QE Fatigue

Kevin Cook here for Steve for a few days as he travels...

The FOMC delivered what most market players expected Wednesday with an extension of Operation Twist. This is not full-on QE because the Fed will sell some bonds to buy others, swapping cash from shorter maturities to longer ones on the Treasury yield curve.

In this way, they do not add to their balance sheet with new Large-Scale Asset Purchases and thus don't appear to be "monetizing" debt. That would be like printing new money and Bernanke and Co. want to save that ammo for a few uglier scenarios that could unfold:

  1)  Europe's financial crisis gets worse and the "troika" cannot act in time to prevent serious contagion, let alone a deeper recession.

  2)  More weak US jobs data. My prediction, since the May payrolls, has been that if June and July come in under 100k net new jobs, "QE3 is coming."

  3)  Congress drives the economy off the "fiscal cliff."

Stocks took the Fed stance in schizophrenic stride, first selling off to new lows, then making new highs, and then testing the lows before settling near unchanged. Why all the senseless bluster? I think equity investors are digesting a lot of mixed messages here about how good the economy really is and when the Fed will feel compelled to act more aggressively, if at all.

But money managers were not surprised to see the Fed lower its GDP projections. And this brings us to the real point of investing: growth. Whether or not we've reached the point of "pushing on a string" with monetary stimulus, markets need to see tangible, self-sustaining economic growth take over at some point. Otherwise, corporate profit estimates for the S&P 500 will keep on slipping as sub-2% GDP gets priced-in.

The good news is that this is still a stock-picker's market where you can still invest for relative safety and income during uncertain times. Looking for companies that deliver steady profits and stellar dividends? Then check out Todd Bunton's latest article 4 Rules of Dividend Investing. As the editor of the Income Plus Investor service, Todd knows how to find the best returns in quality names.

Best,

Kevin Cook
Senior Stock Strategist, Zacks Investment Research

Today's Top Stories: Thursday- June 21, 2012

ZACKS RANK BUY STOCKS

• Aggressive Growth - GNC Holdings, Inc. (GNC) Zacks Consensus Estimate for 2012 has risen 8.3%, representing growth of more than 37%. The 2013 Zacks Consensus Estimate increased 8.1%, reflecting growth of 14.9%. Read More...
   
• Growth & Income - True Religion Apparel, Inc. (TRLG) has beaten the Zacks Consensus Estimate in five of the last seven quarters with an average earnings surprise of 6.26%. TRLG also has a smart 2.7% dividend yield. Read More...
   
• Momentum - PetSmart, Inc. (PETM) has been consistently trading above its 200-day moving average since October 10, 2011. It has also remained above the 50-day moving average since May 23, 2012. Read More...
   
• Value - Oil States International, Inc. (OIS) had a record first quarter as drilling demand remained hot. Yet skittish investors have sold off shares, making OIS a true value stock with a forward P/E of just 8.7. Read More...
   

Learn how to profit from our exclusive Zacks Rank stock-ranking system with free resources. Read More...

• Top 5 Zacks #1 Ranked Precious Metals Funds  Read More...
• Top 5 Best Performing Technology Mutual Funds Year to Date  Read More...
• Forget European Woes with These Three Country ETFs Read More...
• State Street Debuts Two Bond ETFs Read More...
• Fund Homepage

• Bull Of The Day: Loews Corporation
  Full Zacks research report: Read More...
  
  
• Bear Of The Day: Shaw Communications
  Full Zacks research report: Read More...
  
  
• Ahead of Wall Street
  Read More...
  


• Zacks Industry Outlook: Restaurant Stock Review & Outlook - June 2012
  The U.S. restaurant industry has ended the first half of 2012 on a positive note despite nagging sovereign debt issues in Europe and faltering domestic consumer confidence. Read More...
  
  
• Analyst Blog Highlights
• Digital Realty Adds Austin Asset
• Risk, Reward Balance Denbury
• Saks Remains Neutral
• Full Analyst Blog

• QE3 Won't End the Correction
• Value Stock Picks-Jun. 20, 2012
• Market's Attention Shifts

PeopleAndPicks.com:

VIP "Neurodoc" hedges off. "NYSE bullish percent index broke into positive territory through 23d EMA as major averages also broke through major resistance today, raising probability for sustained uptrend. Removing hedge positions and going long." Read More...

• Bernanke 'prepared' to do more @ CNNMoney.com
• Research in Motion, Sony: Tech Winners & Losers (Update 1) @ TheStreet.com
• Bed Bath & Beyond Posts 1Q Revenue Miss, Weak 2Q View @ FOXBUSINESS.com
• Red Hat Q1 profit rises 15% amid revenue growth @ MarketWatch.com

FACEBOOK

Visit the Zacks.com Facebook page and get the latest insight on stocks and the market:
Zacks On Facebook

TWITTER

Get the Zacks.com newsfeed delivered straight to your Twitter account:
Zacks On Twitter

OTHER ZACKS RESOURCES:

• Read current and past issues of this newsletter online
• Zacks.com Home Page
• All Zacks #1 Rank Buy Stocks (Premium)
• Zacks Portfolio Tracker: Follow your investments easily in one place and receive daily email updates that alert you to the changes in your portfolio.
• Zacks Home Study Course: Learn how to make money regardless which way the market is headed.

Manage your Profit from the Pros subscription:

• Free Subscription plus 4 Strong Stock Picks
• Would you like to give us input on new products and features for Zacks.com?
• Unsubscribe

REFER-A-FRIEND

If you enjoy this e-mail newsletter, then please pass it along to a friend. Simply forward them the link below to sign up for their own free subscription. THANKS!
Refer a Friend

Best,

Steve Reitmeister
Executive VP, Zacks Investment Research

p.s. What is the mission for Zacks Profit from the Pros? To find out how we will help you become a more successful investor, click here.

Visit /performance for information about the performance numbers displayed in this newsletter.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

To contact us by mail:

Zacks Investment Research
Attn: Profit from the Pros
111 N. Canal St., Suite 1101
Chicago, IL 60606

To unsubscribe from receiving "Zacks.com Profit from the Pros"
e-mail newsletter, Click here....