The Zacks Analyst Blog Highlights: InTest, Progressive, BioTelemetry, Bausch Health And Steelcase

For Immediate Release

Chicago, IL – January 7, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: inTest Corp. (NYSE:INTT) , The Progressive Corp. (NYSE:PGR) , BioTelemetry (NASDAQ:BEAT) , Bausch Health Cos (NYSE:BHC) and Steelcase (NYSE:SCS) .

Here are highlights from Friday’s Analyst Blog:

Bull or Bear, Your Investment Strategy for 2019

The longest bull market in history has taken both experts and novices by surprise. So every now and then, there is this conversation about the possibilities of a recession and what we should do to prepare for it. There have been many such conversations through 2018, but a recession never materialized, as the market and the government appear to have gotten smarter at aversion. Or at least at ensuring that earlier indicators won’t be valid this time around.

Take the lead indicator yield curve inversion for example. In an expanding economy, government bond yields surpass short-term yields because of greater optimism about the future. When short term yields exceed long term yields, the inversion is an indication of uncertainty about the future.

But monetary policy has effectively kept long term rates low so bond yields remain attractive and spending by both the government and corporations can continue. Still, the gap between 10-year and 2-year yields continues to narrow, indicating that a bear market may be in the offing.

Another indicator is a pickup in M&A activity, which is a typical occurrence toward the end of the business cycle. But M&A has been robust in the last few years with no signs of a bear market. The last year has seen a fresh spate of activity, but since companies aren’t in distress, this may or may not be a valid signal.

The story appears even more positive if you consider the high-yield spread, which is the difference between the yields in below-investment-grade corporate debt and “risk-free” U.S. Treasuries. When the economy is strong, the gap/spread is typically smaller as the risk of doing business is relatively low.

As recession fears near, however, opportunities shrink and it becomes harder to do business. As a result, companies need to pay more for significantly riskier ventures. The high-yield spread has risen during the last two recessions, but as the chart below shows, it remains at acceptable levels right now.

An increase in weekly jobless claims (first-time claims for state unemployment benefits) is another strong and obvious indicator of a recession. But while jobless claims increased in the last week of the year, it makes sense to study the trend rather than what happened in a single week.

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And despite the usual ups and downs, weekly jobless claims continue to trend down steadily since the last recession. Other than the record low unemployment rate, lower taxes and lower oil prices continue to support consumer liquidity.

Persistently declining stock or index valuations can also indicate a broader market slowdown. The following table shows sector valuations for the historical period wherein downward pressure across sectors is apparent. But significant declines (of 20% or more) are seen in less than half the sectors.

Moreover, the bigger sectors (medical, technology, finance) are holding up better, indicating some positive sentiment around growth. Oil/Energy and Transport sectors are borderline cases.

As detailed in the current Zacks Investment Research

Written By: Zacks Investment Research