With Neiman Marcus Stabilizing in 2017, Bonds Look Good Now

Things should be looking up for Neiman Marcus in about a year, writes Steven Ruggerio of R.W. Pressprich Research, who put out a Buy recommendation Monday on some of the department store’s bonds.

Leverage is still dastardly high for Neiman Marcus, but Ruggiero expects it to decline quite sharply by the end of 2017.

GDP Growth Estimates Fall Due to Construction Weakness

Construction spending fell in August by 0.7% – a  much weaker result than expected. Economists were looking for growth of 0.3%. Construction spending also dipped in July by 0.3%, a number that was revised lower. Construction spending is at its lowest level in eight months.

As a result the  Atlanta Fed’s GDPNow estimate for the third quarter was revised lower to 2.2% from 2.4%. 

FPA New Income Fund Boosts Yield by Lowering Its Fee

FPA New Income (FPNIX) announced Monday it’s paying 6 cents per share in income for the third quarter for an annual yield of about 2.4%. That’s pretty decent for a time-tested conservative bond fund that has never lost money in a calendar year.

Investors have portfolio manager Tom Atteberry to thank for that yield for more reasons than you’d think — he put through an expense reduction last June and made up the difference to the company from his own income.

4 Companies that Could Raise Q4 Dividends by 20% or More

Research firm IHS Markit is out with its fourth quarter dividend preview and it highlights four companies expected to hike their dividends by at least 20%. These include Starbucks (SBUX), Zoetis (ZTS), CVS Health (CVS) and Assurant (AIZ).

Below is Markit’s expectations for each company, plus a few lines from its Monday report.

BlackRock Sees ‘New Global Growth Regime’

Times are changing and Richard Turnill, BlackRock’s global chief investment strategist, thinks investors should have more appetite for risk assets.

In a new commentary, he suggests equities and corporate credit will do better than government bonds as global growth picks up.

Boeing and Suppliers Will Benefit from Sales to Qatar, Kuwait

Boeing’s (BA) credit will benefit from sales of 36 F-15 and 28 F-18 fighter jets by the U.S. to Qatar and Kuwait, Moody’s Investors Service pointed out in a research note Monday.

Key component suppliers should also benefit like engine suppliers General Electric (GE) and United Technologies (UTX), and radar and weapons systems provider Raytheon (RTN).

Manufacturing Expands After One-Month Contraction

That wasn’t so bad.

The manufacturing sector looked like it could be in rough shape in August, when it contracted for the first time, with a reading from the Institute for Supply Management that was below 50.

But on Monday, the ISM’s index for manufacturing activity in September climbed to 51.5, a level that signals expansion. Last month the index was at 49.4.

Week Ahead: Payrolls and Politics

This could be a big week for the bond market with lots of economic data — peaking Friday with September non-farm payrolls — more Fed peak and, of course, more politics and more concerns about Deutsche Bank.

Ward McCarthy of Jefferies believes the latter two will dominate.

4 Energy Bonds that Look Better than the Stocks

Earlier in September, I interviewed Noland Langford, chief executive of Left Brain Capital Management, who was buying high yield bonds — not because he’s a bond guy — but because he thinks the debt is a better buy than the equity at current prices. (See, “3 Picks Where the Bonds Could Be a Better Deal than the Stocks.”)

This week his firm sent over four more picks he’s buying for much the same reasons.

Treasuries Fall as Deutsche Bank Fears Subside

Stocks rallied and Treasuries fell as market fears over the Deutsche Bank (DB) calmed after reports that the German bank would be fined a much smaller amount by the U.S. Department of Justice over its mortgage dealings than originally reported.

The yield on the benchmark 10-year note closed at 1.598% after trading as low as 1.536% at 4 a.m. ET on Friday.