FEATURED STOCKS - MAY/JUNE 2017 - Pearson Capital, · PDF file · 2017-05-25of us...

Asthefirstquarterhascometoaclose,itaffordsusanopportunitytoassesswherewearewiththemarket’sperformance.Iwillshareresultsthatthenumbersprovide,butit’snoguaranteeofwherewewillbelaterintheyear.IamhappytoreportthatboththeearningsofthecompanieswithintheS&P500andthestockmarketareupover10%year todate.Thisappears tobeacombinationofverypositiveearnings resultsand theTrumpbump.

TheS&P recently set a record high pushingstockvaluationstonewheights.TheaveragestocktodayhasatrailingP/Eratioof23,aboveits20-yearaverageof21andnearitshighestlevelsinceJanuary2004.Notethathighvaluationsarerarelyenoughontheirowntocausethemarkettoslump.Bullsaresayingthestrongeconomysupportstheiroutlook,andthelong-termfundamentalsremainfavorablewhileignoringthepessimistsandalltheirhorrorstories. TherecentrallyispartiallydrivenbyanticipationthatU.S.companieswillbenefitfromlowertaxesand regulations in aRepublican-ledCongress.Withthatsaidmanyinvestorsstillremainonthesidelines anticipating a pullback. If themarketcontinuestoclimb,andtheirfearofmissingoutovertakestheirfearofmarketlosses,wemayseemany investors return. If this occurs, thewaterlevel should rise for all of us.Still, todaymanybelieveTrumpbeingunpredictableandirrationalwillleadtoveryunfavorableresultsgoingforwardwith themarket’s performance.Obviously noneofusknowtheanswerstothesequestionssoforthatreasonIgiveyouthefollowingadvice:Lettingone’spoliticalopinionshapeinvestingdecisionsisagoodwaytolosemoney.

AspromisedatthebeginningofthisarticleIsaidIwouldsharemyopinionastowhatIwoulddo

FEATURED STOCKS - MAY/JUNE 2017VALUE STOCKS:

Apple Inc Nucor Corp Magna International Inc Taiwan Semiconductor Manufacturing Co

FEATURED ETF INVESTMENTSiShares Core S&P U.S. GrowthiShares Core S&P U.S. Value

ChairmanWalter D. Pearson Donald E. Pearson

President Ann Hathaway

Account Manager

PCI - The 2011 E.G. Simmons Award winner for Outstanding Community Service!

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asIaminthesamepositionyouare.Myadvice:Makewiseinvestmentdecisions,donottrytofixCongress,anddonotallowpoliticstobecomeapart of your decisionmaking.Agoodexample:Invest inApple and leave the politics out of it.Why,youask?Thisisournumberoneholdingandhasbeenforwellovertwelveyears.Throughthegoodtimesandthebadinthepasttwelveyearsthestockisupover1000%.Yeartodateit’sup30%.Withour investmentbeliefs,and trying tohelpeveryone,wehavenostart-upminimums.Wecangeteveryone intoApple throughETF’sas an alternative.TheETF,TechnologySelect(XLK)ismadeupof15%Appleand11%GooglewithAmazonandFacebookincluded.Forthepastthreeyearsthishasaveragedfavorablywellover12%. Ifyouwouldliketodiscusstheseopportunitiesatanytime,pleasegivemeacall.

HELPFUL FINANCIAL TIPS Don’tcheerabigtaxrefund:Theaveragetaxrefundhasamountedto$2,860forthepastfewyears.Manybelieve this is freemoneybut therealityis,itisnot.Arefundofthisamountmeansyoumassivelyoverpaid.YougavetheIRSwhatamountstoaninterestfreeloan.Thismoneycouldhavehelpedyoupaydownadebtorbeeninvestedtobenefityou.IfyouoverpaidyoumightconsideraskingyouremployerforanewW-4andadjusttheamountwithheld.

Paying off amortgage early:Most expertsrecommend not paying amortgage off earlybecause it is more efficient to take the taxdeduction onmortgage interest and invest theextramoney. Manybelieve thepeaceofmindofpayingitoffmayhavesomemeritevenlosingthetaxbreak,butwitha4%mortgage,themoney

mightbebetterspentpayingdowncreditcardsorstudentloanswithmuchhigherinterestdebt.

Earlycontributions:NearlyonequarterofIRAcontributionsfor2017won’tbemadeuntilNEXTApril, just before the tax filing deadline. If youcontributeassoonasthelawallows,youhaveabetteropportunitytotakeadvantageoftheextramonthsforadditionalgrowth.

Social Security decisions:Your decision islike having penalties and/or bonuses included,depending onwhat choice youmake.Did youknowthatifyoudecidetoclaimyourbenefitsattheearliestpossibleage(62),you’llget25%lessthanifyouwaituntilyourfullretirementage?Ifyoupostponeclaimingpast full retirementage,youearndelayedretirementcreditsatarateoftwo-thirdsofapercentamonth(8%ayear).Forthosewithfullretirementatage66,waitinguntilage70meansreceiving32%morethanyouwouldhaveatage66andabout76%morethaniftheyhadstartedatage62.Thislargegapmightmakeyoubelievemostwait,butmorethan45%signupassoonaspossible,andonlyabout3%waituntilage70.

Giftsforchildrenandgrandchildren:Thismightbeforagraduation,orabirthday,oranewborn,or any other special event.Why not start aninvestmentaccountforthem.Otherscanaddtothisatanytime,too.Ifyou’reaclientofours,wecanhelpyouwiththis.Startthemwith$500andwe’lldothisforyouatnocharge.CallAnnorIandwecandiscussthis.ForacollegegraduationgiftaRothcanbestartedforthegraduateanditcanbe fundedwithanyamountup to$5,500. Theonlyrequirementisthestudent’snewemploymentpositionmustpaythemthatmuchwithintheyeartheRothisopened.

DP

1st QUARTER RESULTS

Investment letters are complimentary to our clients with managed accounts!

Copyright©2007PearsonCapital,Inc.-AllRightsReserved-Sources:PearsonCapital,Inc.research,variouspublicationsandtheInternetSource Rating Key for PCI’s featured stocks: Pearson Investment Growth Rating measures long-term past and future growth.

Pearson Value Rating measures current value in terms of potential for the dollar. Investors Business Daily measures growth and relative price strength.S&P measures financial quality and growth potential. Value Line measures timeliness, value and safety.

Information&dataobtainedfromothersourcesisbelievedtobereliable,butitsaccuracyandcompletenesscannotbeguaranteed.WalterPearsonistheformerPresidentofFirstNewEnglandSecurities,Co.,Inc.andatthattime,alsomanagedtheStatisticalDepartment.

Heistheauthorofthebook,InvestingfortheMillionsandPublisherEmeritusforthePearsonInvestmentLetter.Atthistime,Mr.PearsonisChairmanoftheBoardofPearsonCapital,Inc.

HeisacontributingcolumnistforvariouspublicationsandislistedinWho’sWhoinAmerica.“Remember the Lord your God, for it is He who gives you the ability to produce wealth.” (Deut. 8:18)

Page 2

WALTER’S WISDOMwww.pearsoncapitalinc.com

REPETITION I have written to you in the past, but what I have to say bears repeating. The information I have is no doubt repetitious, but it is necessary to repeat, and repeat, and to say it again. THE DOLLAR IS GOING DOWN IN VALUE EACH YEAR AT A RATE OF 5% OR BETTER. Those of you who have been with us for a number of years can understand, but it is important that those of you who are newcomers, and those of you who are subscribers to our paper, understand this, too. The next thing to understand is how to counteract the dollar’s demise, and each of you old-timers understands this fully. Buy Stocks! Stocks will go up as the dollar goes down. But then there is an added momentum; your stocks will not only go up in relation to the dollar’s drop, but the actual growth of your stock gives you another added value. To show you what this means, let’s take a look at some of the things in the past. In January of 1992 I bought $840 worth of Fastenal. This stock has split five times since then and I now have 800 shares with a value approximating $37,000. This will show you what time can accomplish when given the opportunity. McDonald’s was bought in October of 1987 for $1500 giving me 40 shares. I now have 320 shares with a value of $42,000. Isn’t this much better than placing it in the bank and accepting the interest payments? This has happened over and over depending on how much growth has been inherent in the stock. Perhaps I should show you one that has not done as well. Okay! Here goes! I bought 17 shares of RLI back in December of 2010 for $894 or approximately $52 a share. Today it is selling for $52 a share so I imagine your first impulse is to say, “I told you so.” But, hold it! They have split two for one and I now have 34 shares, so they have doubled in value. You should notice that you have more than one thing working for you here: growth of your company, time, and the demise of the value of the dollar. You may not realize that bread used to sell for only 5 cents a loaf about seventy-five years ago, and now it is more than one dollar. The bread is no different now than it was then which means the dollar value has gone down that much. You can do this same thing with gasoline or anything else, but the answer comes out just the same. YOUR DOLLAR IS LOSING VALUE! Do something to correct it, now that you know the truth. One of the things I have mentioned that you have working for you is time. You cannot imagine what this can do for you. Take a look at some of these stocks and imagine what you would have if you had purchased and held them during that period. Apple, if you had bought during 2008 and had waited you would have bought at about $30 a share and today we are still recommending it at $150 a share. Look at Hershey; it was about $40 dollars a share ten years ago but is $110 today. Or take a look at McDonald’s, which has gone from about $50 to $140 in the same period. The necessary thing is to buy good growing companies and then wait. Patience is a necessity. I say this because it has happened to me. When I just couldn’t wait any longer I sold out, but shouldn’t have. And for those of you who are sitting idly by and just waiting for an increase in those dividends, maybe you are one of these and you can find one or more that you own. Here they are; each one has just announced an increase to their normal payout. Good luck to you, and to you too. RTN, SNP, SBS, GBCI, USPH, SHI, PBA, OZRK, TJX, TGP, BBBY, EPD, STZ, SAP, BPT, CCL, GS, CHL, PG, HCSG, LKFN, QCOM, CHA, OHI, VET, WHR, TEP, GS, PKBK, SAN, CLB, RCI, BBD, CSX, CE, MMP, RN, TRV, BBD, UN, FMS, CNI, FELE, APU, AMP, COST, IBM, UGI, WBS, ABX, ETN, QSR, STNG, SU, XLNX, GWW, MPLX, IEX, GWB, XOM, JNJ, ETP, INFY, TRN, NYLD/A, BWXT, SYT, HNP, GGAL, ECA, BP, PEP, KKR, BAX, AAPL, CAH, EXPD, PSX, POOL, WIN, MFC, CBI, PRGO, BBD, RLI, HY, GPN, TEF, CTSH, MAR, JLL, BGCP, BIP, MAR.

WP

Over 50 Years of Investment Experience Page 3

APPLE INC. (AAPL) NASDAQ PRICE $155.69InstitutionalHoldings:5778Industry:TechnologyHardware, Storage&Peripherals

TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD (TSM) NYSE PRICE $35.27

InstitutionalHoldings:1341Industry:Semiconductors&SemiconductorEquipment

Earnings per share

NUCOR CORP (NUE) NYSE PRICE $57.23

InstitutionalHoldings:1562Industry:Metals&Mining

MAGNA INTERNATIONAL INC. (MGA) NYSE PRICE $45.02

InstitutionalHoldings:1276 Industry:AutoComponents

Earnings per share

TaiwanSemiconductorManufacturingCompany Limited (TSMC) is asemiconductor foundry.TheCompany isengaged in themanufacturing,selling,packaging,testingandcomputer-aideddesignofintegratedcircuitsand other semiconductor devices and themanufacturing ofmasks. Itoperates throughfoundrysegment.Thefoundrysegment isengaged inmanufacturing, selling, packaging, testing and computer-aided designof integrated circuits (IC) and other semiconductor devices and themanufacturingofmasks.Itoperatesthree12-inchwaferfabs,foureight-inchwaferfabs,onesix-inchwaferfab(fab2)andtwobackendfabs(advancedbackendfab1and2).Italsomanagestwoeight-inchfabsatitssubsidiaries,WaferTech,LLCintheUnitedStatesandTSMCChinaCompanyLimited.Itsexploratoryworkfocusesontransistorsandtechnologies,suchasthreedimensional (3D) structures, strained-layer complementarymetal-oxidesemiconductor(CMOS),high-mobilitymaterialsand3DICdevices.

PEARSON CAPITAL’S RECOMMENDED STOCKS MAY/JUNE 2017www.pearsoncapitalinc.com

Apple Inc.designs,manufacturesandmarketsmobilecommunicationandmediadevices,personalcomputersandportabledigitalmusicplayers.TheCompanysellsarangeofrelatedsoftware,services,accessories,networkingsolutions,and third-partydigital contentandapplications.TheCompany’ssegmentsincludetheAmericas,Europe,GreaterChina,JapanandRestofAsiaPacific.TheAmericassegmentincludesbothNorthandSouthAmerica.TheEuropesegmentincludesEuropeancountries,India,theMiddleEastandAfrica.TheGreaterChinasegmentincludesChina,HongKongandTaiwan.TheRestofAsiaPacificsegmentincludesAustraliaandtheAsiancountriesnot included in theCompany’sotheroperatingsegments. ItsproductsandservicesincludeiPhone,iPad,Mac,iPod,AppleWatch,AppleTV,aportfolioofconsumerandprofessionalsoftwareapplications,iPhoneOS(iOS),OSXandwatchOSoperatingsystems,iCloud,ApplePayandarangeofaccessory,serviceandsupportofferings.

Ratings & Recommendations

CurrentP/ERatio:18.1AnnualYield:1.6%AnnualDividend:2.52Investor’sBus.Daily:B+ PearsonGrowth&Value:A+MorningstarRating:CStand&PoorRating:A TheStreet(analystavg.):A-

Type:ValueSector:InformationTechnology

Earnings per share

Ratings & Recommendations CurrentP/ERatio:15.6AnnualYield:2.6%AnnualDividend:0.94Investor’sBus.Daily:A+ PearsonGrowth&Value:A- MorningstarRating:DStand&PoorRating:BTheStreet(analystavg.):A+

Type:ValueSector:InformationTechnology

NucorCorporation (Nucor)manufactures steel and steel products.TheCompanyproducesdirectreducediron(DRI)forusein itssteelmills. Itoperatesinthreesegments:steelmills,steelproductsandrawmaterials.Thesteelmillssegmentproducesanddistributessheetsteel(hot-rolled,cold-rolledandgalvanized),platesteel,structuralsteel(wide-flangebeams,beamblanks,H-piling and sheet piling) and bar steel (blooms, billets,concretereinforcingbar,merchantbar,wirerodandspecialbarquality).Thesteelproductssegmentproducessteeljoistsandjoistgirders,steeldeck,fabricatedconcretereinforcingsteelandcoldfinishedsteel.TherawmaterialsproducesDRI;brokersferrousandnonferrousmetals,pigiron,HBIandDRI;suppliesferro-alloys,andprocessesferrousandnonferrousscrapmetal.Italsoprocessesferrousandnonferrousmetalsandbrokersferrousandnonferrousmetals,pigiron,hotbriquettediron(HBI)andDRI.

Ratings & Recommendations

CurrentP/ERatio:17.4AnnualYield:2.6%AnnualDividend:1.51Investor’sBus.Daily:C- PearsonGrowth&Value:A-MorningstarRating:DStand&PoorRating:ATheStreet(analystavg.):N/A

Type:ValueSector:Materials

Earnings per share

Magna International Inc. (Magna) is a global automotive supplier.TheCompany’s segments areNorthAmerica,Europe,Asia,Rest ofWorld,andCorporate andOther.TheCompany’s product capabilities includeproducingbody, chassis, exterior, seating,powertrain, electronic, activedriver assistance, vision, closure, and roof systems andmodules, aswell as vehicle engineering and contractmanufacturing.TheCompanyhasover320manufacturingoperationsandapproximately100productdevelopment,engineeringandsalescentersinover30countries.Itprovidesarangeofbody,chassisandengineeringsolutionstoitsoriginalequipmentmanufacturer(OEM)customers.Ithascapabilitiesinpowertraindesign,development,testingandmanufacturing.Itoffersbumperfasciasystems,exterior trimandmodular systems. It offers exterior and interiormirrorsystems.Itofferssealing,trim,engineeredglassandmodulesystems.Itofferssofttops,retractablehardtops,modulartopsandhardtops.

Ratings & Recommendations

CurrentP/ERatio:8.2AnnualYield:2.5%AnnualDividend:1.10Investor’sBus.Daily:D PearsonGrowth&Value:B+MorningstarRating:CStand&PoorRating:ATheStreet(analystavg.):B-

Type:ValueSector:ConsumerDiscretionary

1.82 2.00 2.18 2.33

0.00

0.50

1.00

1.50

2.00

2.50

2015 2016 2017 2018 Es#mated Es#mated

Es#mated Es#mated

4.95 5.23 5.65 6.46

0.00

2.00

4.00

6.00

8.00

2015 2016 2017 2018 Es#mated Es#mated

Es#mated Es#mated

9.22 8.31 8.95 10.21

0.00

5.00

10.00

15.00

2015 2016 2017 2018 Es#mated Es#mated

Es#mated Es#mated

1.77 2.26

3.93 4.19

0.00

1.00

2.00

3.00

4.00

5.00

2015 2016 2017 2018 Es#mated Es#mated

Es#mated Es#mated

Location:USAType:100%Stocks

Category:LargeValueIndustry:Diversified

Performance by%

TheinvestmentseekstotracktheinvestmentresultsoftheS&P900ValueIndex (the “underlying index”),whichmeasures the performance of thelarge-andmid-capitalizationvaluesectoroftheU.S.equitymarket.Thefundgenerallyinvestsatleast90%ofitsassetsinsecuritiesoftheunderlyingindexandindepositaryreceiptsrepresentingsecuritiesoftheunderlyingindex.Itmayinvesttheremainderofitsassetsincertainfutures,optionsandswapcontracts,cashandcashequivalents,aswellasinsecuritiesnotincludedintheunderlyingindex,butwhichtheadvisorbelieveswillhelpthefundtracktheunderlyingindex.

CurrentP/ERatio:N/AAnnualYield:2.1%AnnualDividend:1.01Investor’sBus.Daily:N/APearsonGrowth&Value: A MorningstarRating:BStand&PoorRating:N/ATheStreet(analystavg.):N/A

Ratings & Recommendations

Simple, Straight Forward Investment Strategy

CORE ETF (EXCHANGE TRADED FUND)iSHARES CORE S&P U.S. VALUE INDEX (IUSV) NYSE ARCA PRICE $50.14

12.80

-4.30

18.50

3.10

-10.00

0.00

10.00

20.00

2014 2015 2016 2017

Location:USAType:100%Stocks

Category:LargeGrowthIndustry:Diversified

Performance by%

TheinvestmentseekstotracktheinvestmentresultsoftheS&P900GrowthIndex (the “underlying index”).The fundgenerally investsat least90%ofitsassets in securitiesof theunderlying indexand indepositary receiptsrepresenting securities of the underlying index. The underlying indexmeasurestheperformanceofthelarge-andmid-capitalizationgrowthsectoroftheU.S.equitymarket. CurrentP/ERatio:N/A

AnnualYield:1.2%AnnualDividend:0.59Investor’sBus.Daily:N/APearsonGrowth&Value:AMorningstarRating:BStand&PoorRating:N/ATheStreet(analystavg.):N/A

Ratings & Recommendations

CORE ETF (EXCHANGE TRADED FUND)iSHARES CORE S&P U.S. GROWTH INDEX (IUSG) NYSE ARCA PRICE $47.64

12.40

5.00 7.40

10.50

0.00

5.00

10.00

15.00

2014 2015 2016 2017

B JUST ASK ANN AWearealmosthalfwaythroughtheyearandIwanttoremindourclientswhohaveIRAaccountsand

haveattainedtheageof70½thattheyarerequiredbytheFederalgovernmenttotaketheirRMDfromtheiraccountbyDecember31,2017orincura50%penaltyontheamountdue.

TheRMDorRequiredMinimumDistributionisdeterminedbytheaccountbalanceonDecember31oftheprioryearandtheageofthe

clientinthecurrentyear.TheIRSusestheUniformDistributionTable,alifeexpectancychart,tocalculatethedivisor.Hence,theEndofYearAccountValuedividedbyLifeExpectancy=RMD$.

ManyclientsthattakethisRMDaskuswhatoptionstheyhavetotakethismoney.Ofcourse,theymaytaketheentireamountinalumpsumatanytimeduringtheyear,butmanyaccountownersopttotakeamonthlydistributiontofulfillthisobligation.Notonlydoesthis

preventoverlookingthisobligationbutitalsohelpstosupplementtheirincomeovertheyear.

Youmayalsotransferthesefundstoaregularindividualorjointaccountifyoudon’tneedthecashrightnowandwishtokeepthefundsinvested.

Ifyouwerefortunatetohavebeenthebeneficiaryofsomeone’sIRAaccount,youalsoneedtotakeanRMDfromtheaccount.This

amountwillbedeterminedbyyourLifeExpectancybasedonageintheyearfollowingthedateofdeathoftheoriginalowner.Adifferentchartisusedtodeterminethislifeexpectancy.

Nomatterwhatoptionyouchoose,youwillneedtocompleteanIRADistributionformorhaveanIRAMoveMoneyAdvisorAuthorization

formonfilebeforewithdrawingtheRMD.Icanprovideyouwiththis.WestronglyrecommendtheMoveMoneyformasitisusuallyaone-timecompletionforyourongoingobligation.

Ifyoufallintothisclientbaseandhaveanyquestions,pleasecontactme.IfyouhavealreadybeentakingyourRMDandwishtoalter

yourmethodofdistributionoramount,letmeknowsothatwecanaccommodateyourrequest.

Investment letters are complimentary to our clients with managed accounts!Page 4

thathavereportedearningstodatehavebeenaboveexpectations.AccordingtoZach’sresearch,58S&P500membersareupabout12percentfromthesameperiodlastyearon8percenthigherrevenues.Seventy-fourpercentarebeatingtheirearningsestimatesand65percentbeatingrevenueestimates.Theseresultsrepresentabigimprovementovertherecentpast.ThisisoneofthereasonstheFederalReserveisreadytoincreaseinterestrates.Thepaceofgrowthinbothearningsandrevenuesareaboveotherrecentperiods,andtheproportionofcompaniesbeatingestimates,particularlyrevenueestimates,isnotablytrackingaboveotherrecentperiodsaswell. Analystestimatesforthenextearningsperiodhavestartedcomingdown,butthatisnormalastheirexpectationsarealmostalwayshigheratthebeginningoftheyear,andthenlowerastheymoveforward.Anyincreaseinestimatestoreflecttheheightenedpostelectionexpectationsintaxesandchangesfromthecurrentpresidentialadministrationarenotfactoredinasofyet.AnalystswillraisetheirestimatesonlyafterCongresspassestaxandotherreformsofhigherinterestratesandtheimmediaterepealsofanynewDodd-Frankrulings.

The new trends continue:

1)AccordingtotheValueLine’sstockportfolio,theP/Eratioisstillnearanall-timehigh.2)Homebuildingiscomingbackashomepriceshaverisenhigher.3)Wewillseemorestocksmovefromgrowthtoincome.

Key Point: Earnings came in with good news this quarter.

Cash Flows:

Buybacksarefewerthisyearthanlastyearascompaniesarewaitingforboththeoveralltaxplanandtherepatriationaswell.Wehadthoughtthattherepatriationwouldbeoneofthefirstthingsontheagenda,butitlookslikethatmaynothappenuntilafuturedate,aslongasnextyear.In2004,CongresspassedtheAmericanJobsCreationact.Thetaxbreakallowedforeignearningstobetaxedatarateof5.25percent.Thisadministrationwantssomethingsimilar,withtheexpectedtaxproceedstogotowardthenation’sinfrastructureneeds.However,rightnow,manycompaniesarepostponingtheirbuybackanddividenddecisionsastheywaitforthenewrepatriationrules.Thismaycausethemarkettomovesidewaysuntilthesenewrulesaresetinplace.Thebumpinthefinancialsectorhasbeenabighelp,asbanksandotherfinancialinstitutionsaregoingtoimmediatelybenefitfromreducedregulationsandaslightlyhigherinterestrate.Theymaytakethistimetoincreasetheirdividends.

New trends we see:

1)Companiesarestillholdingoffpotentialmergersandlargedividendincreasesuntilthenewtaxrulings.2)Westillseegrowthinearningsduetohigherrevenues.

Key Point: Companies are still waiting for this administration on the new repatriation act.

Page 5

MARKET VIEW Continued from page 6

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Apollo Beach, Florida 33572Tel:(813)641-7575Fax:(813)641-7755

Toll Free: (800) 510-0329

PresidentDonald E. Pearson

E-mail: PearsonCapital@aol.com

ChairmanOfTheBoardHeadOfInvestmentResearch

Walter D. PearsonE-mail: PearsonCap@aol.com

www.pearsoncapitalinc.com

StockAnalyst Chris Carothers

PearsonCapital2@yahoo.com

Table of Contents

Editor Roberta Wilde

The Pearson Investment Letter publishedmonthlysince1982

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Page 6

S&P 500

DowJones

Nasdaq

Indexes

AccountManager Ann Hathaway

PearsonCapital7@gmail.com

2012 20142013

MarketAverage

2015

13.4%

7.3%

15.9%

12.2%

29.6%

26.5%

38.3%

31.5%

11.4%

7.5%

13.4%

10.8%

Economic Flows:

Initsmostrecentmeeting,theFederalReservedecidedtokeepinterestratesonholdbutmaintainedexpectationsforfurther2017ratehikes.In its lateststatement, thecommitteesaid it “viewstheslowingingrowthduringthefirstquarteraslikelytobetransitory”andbelievesthe“fundamentalsremainsolid.”ThisleavestheFedFundsrateatthesamelevels.TheFed’sgoalimpliesthatitisstillontracktocontinuetoraisekeyinterestratesonlyiftheeconomyimproves.Ifitdoesnot,thentheFedwillkeepinterestratesthesame.RecentjobgainsandthecontinuedgrowthinconsumerspendinghaveallowedtheFedbreathingroomtoraiserates,butgrowthistepidenoughtohavethemstillworried.

AnexampleofthisisthedebtissueintheterritoryofPuertoRico.ItismovingtowardthelargestdebtrestructuringinthehistoryoftheU.S.municipalmarket.Investorsareworriedabouttheprecedentitsets,astheemergencyrescuelawforPuertoRico,knownasPromesa,isoverridingsomebondholders’rightsleavingthemnexttonothinginthevalueoftheirholdings.Currentdebtsforsomestatesandmunicipalitiesarestillwaitingtoberesolved,andthismaygivethemideasoffuturebailoutsthathurtcurrentbondholders. New trends we see:

1)TheFedcan’tcontrollong-terminterestrates.2)Oilcouldgolowerinthesummermonthsasshaledrillingrampsup.3)Chinaisnowsettinganewfive-yearplanforinfrastructuregoals. Key Point: The Federal Reserve has put on hold its goal of future interest rate increases.

Earnings Flows:

Juneisinthemiddleofthisquarter’searningsseason.Thisquarter’searningshaveimprovedmorethanweexpectedasmorethantwo-thirdsofthecompanies

Walter’sWisdom:................................2

FeaturedStocks:................................3

FeaturedStocks:................................4

AskAnn..............................................4

MarketOutlook................................5-6

(0.8%)

(2.2%)

5.7%

0.9%

Continuedtopage5

2016

5.8%

7.9%

4.1%

5.9%

20172011

EVEN

5.5%

(1.8%)

1.2%

6.7%

5.6%

13.6%

8.6%

EVEN

5.5%

(1.8%)

1.2%

13.4%

7.3%

15.9%

12.2%

29.6%

26.5%

38.3%

31.5%

11.4%

7.5%

13.4%

10.8%

(0.8%)

(2.2%)

5.7%

0.9%

12.9%

11.0%

16.9%

13.8%

5.8%

7.9%

4.1%

5.9%