Report (Premium Edition) 04-05-2021

Introduction (Quick Overview)

On April 5, 2021

Increasing optimism over the growth outlook has overshadowed rising worries about inflation as Q2 begins, lifting equities and cheapening fixed income. Data and events this week are unlikely to alter the markets’ views. In the U.S. a thin data calendar will not challenge the upbeat recovery story that was solidified by a blow-out jobs report.

FOMC minutes and Fedspeak won’t suggest any shift in the ultra-accommodative stance or philosophy. The Fed and US government have embraced a “Modern Money Theory” (MMT) approach and will likely stay the course for some time. As classical economics, we believe that MMT will end in disaster, but we can’t change it and it will run well until the “sugar high” runs out.

In the Eurozone, virus developments will again be the focus against the background of a sluggish vaccination campaign. Important data from Asia includes PMI, CPI and PPI out of China.

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Key Drivers for the Week of April 05

TIP – This is a 1-minute brief bullet-point summary. It is a tool that gives investors and financial a fast and simple list of what to watch for and talking points for the week.

  • Blowout U.S. jobs report reinforces increasingly optimistic growth outlook
  • Wall Street reopens from Friday holiday after futures posted moderate gains
  • UK, Eurozone, Scandi markets remain closed for Easter Monday
  • FOMC and Fedspeak highlight U.S. slate, along with ISM services, PPI data
  • Canada looks to employment report with a gain of 100k expected
  • China Caixin/Markit PMI, CPI, PPI loan data due; Japan services PMI, confidence
  • Australia’s RBA seen steady with 0.10% rate; India’s RBI expected on hold at 4.00% 
  • Eurozone continues to struggle with virus and vaccine difficulties
  • German manufacturing orders, production, trade due;
  • Eurozone composite PMI UK vaccine program remains highly encouraging; virus infection cases decline
  • Upside risks seen for final UK services and construction PMIs

Key Market Trends

Tip: Use this as a quick guide on the short-term direction of key markets. I once had a client that would call me nearly every day asking the direction of the markets. This is a quick cheat sheet to know the trend and help understand what is happening with the markets.

LastCHG %CHGHIGHLOWTREND
Dow33153.220.52%171.6633167.1732985.35Buy
S&P 5004019.881.18%46.984020.633992.78Strong Buy
Crude (WTI)60.291-1.56%-0.95461.38159.972Neutral
Gold1724.04-0.63%-10.981735.021721.15Neutral
10 Year1.7253.20%0.0541.7291.7Buy
Bitcoin/USD57395.69-1.40%-816.495840156800Neutral
US Dollar Index93.0320.00%0.00493.11192.921Buy
VIX17.933.46%0.618.1717.91Strong Sell
REIT Index2315.811.89%43.042316.592277.79Strong Buy

S&P 500 Sectors

Tip: Use this section to know the performance of various sectors, weight portfolios, or look for trades. Modern portfolio theory stresses the importance of diversification, but recently several sectors like technology have out-performed others like utilities. This is also a way to narrow the sectors to find investment opportunities.

REIT Alert: Due to Covid-19, there is a large percentage of people that have not paid rent or mortgages. We are very worried about the effect it could have on real estate investment trusts’ (REITS) value. Even though the sectors may trending bullish, we believe that REITs could have a significant drop in value.

Sector Name5-Day Return1-Month Return3-Month ReturnYTD ReturnYTD Return vs S&P 5003-Year Return5-Year ReturnTrend
 Basic Materials2.80%6.40%11.60%11.60%4.20%43.60%93.50%Bull
 Communication Services2.50%0.60%10.40%10.40%3.00%64.00%56.90%Bull
 Consumer Cyclical3.00%2.50%8.40%8.40%1.00%96.40%157.20%Bull
 Consumer Defensive1.20%6.80%2.70%2.70%-4.60%41.50%47.70%Bull
 Energy2.60%3.00%36.00%36.00%28.60%-15.20%-2.00%Bear
 Financial Services1.80%4.00%17.90%17.90%10.60%32.20%104.10%Bull
 Healthcare1.70%0.50%2.50%2.50%-4.90%56.20%97.20%Neutral
 Industrials2.70%5.50%12.40%12.40%5.00%44.00%96.80%Bull
 Real Estate2.90%6.60%10.80%10.80%3.40%39.40%37.30%Bull
 Technology4.80%-0.40%3.60%3.60%-3.70%121.60%251.40%Bull
 Utilities1.10%7.90%3.00%3.00%-4.40%37.90%52.20%Bull

Week Ahead: Growth Positives Overshadow Inflation Negatives

NORTH AMERICA

U.S. markets will have a chance to fully respond to the stellar March payroll report since Wall Street was shut on Friday and Treasuries traded on briefly in a very abbreviated session. The FOMC minutes and Fedspeak will be the highlights this week now that the jobs data is safely and bullishly out of the way.

Despite the good news from the employment report and other recent data, we don’t expect the Fed to change its tune on the lower-for-longer policy stance and its commitment to the ultra-accommodative posture.

The FOMC minutes (Wednesday) will be old news though they will be scrutinized for more information on the dots which showed four members plugging in rate hikes for next year. Fed Chair Powell’s comments from an IMF panel discussion on the global economy (Thursday) will take center stage. However, he’s been the most adamant in supporting the dovish stance and is likely to repeat that while progress is being made, the Fed is a long way from achieving its employment and inflation goals. Also speaking will be voters Bostic, Evans, and Barkin, along with Kaplan and Bullard.

The Fed and US government have embraced a “Modern Money Theory” (MMT) approach and will likely stay the course for some time. As classical economics, we believe that MMT will end in disaster, but we can’t change it and it will run well until the “sugar high” runs out.

What this means to investors is that the Fed will continue to infuse capital into the markets by low-interest rates and buying investments to keep the economy running hot. Inflation is certain as are higher taxes. Thus investors should look to assets that hedge against inflation risk.

The best indicator we see for a sign of increased inflation is the 10 Year (see chart). Currently, the trend is very bullish. A push above 1.75% will start shifting investors back into bonds from equities. A yield above 2% could start crushing high-yield/junk bonds. This could in turn crash the economy because the junk bond market is larger than mortgage securities in 2008.

A limited calendar is on offer this week, but ISM non-manufacturing, PPI, and factory orders will be worth a look even if the reports will not dent rising optimism over the recovery. Strong numbers will underpin the outlook while weaker data will be attributed to weather and noisy exogenous factors.

The ISM-NMI index (Monday) should rise to 57.5 (median 58.5) from 55.3 in February, with risk of a firmer print given the many upside surprises of late. Producer sentiment has been firm into 2021 and should remain so as robust reopening demand gets some extra fuel from additional stimulus checks. And the scramble to rebuild very depleted inventories will see further pressures from supply chain disruptions — the March ISM manufacturing report showed a jump in the overall index to its highest level since 1983, with order backlogs at a record peak.

A 0.5% gain (median 0.5%) in projected for total March PPI (Friday) with a 0.2% core (median 0.2%) price gain, following respective increases of of 0.5% and 0.2% in February and a hefty 1.3% and 1.2% expansions in January. Monthly changes that come in as expected would leave an acceleration in the y/y headline PPI to 3.8% from 2.8% in February. A 2.6% y/y rate for the core is implied, which would be a tick above the 2.5% rate of expansion in February.

The commodity price updraft into 2021 has provided a particularly big lift for the PPI index. Ongoing supply constraints for some sectors should continue to provide support for the inflation indexes through 2021.

February factory orders (Monday) are expected to fall -1.6% (median -0.5%), with a -1.6% ex-transportation decrease. Shipments should fall -2.8%, while inventories rise 0.9%. The well documented weather hit is behind these estimates — hence significant gains in factory orders, shipments and inventories are seen going forward, as the weather impacts are reversed and as firms scramble to rebuild inventories.

The earnings docket is very lean: Monday has no reports, Tuesday has Paychex, Wednesday brings RPM International, Thursday reveals Constellation Brands, ConAgra, Shaw Communications and Friday is a blank slate.

In Canada, attention is squarely on employment this week. The report, due Friday, is expected to show a 100.0k gain in March after the 259.2k climb in February. The unemployment rate is projected at 8.1% from 8.2%. Hourly wages will be of considerable interest given ongoing worries about inflation — the average hourly wage rate of permanent employees slowed to 4.3% y/y in February from 5.9% in January. Another firm jobs report would further bolster upgraded growth forecasts for Q2, as vaccines and stimulus underpin the recovery.

The trade balance, due Wednesday, is projected at a C$2.0 bln surplus in February from the C$1.4 bln in black ink posted for January. The March IVEY PMI is scheduled for release on Wednesday. The next scheduled event from the BoC is the April 12 release of the Business Outlook Survey.

ASIA

Here too the focus will remain on the growth outlook as the markets react to the U.S. jobs data. Attention will also be centered on inflation dynamics and rising bond yields, and of course the covid pandemic and vaccinations. The Asian calendar includes several important pieces of data this week. From China there is the services PMI, along with CPI, PPI, and loan numbers out of China.

Japan reveals services PMI, consumption, current account, and consumer confidence figures. Prices, trade, and production data are slated for some of the smaller economies. For central banks, Australia’s RBA meets, with no changes to its 0.10% OCR expected. India’s RBI is seen on hold as well, with rates at 4.00%.

China’s Caixin/Markit March services PMI (Tuesday) should rebound to 52.0 after falling 0.5 ticks to 51.5 in February. The pace of activity has been slowing, yet this still would be an 11th month of expansion. It was at 43.0 last March. March CPI and PPI (Friday) should see consumer prices warm to a 0.3% y/y clip from -0.2% previously. Producer prices are seen jumping to a 4.0% y/y rate from 1.7%. March loan growth and new yuan loans are also tentatively due Friday.

In Japan, the final March services PMI is due (Monday). The index edged up to 46.5 in the preliminary March reading from 46.3. However, the index has been generally reflecting a slower pace of expansion since the fall when the index was in the 47.7 to 47.8 region. The February current account (Thursday) should see the surplus widen to JPY 2,000.0 bln from JPY 646.8 bln. March consumer confidence (Thursday) is penciled in climbing to 38.0 from 33.8 in February. It was at 29.6 in January, and t 30.9 a year ago. The index has not hit 40 since April 2019.

India’s RBI meets (Wednesday), with no change to its 4.00% repo rate expected. The rate was trimmed to 4.40% in March from 5.15% previously. The rate was cut again to 4.0% last May. South Korea February current account figures are due Wednesday. Taiwan has March CPI (Thursday) which is expected to have inched up to 1.5% y/y from 1.4%. March exports (Friday) are estimated to have surged to a 20.0% y/y rate, from 9.7% previously. Thailand March CPI (Monday) is forecast to bounce to a 0.5% y/y rate from -1.2%. In Singapore, the rate of contraction in February retail sales (Monday) is seen easing to -3.0% y/y from -6.1%.

The March PMI (Monday) is penciled inching higher to 55.0 from 54.9. Malaysia February industrial production (Friday) likely fell to a -2.0% y/y pace from the prior 1.2% increase. Philippines March CPI (Tuesday) should heat up to 5.0% y/y from 4.7%, while the February trade deficit (Thursday) should narrow to $2.0 bln from $2.4 bln.

In Australia, the RBA’s policy meeting (Tuesday) is expected to result in no change to the current 0.10% rate setting. In March, the RBA left monetary policy unchanged, as had been widely anticipated and maintained guidance that the cash rate won’t be hiked until employment and inflation targets are met. As for the economic data, the docket is rather thin, with nothing in the way of top tier data out this week. New Zealand’s calendar is also thin. The next RBNZ meeting is on April 14, with no change to the 0.25% policy setting expected. CPI, due April 21, is the next top tier data release.

EUROPE

Eurozone: it is another holiday-shortened week, with most of Europe still closed Monday for Easter. Virus developments remain in focus against the background of a very slow vaccination campaign that has exposed the weakness of Germany’s federal system. The fact that the states are fighting the central government on the implementation of measures and that Chancellor Merkel is essentially on the way out are not helping.

The situation risks undermining a still fragile recovery that is quite uneven across sectors and regions. Against the backdrop of these developments, ECB officials remain eager to assure markets that policymakers will see through short term variations in headline inflation rates that have so far been driven largely by base effects from energy prices.

Confidence has improved to a remarkable extent and the Eurozone March composite PMI is expected to be confirmed at 52.5, the services at 48.8. Data continues to reflect a split economy, with manufacturing confidence and output indicators at record highs, while the services sector remains hampered by ongoing virus restrictions, which have become stricter in parts of the Eurozone since the release of the preliminary report. Uneven developments across sectors and countries will keep the dovish camp at the ECB focused on providing sufficient support through PEPP purchases, despite the strength in manufacturing and the rise in price indicators.

Germany’s manufacturing sector has rebounded to a remarkable degree and we expect this to be reflected in manufacturing orders (Thursday) and industrial production (Friday). The former is seen rising 1.1% m/m (median 1.3%), the latter 1.2% m/m (median 1.5%) in February readings. The German trade surplus (Friday) is expected to have widened again that month, thanks to strong export demand.

Other data releases include French production data as well as Eurozone producer price inflation, with the latter expected to lift sharply in the February reading (Thursday).

U.K.: the UK will reopen for business on Tuesday following a four-day weekend for the Easter holiday. The UK economy remains well positioned with the society emerging from a prolonged lockdown phase, and with signs of pent-up demand already starting to be unleashed. The UK vaccination status, alongside the rate of Covid infection and mortalities, remain highly encouraging and in stark contrast to the situation across the Channel.

There are concerns about the emergence of new variants that will render existing vaccinations obsolete, or at least less effective, which is the reason behind the UK government’s draconian decision to make it illegal for its citizens to take foreign holidays in the months ahead. The evidence so far suggests that existing vaccinations will still have significant efficacy against new variants, including the Brazilian version, which is the most worrisome of the known variants.

A 10-year high in the final March manufacturing PMI (data released last Thursday) was an endorsement of sorts for Brexit, being achieved despite the increased trade friction that has been caused between the UK and EU as a consequence of Brexit. The two sides last week reached a post-Brexit Memorandum of Understanding (MOU) on financial regulation, which had been widely anticipated. The MOU will help to lay out a framework for cooperation on regulations and a forum for discussing rules, procedures, and information sharing.

The data calendar this week is quiet. The main highlight will be the final releases of the March services and construction PMI surveys (due Wednesday and Thursday, respectively). Market participants will be factoring upside risk following the unexpected upward revision of the final manufacturing PMI report, which came in at a 10-year-plus high of 58.9 in the headline reading. The median forecast for the final services PMI is 56.8, and 56.6 for the composite reading.

Switzerland:

The Swiss data calendar is quiet this week, highlighted by employment data (Friday).

Stocks & ETF Watch List

Tip: Use this section to find stocks and ETFs to add value to your portfolio by increasing the alpha (return) and decreasing beta (beta). Our list is updated weekly to help provide our readers with timely insights. Readers should do their own research before making any investment.

Solid Picks

This group of stock/ETF picks is likely to experience growth and perform well into the near future. The “Fair Value” is a calculation using a discount cash flow analysis to determine the Intrinsic Value. The rank score of a stock, where a score of 1 is best. This algorithm compares a company to its peers and considers the consistency of key return metrics. The overall score, which 99 is the best) is computed from the percentile rank of valuation, growth, financial strength, efficiency, momentum, and dividends. The score also considers the past performance of a stock in each of the component areas relative to peers.

TickerRankCompanyPriceDividend Yield1-Month ReturnYTD ReturnYTD Return vs S&P 5003-Year ReturnBeta 3-Year5-Year ReturnDividends Ratings ScoreOverall Ratings Score
VIPS12Vipshop Holdings$30.14– -22.20%7.20%-0.10%81.30%0.59130.40%– 90
MLR4Miller Industries$46.871.50%11.60%23.80%16.40%101.00%0.75156.90%7886
TRNS23Transcat$48.91– 6.60%41.00%33.70%212.50%0.84384.30%– 58
FAST17Fastenal$51.112.20%5.40%5.30%-2.10%104.40%0.97141.10%7977
HOLX2Hologic$74.34– -0.40%2.10%-5.30%99.00%0.91114.90%– 96
CLGX13CoreLogic$79.451.70%-7.00%3.20%-4.20%79.70%0.87132.40%5582
SSTK22Shutterstock$91.360.90%2.60%27.70%20.40%104.70%0.72163.00%4692
TTC18Toro$105.361.00%2.80%11.40%4.00%76.10%0.8156.70%6291
IRBT8iRobot$121.69– -3.00%51.60%44.20%89.60%0.99243.80%– 97
AJG15Arthur J. Gallagher$126.611.50%3.90%2.70%-4.60%95.20%0.88217.60%6357
PKI6PerkinElmer$129.880.20%0.10%-9.40%-16.80%73.10%0.86162.80%671
MUSA3Murphy USA$145.450.70%15.60%11.40%4.00%100.60%0.7135.40%3388
JOUT5Johnson Outdoors$146.040.60%14.70%29.90%22.50%141.50%0.79591.60%69100
MODV21ModivCare$149.58– 18.10%7.90%0.50%116.30%0.77196.70%– 96
TGT9Target$200.721.40%7.90%14.10%6.70%213.00%0.7182.70%2467
DHR19Danaher$225.080.40%-0.20%1.40%-5.90%133.30%0.81219.40%7587
MOH7Molina Healthcare$235.48– 6.00%10.70%3.30%190.10%1.01262.80%– 64
SHW16Sherwin-Williams$249.750.90%8.00%2.20%-5.20%96.30%0.94173.30%6575
SMG10Scotts Miracle Gro$250.001.00%11.20%25.90%18.50%220.00%0.98293.60%5091
WSO20Watsco$267.222.90%6.50%18.80%11.50%65.10%0.6137.50%3871
HD14Home Depot$307.752.10%18.40%16.60%9.20%85.80%1.03156.60%7279
TMO11Thermo Fisher Scientific$456.300.20%-0.70%-2.00%-9.30%122.70%0.83224.70%5689
BIO1Bio-Rad Laboratories$579.91– -2.90%-0.50%-7.90%131.90%0.82315.90%– 94

Income Stock & ETFs Picks

This list of stocks and ETFs are selected for their ability to pay dividends. The dividend score of a stock, where a score of 99 is best. This algorithm compares a company to its peers and considers the consistency of key dividend metrics as well as their direction of change. The overall score, which 99 is the best) is computed from the percentile rank of valuation, growth, financial strength, efficiency, momentum, and dividends. The score also considers the past performance of a stock in each of the component areas relative to peers.

Dividend Stock Picks

TickerCompanySectorPriceEx-Dividend DateDividend YieldBeta 3-YearConsecutive Div. Growth YearsYTD Return3-Year ReturnDividends Ratings ScoreOverall Ratings Score
TEFTelefonicaCommunication Services$4.5312/11/202010.10%0.82112.10%-43.70%8765
VIVTelefonica BrasilCommunication Services$7.764/16/20219.80%0.731-11.80%-36.10%9967
TIMBTIMCommunication Services$10.8412/21/20204.90%0.972-22.10%-46.10%9263
VEDLVedantaBasic Materials$12.7110/30/20205.70%1.07144.80%-9.80%6964
VLYValley NationalFinancial Services$13.803/12/20213.20%1.1042.70%26.60%6594
USACUSA Compression PartnersEnergy$14.321/22/202114.70%1.2608.80%30.10%7243
TGPTeekay LNG PartnersEnergy$14.452/1/20216.90%0.97228.70%-3.60%8498
VALEValeBasic Materials$17.123/5/20216.90%1.3216.80%53.20%9994
VSTVistraUtilities$17.723/16/20213.40%0.891-9.10%-9.80%6171
STNGScorpio TankersEnergy$18.633/1/20212.20%1.1067.60%1.40%6198
TAKTakeda PharmaceuticalHealthcare$18.649/29/20204.60%0.6232.40%-14.60%9196
WESWestern MidstreamEnergy$19.081/29/20216.50%1.54040.90%-22.20%6898
TUTELUSCommunication Services$20.233/10/20214.90%0.7210+3.40%33.10%6155
TSLXSixth Street SpecialtyFinancial Services$21.343/24/20217.70%0.67111.20%72.00%8293
WMBWilliams CompaniesEnergy$23.903/11/20216.90%1.08321.20%17.20%7394
XRXXerox HoldingsTechnology$24.593/30/20214.10%1.2807.10%-3.00%7669
STWDStarwood Property TrustReal Estate$24.783/30/20217.80%1.05030.90%58.70%9592
WUThe Western UnionFinancial Services$25.153/16/20213.70%0.81615.70%46.80%7865
UNMUnumFinancial Services$28.141/28/20214.10%1.6310+24.10%-32.90%9484
TRNTrinity IndustriesIndustrials$28.494/14/20213.00%1.0610+8.80%33.30%8239
VICIVICI PropertiesReal Estate$28.843/24/20214.60%1.1214.50%85.80%6998
TOWNTowne BankFinancial Services$30.713/29/20212.30%1.09931.50%17.20%6178
VIRTVirtu FinancialFinancial Services$31.502/26/20213.10%0.09026.20%8.50%9192
SUNSunocoEnergy$32.442/5/202110.20%1.11015.60%79.00%9297
STBAS&T BancorpFinancial Services$33.492/10/20213.30%1.01836.10%-7.10%7960
STORSTORE CapitalReal Estate$34.303/30/20214.20%1.0862.00%59.10%6789
UBSIUnited BanksharesFinancial Services$38.893/11/20213.60%1.1510+21.10%25.10%8880
TXTerniumBasic Materials$39.075/4/20215.40%1.01034.40%29.60%66100
UGIUGIUtilities$41.253/12/20213.20%0.8810+19.00%1.40%6876
TRPTC EnergyEnergy$46.813/30/20215.90%0.9210+16.60%33.70%7997
SWMSchweitzer-MauduitBasic Materials$48.543/11/20213.60%0.99021.80%43.30%8350
STLDSteel DynamicsBasic Materials$50.973/30/20212.00%1.28839.00%25.80%9198
WBAWalgreens Boots AllianceHealthcare$54.752/18/20213.40%0.8210+38.60%-7.40%8261
ZIONZions BancorpFinancial Services$55.412/17/20212.50%1.02828.40%14.60%6177
TRTNTriton InternationalIndustrials$55.643/11/20214.10%1.06415.80%117.20%9999
ULUnileverConsumer Defensive$55.862/25/20213.40%0.581-6.60%10.90%7456
VZVerizon CommunicationsCommunication Services$58.304/8/20214.30%0.4810+0.30%38.80%7672
TDToronto-Dominion BankFinancial Services$65.744/8/20213.80%0.9410+17.80%32.00%9393
SWXSouthwest Gas HoldingsUtilities$68.245/14/20213.50%0.8810+13.40%10.10%8378
WPCW.P. CareyReal Estate$72.363/30/20215.80%0.9910+4.00%39.30%8782
TSNTyson FoodsConsumer Defensive$74.875/28/20212.40%0.71916.90%9.50%9885
STXSeagate TechnologyTechnology$78.493/23/20213.40%1.01227.40%56.30%7475
STRAStrategic EducationConsumer Defensive$92.893/5/20212.60%0.923-1.80%-3.30%8378
THGHanover Insurance GrFinancial Services$130.413/11/20212.20%0.8810+12.20%25.30%8480
TRVTravelers CompaniesFinancial Services$150.623/9/20212.30%0.9710+7.90%16.70%6960
TMToyota MotorConsumer Cyclical$154.169/29/20202.80%0.621-0.30%25.60%9987
UPSUnited Parcel ServiceIndustrials$171.282/19/20212.40%0.8510+2.40%80.40%8869
TROWT. Rowe Price GrFinancial Services$173.963/15/20212.50%1.2110+15.60%75.10%7498
TXNTexas InstrumentsTechnology$192.061/29/20212.10%1.1710+17.70%100.80%9385
WHRWhirlpoolConsumer Cyclical$225.302/25/20212.20%1.2610+25.60%62.70%8997

Dividend Growth Stocks

TickerCompanySectorPriceEx-Dividend DateDividend YieldBeta 3-YearConsecutive Div. Growth YearsYTD Return3-Year ReturnDividends Ratings ScoreOverall Ratings Score
ADTTFAdvantestTechnology$49.323/30/20211.60%-0.0101.10%181.80%8484
AFGAmerican Financial GroupFinancial Services$113.944/14/20211.80%1.3110+30.80%16.80%5970
AGMFederal AgriculturalFinancial Services$101.693/15/20213.50%0.97938.20%31.40%7172
ALLAllstateFinancial Services$116.033/3/20212.80%0.9310+6.30%30.40%8592
APHAmphenolTechnology$67.053/22/20211.70%1.059-48.50%61.50%8867
AUTLYAustalIndustrials$19.653/16/20213.40%0.153-4.70%56.40%– – 
BAHBooz Allen HamiltonIndustrials$81.712/11/20211.80%0.718-5.90%121.00%7580
BOCHBank of Commerce HldgsFinancial Services$12.933/29/20211.90%0.99331.20%18.10%3183
CBOECboe Global MarketsFinancial Services$100.862/25/20211.70%0.6710+8.80%-7.90%7777
CIHHFChina Merchants BankFinancial Services$8.297/2/20202.00%0.31141.50%102.00%3565
CIHKYChina Merchants BankFinancial Services$38.627/1/20202.20%0.8423.50%108.50%3565
CIVBCivista BancsharesFinancial Services$23.151/15/20212.10%1.31932.90%8.00%3686
CRHCRHBasic Materials$46.783/18/20212.50%1.07112.10%49.20%9476
CWBCCommunity West BancsharesFinancial Services$12.852/8/20211.90%0.27042.40%20.70%– – 
DKSDick’s Sporting GoodsConsumer Cyclical$79.273/18/20211.80%1.09641.70%147.30%8498
EHMEFgoeasyFinancial Services$94.623/25/20212.20%0.57625.00%250.60%9596
EWBCEast West BancorpFinancial Services$74.492/8/20211.80%1.25347.60%27.40%1865
FBNCFirst BancorpFinancial Services$43.753/30/20211.80%1.06329.90%30.00%3689
FXNCFirst NationalFinancial Services$18.252/25/20212.60%0.2438.70%4.40%– – 
GABCGerman American BancorpFinancial Services$46.832/9/20211.80%0.94842.40%50.00%6375
GSY.TOgoeasyFinancial Services$128.123/25/20212.10%1.3633.30%264.60%9596
HBNCHorizon BancorpFinancial Services$18.763/31/20212.80%1.22520.00%3.50%5782
HIIHuntington Ingalls IndusIndustrials$204.232/25/20212.20%0.85820.50%-16.20%8997
HKMPYHikma PharmaceuticalsHealthcare$59.683/18/20211.70%0.174-11.90%87.20%– – 
HWBKHawthorn BancsharesFinancial Services$22.603/12/20212.30%1.1393.80%31.20%4952
IBTXIndependent Bank GrFinancial Services$72.432/10/20211.70%1.35716.40%8.10%4976
ITOCYITOCHUIndustrials$65.049/28/20202.50%0.48512.60%82.70%5396
JBSAYJBSConsumer Defensive$10.595/8/20201.70%0.99115.60%92.50%– – 
LKFNLakeland FinancialFinancial Services$69.431/22/20212.00%0.95730.30%62.00%4670
MDCM.D.C. HoldingsConsumer Cyclical$60.622/9/20212.20%1.34435.60%181.90%8195
MGRCMcGrath RentCorpIndustrials$81.994/14/20212.10%1.1310+22.90%64.70%9897
NOCNorthrop GrummanIndustrials$322.242/26/20211.80%0.7510+6.30%-3.00%6391
NRIMNorthrim BanCorpFinancial Services$43.673/10/20213.40%1.2410+29.70%40.90%8696
NXSTNexstar Media GroupCommunication Services$142.702/11/20212.00%1.51731.40%129.20%81100
PKBKParke BancorpFinancial Services$20.711/29/20213.10%1.11634.00%33.20%9583
RILYB. Riley FinancialFinancial Services$56.913/9/20212.50%1.12236.80%256.80%6399
SBFGSB Financial GroupFinancial Services$18.582/11/20212.30%0.5572.20%7.20%6487
SFBCSound Financial BancorpFinancial Services$41.652/9/20211.60%0.36732.30%20.60%– – 
TROWT. Rowe Price GrFinancial Services$173.963/15/20212.50%1.2110+15.60%75.10%7498
VNNVFVonoviaReal Estate$66.774/19/20213.10%0.111-10.90%50.00%7478
WTFCWintrust FinancialFinancial Services$76.122/10/20211.60%1.32725.20%-7.10%1957

ETFs

TickerCompanyCategory GroupDividend YieldBeta 3-YearExpense Ratio3-Year Return
DNLWisdomTree Global ex-U.S. Quality Dividend Growth FundInternational Equity1.80%0.850.58%39.10%
NOBLProShares S&P 500 Dividend Aristocrats ETFU.S. Equity2.10%0.910.35%40.10%
SPHQInvesco S&P 500 Quality ETFU.S. Equity1.50%0.980.15%46.10%
VIGVanguard Dividend Appreciation Index Fund ETF SharesU.S. Equity1.90%0.90.06%44.60%

Dogs of the Dow

This list of DOW stocks based on H. G. Schneider’s Article in the Journal of Finance in 1951 that used price-earnings ratio. The general idea is that blue-chip companies that pay a dividend are more likely to withstand an economic downturn. The dividend score of a stock, where a score of 99 is best. This algorithm compares a company to its peers and considers the consistency of key dividend metrics as well as their direction of change. The overall score, which 99 is the best) is computed from the percentile rank of valuation, growth, financial strength, efficiency, momentum, and dividends. The score also considers the past performance of a stock in each of the component areas relative to peers.

TickerCompanySectorDividend Yield3-Year ReturnBeta 3-YearDividends Ratings ScoreOverall Ratings Score
CATCaterpillarIndustrials1.90%42.90%1.19282
CVXChevronEnergy5.20%0.10%1.234662
DOWDowBasic Materials4.70%– 1.357566
IBMIBMTechnology5.50%-13.20%0.989373
KOCoca-ColaConsumer Defensive3.40%22.80%0.719340
MMM3MIndustrials3.40%-20.90%0.879789
PFEPfizerHealthcare4.70%7.40%0.686765
VZVerizon CommunicationsCommunication Services4.50%28.30%0.487758
WBAWalgreens Boots AllianceHealthcare3.90%-24.90%0.828664
XOMExxon MobilEnergy6.40%-18.20%1.046970

Economic Data Calendar

We have a light economic calendar following the Easter weekend. Factory orders and shipments likely fell in February with a big hit from weather, though price gains will cushion the blow. The February wholesale data will face the same weather and price dynamic, with big February pull-backs. The trade deficit likely widened to a new all-time high in February, with big declines for both imports and exports. The March PPI report should reveal another round of out-sized goods-led price gains, as commodity prices continued to climb.

Week of April 5

The robust March jobs report set the stage for likely massive rebounds in many of the remaining March economic reports, due both to a likely powerful updraft in the face of Q1’s second rebound of stimulus deposits, and rebounds from the outsized weather-hits to February. The deposits are gauged by an estimated 22.8% March personal income surge that reflects an assumed 105% March pop in “current transfer receipts.” The weather bounce should be evident across all the production and sales measures that posted February pull-backs.

With these two March updrafts, we expect a retail sales surge that we peg at 3.5%, though a much larger gain is possible. We already saw a 13.3% March vehicle sales bounce to a 17.8 mln rate despite lean inventories related to semi-conductor shortages. We expect a 3.3% March surge for industrial production despite an assumed -5.5% utility sector drop, thanks to big gains for manufacturing and mining that were signaled by the hefty 183k goods sector jobs gain with a 2.4% goods sector hours-worked increase. All the March housing reports will show an upswing, though the bounce for existing home sales will be lagged to April and May. trade should also continue to boom through Q2, with a skewing of gains to imports that will sustain high deficit readings for now, before stronger gains for exports into late-2021. As with other sectors, trade is constrained by shortages of containers, and backlogs at U.S. ports.

Factory Orders: -1.6%

Factory orders are expected to fall -1.6% in February, with a -1.6% ex-transportation decrease. Shipments should fall -2.8%, while inventories rise 0.9%. The forecasts reflect the -1.1% durable goods orders decline with a -0.9% ex-transportation drop and a -1.6% transportation decrease. The factory goods I/S ratio should rebound to 1.41 from a 2-year low of 1.36, versus 1.40 pre-pandemic readings over the four months ending in February ’20. We saw an all-time high of 1.70 in April of last year, and a prior all-time high of 1.66 at the start of the series in January of 1992. The durable goods I/S ratio rose to 1.70 from a 23-month low of 1.63 in January, versus an all-time high of 2.24 in April, and a prior all-time high of 2.05 in January of 1992. We expect significant gains in factory orders, shipments and inventories going forward, as weather hits are reversed, and as companies scramble to rebuild inventories.

Trade Deficit: -$69.5 bln

The trade deficit is expected to widen in February to a new all-time high of -$69.5 bln from -$68.2 bln in January, versus a prior all-time high of -$69.0 bln in November. We expect exports to fall -2.5% to $187.2 bln, while imports fall -1.3% to $256.7 bln. The trade deficit should average -$69.2 bln in Q1, after gaps of -$66.7 bln in Q4 and -$63.8 bln in Q3. For 2021, we expect a -$61.2 bln average deficit, versus a -$56.8 bln average in 2020. A steep February oil price climb boosted both exports and imports of petroleum products, but bad weather depressed volume, and trade in vehicles fell in response to parts shortages. We expect a $20 bln bilateral goods deficit between the U.S. and China with elevated import and export figures as businesses rebuild inventories, though with a hit from the Chinese New Year. The bilateral gap previously fell between mid-2019 and March 2020 to an -$11.8 bln deficit that marked the smallest gap since 2004, versus a -$43.1 bln all-time wide bilateral gap in October of 2018.

Initial Jobless Claims: 680k

Initial jobless claims are expected to fall to 680k, following last week’s rise to 719k from 658k. Initial claims have posted only a gradual pull-back from the holiday peak likely due to elevated job churn as the economy transitions to its post-pandemic configuration. Claims are expected to average 654k in April, after an anticipated 718k average in March, 789k in February, and 852k in January. The 765k March BLS survey week reading follows prior survey week figures of 847k in February and 886k in January. We assume a 700k April payroll rise after the 916k March surge.

Continuing claims fell by -46k to 3,794k in the week of March 20, following a downwardly revised 3,840k figure. We expect continuing claims to fall -194k to the 3,600k area for the week ending on March 27. We expect continuing claims to extend their downtrend through Q2. We saw a continuing claims drop of -629k between the February and March BLS survey weeks. We saw prior drops of -409k in February, -555k in January, and -705k in December.

PPI/Core: 0.5%/0.2%

We expect a 0.5% March PPI headline rise with a 0.2% core price gain, following respective gains of 0.5% and 0.2% in February and a huge 1.3% and 1.2% in January. As expected readings would result in a rise for the y/y headline PPI metric to 3.8% from 2.8% in February. We expect a 2.6% y/y rate for the core, up from 2.5% in February. The commodity price updraft into 2021 has provided a particularly big lift for the PPI index, with a steep uptrend for energy prices, alongside erratic swings for the service sector measures. The y/y headline PPI reading should climb to a peak in the 5.4% area in April due to hard comparisons, while the core y/y rate rises to a peak near 3.3% around May. Oil prices rebounded as global markets tightened, and we saw an additional lift from disruptions related to the Texas freeze. Ongoing supply constraints will lift the inflation indexes through 2021.

Wholesale Inventories: -2.0%/0.5%

Wholesale sales are estimated to fall -2.0% in February, after a 4.9% January climb, while inventories rise 0.5% after a 1.4% January gain, as seen in the advance report. Both series faced a big February hit from weather disruptions, but a lift since December from rising energy prices. Annual revisions were released on March 24. The I/S ratio should rise to 1.31 from a 7-year low of 1.27 in January, versus an all-time high of 1.67 in April of 2020, as the ratio rises back toward the pre-pandemic reading of 1.34 in January and February of 2020. We saw an all-time high of 1.41 in January of 2009 for a data set extending back to 1992. Business inventories should rise 0.5% in February, with other component readings of 0.9% for factories and unchanged for retailers. The wholesale sector has been boosted by the recovery in trade with China, after the pullback in imports from China between mid-2019 and March of 2020. International trade is disproportionately captured at the wholesale level of production.

DATEETLOCALEINDICATOR – EVENTFORFORECASTMEDIANLAST
 04 Apr 17:00 South Korea FX Reserves USD (end-month)  MAR   447.6B
 04 Apr 20:30 Japan PMI Services (Jibun Bank/Markit)  MAR   46.5
 04 Apr 21:00 Australia Melbourne Inst. Inflation Gauge  MAR   0.1%
 05 Apr 00:00 Thailand CPI Y/Y  MAR 0.5%  -1.2%
 05 Apr 01:00 Singapore Retail Sales (Nominal) Y/Y  FEB -3.0%  -6.1%
 05 Apr  Europe Easter Monday – Eurozone/U.K./Scandi/Swiss Markets Closed
 05 Apr 03:00 Turkey Consumer Price Index (Y/Y)  MAR   15.6%
 05 Apr 09:00 Singapore Purchasing Managers Index  MAR 55.0  54.9
 05 Apr 09:45 United States Markit PMI – Services  MAR   60.0
 05 Apr 10:00 United States Factory Orders  FEB -1.6% -0.5% 2.6%
 05 Apr 10:00 United States Factory Inventories  FEB 0.9%  0.1%
 05 Apr 10:00 United States ISM-NMI  MAR 57.5 58.5 55.3
 05 Apr 10:00 United States ISM-NMI – Prices  MAR 72.0  71.8
 05 Apr 10:30 Mexico Markit Manufacturing PMI  MAR   44.2
 05 Apr 17:39 Bolivia CPI Y/Y  MAR   1.4%
 05 Apr 19:30 Japan PCE-Overall Households Y/Y  FEB -5.0%  -6.1%
 05 Apr 20:01 Colombia CPI Y/Y  MAR   1.6%
 05 Apr 21:00 Philippines CPI (2006 base) – Y/Y  MAR 5.0%  4.7%
 05 Apr 21:30 Australia ANZ Job Ads  MAR   7.2%
 05 Apr 21:45 China PMI Services (Caixin/Markit)  MAR 52.0  51.5
 05 Apr 23:30 Australia RBA Official Cash Rate   0.1%  0.1%
 06 Apr 03:00 Spain Unemployment Change  MAR   44.4K
 06 Apr 05:00 Eurozone Unemployment Rate  FEB 8.1%  8.1%
 06 Apr 08:55 United States Redbook 04/03    -17.4%
 06 Apr 09:00 Brazil Markit Services PMI  MAR   47.1
 06 Apr 10:00 United States JOLTS Job Openings  FEB   6,917K
 06 Apr 10:00 United States IBD/TIPP Economic Optimism Index  APR 56.0  55.4
 06 Apr 12:00 Russia Consumer Price Index (Y/Y)  MAR   5.7%
 06 Apr 19:00 South Korea Current Account USD NSA  FEB   $7.1B
 06 Apr 19:50 Japan Trade Balance 1st 20 NSA JPY  MAR   -226.1B
 07 Apr 00:00 Indonesia FX Reserves USD  MAR   $138.8B
 07 Apr 02:00 India RBI Repo Rate   4.00%  4.00%
 07 Apr 02:00 Russia Markit PMI – Services  MAR   52.2
 07 Apr 03:45 Italy Markit PMI – Services  MAR   48.8
 07 Apr 03:50 France Markit PMI – Services  MAR 47.8 47.8 47.8 P
 07 Apr 03:55 Germany Markit PMI – Services  MAR 50.8 50.8 50.8 P
 07 Apr 04:00 China FX Reserves  MAR   $3205B
 07 Apr 04:00 Philippines FX Reserves USD  MAR   109.1B
 07 Apr 04:00 Eurozone Markit PMI – Composite  MAR 52.5 52.5 52.5 P
 07 Apr 04:00 Eurozone Markit PMI – Services  MAR 48.8 48.8 48.8 P
 07 Apr 04:20 Taiwan FX Reserves USD  MAR   $543.3B
 07 Apr 04:30 United Kingdom CIPS Composite PMI  MAR  56.6 49.6
 07 Apr 04:30 United Kingdom CIPS Services PMI  MAR  56.8 49.5
 07 Apr 05:00 Singapore FX Reserves USD  MAR   S$508.8B
 07 Apr 06:00 Malaysia FX Reserves USD  MAR   $109.0B
 07 Apr 07:00 United States MBA Mortgage Applications 04/02    -2.2%
 07 Apr 08:30 United States Trade: Goods & Services  FEB -$69.5B -$70.5B -$68.2B
 07 Apr 08:30 United States Goods & Services Exports (BOP)  FEB $187.2B $187.6B $191.9B
 07 Apr 08:30 United States Goods & Services Imports (BOP)  FEB $256.7B $257.2B $260.2B
 07 Apr 08:30 Canada Merchandise Exports  FEB   8.1%
 07 Apr 08:30 Canada Merchandise Imports  FEB   0.9%
 07 Apr 08:30 Canada Merchandise Trade Balance  FEB C$2.0B  C$1.4B
 07 Apr 08:30 Chile Trade Balance USD  MAR   1516M
 07 Apr 09:00 Russia FX Reserves  MAR   586.3B
 07 Apr 09:00 Chicago Fed’s Evans discusses the economic outlook
 07 Apr 09:00 Ecuador CPI Y/Y  MAR   -0.8%
 07 Apr 10:00 Canada IVEY PMI (SA)  MAR   60.0
 07 Apr 10:00 Canada IVEY PMI (NSA)  MAR   63.1
 07 Apr 10:30 United States EIA Crude Oil Stocks 04/02    -0.9M
 07 Apr 10:30 United States EIA Gasoline Stocks 04/02    -1.7M
 07 Apr 10:30 United States EIA Distillate Stocks 04/02    2.5M
 07 Apr 11:00 Dallas Fed’s Kaplan in panel discussion
 07 Apr 12:00 Richmond Fed’s Barkin discusses monetary policy and the economy
 07 Apr 14:00 Washington FOMC Minutes for Mar 16-17 Meeting
 07 Apr 15:00 United States Consumer Credit  FEB $5.0B $5.0B -$1.3B
 07 Apr 19:01 United Kingdom RICS House Price (Balance)  FEB   52%
 07 Apr 19:50 Japan Current Account NSA  FEB 2000.0B  646.8B
 07 Apr 21:00 Philippines Exports Y/Y  FEB   -5.2%
 07 Apr 21:00 Philippines Trade Balance  FEB -$2.0B  -$2.4B
 08 Apr 01:00 Japan Consumer Confidence Index SA  MAR 38.0  33.8
 08 Apr 02:00 Germany Manufacturing Orders (M/M)  FEB 1.1% 1.3% 1.4%
 08 Apr 02:00 Germany Manufacturing Orders (Y/Y)  FEB   2.5%
 08 Apr 02:45 France Trade Balance (Eur)  FEB   -3.9B
 08 Apr 04:00 Taiwan CPI Y/Y  MAR 1.5%  1.4%
 08 Apr 04:00 Hungary Trade Balance Prelim (Eur)  FEB   855M
 08 Apr 04:30 United Kingdom CIPS Construction PMI  MAR   55.3
 08 Apr 05:00 Eurozone Producer Price Index (M/M)  FEB   1.4%
 08 Apr 05:00 Eurozone Producer Price Index (Y/Y)  FEB 1.4% 1.3% UNCH
 08 Apr 06:00 Ireland CPI – EU Harmonized (M/M)  MAR   0.3%
 08 Apr 06:00 Ireland CPI – EU Harmonized (Y/Y)  MAR   -0.4%
 08 Apr 06:00 Ireland Consumer Price Index (M/M)  MAR   0.4%
 08 Apr 06:00 Ireland Consumer Price Index (Y/Y)  MAR   -0.4%
 08 Apr 07:00 Chile CPI Y/Y  MAR   2.8%
 08 Apr 08:30 United States Initial Claims 04/03  680K 690K 719K
 08 Apr 08:30 United States Continuing Jobless Claims 03/27  3,600k  3,794K
 08 Apr 09:45 United States Langer Consumer Comfort Index 04/04    50.0
 08 Apr 10:00 Mexico CPI Y/Y  MAR   3.8%
 08 Apr 10:30 United States EIA Natural Gas Stocks 04/02    14B
 08 Apr 11:00 Richmond Fed’s Bullard discusses monetary policy and the economy
 08 Apr 11:00 United States Treasury Announces 3-Year Notes
 08 Apr 11:00 United States Treasury Announces 10-Yr Notes Reopen
 08 Apr 11:00 United States Treasury Announces 30-Yr Bonds Reopen
 08 Apr 12:00 Washington Fed Chair Powell speaks on IMF panel on the global economy
 08 Apr 14:00 Argentina Industrial Production Y/Y  FEB   4.4%
 08 Apr 18:00 Peru Central Bank Lending Rate     0.25%
 08 Apr 21:30 China CPI Y/Y  MAR 0.3%  -0.2%
 08 Apr 21:30 China PPI Y/Y  MAR 4.0%  1.7%
 09 Apr 00:00 Malaysia Industrial Production Y/Y  FEB -2.0%  1.2%
 09 Apr 00:00 Malaysia Manufacturing Sales Y/Y  FEB   4.1%
 09 Apr 01:45 Switzerland Unemployment Rate sa  MAR   3.6%
 09 Apr 02:00 Germany Industrial Production (M/M)  FEB 1.2% 1.5% -2.5%
 09 Apr 02:00 Germany Industrial Production (Y/Y)  FEB   -3.9%
 09 Apr 02:00 Germany Current Account (Eur)  FEB   16.9B
 09 Apr 02:00 Germany Trade Balance nsa (Eur)  FEB   14.3B
 09 Apr 02:00 Germany Trade Balance sa (Eur)  FEB 24.0B  22.3B
 09 Apr 02:00 Germany Exports sa (M/M)  FEB   1.4%
 09 Apr 02:00 Germany Imports sa (M/M)  FEB   -4.7%
 09 Apr 02:00 Norway Consumer Price Index (M/M)  MAR   0.7%
 09 Apr 02:00 Norway Consumer Price Index (Y/Y)  MAR   3.3%
 09 Apr 02:00 Norway CPI – Core (M/M)  MAR   0.4%
 09 Apr 02:00 Norway CPI – Core (Y/Y)  MAR   2.7%
 09 Apr 02:45 France Industrial Production (M/M)  FEB 0.5%  3.3%
 09 Apr 02:45 France Industrial Production (Y/Y)  FEB   -0.2%
 09 Apr 02:45 France Manufacturing Production (M/M)  FEB   3.3%
 09 Apr 02:45 France Manufacturing Production (Y/Y)  FEB   -1.0%
 09 Apr 03:00 Hungary Consumer Price Index (Y/Y)  MAR   3.1%
 09 Apr 03:30 United Kingdom Halifax House Prices sa (M/M)  MAR   -0.1%
 09 Apr 03:30 United Kingdom Halifax House Prices (Y/Y)  MAR   5.2%
 09 Apr 04:00 China M0 Y/Y  MAR   4.2%
 09 Apr 04:00 China M1 Y/Y  MAR   7.4%
 09 Apr 04:00 China M2 Y/Y  MAR   10.1%
 09 Apr 04:00 China Loan Growth Y/Y  MAR   12.6%
 09 Apr 04:00 China New Yuan Loans  MAR 2300B 1359B R
 09 Apr 04:00 Taiwan Exports-CC Y/Y  MAR 20.0%  9.7%
 09 Apr 04:30 Hong Kong FX Reserves USD  MAR   $495.9B
 09 Apr 05:00 Greece Unemployment Rate  JAN   16.2%
 09 Apr 08:00 Brazil CPI Y/Y  MAR   5.2%
 09 Apr 08:30 United States PPI  MAR 0.5% 0.5% 0.5%
 09 Apr 08:30 United States PPI Y/Y  MAR 3.8%  2.8%
 09 Apr 08:30 United States PPI ex-Food & Energy  MAR 0.2% 0.2% 0.2%
 09 Apr 08:30 United States PPI ex-Food & Energy Y/Y  MAR 2.6%  2.5%
 09 Apr 08:30 Canada Employment  MAR 100.0K  259.0K
 09 Apr 08:30 Canada Unemployment Rate  MAR 8.0%  8.2%
 09 Apr 09:00 Russia Trade Balance USD  FEB   8.9B
 09 Apr 10:00 Dallas Fed’s Kaplan in moderated Q&A
 09 Apr 10:00 United States Wholesale Inventories  FEB 0.5% 1.4% R
 09 Apr 10:00 United States Wholesale Sales  FEB -2.0% -2.2% 4.9%
 09 Apr 10:00 Mexico Industrial Production Y/Y  FEB   -4.9%
 09 Apr 12:00 Dallas Fed’s Kaplan in moderated Q&A
 09 Apr 12:00 Peru Trade Balance USD  FEB   347M
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