We Know This Much Is True

Now that both presidential candidates have informed the world of their blood pressure and cholesterol counts, here’s hoping the inane campaign coverage turns to topics that really matter to the future of our country and the world.

From an economic perspective, it’d be nice for the media to examine both candidates’ spending and tax proposals. So far, we’ve seen tidbits from those plans, but little scrutiny of either side’s promises or predictions.

Hey, maybe we’ll see a serious discussion of the issues at the first presidential debate on September 26th! And maybe the IRS will tell us to forget about paying taxes this year and buy us all ponies.

But here are four points we can bank on:

  • Want evidence that investors think interest rates are going up? S&P just reported that financial-stock ETFs enjoyed strong inflows in August, indicating a strong belief that rate hikes are coming sooner versus later. That’s because banking stocks benefit from higher short-term rates—especially large banks, which invest a lot of assets in short-term fixed-income and have more flexibility to take advantage of higher lending rates if the Fed hikes rates. Look for the “bank rebound” story to unfold in the coming months.
  • That story’s already happening in Canada, where the largest banks are already performing well, financially and in the stock market. This week, Canadian Edge Chief Investment Strategist Deon Vernooy explained why and told subscribers how to profit from banks in the Great White North.
  • Higher rates tend to hurt some income investments, including utility stocks and bonds. But in the most recent issue of Personal Finance, analyst Richard Stavros described how he’s using three models to shape a portfolio that can generate both solid yields and capital appreciation in what could be a bumpy market for income investors.
  • And in the energy sector, a big IPO went well yesterday, indicating that investors also see better days ahead for energy. Robert Rapier, chief investment strategist of The Energy Strategist and MLP Profits, provides us with details and analysis about the newborn master limited partnership (MLP) Noble Midstream, the spawn of oil and natural gas producer Noble Energy (NYSE: NBL).