Welcome back to the weekly Dividend Dollars portfolio review, and a very special one at that! If you didn’t catch it last week, you’ll notice within the screenshot of my portfolio that the general structure has changed a little bit. I am starting to implement a new strategy! I am quite excited about the new direction of the portfolio, so read on to see what we’re doing!
This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $15,530 into the account the total value of all positions plus any cash on hand is $15,725.46. That’s a total gain of 1.26%. The account is up $27.97 for the week which is a 0.18% gain.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is down -6.42% which puts us 7.7% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!
We added $120 in cash to the account last week, trades made will be broken out below.
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI increases from $539 to $557.
Dividends
This week we received two dividends: $5.30 from $CMCSA and $1.51 from $SPY.
In my portfolio, all positions have dividend reinvestment enabled. I don’t hold onto the dividend, I don’t try to time the reinvestment, I just let my broker do it automatically. The $SPY dividend hit afterhours on Friday, so that will be invested automatically on Monday.
Dividends received for 2023: $160.72
Portfolio’s Lifetime Dividends: $571.12
Trades
This week was the first week that we really followed the Turtle Trend strategy. Soon I will be post a large in-depth article of the strategy, its history and story, and how I have altered it a little bit to accommodate my portfolio. This was a choppy week for the market which made finding trends difficult. I have added a new table below to show the performance of the strategy so far.
Aside from Turtle trades, we made a move from $FIS and $JKH simply based on better performance and financials but still is a position in the banking tech space. I much prefer this new hold over $JKH.
Full details for my trades are below:
April 24th, 2023
Fidelity National Information ($FIS) – sold 3.020708 share position at $56.17 (roughly $18 loss)
Jack Henry & Associates – added 1 share at $160.08
April 25th, 2023
iShares US Transportation ETF ($IYT) – sold 2 share position at $220.86, trend trade stop hit ($19.72 loss)
Investment Managers Series Trust II AXS Short Innovation Daily ETF ($SARK) – added 8 shares at $44.04, trend trade starter
April 26th, 2023
Invesco Solar ETF ($TAN) – sold 5 share position at $75.75, trend trade stop hit ($35.95 loss)
iShares US Broker Dealers & Securities Exchanges ETF ($IAI) – sold 10 share position at $90.86, trend stop hit ($22.00 loss)
Direxion Daily Small Cap Bear ETF ($TZA) – added 7 shares at $36.16, trend trade starter
Investment Managers Series Trust II AXS Short Innovation Daily ETF ($SARK) – added 6 shares at $47.67, first add into trend trade
Comcast ($CMCSA) – dividend reinvested
April 27th, 2023
The Communication Services Select Sector SPDR ($XLC) – added 10 shares at $59.45, trend trade starter
Vanguard Mega Capp 300 Growth ETF ($MGK) – added 3 shares at $206.26, trend trade starter
Next week I will look to continue my weekly buys into $SPY, $SCHD, and $XYLG and watch for opportunistic adds as well as trend opportunities. I’ll be looking to add to my redder positions in $MMM and $BAC to take advantage of the coming ex-dividend dates estimated to come in the next month or two. I will also be keeping my eyes on $ATVI to see if it falls below my cost basis for a potential add. The stock lost substantial gains this week on account of the CMA blocking the transaction. Read my recap on the situation here.
Turtle Trades
Summary
That is it for the update this week. Big week for DividendDollars!
The market recap and outlook will be posted later this week and provides tons of information on what macro statistics I look at to keep a temperature gauge on the market and inform my portfolio movements. Read last week’s here while you wait for the new one!
I will also work on finishing my write up on the trend following strategy to share with you, so stay tuned for that.
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!
Thank you for reading! See you next week and stay safe!
I’ve been spending some time this morning digesting the news that the UK’s Competition and Markets Authority (CMA) has blocked the $MSFT acquisition of $ATVI. The announcement from the CMA is linked here and is about twenty pages long. After reading and organizing some thoughts, I decided I want to share major points on the decision.
CMA’s Conclusions
After the CMA’s investigation and assessment of the acquisition, they concluded that the action may result in a “substantial lessening of competition” (SLC) in the cloud gaming services within the UK. This is a very different reasoning from the initial concerns surrounding the ideas that Microsoft would withhold the large Call of Duty franchise from competitor’s platforms. The CMA says that the deal could change “the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.”
Microsoft provided a Cloud Remedy Proposal to the CMA in which they would be committed to license Activision games royalty-free to specific cloud gaming providers for 10 years. A proposed change in consumer licenses of the games would also give the right to stream an Activision game within the cloud service provider’s online store. This essentially means that if Steam’s online store was selling Activision games, the consumers of those games would be able to play it on Steam’s cloud service (assuming they have one) and wouldn’t be forced to use Microsoft’s cloud gaming service. Microsoft also offered to appoint a monitoring trustee to ensure compliance with the proposed remedy.
The CAM determined that the proposed remedy was unlikely to provide structural remedies to the SLC. Their reasoning for this is that the proposal limits different types of commercial relationships between cloud gaming service providers and game publishers, restricting arrangements like exclusive content, early access, or gaming subscription services. They also conclude that this proposal lessens the incentives for Activision to make their games available on non-Windows operating systems which may exclude or restrict cloud service providers who wish to use other operating systems now and in the future.
The CMA ends their conclusions by stating that the “only effective remedy to this SLC and its adverse consequences is to prohibit the Merger.”
My Opinions
I was shocked to read that this rejection was literally only about cloud gaming. The CMA even recognized that they understand the public support for deal as it would
It is extra odd when considering the fact that cloud gaming is such a small part for the entire video game industry, let alone Microsoft. Google’s cloud gaming attempt with Stadia failed and was officially discontinued in January of 2023, only three years after it was launched in November of 2019. Amazon’s attempt at cloud gaming, called Luna, is still up and running but has mixed reception and not a huge base due to major complaints around impracticality, lag issues, and extra monthly fees to access all the content.
These other players aren’t struggling because Microsoft is out-competing them, its because cloud-gaming just isn’t as good compared to console or PC gaming. I’ve messed around with Xbox’s cloud service called X Cloud Gaming. It’s not mind-blowing.
As internet speeds improve over time and as it becomes more cost effective for companies to house all of the necessary computing power that is needed to offer cloud gaming services, I’m sure the sector will grow. With Microsoft having a 60-70% market share in cloud gaming, the CMA is concerned that this deal would make their market share greater, and as a result make the industry less competitive. The CMA seems to believe they are forward-looking in terms of the potential growth in cloud gaming, but given the context of the small size of cloud gaming relative to the entire industry and the significant time and money it will take to get cloud gaming anywhere close to being competitive with console/PC gaming, it seems the CMA’s focus on cloud is extremely misled.
Moving Forward
Next steps lie at the Competition Appeal Tribunal (CAT). This is the special judicial body within the UK that hears and decides on cases involving competitive regulatory issues. Just last November, the CAT overruled the CMA’s decision on a case involving Apple for disregarding statutory time limits. In Apple’s case, this was a procedural error and was overrule quickly. Microsoft’s case does not have any procedural issues (though if there are some they may appear in the near future).
The CMA’s initial key concern when the merger was first reviewed was regarding foreclosure in the console market. Their concerns then of Activision games becoming exclusive to Game Pass or removed from Playstation were entirely misinterpreted on the CMA’s part. Now the focus is on cloud gaming and their decision to block a merger over an infant market at the expense of greater aggregate consumer benefit within PC and console gaming. The CMA may have a hard time explaining to the CAT why this is reasonable.
Immediately following the CMA’s decision, Microsoft and Activision reaffirmed their commitment to this deal and that they would appeal the decision. Lulu Cheng Meservey, CCO of Activision Blizzard, tweeted that “the UK is closed for business”. Brad Smith, Vice Chairman of Microsoft, tweeted that they will appeal the CMA in an offical statement. Their statement says that the decision “reflect[s] a flawed understanding of this market and they way the relevant cloud technology actually works.”
The deal has been cleared in other jurisdictions such as Japan, South Africa, Brazil, Saudi Arabia, Serbia, and Chile. It should be cleared by others in the near future as the European Union has a May 22nd deadline, an August trial within the US is expected, and Australia and New Zealand appear to be waiting further outcomes from the CAT as their historical ties with UK show.
Microsoft has been more cooperative and friendly with regulators than nearly any big tech company I can think of. Now, they have no choice but to fight to back as they have shown they dedicated to this deal and will see it to the end. I hope we get to see this to fruition, however, there is always the risk impatient and despairing investors push Activision to take the $3 billion break up fee. Only time will tell.
In the meantime, $ATVI is down over 11% in today’s trading session, wiping out almost three months of uptrending gains for the stock. My current position is still up over 3% with a cost basis of $74.07. If prices manage to drop below my cost basis before more news develops, I may look to add to my position.
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Dividend Dollars’ Outlook & Opinion
If you read last week’s outlook, you’ll know that our outlook for this week was for volatility on account of earnings only to end the week flat. Last Friday, $SPX closed at 4,137 and this week it closed at 4,133. Sorry I was off by 4, but if we are understanding I would say we were spot on this week. Price action was choppy as earnings are better than feared but market positioning and sentiment are bearish, valuation is full at a forward P/E of 19 and the Fed could still make rate moves soon. Next week will likely help decide direction for the market as a result of mega-cap tech earnings.
First quarter 2023 earnings have rolled in this week with 87 of the 500 S&P companies reporting. 54% of those beat the top line and 75% on the bottom line, compared to 58% and 70% respectively last quarter. Next week is busy with earnings from mega-caps such as $KO, $PEP, $MCD, $MSFT, $GOOG, $V, $META, $AMZN, $BA, $INTC, $XOM, $CVX, and more.
Technicals-wise, the S&P 500 seems to be stalling around the top of the 3,800-4,200 trading range. Near term, the upside bs downside potential is in favor of the bears assuming the range remains intact. However, next week’s earnings could easily swing the market in either direction. If $SPX is able to break above 4,200, it could see buyers scramble to scoop up more as sentiment shifts away from the bearish scope we are currently in.
This week we got a decent dose of economic data and the results were mixed. PMI’s were hot, jobless claims were in line, and housing/construction disappointed. Next week we’ve got consumer confidence reports, retail, GDP, and PCE readings to look forward to. GDP will likely be the key. Of course inflation is still very important to the market, so Friday could prove particularly volatile.
Stocks were flat across the board. The market appears to be waiting for mega-cap tech earnings reports or the May FOMC meeting. Given the fact that many of the major indices on sitting near range level highs and earnings have the potential to move us in either direction, my outlook for next week is breakout.
I am loath to call a direction, because really it is up the earnings reports and economic data releases. It is entirely possible that we just hang out at resistance for another week to see what the Fed says, but to me it feels like the tech stocks have the power next week to swing us higher or lower, entirely dependent on their earnings reports.
Weekly Market Review
Summary:
The stock market didn’t move in either direction this week. The S&P 500 closed at 4,137 last Friday, then closed at 4,133 this Friday. Investors were playing a waiting game ahead of a big batch of earnings results next week. These reports will follow disappointing Q1 results from Tesla ($TSLA), which fell nearly 10% on Thursday.
On the other hand, Dow component Procter & Gamble ($PG) rose 3.5% on Friday as investors digested its pleasing fiscal Q3 results and affirmation of its FY23 EPS outlook.
Bank stocks were weak this week following earnings reports from some regional banks like Zions Bancorporation ($ZION), Truist Financial ($TFC), and Western Alliance Bancorp ($WAL). Despite regional bank weakness, the S&P 500 financial sector was among the top performers with a 1% gain.
Other top performing sectors include real estate (+1.58%), consumer staples (+1.85%), and utilities (+1.06%). The communication services (-2.6%) and energy (-2.5%) sectors were the worst performers by a wide margin.
Weak economic data also contributed to the hesitant mindset that slower growth will put pressure on future earnings. Data releases this week featured the highest continuing jobless claims level since November 2021, the weakest reading for the Philadelphia Fed Index since May 2020, the weakest level for the US Leading Economic Index since November 2020, and a 22% YoY decline in existing home sales in March.
The market shows a belief that the Fed will keep rates higher for longer. Philadelphia Fed President Harker said the Fed is going to need to do more to get inflation back down to target, New York Fed President Williams also showed support for another rate hike at the May FOMC meeting. Unlinked here, but Fed President Bullard and Fed President Bostic also supported higher rates for longer in talks this week.
This commentary from Fed officials contrasts the fed funds futures market, which is pricing in two rate cuts before the end of the year, according to the CME FedWatch Tool.
Monday:
The stock market spent most of the day in a range that included modest losses for the Dow, Nasdaq, and S&P 500. There was no conviction ahead of earnings news this week. Earnings results so far have been better than expected/feared, which helped limit selling interest, but valuation concerns kept the market from moving noticeably higher.
The market was able to log gains, though, thanks to a late afternoon rebound effort. The indices all finished at their best levels of the day, leaving the S&P 500 just above 4,150. Even semiconductor equipment makers, which had been a notable spot of weakness, came along with the rebound.
The April Empire State Manufacturing hit a reading of 10.8 versus a consensus of -19 and the last reading of -24.6. This is the first reading of solid business activity increase in New York in five months.
The April NAHB Housing Market Index came in at 45, in line with expectations and just above lost month’s reading of 44.
Tuesday:
Tuesday’s session was mixed. The main indices spent most of the day trading right around their flat lines. Investors were reacting to a slate of earnings news, some positive economic data, and commentary from a few Fed officials as previously mentioned.
Following their better-than-expected Q1 earnings, Bank of of America ($BAC) and Lockheed Martin ($LMT) were among the more influential winners on Tuesday. BAC, which was down as much as 1.9% at one point, helped drive a 0.3% gain in the S&P 500 financial sector and LMT helped propel the industrials sector (+0.5%) to the top of the sector leaderboard.
Meanwhile, Dow components Johnson & Johnson ($JNJ) and Goldman Sachs ($GS) registered large losses following their earnings reports. Both companies reported better-than-expected Q1 earnings, but GS came up shy with its revenue.
Bank stocks in general were weak. Notably, homebuilders were a pocket of strength after the better-than-expected housing starts data from March, which was accented with welcome gains in both starts and permits for single family units.
Total housing starts fell 0.8% in March to a seasonally adjusted annual rate of 1.420 million, 1.407was expected. The decline was due to falling multi-unit starts. Single-unit starts were up 2.7% MoM. Building permits fell 8.8% MoM, driven by a 24.3% decline in permits for 5 units or more, whereas single-family permits increased 4.1% MoM. The key takeaway from the report is the growth seen in single-family starts and single-family permits (a leading indicator) which is needed given the limited supply of existing homes for sale.
Wednesday:
Again, the market had a lackluster showing. Major indices were in narrow trading ranges, registering only modest gains or losses throughout the session. The sideways action was the culmination of wait-and-see mindset ahead of earnings reports from most mega cap stocks next week and Tesla ($TSLA) after Wednesday’s close.
The market had more negative bias initially, but several mega cap stocks recovered from early weakness and boosted index performance. The main indices closed off their lows of the day with $AAPL, $AMZN, and $NVDA as some of the notable winners.
Outsized moves were mostly reserved for stocks with specific catalysts in earnings surprises. Morgan Stanley ($MS) closed with a nice gain, rebounding from an opening 3.7% decline following its earnings results.
Treasury yields rose Wednesday, which acted as a headwind for equities. Price action in the bond market was a reflection of concerns about Fed policy. Some persistently high core inflation data for the eurozone and UK in March also contributed to selling interest.
Wednesday economic data included only the MBA Mortgage Application Index. The index fell 8.8% with purchase applications tanking 10% and refinance applications dropping 6%
Thursday:
Thursday was the day we finally say some solid intraday moves. Economic data was weak and disappointing earnings results from Tesla ($TSLA) kept us down. Bank stocks were also a big drag following several earnings misses from regional banks.
Despite Tesla’s sizable decline and other headwinds, index level performance was fairly resilient until mid-afternoon. Some relative strength from other mega cap names lead rebound effort midday and then hit a pullback looked technical in nature after the S&P 500 failed to break above the 4,150 level, hitting 4,148 at its high of the day.
There were some big outperformers Thursday, however. Homebuilders ran following D.R. Horton’s (DHI) impressive quarterly results and outlook. This fueled buying interest in other homebuilders as evidenced by the 1.7% gain in the iShares U.S. Home Construction ETF (ITB) and a 0.7% gain in the SPDR S&P Homebuilder ETF (XHB).
Economic data for Thursday included
Initial jobless claims for the week ending April 15 increased by 5,000 to 245,000 (Briefing.com consensus 242,000) while continuing jobless claims for the week ending April 8 increased by 61,000 to 1.865 million.
The key takeaway from the report is that continuing jobless claims are at their highest level since November 27, 2021, suggesting it is becoming more challenging to find new employment after a layoff.
The April Philadelphia Fed Index slumped to -31.3 (Briefing.com consensus -20.0) from -23.2 in March. That is the eighth straight reading in negative territory for this manufacturing survey and the lowest reading since May 2020. The dividing line between expansion and contraction for this report is 0.0.
With the diffusion index for general activity running at -1.5 (versus -8.0 in March), the key takeaway from the report is that respondents’ expectations for growth over the next six months remain subdued.
Existing home sales declined 2.4% month-over-month in March to a seasonally adjusted annual rate of 4.44 million (Briefing.com consensus 4.50 million) versus a downwardly revised 4.55 million (from 4.58 million) in February. Sales were down 22.0% from the same period a year ago.
The key takeaway from the report is the recognition that the inventory of existing homes for sale remains extremely tight, which is due in part to the strength of the labor market (and ability to work remotely) and the jump in mortgage rates that is deterring existing home owners’ interest in moving.
The Leading Index was down 1.2% in March (Briefing.com consensus -0.4%) after falling a revised 0.5% (from -0.3%) in February.
Weekly natural gas inventories increased by 75 bcf after increasing by 25 bcf a week ago.
Friday:
The market made a slim gain on Friday’s options expiration day, but that wasn’t an impressive feat. The market was little changed from Thursday’s closing levels for the entire session.
In general, outsized moves were limited to individual stocks like Dow component Procter & Gamble ($PG), which reported pleasing fiscal Q3 results and affirmed its FY23 EPS outlook, and HCA ($HCA), which also reported favorable earnings.
Bank stocks were under pressure Friday after underperforming for most of the week. This weakness followed disappointing earnings from Regions Financial ($RF).
The materials sector (-0.9%) logged the biggest Friday decline due to a sizable loss in Freeport McMoRan ($FCX) following its earnings report and a loss in Albemarle ($ALB) in response to reports that Chile is planning to nationalize its lithium industry.
April IHS Markit Manufacturing PMI preliminary reading came in at 50.4, compared to 49.2 from last month. The Markit Services PMI was 53.7 compared to 52.6 last month.
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.
Welcome back to the weekly Dividend Dollars portfolio review, and a very special one at that! If you didn’t catch it last week, you’ll notice within the screenshot of my portfolio that the general structure has changed a little bit. I am starting to implement a new strategy! I am quite excited about the new direction of the portfolio, so read on to see what we’re doing!
This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $15,410 into the account the total value of all positions plus any cash on hand is $15,598.91. That’s a total gain of 1.23%. The account is down $255.86 for the week which is a 1.61% loss.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is down -7.23% which puts us 8.45% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!
We added $120 in cash to the account last week, trades made will be broken out below.
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI increases from $532 to $539.
Dividends
This week we received one dividend: $9.16 from $SMHB.
In my portfolio, all positions have dividend reinvestment enabled. I don’t hold onto the dividend, I don’t try to time the reinvestment, I just let my broker do it automatically. This dividend will be reinvested on Monday
Dividends received for 2023: $153.90
Portfolio’s Lifetime Dividends: $564.30
Trades
This week was the first week that we really followed the Turtle Trend strategy. Read last week’s portfolio update here to get a brief rundown of the strategy. Soon I will be posted a larger in-depth article of the strategy, its history and story, and how I have altered it a little bit to accommodate my portfolio.
Moves for this week included those trend strategy trades in ETFs and timely purchases in $BAC and $T after their earnings reports.
Vanguard Financials ETF ($VFH) – sold 16 share position at $80.98 (Trend trade)
iShares US Broker Dealers & Securities Exchanges ETF ($IAI) – added 5 shares at $93.84 (Trend trade)
April 20th, 2023
iShares US Transportation ETF ($IYT) – added 2 shares at $230.72 (Trend trade)
April 21st, 2023
AT&T ($T) – added 3 shares at $17.89
Next week I will look to continue my weekly buys into $SPY, $SCHD, and $XYLG and watch for opportunistic adds as well as trend opportunities. I’ll be looking to add to my redder positions in $MMM, $BBY, $FIS, and $INTC to take advantage of the coming ex dividend date.
Summary
That is it for the update this week. Big week for DividendDollars!
The market recap and outlook will be posted later this week and provides tons of information on what macro statistics I look at to keep a temperature gauge on the market and inform my portfolio movements. Read last week’s here while you wait for the new one!
I will also work on finishing my write up on the trend following strategy to share with you, so stay tuned for that.
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!
Thank you for reading! See you next week and stay safe!
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Dividend Dollars’ Outlook & Opinion
Boy is this market difficult to wrap your head around. From a bullish perspective, inflation has continued to trend lower, earnings kicked off to a solid start, and consensus sentiment may be too bearish and lead to a continued “melt up” so-to-speak. On the other hand, bearish perspective is that valuations are too high, technicals show we are close to strong resistance levels, and there is still too much uncertainty surrounding global economic health, inflation, and rate movements.
This week was heavy with economic data that contributes to everyone’s potential differences in market perspectives (all of these releases will be broken down in the recap below). We received good news on the inflation front, but bad news in soft retail sales and rising unemployment claims. The consumer sentiment report surprised with higher-than-expected inflation expectations. Q1 earnings from the big banks came in above analyst estimates, with more to come next week.
Last week we said that this week was technically bearish but positive data and earnings report could “flip the script”. That’s exactly what we saw. Two weeks ago, we also mentioned that April tends to be a relatively bullish month. Though the first week of the month didn’t hold true, this week definitely did.
Technicals-wise, the S&P 500 is nearing the upper end of the 3,800-4,200 range that was established in November. From a technical near-term perspective this skews favor to the bears. It is possible that the uptrend continues and breaks above the range, but this may be difficult for a number of reasons. For one, the current forward PE multiple is roughly 19, and earnings revisions aren’t shifting up to justify a higher multiple.
We have a fair number of economic data releases next week, but none of them really stand out. All eyes will be on earnings reports which include some big names like $JNJ, $BAC, $NFLX, $WMT, $TSLA, $T, and $PG.
As these earnings reports roll in, expect volatility. But it’s impossible to know if they’ll be positive or negative for the market. Therefore, I think the official and safe outlook for next week is volatile and neutral with an expected week ending next week around current prices, especially since upper resistance on the SPX is close. However, the bull in me really wants to see earnings surprises push the market higher to 4,200 and even above. But only time will tell.
Weekly Market Review
Summary:
The stock market had a mixed but overall positive showing for the week. All major indices made gains, but modest ones on the back of continued inflation and Fed concerns.
Early week was a slow trend up as investors awaited economic data and Q1 earnings reports from banks on Friday. Coinbase Global ($COIN) was an exception here, gaining 6.0% on Tuesday after Bitcoin breached $30,000.
Inflation concerns came up after the Consumer Price Index (CPI) came in for March. Total CPI fell YoY, which was a welcome development, but core-CPI did not. The total Producer Price Index (PPI) and core-PPI fell in March, but the uptick in core-CPI offset some excitement about PPI disinflation.
Also, comments from Fed officials this week indicated that the new inflation readings are not likely to convince the Fed to pause its tightening efforts just yet. Fed Governor Waller (FOMC voter) said on Friday that the Fed hasn’t made much progress on its inflation goal and that he thinks monetary policy needs to be tightened further and remain there for a while.
The data and comments did not change forecasts for the Fed’s May FOMC meeting. According to the CME FedWatch Tool, the fed funds futures market is pricing in a 78% chance of a 25 basis points rate hike.
Q1 earnings season kicked off on Friday with $JPM, $C, $BLK, and $PNC all finishing the day with a gain on a good report. Strength from the financial sector was not enough to carry the market on Friday, though as regional banks were weak on Friday despite gains from their larger peers.
Still, the S&P 500 hit its best level since mid-February. Trading had noticeably light volume this week, which could be attributed to a larger wait-and-see mindset as investors await the bulk of Q1 earnings season.
Only 4 S&P sectors closed with a loss this week — real estate (-1.35%), utilities (-1.32%), information technology (-0.28%), and consumer staples (-0.24%) — while financials (+2.78%) led the outperformers by a decent margin.
Monday:
The stock market looked weak at the open as the main indices fell under the weight of mega cap losses. Even at session lows, though, the broader market showed nice resilience in front of several market-moving data releases later in the week.
The Dow Jones Industrial Average was the strongest of the day, declining just 0.4% at its low for the day, while the tech-heavy Nasdaq saw a loss of 1.3% at its low before settling the day close to flat. Monday’s best performer, however, was the small cap Russell 2000 (+1.0%).
The main indices all improved noticeably when the mega cap stocks started to recover earlier losses. The Vanguard Mega Cap Growth ETF ($MGK) was down as much as 1.6% before closing with a 0.3% loss. This recovery effort helped the market close near its highs for the day, which had the S&P 500 above 4,100.
There was no economic data of note for Monday.
Tuesday:
Tuesday continued the trend of relatively light volume, again showing resilience to selling efforts ahead of big events later in the week.
Some of the mega cap stocks were able to climb off their session lows as the broader market settled into a steady grind higher in the afternoon. The main indices took a sharp turn lower, though, with about 30 minutes left in the session as names like Microsoft (MSFT), Apple (AAPL), and NVIDIA (NVDA) retested early lows.
Coinbase Global (COIN) made an outsized move Tuesday after Bitcoin reached $30,000, Moderna (MRNA) dropped 3.1% following its acknowledgment that its influenza vaccine candidate did not accrue sufficient cases at the interim efficacy analysis to declare early success, and CarMax (KMX) logged a nearly 10% gain after its better than expected fiscal Q4 earnings results.
Again, there was no economic data of note for Tuesday.
Wednesday:
The day started on an upbeat note as investors digested the Consumer Price Index (CPI) for March. The S&P 500 and Nasdaq logged gains of 0.6% and 0.9%, respectively, shortly after the open.
Early gains disappeared, though, as mega cap stocks rolled over and Treasury yields also climbed.
There was a subsequent rebound effort that took root after the S&P 500 dipped below 4,100. The market was moving cautiously forward into the release of the FOMC Minutes from the March 21-22 meeting.
The Minutes revealed that members agreed that inflation remains too high and that the banking problems increased economic uncertainty. Still, all agreed that it was appropriate to raise the target range for the fed funds rate even though the staff economic outlook included a mild recession starting later this year given the potential economic effects of recent banking-sector developments.
Things rolled over again in the late afternoon with mega cap stocks leading the slide.
The selling interest was likely also driven more by valuation concerns rather than a negative reaction to the Fed forecasting a mild recession, in my opinion. The cyclical S&P 500 sectors pulled back along with the rest of the market, but still finished the day in a position of relative strength.
The weekly MBA Mortgage Applications Index rose 5.3% with purchase applications jumping 8.0% while refinance applications were flat.
Total CPI was up 0.1% MoM on February’s increase of 0.4%, 0.3% was expected. Core-CPI, which excludes food and energy, increased 0.4%, as expected, following a 0.5% increase in February. Services inflation was up 0.3% MoM, versus up 0.5% in February, and up 7.3% YoY versus up 7.6% in February. Excluding shelter, services inflation was flat, compared to a 0.1% increase in February, and up 6.1% YoY versus up 6.9% in February. On a YoY basis, total CPI was up 5.0%, versus up 6.0% in February. That is the smallest 12-month increase since May 2021. Core-CPI was up 5.6% year-over-year, versus up 5.5% in February.
The key takeaway from the report is the disinflation seen in March. That trend doesn’t necessarily take a rate hike at the May FOMC meeting off the table, especially with core-CPI tipping slightly higher, but it is fostering a belief that a rate hike in May could be the last hike in the Fed’s tightening cycle.
Thursday:
Thursday was strong and only strong. Gains from the mega cap space gave the main indices a big boost. The positive bias was partially a reaction to the pleasing economic data in the morning and there was likely some short-covering activity contributing too.
The major indices spent most of the session in a steady climb, closing near their best levels of the day. The S&P 500 hit 4,150 at its high of the day, marking its best level since February 15.
By the close, bonds had given back all of their post-PPI, knee-jerk gains to settle the session with losses across the curve. Notably, stocks advanced as bond yields rose from their post-PPI lows, which were set around the time the stock market opened for trading, suggesting perhaps that there was some asset reallocation within the day.
The Producer Price Index for final demand declined 0.5% MoM in March compared to an expected 0.1% and following an upwardly revised 0.0% reading in February. Excluding food and energy, the index for final demand fell 0.1% MoM. YoY, the index for final demand was up 2.7% versus 4.9% in February. Excluding food and energy, the index for final demand was up 3.4% versus 4.8% in February.
The key takeaway is that producers are seeing some welcome disinflation, aided by declines in energy prices; however, the stickiness of core CPI in March has offset some of the excitement about the improvement in the PPI data in March.
Initial claims for the week ending April 8 increased by 11,000 to 239,000, above expectations by 3,000, and continuing claims for the week ending April 1 decreased by 13,000 to 1.810 million. The key takeaway from this report is that it reflects some softening in the labor market but not any clear-cut weakness.
Friday:
Friday was the big day. Trading sent many stocks lower. The main indices tried to move higher, but quickly fell below their flat lines and remained in the red through the close. Investors were digesting a slate of economic data and corporate news ahead of the open, including some pleasing Q1 earnings results from several large banks.
$JPM, $C, $BLK, and $PNC were among the top performing stocks Friday, driving a 1.1% gain in the S&P 500 financial sector.
While the financial sector was providing support for the broader market, mega cap losses offset much of that support and drove a lot of the index level weakness. Names like $META, $AMZN, $GOOG were able to recover their losses and finish with at least a modest gain. This coincided with the broader market rebounding from its lows of the day.
Investors were also reacting to Fed Governor Waller’s remarks in a speech before the open that the Fed hasn’t made much progress on its inflation goal and that he thinks monetary policy needs to be tightened further and remain tight for a substantial period of time.
Also, some added selling pressure kicked in after the preliminary Consumer Sentiment Index for April showed year-ahead inflation expectations rising to 4.6% from 3.6%.
Import prices fell 0.6% MoM and were down 4.6% YoY. Excluding fuel, import prices were down 0.5% MoM and down 1.5% YoY. Export prices fell 0.3% MoM and were down 4.8% YoY. Excluding agricultural products, export prices were down 0.2% MoM and were down 5.2% YoY.
Total retail sales fell 1% MoM in March, much lower than the expected -0.4%, and the 0.2% decline in February. Excluding autos, retail sales were down 0.8% MoM. The key takeaway is that sales declines were seen across most retail categories, reflecting weakness in consumer spending on goods that should exacerbate concerns about an economic slowdown that cuts into earnings prospects.
Total industrial production rose 0.4% MoM in March. The capacity utilization rate jumped to 79.8%. The key takeaway from the report is that the entire gain in industrial production in March was driven by the increased output of utilities, which is to say the headline print contradicts an otherwise soft environment for manufacturing output.
The preliminary University of Michigan Consumer Sentiment Index for April was 63.5, above the 62.7 consensus and the final reading of 62.0 for March. YoY, the index stood at 65.2. The key takeaway from the report is that short-run inflation expectations were up noticeably from the prior month, which is something that could compel the Fed to press ahead with another rate hike in May even though long-run inflation expectations remained stable.
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.
Welcome back to the weekly Dividend Dollars portfolio review, and a very special one at that! You’ll notice within the screenshot of my portfolio that the general structure has changed a little bit. I am starting to implement a new strategy! I am quite excited about the new direction of the portfolio, so read on to see what we’re doing!
This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $15,290 into the account the total value of all positions plus any cash on hand is $15.712.20. That’s a total gain of 2.76%. The account is up $177.46 for the week which is a 1.14% gain.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is down -7.13% which puts us 9.89% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!
We added $120 in cash to the account last week, trades made will be broken out below.
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI decreased from $638 to $532. This large decrease was intentional and part of the new strategy I mentioned above.
So what is this new strategy, what has changed? Overall, I’m being pickier about the allocation percentage of my capital to different aspects of the portfolio. 70% of my capital will go to my stock picks which coincides with my long term strategy.
I have been reading a number of books like CommonStocks & Uncommon Profits, The Joys of Compounding, 100 Baggers, One Up On Wall Street, and many others. These books have inspired me to be pickier with my individual stock holdings and narrow down my number of positions. As I continue to study these investors and use their lessons to develop my own long-term stock picking strategy, I will create an excel sheet/dashboard that will allow me to track relevant qualitative and quantitative information such as leadership quality, cash flow generation, debt levels, capital allocation, margin of safety, intrinsic value, and more. There’s a lot of work I need to do to get to that point, but we are in the process of upgrading our strategy!
The other 30% will be equally split between ETFs and a new swing trade strategy. The 15% in ETFs will allow me to continue investing in the ETFs that afford me a level of diversity and dividend income that I will continue to grow.
The other 15% will be allocated to a trend following strategy inspired by legendary trader Richard Dennis. I have been studying him and his Turtle Traders for sometime and am working on article to publish the specifics about my strategy for these funds. That should be out soon, so stay in touch with this website or my Twitter account. I have morphed his strategy into a variation that will allow me to follow trends in dividend paying ETFs. The goal with this strategy is boost the medium term gains of my portfolio and use any gains over the allotted 15% to reinvest into my stock and ETF picks.
I look forward to this new phase of evolving my portfolio and am excited to bring you guys along with me!
Dividends
This week we received two dividends: $8.60 from $BBY and $2.27 from $O.
In my portfolio, all positions have dividend reinvestment enabled. I don’t hold onto the dividend, I don’t try to time the reinvestment, I just let my broker do it automatically.
Dividends received for 2023: $144.74
Portfolio’s Lifetime Dividends: $555.14
Trades
Obviously, because the restructure and the goal of cutting down on some of my positions, this was a week of selling. The positions I sold were either intended shorter term holdings or positions I felt I hadn’t researched enough to earn a spot within my portfolio. The short list has been chosen!
Full details for my trades are below:
April 4th, 2023
SPDR S&P 500 ETF ($SPY) – added $10 at $407.83
Global X S&P 500 Covered Call & Growth ETF ($XYLG) – added $10 at $26.47
Schwab US Dividend Equity ETF ($SCHD) – added $10 at $72.68
ETRACS 2xMonthly Leveraged US Small Cap High Dividend ETN ($SMHB) – added 1 share at $5.37
April 10th, 2023
ETRACS 2xMonthly Leveraged US Small Cap High Dividend ETN ($SMHB) – added 2 shares at $5.34
April 13th, 2023
New York Community Bank ($NYCB) – Sold 130 share position at $8.94 for a 18.46% gain of $181.10
Orsted ($DNNGY) – sold 4 share position at $29.99 for a 7.26% loss of $9.73
Atlantic Infrastructure ($AY) – sold 13.09 share position at $27.72 for a 6.15% loss of $24.96
Steve Madden ($SHOO) – sold 3.01 share position at $35.02 for a 0.23% loss of $0.24
Ally Financial ($ALLY) – sold 13.27 share position $26.47 for a 4.80% loss of $18.00
SPDR S&P Biotech ETF ($XBI) – added 5 shares at $79.81 under the trend strategy
Best Buy ($BBY) – reinvested dividend
April 14th, 2023
Vanguard Financials ETF ($VFH) – added 8 shares at $78.80 under the trend strategy
Next week I will look to continue my weekly buys into $SPY, $SCHD, and $XYLG and watch for opportunistic adds as well as trend opportunities. I’ll be looking to add to my redder positions in $MMM, $BBY, $FIS, and $INTC to take advantage of the coming ex dividend date.
Summary
That is it for the update this week. Big week for DividendDollars!
The market recap and outlook will be posted later this week and provides tons of information on what macro statistics I look at to keep a temperature gauge on the market and inform my portfolio movements. Read last week’s here while you wait for the new one!
I will also work on finishing my write up on the trend following strategy to share with you, so stay tuned for that.
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!
Thank you for reading! See you next week and stay safe!
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Dividend Dollars’ Outlook & Opinion
Be careful what you wish for was the theme of this week. The Fed has been telling us for months that labor market deterioration would be needed in order to slow inflation. This is a risky ask as consumer spending accounts for about 2/3s of the US economy, job losses significant enough to dent inflation are likely to lead to a recession.
This week was about as choppy and directionless as we can get. This action tells me that the market is at an inflection point, one where we must decide if bad news is good news (because it might mean the end of the rate hike) or if bad news is bad news (because it might mean a recission is unavoidable0. It may be a while before we have the answer to that question.
Last week, our indicators and thoughts pointed to moderate bullishness with high volatility. At the close of Thursday, the $VIX was $0.42 lower for the week at $18.40. Volatility ended lower, but it was not without it spikes close to $20.00 four times throughout the week. SPX ended slightly lower for the week at 4,105 compared the close last week at 4,109. I’d say the jury is out on whether the forecast was on target or not (I’m thinking not)!
Technically, because of the lack of moves, things haven’t changed much for SPX. It is still about the long term downtrend and all of the significant SMAs. We did break above and then back under the significant 4,100 level.
Remember last week when I said, “Historically, markets tend to switch directions at the beginning of a new quarter and April tends to be a relatively bullish month”? Well the first half of that was true! This week was a definitely a switch away from the strong upward direction we had to end March.
Various indicators have worsened through the course of this week. SPX open interest put call ratios and the volume put call ratio of the major indexes worsened to moderately bearish levels. SPX volume put call ratio worsened to neutral levels from moderately bullish last week. Meanwhile, VIX open interest changed to moderately bullish. Overall, there was not much shifting in the indicators, but they’re just enough to lean a bit more bearish next week compared to this week.
Additionally, the reaction to the march employment report will be felt on Monday, the CPI and PPI follow midweek, and the unofficial start of Q1 earnings season from several banks is certain to bring volatility next week.
Next week appears to be learning bearish via the indicators and technical resistance around the 4,100. Positive data and earnings reports may flip that script.
Weekly Market Review
Summary:
The stock market ended the week slightly down. The Dow Jones Industrial Average squeezed out a slim gain, thanks to money flowing into blue chips, while the major indices made losses due to renewed growth concerns.
There was not a ton of conviction to start the week after OPEC+ surprised markets with a 1.16 million barrels per day production cut announcement. This sent oil prices on a tear, rising 6.4% this week to $80.70/bbl.
Then, growth concerns carried the price action for the remainder of the week. Lingering slowdown concerns were stoked by a slate of weak economic data and a contention by JPMorgan Chase ($JPM) CEO Jamie Dimon in his annual shareholder letter that the regional banking crisis is not over yet and have unseen repercussions for a time.
Many of the economic releases this week came in weaker than expected, adding to the uncertainty surrounding this week.
With an increasing concern of slower growth, investors anticpate further cuts to earnings estimates. Cyclical sectors were the biggest losers this week while defensive-oriented sectors enjoyed nice gains.
The industrials, consumer discretionary , and materials sectors were the top losers while the utilities and health care sectors rose to the top of the leaderboard. The energy sector was another top performer this week despite its economically-sensitive status thanks to the OPEC+ announcement.
Monday:
The stock market kicked off this holiday-shortened week with mixed price action. There was not a lot of conviction in the market except for oil-related trades following the OPEX+ announcement.
The main indices traded in narrow ranges Monday, with the Dow Jones Industrial Average leading throughout the session. The S&P 500 climbed to 4,127 in early action but gave back those gains and then some as it slid to 4,098 before staging an afternoon push that left it close to its high for the day at the close. Nasdaq slumped throughout the day but ended above its lows as mega cap stocks pared larger losses in the late afternoon run.
The March IHS Markit Manufacturing PMI fell to 49.2 from 49.3.
The March ISM Manufacturing Index fell to 46.3% (Briefing.com consensus 47.5%) from 47.7% in February, the consensus was 47.5%. This is the lowest reading since May 2020. The line between expansion and contraction is 50.0%, so the sub-50.0% reading for March reflects a general contraction in manufacturing activity for the 5th straight month. The ISM says this level corresponds to a change of -0.9% in real GDP on an annualized basis based on the past relationship of the PMI and the overall economy.
Total construction spending declined 0.1% MoM in February, compared to flat expectations. Total private construction was flat MoM while total public construction fell 0.2% MoM. On a YoY basis, total construction spending was up 5.2%. New single-family construction remained a weak spot, as higher interest rates and increased building costs make financing expensive at a time when concerns about a future economic slowdown/contraction are taking root.
Tuesday:
The Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 hit modest losses on Tuesday as the resistance to Monday’s selling efforts dissipated. Initially, the main indices all moved higher, but gains quickly faded and the market traded near its worst levels for most of the session. The S&P 500 was able to close right on top of the 4,100 level thanks to a last minute move higher.
Banks stocks came under some added selling pressure, undercut by economic slowdown concerns that followed the day’s weaker than expected economic data and a stark warning by JPMorgan Chase (JPM) CEO Jamie Dimon’s annual letter.
In addition to the financial sector, other cyclical sectors felt the pinch of slowdown concerns and underperformed Tuesday, while defensive areas received modest gains.
Still, the S&P 500 held up okay Tuesday despite being overbought on a short-term basis following big gains in Q1. Losses would have been more pronounced if not for gains in a few heavily-weighted stocks.
Additionally, Finland has joined NATO as the 31st member through a swift addition that began in response to Russia’s invasion of Ukraine. “What we see is that President Putin went to war against Ukraine with a declared aim to get less NATO,” Jens Stoltenberg, NATO Chief, told reporters. “He’s getting the exact opposite.” Following the announcement, Russia claims it will bolster their border defenses.
Factory orders fell 0.7% MoM in February, compared to an expected 0.5% fall. This follows a downwardly revised 2.1% decline in January. Shipments of manufactured goods fell 0.5% MoM after increasing 0.3% in January. This report is backward looking, yet it fits the understanding that manufacturing conditions have weakened, evidenced by the more current March ISM Manufacturing Index which was lackluster on Monday.
The JOLTS report showed that job openings totaled 9.931 million in February following a downwardly revised count of 10.563 million in January.This was the first reading below 10 million since May 2021.
Wednesday:
The stock market had a weak showing Wednesday. Blue chip names continued to get bought while more economically-sensitive sectors logged decent losses following another batch of weak economic data Wednesday morning.
the ADP Employment Change for March was weaker than expected, the February trade deficit widened more than, and the March ISM Non-Manufacturing Index was weaker than expected.
Buying interest for Treasuries picked up following the data releases. Stocks didn’t respond positively to the drop in market rates due to a sense that a weaker economy will translate into further cuts to earnings estimates.
The main indices spent most of the morning in a slow grind lower, but climbed above their worst levels of the day by close. Nasdaq fared the worse while the Dow Jones Industrial Average squeezed out a slim gain, benefitting from blue chip favoritism, with big wins by $UNH and $JNJ for the day.
Shares of Johnson & Johnson moved on news that its subsidiary LTL Management re-filed for voluntary Chapter 11 bankruptcy protection to resolve claims from cosmetic talc litigation and will pay an $8.9 billion settlement, while UnitedHealth surged on an upgrade to Strong Buy from Raymond James.
The ADP Employment Change Report for March showed private sector employment increasing by 145,000 compared to a 205,000 expectation. Interestingly, Services Hiring surrounding financial activities and business services fell the most this reading. Weak pockets included manufacturing (-30,000), financial activities (-51,000), professional/business services (-46,000), and information (-7,000).
The February Trade Balance Report showed a growing trade deficit to $70.5 billion from a downwardly revised $68.7 billion in January. Exports were $6.9 billion less than January exports and imports were $5.0 billion less than January imports. The decline in both exports and imports is reflective of a slowdown in global trade activity.
The March IHS Markit Services PMI fell to 52.6 in the final reading from 53.8. The ISM Non-Manufacturing Index for March dropped to 51.2% from 55.1% in February. Again, line between expansion and contraction is 50.0%, so the March reading reflects continued growth in the services sector, but at a slower pace than the prior month. Activity in our economy’s largest sector is slowing noticeably with a cooling off in the new orders growth rate. The slowdown in activity and improved supply chain dynamics, though, have helped temper the pace of price increases for services.
Thursday:
The last day of this holiday-shortened week started on a softer note as investors digested another weak economic release. Things improved considerably around mid-morning thanks to some mega cap stocks staging a strong recovery from their lows.
The main indices all closed near their best levels on Thursday, but on below-average volume. Despite Thursday’s gains, growth concerns that drove price action in recent sessions did not fade as seen by the underperformance of economically-sensitive sectors.
The energy (-1.5%), materials (-0.2%), and industrials (-0.03%) sectors were the lone laggards to close in the red. On the flip side, the communication services (+1.7%) and information technology (+0.7%) sectors were among the best performers, thanks to gains in their respective mega caps. Other notable outperformers were the utilities (+0.7%) and real estate (+0.7%) sectors.
Claims came in at 228K and the last reading was revised to 246K from 198K. Weekly Continuing Claims also saw a slight increase to 1.823 million from the upwardly revised 1.817 million in the last reading. The report featured a revision to the seasonal adjustment factor, which resulted in big upward moves to figures from recent weeks. This is a big miss as far as these reports are concerned. That said, the higher level of claims will invite some questions about the strength of the labor market after last week’s release of the Job Openings and Labor Turnover survey for February showed a big drop in openings.
Friday:
Happy Good Friday yall! Enjoy your weekend and happy holidays!
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.
Welcome back to the weekly Dividend Dollars portfolio review! And Happy Easter weekend!
This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $15,170 into the account the total value of all positions plus any cash on hand is $15,481.85. That’s a total gain of 2.06%. The account is down $119.58 for the week which is a 0.7% loss.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is down -7.87% which puts us 9.92% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!
We added $120 in cash to the account last week, trades made will be broken out below.
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI increased from $635 to $638.
Dividends
This week we received no dividends. But we did receive some new dividend declarations, so the chart below shows an increase in expected dividends for April and May compared to last week.
In my portfolio, all positions have dividend reinvestment enabled. I don’t hold onto the dividend, I don’t try to time the reinvestment, I just let my broker do it automatically.
Dividends received for 2023: $133.88
Portfolio’s Lifetime Dividends: $544.28
Trades
This week was a very slow one for me. The end of March experienced a crazy run up which left me feeling not too excited to buy this week. So I didn’t! I only executed my weekly ETF buys and picked up a share of $SMHB on the way.
Full details for my trades are below:
April 4th, 2023
SPDR S&P 500 ETF ($SPY) – added $10 at $407.83
Global X S&P 500 Covered Call & Growth ETF ($XYLG) – added $10 at $26.47
Schwab US Dividend Equity ETF ($SCHD) – added $10 at $72.68
ETRACS 2xMonthly Leveraged US Small Cap High Dividend ETN ($SMHB) – added 1 share at $5.37
Next week I will look to continue my weekly buys into $SPY, $SCHD, and $XYLG and watch for more red in the market when adding to positions. I’ll be looking to add to my redder positions in $MMM, $BBY, $FIS, and also $INTC to take advantage of the coming ex dividend date.
Summary
That is it for the update this week. The market recap and outlook will be posted later this week and provides tons of information on what macro statistics I look at to keep a temperature gauge on the market and inform my portfolio movements. Read last week’s here while you wait for the new one!
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!
Thank you for reading! See you next week and stay safe!
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Dividend Dollars’ Outlook & Opinion
I’m switching it up this week and putting the outlook first as I believe the outlook content is more pertinent for the following weeks than a recap of historical information. The best information should always be at the top, right?!
Anyways, this was a light week for economic data. The most important figure, in my opinion, was the core PCE. This is the Fed’s preferred inflation gauge. While the reading’s MoM increase was exactly on target, the YoY level was +4.6%, just below the estimate and prior month’s reading at +4.7%. Like the other inflation metrics, this figure has been falling steadily for several months now. The takeaway here is that prices are not falling, however, they are rising at a slower rate. This is good news.
When this quarter began, you could probably count the number of bullish analysts on one hand. Objectively, it was not a great quarter, however, following a 19.4% decline in 2022, total rate hikes of 50 basis points, two significant bank failures and touching negative territory two weeks ago to finish the quarter up over 6% is wild.
With this rally to end the month, SPX is now higher than the long-term downtrend by the largest margin to date. SPX finished the week well above all significant moving averages, and inched above the 4,100 technical resistance level with some fast moves at the end of Friday.
Historically, markets tend to switch directions at the beginning of a new quarter and April tends to be a relatively bullish month. However, nearly missing a major banking crisis is still in the back of the market’s mind and the start of a potentially weak Q1 earnings season around the corner, it’s too early to tell if history will repeat itself.
Various indicators have improved and worsened through the course of this week. VIX and SPX open interest put call ratios improved into neutral territory, VIX and SPX open interest changes improved to moderately bullish levels. Meanwhile, major ETF and equity changes in open interest, and VIX implied volatility gaps have worsened to moderately bullish, neutral, and neutral territory, respectively.
In general, things are looking moderately bullish. There are a few more upgrades than downgrades this week, but some items contradict others, indicating increased volatility. With the next potential rate hike will not arrive till May, earnings season kicks off in a few weeks, and a dodged financial crisis looming over shoulders, traders may look to continue the buying spree, but not without some volatility.
Q1 2023 ended with a bang. The S&P 500 spent most of the week above its 50-day moving average and the 4,100 level by Friday’s close. The indices stuck to a narrow range in the first half of the week, though, as investors continued to digest all the bank happenings of prior weeks.
Participants reacted favorably to news that First Citizens Bancshares ($FCNCA) will acquire some of Silicon Valley Bank’s and that authorities are considering expanding an emergency lending facility for banks. Bank stocks remained under pressure though. FDIC Chairman Michael Barr told the Senate Banking Committee that he sees needing to increase capital and liquidity standards for firms over $100 billion.
Overall, the S&P 500 financial sector rose 3.7% this week, but it declined 6.1% in Q1.
Some of the gains this week were pushed by strong leadership from semiconductor stocks. The iShares Semiconductor Index ($SOXX) rose 3.17% this week and surged 25.6% this quarter. The market liked Micron’s ($MU) earnings report, but prices fell back down on Friday due to reports that Chinese regulators are reviewing their products for security.
The rally charged ahead on Friday from relatively pleasing inflation data. The PCE Price Index slowed to 5.0% YoY in February from 5.3% in January. The core-PCE Price Index hit 4.6% from 4.7%. The direction of these moves is good news, but the pace of decreases could improve.
The U.S. Dollar Index fell 0.6% to 102.52. On that note, China and Brazil agreed to trade in their own currencies instead of the USD.
All 11 S&P 500 sectors ended the week green. Energy (+6.3%), consumer discretionary (+5.6%), and real estate (+5.2%) lead while communication services (+2.3%) and health care (+1.7%) trailed.
Monday:
The market started the day mixed. Sentiment around the bank sector shifted after investors learned that First Citizens Bancshares ($FCNCA) will acquire $72 bln of Silicon Valley Bank’s assets at a discount of $16.50 bln.
Additionally, a Bloomberg report indicated that US authorities are considering expanding an emergency lending facility for banks in ways that would give First Republic Bank ($FRC) more time to improve its balance sheet.
Despite the banking improvements, major indices closed mixed with NASDAQ trailing. They were feeling the weight of lagging mega cap stocks, which helped drive a 0.7% loss in the Vanguard Mega Cap Growth ETF ($MGK) versus a 0.7% gain in the Invesco S&P 500 Equal Weight ETF ($RSP).
There was no economic data of note on Monday.
Tuesday:
Markets were in relatively tight range on below average volume. Indices closed red after climbing above their worst levels in the afternoon. The Nasdaq trailed its peers again Tuesday, weighed down by lagging mega cap stocks.
Morning money flows looked somewhat similar to Monday’s with banks leading. Sentiment seemed to shift around the time that FDIC Chairman Michael Barr testified at Senate Banking Committee, suggesting more regulation.
The advanced report for international trade in goods showed a $91.6 billion deficit in February versus a $91.1 billion deficit in January. Retail inventories reflected a 0.8% build following a 0.1% from the prior. Wholesale inventories showed a 0.2% build after a 0.5% decline in January.
The FHFA Housing Price Index rose 0.2% in January following a 0.1% drop in December.
The Conference Board’s Consumer Confidence Index for March hit 104.2 above the expected 101.5 versus the 103.4 reading for February. Last year, the index was at 107.6.
The key here is that this survey included the period included the SVB fiasco and still help up well. However, the Expectations Index remained below 80 level for the 12th month out of the last 13, which serves as a concerning signal about future growth.
Wednesday:
Wednesday was a positive day following the 2-day Congressional hearing on the SVB bank failure. For most of the day, the main indices chopped around a range, albeit sporting nice gains. A late afternoon push higher had the main indices close near their highs of the day, leaving the S&P 500 above its 50-day moving average.
Nasdaq led thanks to strong mega caps and chipmakers. Micron’s ($MU) quarterly results pleased, and many semi stocks traded up with it.
Semi strength helped drive a 2.1% gain in the S&P 500 information technology sector, which closed near the top of the leaderboard of sectors.
The weekly MBA Mortgage Applications Index rose 2.9% with purchase application jumping 2.0% (-35% YoY) with refinancing applications rising 5.0% (-61% YoY). Improvements are being made, activity is still at historical lows.
Pending home sales rose 0.8% in February versus an expected 2.3% drop. This is coming off of the 8.1% increase from January.
Thursday:
At first, the main indices all logged decent gains led by the Nasdaq thanks to relative strength from chipmakers and mega cap stocks.
This faded and the main indices slowly fell, hitting their session lows around midday. The downturn was attributed to renewed selling pressure in bank stocks, indicating that concerns about additional fallout remain in play. The S&P 500 financial sector (-0.3%) was the worst performer for the day.
After the slump, the main indices bounced and closed near highs of the day. The S&P 500 was able to extend even higher above its 50-day moving average.
Initial jobless claims for the week ending March 25 rose 7,000 to 198,000 while continuing jobless claims for the week ending March 18 rose 4,000 to 1.689 million.
The key takeaway from the report is that claims remain at a stable level near the 200,000 mark, suggesting little recent stress in the labor market.
The third estimate for Q4 GDP showed a small downward revision to 2.6% from 2.7% reported in the second estimate. The drop was due decreases to exports and consumer spending. The personal consumption expenditures index was flat at 3.7% while the core-PCE Price Index was revised up to 4.4% from 4.3%. The GDP Price Deflator was left flat at 3.9%.
The key takeaway from the report is that it continues to show decent growth while inflation remains above the 2% target, which the Fed could use as an argument for additional rate hikes.
Friday:
The market ended Q1 with great gains. The indices moved up right out of the gate and spent most of the day trending higher. A sharp jump higher in the late afternoon had the S&P 500 close above the 4,100 level.
The run followed some pleasing inflation and consumer sentiment data in the morning.
Strength from the mega cap space pushed index levels high on Friday and throughout the quarter in genera. The Vanguard Mega Cap Growth ETF ($MGK) rose 1.8% versus a 1.5% gain in the Invesco S&P 500 Equal Weight ETF ($RSP) and a 1.4% gain in the market-cap weighted S&P 500. $MGK rose 18.9% this quarter versus a 2.4% gain in the $RSP.
February Personal Income increased 0.3% while spending only increased 0.2%. February PCE Prices and Core PCE prices rose 0.3% with core PCE Prices.
The key takeaway from the report is that it only showed a slight deceleration in the YoY PCE and core-PCE price indices. Though things are moving in the right direction, one can argue the Fed still has room to raise rates.
The March Univ. of Michigan Consumer Sentiment hit 62, down from 63.4 in the prior.
The key here is similar to the other reading we saw, sentiment was relatively strong considering the SVB situation occurred during the survey period.
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.
Welcome back to the weekly Dividend Dollars portfolio review!
This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $15,050 into the account the total value of all positions plus any cash on hand is $15,453.30. That’s a total gain of 2.68%. The account is up $516.46 for the week which is a 3.46% gain.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is down -7.777% which puts us 10.45% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!
We added $120 in cash to the account last week, trades made will be broken out below.
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI increased from $630 to $635.
Dividends
This I received $21.14 from four dividends ($AY, $SCHD, and $XYLG).
In my portfolio, all positions have dividend reinvestment enabled. I don’t hold onto the dividend, I don’t try to time the reinvestment, I just let my broker do it automatically. All four of these dividends were received after close on Friday and will be reinvested on Monday.
Dividends received for 2023: $133.88
Portfolio’s Lifetime Dividends: $544.28
Trades
This week was not too busy for me. The market was on quite the run to end the quarter. I personally think some more downside is coming later this year, so taking a couple conservative weeks like this won’t hurt me in the long run. We took 91% gains on the $NYCB covered call, reinvested all dividends, picked up some $CMCSA for the next dividend, and added more into $SMHB due to the continued small cap weaknesses.
Full details for my trades are below:
March 27th, 2023
Bought to Close $NYCB Covered Call – $11 strike, 4/21 expiration for $1, $10 gain
Global X S&P 500 Covered Call & Growth ($XYLG) – $4.41 dividend reinvested
Next week I will look to continue my weekly buys into $SPY, $SCHD, and $XYLG (which I haven’t been doing a good job of), and watch for more opportunities to add into $CMCSA and $INTC as those are my next ex dividend dates for red positions.
Summary
That is it for the update this week. The market recap and outlook will be posted later this week and provides tons of information on what macro statistics I look at to keep a temperature gauge on the market and inform my portfolio movements. Read last week’s here while you wait for the new one!
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!
Thank you for reading! See you next week and stay safe!
