Guest: Mark Luschini, Janney Montgomery Scott, Chief Investment Strategist (AUM: $81 billion)
Topic: Market Monitor
This market volatility will be a more permanent feature of the landscape. Because of all the cross currents that exist between tightening monetary policy and politics, we don’t expect it to go away. Investors are going to be jittery and therefore the gains will come in a less linear fashion.
Most investors should play the volatility by trying to ignore it and making sure they’re not doing anything foolish or rash. We’re experiencing a steep correction, but we feel that it is a correction rather than a more sinister bear market. This should be viewed as a reset to sober expectations of not only the risks that are surrounding the market but also the likelihood that we’re seeing the best of what earnings are going to be on a go forward basis.
Earnings season so far:
Reactions to company announcements have been volatile but the aggregate earning picture has been very good. Investors are hearing more companies talk about the dollar, tariffs, and growth that has them assessing whether this may be the best of this cycle.
On China & trade: Probably the highest risk to the markets at the moment since it could have economic and earnings-related consequences. The hope is for a quick resolution but I expect the process to evolve slowly. Even an agreement for a tariff truce would be welcomed by markets.
These are my income picks with the common theme being that the three benefit from consumer spending which I expect to remain healthy
Carnival (3.5% yield) – vacations and getaways
Tapestry (3.15% yield) – aspirational purchases
WalMart (2.5% yield) – basic merchandise and strong ecommerce initiative
Disclosures: Luschini owns CCL, TPR & WMT for his clients