It was another solid week for the market, even remarkable when you consider how far and how fast the market has rallied in 2019. The most impressive part of the rally is how well the market has begun this year. This is the first time the market has rallied eight straight weeks at the start of the year since 1964. Friday’s session saw Technology come on strong, but it was led by Intuit (INTU) and Western Digital (WDC) and Xilinx (XLNX).

Auto dealer Copart (CPRT)) led Consumer Discretionary stocks, even as many of its rivals were hammered during the week. 

S&P 500 Index	+0.64%
Communication Services (XLC)	+0.94%
Consumer Discretionary (XLY)	+0.54%
Consumer Staples (XLP)	-0.48%
Energy (XLE)	+0.29%
Financials (XLF)	-0.15%
Health Care (XLV)	+0.92%
Industrials (XLI)	+0.66%
Materials (XLB)	+0.43%
Real Estate (XLRE)	+0.57%
Technology (XLK)	+1.28%
Utilities (XLU)	+0.62%

Same Tide

There is an old saying about the same tide lifting all ships, and that has been the case for all investment classes in 2019. Crude oil continues to edge higher and has been among the best investments of the year. I continue to pound the table on small-cap names in the Russell 2000. It’s where all the grand slams trade these days. 

Index/Asset	Feb 22, 2019	Year to Date
Dow Jones Industrial Average	+0.70%	+11.6%
S&P 500	+0.64%	+11.4%
NASDAQ Composite	+0.91%	+13.5%
Russell 2000	+0.92%	+17.9%
Dow Jones Transportation	-0.37%	+15.6%
Philly Semiconductor Index	+1.08%	+18.1%
Crude Oil	+0.19%	+22.7%

There is still a fair amount of grumbling about the yield curve, which is this close to inverting. Keep in mind: in the past, inverted yield curves predicted recessions, but by an average of 18 months later.  I think any hysterics around inversion has created a buying opportunity, as bears scream for the end is nigh.

Portfolio Approach

On Friday, we added another idea in the model portfolio to Consumer Discretionary, which brings it to a four weighting, matching the Industrials and Material sectors.

Make sure you understand our Portfolio Approach and our online position tracker. Check with your rep or research@wstreet.com.

Communication Services	Consumer Discretionary	Consumer Staples
1	4	1
Energy	Financials	Healthcare
1	1	1
Industrial	Materials	Real Estate
4	4	0
Technology	Utilities	Cash
2	0	1

Today’s Session

Two Big Deals

GE is selling its Life Science business to Danaher for $21.4 billion ($21.0 billion in cash).  It’s a great deal for both companies and shares of both are indicating higher.

Note: Danaher was once a mortgage company.  Management adopted the “kaizen” Japanese business philosophy and has been reinventing itself for a couple of decades.  Last year, Life Sciences became the largest biggest segment and enjoyed a sharp increase in operating margin.

 

Danaher (DHR) Revenue	2018 in billions	2017 In billions
Life Sciences	$6.47	$5.71
Diagnostics	$6.26	$5.84
Environmental	$4.37	$3.97
Dental	$2.84	$2.81

Danaher (DHR) Op Margins	2018	2017
Life Sciences	19.0	17.6
Diagnostics	17.2	14.9
Environmental	22.9	23.0
Dental	12.2	14.3

Spark Therapeutics is being bought by Roche for $4.8 billion.  The Philadelphia based company is the first to receive approval for gene therapy.  Its treatment for Luxturna, a rare form of blindness that affects up to 2000 US Patients, has unleashed a wave of excitement about additional applications.

Comments

I enjoy watching and listening to your financial assements, comments and predictions. I also appreciate your support of our country, administrators and President bases on those capitalist policies and results rather than the color of their skin. Furthermore, I prefer those wonderful financial post and graphs in your photos and timeline rather than photos of typical Facebook nonsense. Keep up the good hard work. Andrew Jake Mladinich III on 2/25/2019 11:27:29 AM

Charles, your laughter is contagious. Thank you for Pointing out FALSE STATEMENTS FROM sjwBABIES so called economics forecasts of USA RECESSION in 3yrs.. It is SAD, how many DEMS & PROPAGANDA NEWS media hoping for failure & their supposedly analysts, experts on economics from cnn, msnbc, & all propaganda DEMS MEDIA NETWORKS THAT WANT USA TO GO INTO RECESSION. We believe that many of them(DEMS& MAIN STREET PROPAGANDA MEDIA) hate our USA ELECTED president Trump, and ALL THE ECONOMIC SUCCESS, JOBS , so much they are willing to lose billions if it means 5he USA collapses under debt from 8yrs of Obama. Thanks to president Trump policies, regulations cutting, and renegotiating horrid policies deals, JOBS, JOBS, JOBS, 7.333MILLION available (& ONLY 6.2MILLION LOOKING FOR JOBS), & NEW FOREIGN POLICIES SUCCESSES, ALL THE PROMISES MADE & KEPT, RAISES FOR ALL HRLY WORKERS FINALLY MORE THAN WHITECOLLAR WOKERS, RAISES FOR ALL USA CITIZENS ETC. ALL OF USA HAS PRIDE IN THEMSELVES AGAIN, WITH MOTIVATION TO SUCCEED. AFTER 8YRS OF DEMS, SELF HATRED, AND DEPRESSION, NO JOBS, OPEN BORDERS, NO WONDER SO MANY PEOPLE FELL INTO DRUGS, DRINKING, AND PITY THEMSELVES AS BIGGER VICTIMS THAN THE NEXT DEM SOCIALIST PARTY MEMBER. PRIDE, CONFIDENCE, STRENGTH, AND TRAINING IN SKILLS TRADESMEN ARE WHAT PRESIDENT TRUMP HAS DONE, IT ALL POSITIVE AGAIN, AND DEMS HATE IT WHEN PEOPLE CAN TAKE CARE OF THEMSELVES AND MAKE THEIR OWN DECISIONS WITH THEIR EARNED NOT GIVEN MONEY. LIFE IS GREAT INVEST LONG. THANK YOU CHARLES PAYNE, FBN. THANK YOU PRESIDENT TRUMP. N.KOREA DENUCLEARIZATION HAS STARTED, AND FINALLY CHINA IS FEELING PRESIDENT TRUMP'S WILL AND FORTITUDE. WE ALL GET A WIN & WIN . PRESIDENT TRUMP 2020. THEN PENCE, THEN IVANKA TRUMP 2032. SOUNDS GREAT. Long BA, AAPL, MSFT, AAXN. Ed on 2/25/2019 12:41:26 PM

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