7.1.14: Weekly Linkfest

A little late getting out this week…

We are going to start off the Linkfest with a corporate credit topic: the continuing erosion of credit covenants, which will have its biggest impact on the high-yield corporate bond market. Here is a piece from Moody’s Christina Padgett this week, on the growing erosion of credit covenants. Moodys63014. This is the main reason we sold all of our taxable high yield, and have no exposure, but the fact is, if the economy continues to improve, high yield credit spreads can remain tight for some time. We will update readers on how we have our client’s bond portfolio’s positioned;

Here is Schwab’s Brad Sorenson on a review by sector of the first 6 months of 2014;

Excellent chart by Charlie Bilello, CMT (@mktoutperform) on the long-term trend of the SP 500 remaining above 200-day moving average. Over 400 trading days and counting. Another excellent chart by Charlie on the SP 500 corrections since the 2009 low.

Excellent tweet by Ryan Detrick (@ryanDetrick) on historical job creation for the month of June. Because Friday this week is July 4th, the June jobs report will fall on Thursday, July 3rd. Expectations have been gradually increasing as the June “net new jobs created” number is expected to come in between 215,000 – 230,000 net new jobs created within the month of June by the US economy.

Jeff Miller, and his weekly, “Weighing the Week Ahead” from his “A Dash of Insight Blog”. Another great article.

Kristen Bentz (i.e. the TalentedBlonde) hasn’t updated her blog in a while, but I have to give her credit, her work on the Retail Sector and Consumer Discretionary has borne fruit this year. Our worst trades have been retail, i.e. taking a position in Coach (COH), and having the stock crater 12% in a week, Bed, Bath (BBBY) which we are still long with a cost basis of $60, and the granddaddy of them all, Whole Foods (WFM) which looks to be forming a base in the high $30’s, low $40’s. Technically WFM is a staple, but given the price points, we consider it a higher-end, discretionary specialty grocer. Is there value in this space now ? Are all these companies being Amazon’ed and Wal-Mart’ed out of existence, from brutal price pressure ? (Long BBBY, WFM, AMZN, WMT.)

A graphical history of bull and bear markets by Morningstar. This current bull market looks to be about average in terms of duration, but less overbought in terms of the upside, at current levels. Josh Brown on the avalanche of US economic data this week.

Jeffrey Kleintop, LPL Financial’s excellent Strategist, with his mid-year 2014 Almanac.

Good article by Jeff Carter, former CME and CBOT trader who is now an angel investor. Jeff is an economic-conservative, like me, which is like being an Eskimo in Haiti for those of us who live in Lincoln Park, just north of downtown Chicago. I like the fact that Jeff has been complimentary of Mayor Rahm Emanuel and his efforts to bring tech starts-ups to Chicago. Here Jeff talks about where the VC money goes – didn’t know this.

Excellent tweet from @361Capital on the Oil Services action last week. Remember, Schlumberger guided higher. It isn’t all Iraq. We are underweight Energy but cant buy the sector up here. Way overbought.

Thanks for reading. With the advent of blogging and Twitter, there is so much good content floating around out in the ether. Thanks for taking a minute and reading ours.

Trinity Asset Management, Inc. by:

Brian Gilmartin, CFA

Portfolio manager

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