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There's Nothing Like a Good Jobs Report

Yesterday’s broad-based selloff had a lot of people worrying about cracks in the bull market. But then today’s jobs report blows past expectations...and everything is great again! Yes, that’s a bit of an oversimplification, but it goes to show how crazy this market has been. The important thing is that the 222,000 jobs that were added last month was far better than estimates at around 180,000, sending the market sharply higher and salvaging this holiday-shortened week. 

Tech stocks rebounded on Friday and boosted the NASDAQ by 1.04% to 6153.1, leaving the index with a slight weekly gain of around 0.2%. The Dow climbed 0.44% to 21,414.3 while the S&P increased 0.64% to 2425.2, marking weekly advances of about 0.3% and 0.1%, respectively. It wasn’t exactly a week to write home about, but it would have looked a lot worse had the jobs report disappointed. Next week, earnings season slowly starts with the banks, though it won’t really heat up until a few weeks later. 

In the portfolios, ETF Investor and Income Investor both announced yesterday that they were making moves today. The former portfolio added a fund focused on the Eurozone and a fund focused on Mexico, while the latter picked up a chemicals company with a nice dividend. Each portfolio also sold positions to make room. Value Investor cashed in on a double-digit winner, and then added two more stocks. Read below for a lot more on these moves. 

Today's Portfolio Highlights: 

Value Investor: The bank trade is heating up, so Tracey wants to rotate into individual stocks. Therefore, she sold the Regional Bank ETF (IAT) on Friday for a strong return of 36%. The editor replaced this fund with the large-cap regional bank KeyCorp (KEY). In addition to its solid value, earnings for the company are expected to rise 26% in 2017 and another 11% in 2018. 

But that wasn’t all. Tracey also bought PVH (PVH), a well-run, big-cap apparel company with brands that include Calvin Klein, Tommy Hilfiger and IZOD. The company has all the classic value fundamentals, along with earnings growth expectations of 10% in fiscal 2017. In its most recent quarter, PVH beat estimates and raised its full year guidance. The complete commentary has a lot more on all these moves. 

Income Investor: Earnings estimates continue to slide for PACW heading into its earnings report, so Neena doesn’t feel comfortable holding onto it any longer. As announced yesterday, the editor sold that position this morning and picked up Eastman Chemical (EMN), which has a positive Earnings ESP for its upcoming report and is coming off a strong first-quarter performance. The company also generates a lot of free cash and has increased its annual dividend for seven straight years. It currently has a yield of 2.44%. Learn more about this new addition in the complete commentary. 

ETF Investor: Pakistan is out, the Eurozone and Mexico are in. The PAK position hasn’t worked out as hoped, so Eric exited it this morning (along with EEMV) and got into iShares MSCI Euro Zone ETF (EZU). This fund focuses solely on countries in the common currency bloc in Europe (no UK), which is in an all-around solid situation right now. This diversified fund gives the portfolio more large-cap exposure and has solid holdings in areas like the consumer and financials. 

The editor also picked up MSCI Mexico Capped ETF (EWW), as Trump fears have subsided with our southern neighbor. The country’s currency is on the mend and its growth prospects are improving, making it a much safer emerging market play. This fund has reasonable levels of diversification with solid holdings in financials and consumer staple segments. Read the full write-up for more on all of today’s moves. 

Reitmeister Trading Alert:

"+2.7% Q2 GDP estimate  

"222,000 jobs added versus 170,000 expected

"57.8 ISM Manufacturing is highest since 2014

"57.4 ISM Services is nice. 60.8 forward looking New Orders component even nicer

"Sum Total = Be bearish at your own risk!" -- Steve Reitmeister 

Have a Great Weekend,
Jim Giaquinto

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