Quant Ratings Updated on 124 Stocks Dear Reader, “The job of the central bank is to worry.”
The person who said that ought to know. As vice chair of the Federal Reserve Board in the 1990s, Alice Rivlin was the highest-ranking female member in the Fed’s history prior to Janet Yellen's appointment as Fed Chair in 2014.
I bring this up because the Federal Open Market Committee (FOMC) meeting is happening this week. While no changes are expected when the Fed announces its decision on key interest rates tomorrow, we will get a fresh look at the Fed’s “dot plot.”
Released each quarter, this chart shows each Fed official’s prediction about the direction of the federal funds rate. The last one, released in December, showed Fed members were expecting three quarter-point (0.25%) cuts this year.
Now, we covered the latest inflation data in a previous Market 360. But here is a quick snapshot of what we learned... - The Consumer Price Index (CPI) increased 0.4% in February and 3.2% over the past 12 months. The core CPI, which excludes food and energy, rose 0.4% in February and 3.8% in the past 12 months. Economists expected the core CPI to rise 0.3% in February and 3.7% annually.
- The Producer Price Index (PPI) reading was disastrous. Wholesale prices increased 0.6% in February and 1.6% in the past 12 months. Core PPI, which excludes food, energy and trade margins, was up 0.4% in February and 2.8% in the past 12 months. The monthly readings for PPI and core PPI were double economists' estimates.
- The U.S. retail sales report showed a 0.4% rise in February. Excluding transportation, retail sales rose 0.3%, which was below economists’ expectations. January retail sales were revised to show a 1.1% decline, compared to the previously reported 0.8% dip.
In the wake of the soft retail sales report, the Atlanta Fed revised its first-quarter GDP growth estimates lower, to 2.3%, compared to previous estimates of 2.5%.
Bottom line: The Fed isn’t likely to cut key interest rates until at least June – and possibly even later. The recent decreases in inflation have lost steam, and the Fed doesn’t want to act too quickly with any key interest rate cuts. The reality is, since that December dot plot, the markets may have gotten a little ahead of themselves regarding rate cut expectations. At the beginning of the year, futures markets were predicting six cuts starting in March. And now, the odds of a June cut are even being called into question. The CME FedWatch tool is forecasting a 51% chance of a quarter-point cut. Essentially a coin flip. And the Fed only has four more meetings in 2024.
So, in today’s Market 360, let’s consider what impact the Fed’s interest rate decision and policy statement on Wednesday could have on the stock market. I’ll also share the stocks that might struggle this week, as well as where you can find fundamentally superior stocks that are poised to profit regardless of the Fed’s decision. This Week’s Ratings Changes So far, March has been a bit of a bumpy ride for investors. And the stock market could trade a little erratically over the next few days as investors await news from the Fed. We saw a bit of that erratic behavior today, as the major indices chopped around and then climbed higher in afternoon trading – ultimately ended the day on a positive note.
So, I took a fresh look at the latest institutional buying pressure and each company’s financial health and revised my Portfolio Grader for 124 big blue chips. Of these 124 stocks, 27 were downgraded from a B-rating (Buy) to a C-rating (Hold), and 27 stocks were downgraded from a C-rating to a D-rating (Sell).
I’ve listed the first 10 stocks rated as Sell below, but you can find the full list – including the stocks’ Fundamental and Quantitative Grades – here.
Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and adjust accordingly. | ABEV | Ambev SA Sponsored ADR | D | | AEP | American Electric Power Company, Inc. | D | | AMT | American Tower Corporation | D | | ATO | Atmos Energy Corporation | D | | BDX | Becton, Dickinson and Company | D | | BMRN | BioMarin Pharmaceutical Inc. | D | | DHR | Danaher Corporation | D | | DLTR | Dollar Tree, Inc. | D | | DOCU | DocuSign, Inc. | D | | EXC | Exelon Corporation | D | Position Yourself in the New Market Leaders Now, the Fed wants to see inflation reach 2% on an annual basis. And based on the latest data, we’re not there yet. But when the Fed does finally cut key rates, expect a big shift in the market…
That’s because about $8.8 trillion in cash is sitting on the sidelines – a record high. When the Fed does cut rates, I predict much of this will flood back into the stock market as investors realize they can make a lot more money in stocks than in their savings accounts, money markets or Treasury bonds.
But this money isn’t going to pour into just any stock – I expect a lot of it is going to flood into a select few artificial intelligence stocks…
The truth is there are plenty of AI stocks out there – but not every AI stock is created equally. So, instead of blindly throwing your money at any AI stock, you need to make sure they have superior fundamentals.
That’s why I’ve used my system to flag five fundamentally superior stocks that stand to profit from the current AI boom. As I explained in my recent Emergency Cash Bubble Briefing, this boom is just getting started, and I’m confident that these five stocks should see an immense amount of money flow once the Fed opens the floodgates.
During my Emergency Cash Bubble Briefing, I revealed one of my top five picks. It is one of my biggest winners over at Breakthrough Stocks recently, up over 220% for the year so far!
But this is only one of the five stocks my system is flagged. The other four are reserved for members of Breakthrough Stocks . This is my premium service designed to spot high-quality small-cap stocks that are primed to surge from explosive trends like AI. And the goal is to make subscribers aware of these stocks before the rest of the market catches on.
There’s still time to catch the replay of my Emergency Cash Bubble Briefing if you haven’t already…
The rebroadcast is available right now – but only for a limited time. In it, you’ll learn about the wave of cash that’s about to hit the market – and why I think my five AI picks are primed to benefit.
You can catch the replay of my Emergency Cash Bubble Briefing by clicking here now.
(Already a Breakthrough Stocks member? Click here to log in to the members-only website now.) Sincerely, |
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