H&W in the Media

News giants vs tech titans: battle for the ad market


By Kevin D. Mahn, president and chief investment officer, Hennion & Walsh Asset Management

The news industry’s biggest names including the Washington Post, The New York Times and the Wall Street Journal are joining forces and seeking permission to negotiate with Google and Facebook on ads. Yahoo Finance’s Alexis Christoforous, Pras Subramanian, and Hennion & Walsh Asset Mgt. CIO Kevin Mahn discuss why whether or not Google and Facebook will continue to control 70% of the ad market.

Click here to watch the video on Yahoo! Finance.

Stocks mixed but tech strength mounts


By Kevin D. Mahn, president and chief investment officer, Hennion & Walsh Asset Management

Stocks (^DJI, ^GSPC, ^IXIC) are mixed at the midday mark, with the tech (XLK) and materials (XLB) sectors the most in the green, while the real estate (XLRE) sector is the most in the red. Keith Bliss of Cuttone & Co. joins us live from the New York Stock Exchange. To discuss the other big stories of the day, Alexis Christoforous is joined by Yahoo Finance’s Pras Subramanian and Kevin Mahn, CIO at Hennion & Walsh Asset Management.

Today, we discuss:

Newspaper industry teams up against Google and Facebook
Big banks to kick off earnings season
Saudi Aramco CEO: oil supply is ‘worrying’
Inside the emerging markets trade
Outlook for biotech
Best Buy shares drop on news of Amazon’s Geek Squad competitor
Prince finally gets a Youtube channel (posthumously)

Click here to watch the video on Yahoo! Finance.

European stocks poised to outrun US equities


By Kevin D. Mahn, president and chief investment officer, Hennion & Walsh Asset Management

Emmanuel Macron won the run-off contest this past weekend over Marine Le Pen and will become the next president of France on May 14, 2017. At the age of 39, Macron will become the youngest president in France’s history and is a relative newcomer to the global political stage. Seen as more of a centrist candidate compared to the right leaning Le Pen, Macron is expected to maintain France’s position with the European Union and continue to use the euro as its currency.

The victory was largely expected and the actual polling results held true to form with Macron winning approximately 65% of the votes cast. Many investors were surprised on Monday when European stock prices moved slightly lower, as most thought that the “status-quo” result would lead to an upswing in European stock prices. We believe this short-term behavior is more related to the widely recognized “buy the rumor, sell the news” trading philosophy than it is a referendum on the investment community’s outlook for a Macron presidency. Despite this, there is still quite a deal of uncertainty over how Macron will govern and if his policies will be supportive of future economic growth in France.

The Macron election does remove one of the clouds lingering over the European continent in that a Le Pen victory could have led to France being the second country, behind Great Britain, to announce its intentions to leave the European Union (EU). This second departure could have been even more of a market disruption than Brexit because France is currently Europe’s third largest economy, behind Great Britain and Germany, and because France, as opposed to Great Britain, uses the euro as its base currency. However, since this will not happen, a certain sense of calm has returned to the eurozone, at least until the next scheduled election takes place or until the next country within the EU, such as one of the P.I.I.G.S. (i.e. Portugal, Italy, Ireland, Greece and Spain) countries, experiences its own set of financial difficulties.

While Italy is not scheduled to go to the polls until 2018, Germany’s federal election is slated for September 2017. Incumbent Angela Merkel is running for her fourth term as chancellor but will likely face opposition from candidates in favor of Germany leaving the EU and the euro currency. As a result, this will be a key election to follow as Germany remains the critical cog within the overall European Union wheel. While a Merkel loss is not currently expected, should a German referendum ever result in a vote to leave the European Union, the EU would likely not survive longer term. A similar fate for the euro could follow under such a scenario. That type of scenario would have no historical precedent and thus lend itself to an environment of great uncertainty, and likely periods of volatility, for global investors.

We, at Hennion & Walsh, will continue to pay close attention to all of the key upcoming elections in Europe over the course of the next year. As it stands now, recognizing all of these highlighted possibilities and associated risks, international equities seem to be worthy of strong consideration for globally diversified, growth portfolios given relative valuations and economic growth prospects.

Momentum appears to be on the side of equities of the international developed market and emerging market versus domestic equities thus far in 2017. Consider the returns for certain geographically representative exchange-traded funds (ETFs) provided in the chart below.

Click here to watch the video on Yahoo! Finance.

It’s Time to do Some Pruning, Portfolio Experts Say

rate hikes

U.S. equities are still the place to be, but it may be time to take some profits in certain names, expert Dave Donabedian told CNBC on Tuesday.

“Growth is good but you don’t want to overpay for it,” the chief investment officer at Atlantic Trust said in an interview with “Power Lunch.”

“Our strategy year to date has really been to look through the portfolio and look for names that have performed very well, where valuations are at the top end of their historical ranges, and do some pruning and recycle those proceeds into areas that perhaps didn’t perform quite as well in the first quarter,” he noted.

Donabedian sees opportunity for growth in areas like energy E&P companies, some technology names that have recurring revenue stream and even some industrial stocks.

Kevin Mahn, on the other hand, thinks there is more value to be found in international markets, which are in the early stages of a recovery.

That said, the chief investment officer at Hennion & Walsh isn’t discounting the potential for the U.S. market to move higher — and he thinks earnings could be the catalyst.

“There’s a chance we could get a double-digit earnings growth rate in the first quarter and if we do, that could propel U.S. large-cap stocks higher, mid cap and small cap will follow,” he told “Power Lunch.”

Mahn thinks investors just have to expect some volatility given the geopolitical and domestic policy uncertainty. He suggests diversifying portfolios by adding international allocations.

CNBC’s Jennet Chin contributed to this report.

<   Click here to watch the interview on CNBC.com.

These 5 Investment Themes will Dominate 2017


By Kevin D. Mahn, president and chief investment officer, Hennion & Walsh Asset Management

1. Emphasis on US stocks over international stocks

While not abandoning international equities altogether (see Theme 3 below), I believe that it is worthy to consider overweighting US equities to start 2017 given heightened optimism for US economic growth plus accompanying US stock market growth in the new year as a result of the election of Donald Trump as the new US president, who is backed by a Republican-controlled Congress.

According to TheWeek.com, this is only the second time since 1929, the Republican Party will control the House, Senate, White House, most governorships and state houses, and decide a Supreme Court pick. One party having so much control may provide some tailwinds to stock market investors in 2017.

To this end, based on a MFS research report, it appears from the chart below that although the combination of a Democrat president and a Republican Congress has produced the best historical returns from 1961-2010, on average, for the stock market (which is defined in this case by the S&P 500 index (^GSPC), the stock market still experienced an average return of 12.1% when the White House and Congress were controlled by the same party.

S&P 500 returns based on political control
Source: Hennion & Walsh Asset Management

Please note: The Dow Jones Industrial Average (DJIA) measures the US stock market. Figures referenced are price change only and do not include the impact of reinvested dividends. The Standard & Poor’s 500 Index (S&P 500) measures the broad US stock market. It is not possible to invest directly in an index. Past performance is not a guarantee of future results.

As a result, the psychological achievement of Dow (^DJI) 20,000 may serve as more of a springboard for the next leg of this secular bull market as opposed to being a market top for this bull market rally that some are suggesting.

2. Consider different market capitalizations to help deal with strong US dollar

Rising interest rates in the US, coupled with declining or stagnant interest rates across the rest of the globe, could result in a stronger US Dollar, despite the stated reservations of this happening by Trump. This could, in turn, put pressure on multinational US companies that derive a significant portion of their revenue overseas.

As a result of the expected US dollar strengthening, certain mid-cap and small-cap US companies, which generally have less of an overseas focus when compared to their large-cap US counterparts, may be worthy of consideration to help minimize some of the strengthening US dollar risk while still allowing for allocations to US equities in general. Certain currency investment strategies may be worthy of consideration to assist in this regard as well.

3. Don’t discount the benefits of a globally diversified portfolio

International equities, through stock allocations in international developed markets and some international emerging market, should still be a part of most globally diversified portfolios in 2017 as a result of the anticipated stimulation measures on the part of central banks across the globe in the new year needed to spur additional economic growth.

4. Understand the role of bonds in income and growth-oriented portfolios

For income-oriented investors, bonds can provide for a dependable and consistent stream of income, and principal protection when held to maturity. Bonds, whether they are municipal, government or corporate bonds, can also provide for compounded growth opportunities when the income received from the bonds is reinvested.

Additionally, for growth-oriented investors, fixed income securities can provide investors with downside protection and diversification within a growth portfolio, especially in a highly volatile market where additional, measured, short-term flights to quality are likely.

In our view at Hennion & Walsh, investors should be careful not to miss out on the income and diversification opportunities offered by bonds by trying to time potential changes in interest rates. History has shown us that trying to time the market, or time interest rate increases or decreases, can be very difficult. With this said, it is important to understand that when interest rates do increase, bond prices may fall and yields may rise. However, rising interest rates should not impact the interest that bond holders receive on their bond holdings nor should they change the ability of these investors to receive par value on their bond holdings at maturity. Bond fund investors, on the other hand, may see the interest they receive on their fund holdings change in a rising rate environment and will not receive par value at maturity as there generally is no set maturity on bond funds.

While allocations to bonds may vary based upon market conditions and investor objectives and risk appetites, certain types of bonds, from certain types of issuers, can still find a home in most investment portfolios throughout most market cycles.

5. Selectively include ‘Trump trade’ sectors as appropriate

While recognizing that President Trump’s suggested priority initiatives, based largely on his “Contract with the American Voter” at this point in time, are subject to change and may either a) take longer than expected to achieve, b) not come to reality, or c) not deliver upon the intended results if achieved, investors would be wise to consider less significant, “satellite” allocations to areas of the US stock market that many believe stand to benefit over the term of a Trump presidency. Some examples of these potentially benefiting areas include energy equipment and services, industrials, banks, defense and cybersecurity.

Disclosure: Hennion & Walsh Asset Management currently has allocations within its managed money program, and Hennion & Walsh currently has allocations within certain SmartTrust® Unit Investment Trusts (UITs) consistent with several of the portfolio management ideas for consideration cited above.

Click here to read the entire article on Yahoo! Finance.

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