Day: February 19, 2020

Personal Finance Daily: This diet will help reduce your risk of heart disease and fewer people are having trouble paying their medical bills

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Happy Wednesday, MarketWatchers! Don’t miss these top stories:

Barron’s wants to recognize people and organizations whose products, services, or education programs are making an impact to improve the financial health of individuals across the U.S. Be sure to head to barrons.com/celebrates for more information and to submit a nomination by Feb. 29 for the Barron’s Celebrates: Financial Empowerment program.

Personal Finance
‘I’m hurt and apprehensive about where I stand.’ My husband of 5 years inherited his parents’ Californian home and didn’t put my name on the deed — what should I do?

‘I understand an inheritance is not community property unless you make it so. If the shoe were on the other foot, I would have added his name to the deed.’

Lawsuit: Department of Education is making it ‘nearly impossible’ for defrauded students to cancel their student loans

Department officials say the new rules help students, and also save taxpayers money.

I took out $50K in student loans, but now I’m living on disability. Is my spouse responsible — and will my family have to pay off my student debt if I die?

‘There are several deferments and forbearances that can temporarily suspend the obligation to repay federal student loans.’

This is the cheapest time to visit Disneyland and Disney World

Disney increased the prices of some tickets and passes for its theme parks in California and Florida.

This diet will help reduce your risk of heart disease, scientists say

Researchers evaluated the coronary health of 760 women over a decade to figure out how what we eat affects our heart health.

‘I stock shelves at a grocery store 3 days a week.’ I’m 28, a single mother, a veteran and work two part-time jobs. Should I accept my father’s offer to help with my expenses?

‘For the last few months, I’ve been working two part-time jobs in addition to my military duties to save up for my monthly shortfall while I’m in school.’

Home permits soar to highest level in 13 years in January, even as new construction dips slightly

‘Mortgage rates should remain low for some time,’ says Sal Guatieri, senior economist at BMO Capital Markets.

‘My husband’s ex-mistress is ruining our life.’ She claims she gave birth to his child and is extorting us for money

‘After he signed a waiver, I removed my husband as beneficiary from my retirement accounts, and he took his name off our joint checking and savings accounts.’

Fewer people are having trouble paying their medical bills — now for the bad news

‘Significant expenses for one family member may adversely affect the whole family.’

More employees are filing retaliation charges — here’s what every whistleblower should know

Reporting your boss for being a bully or a bad manager does not qualify as a protected activity under the law, experts say.

Elsewhere on MarketWatch
Fidelity customers freaked out today when a tech glitch caused their 401(k) balance to drop to $0

‘Could you imagine if you went to bed last night with $1 million in your Fidelity accounts and woke up this morning to $0?’

Where Bloomberg, Sanders, Warren and 2020 Democrats stand on climate change

The field of Democrats looking to beat President Donald Trump this year — including the six on the stage Tuesday night — are aligned in their pledge to rejoin the Paris Climate Agreement.

Obama takes credit for the economic boom and Trump attacks him for it — here’s why they’re both wrong

Jeff Snider of Alhambra Investments says both the former and current president are off base about this economy.

Could Apple be the canary in the coal mine for coronavirus?

Markets are too optimistic about the hit to growth from the coronavirus and the likelihood of a swift rebound.

Can stocks keep soaring as the U.S. dollar surges? What investors need to know

The dollar is on fire in 2020, but that isn’t cooling investors’ ardor for U.S. stocks. Can that relationship continue?

Commodities Corner: Gold’s rise to near 7-year highs feeds talk of a climb to record prices of $2,000 and beyond

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Gold prices now trade at their highest levels in almost seven years, as the economic impact of the COVID-19 epidemic in China has raised expectations for stimulus from global central banks to sustain economic growth, feeding talk of record $2,000-an-ounce prices and beyond for the precious metal.

“The markets are in the throes of a weird mix of safe-haven and speculative motivations,” said Brien Lundin, editor of Gold Newsletter. “The U.S. dollar and stock market are benefiting from an influx of global funds looking for security during the coronavirus uncertainty, but stocks domestically and worldwide are also joining gold and silver in expectation of central bank stimulus to counteract whatever the economic effects may be.”

“So, for now at least, fear and greed are combining to move most markets higher,” Lundin said on Wednesday.

Prices may hit a record level of $2,000 before the end of next year, he said. The timing of that would “keep the market from overheating and give investors more time to make more money in mining equities, which typically over leverage to gold’s moves.”

Based on records going back to November 1984, the record intraday level for most-active gold futures stands at $1,923.70 an ounce on Sept. 6, 2011, with the settlement record at $1,891.90 from August 22, 2011, according to Dow Jones Market Data.

Futures prices on Wednesday tallied a fifth consecutive session gain, with April gold GCJ20, +0.69%  up $8.20, or 0.5%, to settle at $1,611.80 an ounce. The metal marked its highest settlement since March 2013.

The precious metal conquered the $1,600 level “as market players evaluate the global economic damage caused by the virus outbreak,” Lukman Otunuga, senior research analyst at FXTM, told MarketWatch. “With global growth concerns back on the table and speculation rising over central banks turning up the taps on looser monetary policy, gold is positioned to push higher.”

Gains for gold came despite a climb Wednesday in the S&P 500 SPX, +0.47%  and Nasdaq Composite COMP, +0.87%  to record intraday records.

Lundin believes “gold will do far more than beat that record.” Adjusting for inflation, in order to match the record of $850 set in January of 1980, gold would have to trade for about $2,805 in today’s dollars, he said.

‘I think we’ll set a new record in real terms, exceeding $3,000, at some point over the next four years or so.’

Brien Lundin, Gold Newsletter

“I think we’ll set a new record in real terms, exceeding $3,000, at some point over the next four years or so,” he said.

In a note Wednesday, commodity strategists at Citi said gold prices may see nominal highs of $2,000 an ounce in the next 12 to 24 months, according to Barron’s. For the shorter term, they upgraded their six- to 12-month target to $1,700 per ounce.

Prices had topped $1,600 an ounce on Tuesday for the first time since 2013. Lundin had attributed that move to “anticipation of the flood of central bank stimulus that is all but guaranteed by the effects” of the greater economic fallout from the coronavirus to date.

Read: Why gold prices topped $1,600 and may soon hit a more than 7-year high

Also see: Why silver prices may climb to their highest yearly average since 2014

The World Health Organization reported on Wednesday 75,203 confirmed cases of COVID-19, the new coronavirus that was first identified late last year in Wuhan, China. There have been at least 2,009 deaths from the virus, WHO said.

China has taken steps to boost its economy, and the People’s Bank of China reduced its one-year lending rate on Monday.

Read: China may postpone annual congress because of virus

“Investors have revised down their expectations for interest rates in the US in a year’s time by 20 [basis points] since the virus outbreak on 20th January, presumably because they think that the [Federal Reserve] will respond in the same way as the PBOC,” said Simona Gambarini, markets economist at Capital Economics, in a note Wednesday. “That has prompted real bond (TIPS) yields in the US to fall well below zero. And since gold is a non-interest-bearing asset, it has benefited, as often happens, from lower real yields.”

However, Capital Economics believes the “rally in gold will end before long,” said Gambarini.

“We doubt that the outbreak will prompt the Fed to cut rates further,” she said. “The almost unchanged statement issued at the conclusion of the FOMC meeting on 29th January…suggests as much.”

Minutes from the January Federal Open Market Committee meeting released Wednesday after the gold futures settlement revealed that officials from the central bank believed the U.S. economy seemed stronger in late January than they had expected.

Read: Fed officials more upbeat about the economic outlook this year, minutes show

“Just last week, Fed policymakers said that, while they were paying attention to the economic risks of the outbreak, the virus has not altered their outlook for the US economy,” Gambarini said early Wednesday, ahead of the FOMC minutes. “In our view, the Fed would only loosen policy if there were evidence of significant economic costs at home, alongside a large and sustained drop in equity prices. So far there is little sign of either.”

Lawsuit: Department of Education is making it ‘nearly impossible’ for defrauded students to cancel their student loans

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Alex Wong/Getty Images
U.S. Secretary of Education Betsy DeVos at a December Congressional hearing on her department’s ‘borrower defense’ rules.

A lawsuit filed Wednesday alleges that new Department of Education rules, set to take effect in July, will make it more difficult for scammed students to write off their student loans.

The lawsuit relates to the so-called borrower defense law, enacted in the 1990s. The provision allows defrauded students — often from closed for-profit schools — to cancel their student loans. But turning the rules’ pledged benefits into reality has fallen short, advocates for the borrowers say.

In September 2019, the Trump-era Department of Education unveiled its version of the regulations to enforce the borrower defense rule. At that time, Education Secretary Betsy DeVos said her department’s rules cleaned up a “mess” the department “inherited from the previous administration.”

However, the lawsuit filed Wednesday alleges the department’s new rules will make it “nearly impossible” for short-changed students to show they deserve loan cancellation.

The lawsuit was filed by the student-advocacy nonprofit, the Project on Predatory Student Lending and Public Citizen Litigation Group, on behalf of the New York Legal Assistance Group (NYLAG), which provides free legal services, in the U.S. District Court for the Southern District of New York.

NYLAG is represented by Public Citizen Litigation Group, the legal arm of Public Citizen, a consumer advocacy group, and the Legal Services Center of Harvard Law School’s Project on Predatory Student Lending.

The lawsuit opens up another front in the challenges against the looming Trump administration rules. Last month, the Democrat-controlled House of Representatives voted to stop the rules from taking effect. The bill is pending in the Senate.

The Obama-era rules were originally planned to take effect in 2017. The DeVos-led department postponed implementation, which in turn spurred lawsuits over the delay.

The new rules compare median earnings of borrowers looking for cancellation against earnings from graduates at comparable schools. If the applicant’s earnings are lower, the new rules said they were harmed and deserved full or partial cancellation. The new standards prevented fraudulent cancellation claims, DeVos said. Education officials did not provide evidence of one frivolous claim under the old system, the lawsuit alleges.

Furthermore, the lawsuit said the new rules erase Obama-era bans on schools using forced arbitration, end automatic loan cancellation for students at closed schools and shorten student time frames to file loan-discharge applications.

Those changes, combined with tougher evidence requirements, “imposed Herculean standards for obtaining borrower defense relief,” the suit said. It also said the Department of Education created its regulations without sufficient public input.

The Department of Education could not immediately be reached for comment on the new lawsuit, but it previously said its version of the rule “corrects the overreach of the prior administration, gives students and borrowers the relief that they’re owed and restores fairness and due process.”

The new version of the rule would save taxpayers $11.1 billion over a decade, a spokeswoman for the department said at the time of the House of Representatives’ vote.

As the rule challenge makes its way through the judicial system, a mixed Congress already weighed in. Last month, the House voted 231-180 to roll back the change. Like the lawyers in the new case, Democrats said the rule imposed overly stringent standards.

The bill now goes to the Republican-controlled Senate. Even if it can pass the Senate, President Donald Trump’s advisers say he will veto the bill if it gets to his desk, according to the Washington Post.

Fidelity customers freaked out Wednesday when a tech glitch caused their 401(k) balances to drop to $0

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Some Fidelity Investments customers were in for a nightmare scenario on Wednesday: when they logged into their online portals, they saw they had no balance — or, in some cases, no account at all.

The Boston-based financial services company is fielding complaints on Twitter from users who say they can’t see their retirement accounts, or their other investment or checking accounts. The problem appears to have started in the morning, though the company was still responding to Twitter users as of 3 p.m. EST.

The company said some clients were experiencing intermittent technical issues and that they have now been resolved. There was also a service alert on the site. ”We are experiencing website difficulties,” it said. “Try logging back in, and if the problem persists, please try again later. We apologize for any inconvenience.”

Fidelity has 30 million individual investors, 29.6 million brokerage accounts and $7.8 trillion in total customer assets, as of Sept. 30, 2019, according to the company. It manages more than $1.5 trillion in retirement assets.

Last week Fidelity reported that its retirement accounts, on average, performed well in the fourth quarter. The plan sponsor said more employers are automatically enrolling their employees in retirement accounts, and automatically escalating their contributions yearly, too. Average 401(k), 403(b) and individual retirement account balances increased in the last quarter, as well.

More from MarketWatch

Tezos (XTZ) Outperforms in 2020: Here are the Key Drivers

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Tezos

The New Year has seen a degree of a turnaround in the crypto space, as many tokens have recorded significant gains. One notable gainer is Tezos (XTZ). Since the start of the year, the XTZ token has more than doubled in price, and it goes without saying that it could be on the radars of most crypto traders by this point.

More importantly, the coin has managed to break into the top 10 crypto projects by market cap thanks to this rally. Currently, XTZ enjoys a market cap of $1.9 billion. However, this begs the question of whether the current surge is sustainable or just another crypto bubble.


Key Triggers

Over the years, the crypto world has seen many such remarkable rallies, which have later turned into monumental bubbles. Hence, it would perhaps be far more prudent to be cautious about the current rally in Tezos. Alex Saunders, who is a well-regarded commentator on the crypto space, recently tweeted about the XTZ rally. He stated that there are rumors of hard forks since “people aren’t happy” with XTZ. He went on to assert that once the “euphoria” about the token is over, it is going to “fall hard.”

The XTZ blockchain is something that is described as a “self-amending blockchain” and allows for the development of smart contracts that allow two entities to interact on the basis of predetermined conditions. Due to its very nature, Tezos cannot go through a hard fork unless there is an agreement between the majority of participants.

>> Telegram Developers Jump to TON’s Defense in SEC Case

In order to achieve that, the blockchain would need an update of the whole system, which could prove to be a particularly tough thing to accomplish. That being said, it should be noted that the Tezos token has performed impressively over the past months, and investors need to look closely before making any decision.

Featured image: DepositPhotos © Piter2121

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The Tell: Fed staffers say life insurers have leveraged up and are vulnerable to risks from the corporate sector

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Getty Images
The MetLife building.

A new research paper from Federal Reserve staffers finds U.S. life insurers have taken on the risks in private debt largely ceded by banks after the 2008 financial crisis.

These insurers, who are sparsely regulated at the federal level, have deployed “complex on- and off-balance sheet arrangements” to deploy “vast amounts of annuity capital” investing in private debt, according to the paper.

“Within ten years, the U.S. life insurance industry has grown into one of the largest private debt investor in the world,” says the paper written by Nathan Foley-Fisher, Nathan Heinrich and Stéphane Verani, all of whom work in the Fed’s research and statistics division.

The authors find that retail and institutional annuity capital has grown by about $1 trillion since the financial crisis, which in turns funds close to $500 billion in private real estate and $200 billion in private credit.

The insurers are acquiring annuities not just through selling new contracts to retail customers but also by acquiring the pension obligations of corporations.

The Fed staffers found insurers including American International Group AIG, +0.91%  , Allianz ALV, -0.15%, Genworth GNW, +0.92%, MetLife MET, +0.17%  and AXA AXA, -0.16%  have set up Bermuda reinsurers after 2012. The insurers also developed or acquired asset management arms.

The reinsurance arms lower the capital cost of providing traditional insurance products. In turn, the freed capital can finance additional investments, which can be originated by the insurer’s asset management arm.

Private-equity firms including Apollo Global Management also have been rapidly growing their life insurance business, controlling roughly 8% of U.S. life insurance general account assets from basically nothing in 2008.

The life insurers originate and invest in a range of assets, including thinly traded private real estate and private credit. That illiquidity in turns generates a premium, which is crucial in a low interest-rate environment.

Investment by U.S. life insurers in commercial real estate loans has grown by about 70% since the end of the financial crisis. AIG and MetLife have also turned to residential mortgage-backed securities issuance, the paper said.

U.S. insurance holdings of collateralized loan obligations has more than tripled from 2009 to 2018, a period where total bond holdings in the life insurance business has only climbed 20%.

The staffers say the life insurers are vulnerable to a downturn in the credit cycle. “For example, a widespread decline in the value of the loans backing the CLOs could directly wipe out the equity held by the affiliated life insurers. As we learned from the 2007-09 financial crisis, even a relatively small exposure could create a vulnerability for life insurers who pledged their excess capital to the deal risk,” they write.

In turn, the insurers are at risk that wholesale funding could dry up. “The combination of eroding equity and rapid institutional investor withdrawals would likely create a severe liquidity crisis for the life insurance industry,” they say.

AIG and MetLife were initially designated to be so-called non-bank systemically important financial institutions. The Financial Stability Oversight Council rescinded that designation for AIG, and after a long legal fight, for MetLife as well.

In this wild stock market, some investors favor Tesla and Virgin Galactic over Apple and Amazon

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Investors are beginning to show late-cycle stock market behavior. Those with less knowledge are pouring money into the riskiest areas of the stock market. For those who have been around, it is time for prudence.

Investors’ new mantra: Apple AAPL, +1.62%  and Amazon AMZN, +1.08% are for boomers — we buy Tesla TSLA, +7.75% and Virgin Galactic SPCE, +14.14%. Apple and Amazon are pedestrian stocks of yesterday; they do nothing interesting. Vacationing in space on a Virgin Galactic flight is around the corner. Soon we will be mining on Mars. When we return from Mars to the lowly planet Earth to visit our aging parents, we will be getting around in flying autonomous electric taxis from Tesla and staying in homes powered by Tesla solar roofs and batteries.

Also: They’re bored with 20% returns over a couple months. They want to double their money.

Let’s explore this late-cycle behavior with the help of a chart.

The chart

Please click here for an annotated chart.

Note the following:

• The chart shows Virgin Galactic’s stock, which has almost tripled this year.

• Tesla, which has had a wild ride, is looking almost mainstream, to be honest: It’s only doubled this year.

• What happened to the old fogies who were trying to beat the Dow Jones Industrial Average DJIA, +0.50% ? Their returns are stuck at the bottom of the chart.

• Who cares about the Dow, anyway? The most mundane investments are Microsoft MSFT, +0.28%, Facebook FB, +0.01%, Alphabet GOOG, +0.69% GOOGL, +0.60%, Amazon and Apple.

• If you are a rare breed of investor who has not yet drunk the Kool-Aid of the momentum crowd, you may be thinking about risk in Virgin Galactic. Well, space is so huge and the opportunity so big, how could there possibly be any risks?

• The volume of options in Virgin Galactic has skyrocketed. Implied volatility has risen so sharply that the old fogies won’t touch them. But investors chanting the new mantra have stars in their eyes. They have never heard of implied volatility.

• Of course, valuation is no problem for Virgin Galactic. The reason: It’s not constrained by anything other than imagination. There are a lot of people with money; for them paying $250,000 for a flight is pocket change. It gets even better because the deposit required is only 50% to secure a seat. The company has already sold 600 seats. Herein lies the opportunity because millions more seats will be sold. Moreover, the flight may be very short in duration. Just do a simple calculation of the potential sales; the present low market cap of about $6 billion is a bargain.

• Tesla’s market cap is only about $150 billion. There is talk of Tesla becoming a company worth trillions. The fabulous riches to be gained are only limited by your imagination.

Highly speculative stocks

This chart shows when the ZYX Change Method ranked Tesla No. 1 among popular technology stocks on a non-risk-adjusted basis. For the sake of full transparency, this chart was previously published and no changes have been made.

We do not have a realistic detailed analysis for Virgin Galactic at this time. It is important to understand that these are highly speculative stocks. The main drivers are short-squeezes and sentiment. For most investors, stocks such as Virgin Galactic are simply not suitable because of their high risks. For those who are aggressive, these stocks should be only a small part of a diversified portfolio. As these stocks go higher in price, analysts have no choice but to raise their targets.

It is worth repeating that the stock market is in a late bullish cycle when such behavior is common. This calls for extra caution on the part of prudent investors.

Trading opportunities for experts

Both Virgin Galactic and Tesla provide short-term trading opportunities for sophisticated investors both from the long side and the short side. Our system gave a signal to short-sell Virgin Galactic for a very short-term trade near the highs. However, there was no point in publishing that signal because the shares were not readily available to short. The plan is to trade only those setups where there is reasonable risk control. It is also important to pay attention to Arora’s 14th Law: “To be successful at investing and trading, become a master of position sizing.”

Disclosure: Subscribers to The Arora Report may have positions in the securities mentioned in this article or may take positions at any time. Nigam Arora is an investor, engineer and nuclear physicist by background who has founded two Inc. 500 fastest-growing companies. He is the founder of The Arora Report, which publishes four newsletters. Nigam can be reached at Nigam@TheAroraReport.com.

Deep Dive: Here are 25 Dividend Aristocrat stocks screened for ‘quality’

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Dividend stocks are always a popular topic for investors. Some are attracted to payout yields that may be much higher than bond yields. Others believe that consistently raising dividends is a good sign that a company’s management team is strong and that the stock will perform well in the long run.

MarketWatch’s Michael Brush has a list of nine secrets of dividend investing, based on his interview with Matthew Page and Ian Mortimer, who manage the Guinness Atkinson Dividend Builder Fund GAINX, -0.52%, which is rated four stars (out of five) by Morningstar. The managers give practical advice, including focusing on companies with consistent records of increasing payouts, with high returns on capital and moderate dividend yields.

A high dividend yield may be a signal that a majority of investors don’t trust the company to maintain the payout. A dividend cut is typically associated with a severe drop in a company’s stock price. A long-term investment in a quality company with a moderate dividend yield may be much better, as the company will be more likely to increase the payout over the years.

Here’s an example: If you had bought shares of McDonald’s MCD, +0.12%  at the close Feb. 18, 2015, your share price would have been $94.58 and the quarterly dividend of 85 cents a share would have made for a dividend yield of 3.59%. If you held those shares through the close Feb. 18, 2020, and had not reinvested your dividends (to keep our math simple), your share price would have more than doubled to $216.15, while the dividend yield based on your cost in 2015 would have risen to 5.29%, based on the current quarterly payout of $1.25 a share.

For someone who just bought shares of McDonald’s on Feb. 18, 2020, the dividend yield was “only” 2.3%.

Screen of U.S.-listed companies

You may have heard of the S&P 500 Dividend Aristocrats Index SP50DIV, +0.41%, which is made up of the 57 companies in the S&P 500 that have increased their regular dividends for at least 25 consecutive years. That’s the criteria — it makes do difference how high a company’s current dividend yield is. You can invest in this group all together with the ProShares S&P 500 Dividend Aristocrats ETF NOBL, +0.38%.  

But S&P Dow Jones Indices also maintains an expanded list of 119 High Yield Dividend Aristocrats SPHYDA, +0.23%, which is tracked by the SPDR S&P Dividend ETF SDY, +0.27%. These are companies included in the S&P 1500 Composite Index (made up of the S&P 500, the S&P 400 Mid-Cap Index MID, +0.54%  and the S&P Small-Cap 600 Index SML, +0.31% ) that have increased their regular dividends for at least 20 straight years.

Despite the name, it makes no difference how high a company’s yield is when it is included in the High Yield Dividend Aristocrats Index.  

Getting back to focusing on companies with “moderate” payouts, we are paring the High Yield Dividends Aristocrats to a list of 25 with minimum dividend yields of 2% that have had the highest average returns on invested capital (ROIC) over the past 20 reported quarters through Feb. 19. Here’s the list, sorted by ROIC:

Company Ticker Industry Average ROIC – five years Dividend yield
Colgate-Palmolive Co. CL, -0.33% Household/Personal Care 33.41% 2.26%
Clorox Co. CLX, +0.29% Household/Personal Care 32.14% 2.57%
Automatic Data Processing Inc. ADP, +0.52% Data Processing Services 28.67% 2.02%
C.H. Robinson Worldwide Inc. CHRW, +1.50% Air Freight/Couriers 27.17% 2.82%
T. Rowe Price Group TROW, +0.87% Investment Managers 26.85% 2.61%
Kimberly-Clark Corp. KMB, +0.33% Household/Personal Care 25.67% 2.98%
Fastenal Co. FAST, +0.21% Wholesale Distributors 25.44% 2.61%
3M Co. MMM, +0.87% Industrial Conglomerates 22.08% 3.70%
Polaris Inc. PII, +0.47% Recreational Products 19.82% 2.64%
International Business Machines Corp. IBM, -0.15% Information Technology Services 19.49% 4.29%
McDonald’s Corp. MCD, +0.12% Restaurants 18.76% 2.31%
Illinois Tool Works Inc. ITW, +0.81% Industrial Machinery 18.50% 2.30%
General Dynamics Corp. GD, -0.26% Aerospace & Defense 18.33% 2.17%
A. O. Smith Corp. AOS, +0.27% Building Products 17.82% 2.18%
PepsiCo Inc. PEP, +0.26% Beverages: Non-Alcoholic 16.95% 2.62%
Eaton Vance Corp. EV, +1.07% Investment Managers 16.92% 2.98%
Emerson Electric Co. EMR, +1.43% Electrical Products 16.87% 2.80%
Genuine Parts Co. GPC, +3.03% Wholesale Distributors 16.51% 3.27%
V.F. Corp. VFC, +1.22% Apparel/Footwear 16.17% 2.32%
AbbVie Inc. ABBV, +0.31% Pharmaceuticals 15.91% 5.04%
Lincoln Electric Holdings Inc. LECO, -0.77% Industrial Machinery 15.62% 2.15%
Johnson & Johnson JNJ, -0.18% Pharmaceuticals 13.95% 2.55%
Leggett & Platt Inc. LEG, +0.58% Home Furnishings 13.62% 3.55%
Target Corp. TGT, -0.25% Specialty Stores 11.89% 2.24%
Aflac Inc. AFL, +0.06% Life/Health Insurance 11.86% 2.16%
Source: FactSet

You can click on the tickers for more about each company.

A company’s ROIC is its after-tax profit divided by the total of its debt and equity. It provides an indication of how good a management team is at deploying money to expand, improve products and services, expand distribution and sales methods, etc.

Don’t miss: Health-care stocks hinge on presidential politics — and they’re now looking favorable

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This diet will help reduce your risk of heart disease, scientists say

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Plant-based diets have become all the rage. And your heart will thank you for cutting animal products from the menu.

A new study published in the Journal of the American College of Cardiology this week examined how our diets impact our coronary health. Researchers found that a byproduct produced by micro-organisms in people’s guts — a metabolite called trimethylamine N-oxide, or TMAO for short — increases their risk of heart attack and coronary heart disease. Eating animal products was shown to increase the concentrations of TMAO in people’s bodies.

To produce their findings, researchers examined 760 women who participated in the Nurse’s Health Study, a long-term research study that tracks the health outcomes of nearly 122,000 female registered nurses between the ages of 30 and 55.

The women who participated in the study were asked for information regarding their diet, smoking habits, physical activity and other demographic information. The women also provided two blood samples, which were taken 10 years apart to measure concentrations of TMAO in their plasma.

Women who showcased the largest increases in TMAO levels had a 67% risk of contracting coronary heart disease. Overall, the researchers found that women who developed heart disease had higher concentrations of TMAO, a higher body-mass index, a family history of heart attack. Additionally, these women didn’t follow a diet that featured a higher intake of vegetables and lower consumption of animal products.

Read more: How to eat less meat without driving yourself nuts — and save up to $750 a year

The study’s findings “suggest that gut-microbiomes may be new areas to explore in heart disease prevention,” said Lu Qi, director of the Tulane University Obesity Research Center and the study’s senior author.

Researchers noted the study did have some limitations. Namely, no men were included, and participants self-reported much of the information about their diet and lifestyle choices. But other studies have similarly shown the benefits of eating plant-based diets.

A 2019 study from the Journal of the American Heart Association based on data from more than 12,000 middle-aged adults found that people who consumer the most plant-based foods had a 16% lower risk of having cardiovascular disease and a 25% lower risk of dying from any cause.

Those looking to shift toward a more plant-based diet may want to follow one of two popular diets commonly associated with cardiovascular benefits: the Dash Diet and the Mediterranean Diet. (Dash is an acronym that stands for Dietary Approaches to Stop Hypertension.)

Both diets emphasize eating vegetables, fruits, nuts, whole grains, poultry, fish and low-fat dairy products. Similarly, both diets advise cutting out salt, red meats, sweets and sugar-sweetened drinks, though the Dash Diet also suggests eliminating full cream and alcoholic beverages.

Don’t miss: Two hot dogs or four pieces of bacon a week raise your risk of heart disease, death

Economic Report: Home permits soar to highest level in 13 years in January, even as new construction slumps

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The numbers: Builders started construction on new homes in the U.S. at a pace of 1.57 million in January, the Commerce Department said Wednesday. This represented a 3.6% decrease from a revised 1.63 million in December, but was 21.4% higher than a year ago.

Permitting activity, however, hit yet another post-recession high. Building permits for privately-owned housing units were authorized at a seasonally-adjusted rate of 1.55 million. That was 9.2% above the pace of 1.42 million set in December and 17.9% above last year’s rate. The higher pace of permitting suggests that builders are aiming to ramp up construction activity in the months to come.

Economists polled by MarketWatch had projected housing starts to occur at a 1.44 million pace and building permits to occur at a rate of 1.45 million.

What they’re saying: “The 12-month trend is at a cycle high and we see it drifting higher this year in response to sturdy job growth and low mortgage rates,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a research note. “With the 30-year Treasury rate testing all-time lows, mortgage rates should remain low for some time…barring a material upturn in inflation that seems unlikely.”

What happened: Permitting activity increased across all types of units, including single-family homes (up 6.4%) and multifamily buildings (up 15.2%). Building permits rose in every region of the country, with the Northeast seeing the biggest increase at 34.6%, led by single-family activity.

Housing starts decreased for single-family (down 5.9%), but rose for multifamily structures (up 3%). Regionally though, housing starts varied significantly. Housing starts skyrocketed in the Northeast, rising nearly 32% month over month, including a 3.1% gain for single-family units. The West also saw a 1.2% uptick in housing starts. Meanwhile, housing starts plummeted 26% in the Midwest and 5.4% in the South.

The decline in housing starts on a monthly basis is a reflection of the larger-than-expected surge in construction in December, owing in large part to the warmer weather that month.

The big picture: Two main factors are driving the high level of home-building activity in recent months. Low mortgage rates have sparked greater demand among home buyers.

But when home buyers go to the market for a property to purchase, they are being met with a historically low supply of homes for sale. A slowdown in home building in the wake of the Great Recession meant that the housing market did not keep pace with household formation for quite some time. As a result, there’s a massive pool of people who want to buy homes with few options to choose from.

As a result, many parts of the country have seen home prices soar to new highs in recent years thanks to the competition among buyers. That has made home buying unaffordable for many Americans.

This whole situation, however, is a boon to home builders. Sentiment among home builders has hit record highs given the long runway they have to continue building. Economists have argued that even in the event of a recession, home builders should be able to continue constructing new units given how much pent-up demand there is in the market.

Market reaction: Dow Jones Industrial Average DJIA, -0.56%  and S&P 500 SPX, -0.29%  futures were both up ahead of the market’s open following the release of the housing starts and wholesale price reports.

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