Wyatt Research Week in Review: Jan. 17-23

In my role as an editor at Wyatt Investment Research I do a lot of reading.
My weekly reading list includes the usual suspects: The Wall Street Journal, the Financial Times, The Economist, Barron’s, Bloomberg.
I also do a lot of listening. CNBC is the daily soundtrack to workaday life in the Wyatt Research trenches. When getting a cup of coffee, the frenetic voices of Jim Cramer, Rick Santelli and the Najarian brothers are the counterpoint to the slow drip of java.
For the past year, it was hard to go a week without hearing the words “Fed” or “Yellen” invoked with solemn reverence on the office boob tube, as if the fate of the global economy hung on the Federal Reserve chairwoman’s every word.
Yet since the events of Jan. 4 – when the U.S. markets were shellacked in the worst opening day since the financial crisis – the talk on the Street has been that two-headed bearish monster: China and oil.
By comparison, precious little press has been allocated to the Federal Reserve recently, despite the fact that Janet Yellen and company reconvene next week for the first time since raising interest rates by a quarter percentage point in December.
That’s not altogether surprising. Fed funds futures traders are currently pricing a mere 10% probability that the Fed will raise interest rates again at its next meeting.
It’s easy to blame the slowing Chinese economy and oil demand concerns for the worldwide market woes. Yet my colleague Tony Daltorio proposed another theory in Tuesday’s issue of Daily Profit: that the Fed itself is the main reason for the current market malaise. I invite you to check it out, along with a few more of my favorite Wyatt Research articles from the past week:
Don’t Give Up on Oil Income Quite Yet – If you listen to the International Energy Agency, we’re close to drowning in oil oversupply. But not so fast. Investors seeking oil income are just as likely to swim as to drown if they look in the right places.
These Oil Dividends Are in Real Danger – The collapse in commodity prices has brought the entire energy sector to its knees, and now all eyes are on which oil dividends might be next to get the ax. Not only that, but we could see a coming wave of bankruptcy activity in the upstream MLP arena.
The Overlooked Logic of Buffett’s Phillips 66 Investment – Berkshire Hathaway’s (NYSE: BRK-B) investment in Phillips 66 (NYSE: PSX) is a classic contrarian play – buying an asset or asset class when it is unloved by Wall Street. But Warren Buffett is not buying shares of Phillips 66 as a bet on oil prices, nor for its massive refining capacity.
First Solar Stock Rallies as Oil Falls – Oil prices starting falling in the summer of 2014. The decline is still going on today. The price of West Texas Intermediate crude has fallen from almost $107 a barrel to $30 a barrel. Initially, as the downturn in oil started, the price of First Solar (NASDAQ: FSLR) stock started falling too. Yet in the last few months, First Solar has surged. Is it sustainable?
Icahn Ups Pressure for Top Insurance Stock – Shares of insurer American International Group (NYSE: AIG) are now down more than 10% since activist investor Carl Icahn first pitched his thesis for splitting up the company back in October. Icahn put out a new open letter to the AIG board this week reiterating these thoughts. But he has some serious support now.
Netflix Subscribers Go Through the Roof, Stock Stumbles – Streaming media giant Netflix (NASDAQ: NFLX) reported better-than-expected earnings on Tuesday after the market closed. The company added 5.59 million subscribers last quarter, 4.04 million of whom came from outside the United States. That easily eclipsed expectations of 3.51 million international subscriber additions. The stock surged 8% in after-hours trading, then plummeted 10% in early trading on Wednesday before finishing the day basically flat. Is the seesaw trading a product of the current market volatility, or are Netflix’s days as a high-flying growth stock numbered?
The Hidden Winner in Railroad Consolidation – Railroad consolidation will be a tough sell for regulators, but there’s a broader way to play the rails – without having to gamble on M&A.
One of the Best Sources of Income in a Declining Market – If you are caught in a declining market, you will always be better off using this time-honored income strategy.
Have a great weekend!