Sorry about yesterday. The massive rains on Wednesday (on top of my normal schedule) kept me busy all day and night and then I had an early morning breakfast meeting at the university on Thursday. Luckily we did not get flooding but many homes throughout New Jersey did. On Wednesday after the FOMC announced its rate and policy decision, the market advanced modestly with the Dow Jones Industrials (INDU) setting a new all-time high. On Thursday the markets marked time ahead of today’s monthly labor report. The market is expecting 210,000 non-farm jobs being added to the economy in April.
The flow of economic data, the FOMC’s recent statement and Janet Yellen’s commentary all continue to confirm that the winter weather had an unexpected adverse impact on the economy and pent up demand for goods, services and labor will result in greater than average expansion in the second quarter. Overall, I expect that when you smooth out economic activity in the first half of the year, growth will be back to the modest trend that we have been experiencing.
Casino Business Getting Stronger
Data was released and reported by Reuters stating that Macau gambling revenue rose 10.6% in April. This should bode well for the two major American casino chains that have operations there: Las Vegas Sands (LVS) and Wynn Resorts (WYNN). Have you heard about the tussle going on between Steve Wynn and George Clooney? It is conservative business versus left wing Hollywood. However, reports of Clooney’s being publically drunk are beginning to appear. With the money that Wynn and peer Sheldon Adelson have, it would not surprise to me to see the 2016 RNC convention in Las Vegas. No matter what you may think, Las Vegas Sands and Wynn Resorts are good bets to have in one’s portfolio. Those stocks should rise today on the Macau news.
Adding to Stock Purchase Plans
On Wednesday I wrote about the Exelon (EXC) takeover of Pepco Holdings (PEP) and my history of investing in dividend reinvestment plans (DRIPs) in a Talmudic version of My Gut Feeling. I decided to reinvest the proceeds of the sale of my Pepco shares into three other plans which I set up on Wednesday: Altria (MO), Realty Income (O) and UPS (UPS).
The employment report is going to drive today’s market action. A better than expected report, which is quite possible, will help send markets to new highs. A lesser than expected report will give the bears another breath of life. I am expecting a Goldilocks reports – not too hot not too cold. – but one which proves true the economic thesis I have been espousing and outlined once again above.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long LVS, EXC, POM, MO, O, UPS — although positions can change at any time.
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