priced in much of the US-China trade war based upon their low valuation, weak performance, and high dividends.

There are also 5 contrarian energy stock picks that could score despite lower oil prices.

And hedge funds love 4 solid stocks for upside ahead.