Cumberland Advisors Week in Review (Jan 06, 2020 – Jan 10, 2020)

The Cumberland Advisors Week in Review is a recap of news, commentary, and opinion from our team.

Week In Review

These are not revised assessments, and circumstances may have changed in the market from the time of original publication. We also include older commentaries that our editors have determined may be of interest to our audience. Your feedback is always welcome.

CUMBERLAND ADVISORS’ WEEKLY RECAP

As part of Cumberland Advisors’ continuous effort to maintain strong customer relationships, we offer this week’s short video discussing current market conditions and how we are positioning portfolios.

Matt McAleer talks about his week in trading and John Mousseau joins us for his view on bonds and employment.

* Headline Risk – This week was fraught with it.
* What do we like? Large Cap Growth.
* What concerns us? How quickly Small Caps and Mid Caps fade.
* How/When we look at break out summaries. What tips us off?
* If there’s something that’s bothering us in an otherwise very solid market, it’s that weakness in Small Caps and semi-weakness in Mid Caps.
* John Mousseau talks about Cumberland’s defensive strategy on bonds.
* John also discusses the employment numbers.

Watch in the video player above or at this link: https://youtu.be/5ZwRKgHVUdI

Would you like to leave a comment for John? Contact him or any one of our advisors by following this link: https://www.cumber.com/our-people/ Or email us at info@cumber.com or give us a call at (800) 257-7013

Have a great weekend and thank you for joining us at Cumberland Advisors.

Matt enjoys your feedback. You can reach him at:
-Link to Matt’s Email: Matthew.McAleer@Cumber.com
-Link to Matt’s Twitter: https://twitter.com/MattMcAleer4
-Link to Matt’s LinkedIn: https://www.linkedin.com/in/matthew-c-mcaleer/
-Call Matt: (800) 257-7013

 


IN THE NEWS

Taking a look at the president’s pocket veto

Quoted: David R. Kotok | Posted on: 01/10/2020

Instant View: Iran Missile Attack Roils Financial Markets

Quoted: David R. Kotok | Posted on: 01/08/2020

Bloomberg Markets: The Close Full Show with David R. Kotok (Video)

Quoted: David R. Kotok | Posted on: 01/07/2020

Vanguard’s market forecasts for 2020 and beyond? Higher, but not as juicy as the 2010 decade.

Quoted: David R. Kotok | Posted on: 01/01/2020

BondBuyer – It’s a wrap: Munis end on a quiet note

Quoted: John R. Mousseau, CFA | Posted on: 01/01/2020

NPR – A Decade After A Fearful Market Hit Bottom, Stock Bulls Continue Historic Run

Quoted: David R. Kotok | Posted on: 12/30/2019

David Kotok: Discussion of Financial Markets with Chuck Jaffe – Money Life (Radio)

Quoted: David R. Kotok | Posted on: 12/27/2019

Surveillance: Negative Rates with Mohamed El-Erian (Bloomberg Radio Podcast)

Quoted: David R. Kotok | Posted on: 12/24/2019

Susan Dushock, ‘one of a kind’ muni analyst, dies at 65

Quoted: John R. Mousseau, CFA | Posted on: 12/18/2019

Weighing The Week Ahead: 20/20 Visions

Quoted: David R. Kotok | Posted on: 12/16/2019

 



Cumberland Advisors Market Commentary – ESG Investing. Also Brazil.

Author: David R. Kotok, Post Date: January 10, 2020

Market Commentary - Cumberland Advisors - ESG

ESG investing is getting hotter (pun intended). We are watching organizations change their institutional asset allocation to increase their exposure to environmental, social, and/or governance standards that are acceptable to the trustees or boards or donors. Those incoming flows into the ESG space mean higher stock prices for the companies and securities that meet the [Continued…]

4Q 2019 Review: International Equity Markets

Author: William Witherell, Ph.D., Post Date: January 2, 2020

Cumberland Advisors Market Commentary by William "Bill" Witherell, Ph.D.

International equity markets – that is, stock markets outside the US – finished the year robustly, with the iShares MSCI All Country ex US ETF, ACWX, gaining 7% in the 4th quarter on a total return basis. For the year as a whole, ACWX gained 16.5%. While this was less than the US market’s 28.3% [Continued…]

John Mousseau at the Money Show Orlando

I’ll be speaking at The MoneyShow Orlando, February 6-8, 2020!

During this three-day educational conference for self-directed investors and traders, attendees will receive real-time market and economic analysis, hear hundreds of specific buy/sell recommendations, listen how 150+ experts are adapting their strategies, have an opportunity to test-drive new tools, with a lot more planned by the organizers.

f you’d like to join me, register here to secure your spot. We convene at the Omni Orlando Resort at ChampionsGate in sunny Florida.

My Presentation Schedule:

Retirement and Income Panel* (For Financial Advisors Only)

The Federal Reserve and Your Portfolio

Additional featured speakers joining me include:

  • Steve Forbes, Chairman and Editor-in-Chief, Forbes Media
  • Rick Rule, President and CEO, Sprott US Holdings
  • Jeffrey Saut, Chief Investment Strategist, Capital Wealth Planning
  • Christine Benz, Director of Personal Finance, Morningstar
  • Keith Fitz-Gerald, Chief Investment Strategist, Money Map Press
  • Howard Tullman, Executive Director, Ed Kaplan Family Institute
  • Lindsey Bell, Chief Investment Strategist, Ally Invest
  • Sam Stovall, Chief Investment Strategist, CFRA Research
  • Tom Sosnoff, Founder and Co-CEO, tastytrade

Learn more at their site, The MoneyShow.

Sincerely,

John Mousseau
President, CEO, & Director of Fixed Income
Cumberland Advisors


Bloomberg Surveillance: Negative Interest Rates with Kotok (Radio Podcast)

Author: David R. Kotok, Post Date: November 27, 2019

Cumberland Advisors’ David R. Kotok talks about negative interest rates, NIRP, and says the European Central Bank’s (ECB) Christine Lagarde has a difficult task right now.

Cumberland's David Kotok on Bloomberg Radio

He also discusses China, the pork shortage, and the impact of viruses on the global food supply.

Running time 25:02, David is introduced at the 10:45 mark – Play Episode: https://www.bloomberg.com/news/audio/2019-11-27/surveillance-negative-interest-rates-with-kotok-podcast

Also see David’s Nov 25, 2019 commentary on NIRP: https://www.cumber.com/cumberland-advisors-market-commentary-nirp-lagarde-trump-dickens-holidays/


In Case You Missed It…

A look back on: “Iran-Persian Gulf-Oil Threat”

Author: David R. Kotok, Post Date: July 3, 2012

Javad Karimi-Qoddusi, a member of the parliamentary National Security and Foreign Policy Committee, said: “In line with this bill and Iran’s sovereign rights, the Islamic Republic of Iran will not let oil tankers, which carry oil to the countries that have imposed sanctions against Iran, such as the European Union, the USA, and occupier Israel, pass through.” He added: “When they impose sanctions on Iran unfairly, the implementation of sovereign rights in Iran’s internal and coastal waters is the least solution.” Source BBC Monitoring Newsfile, July 2, 2012

Market Commentary - Cumberland Advisors - Iran-Persian Gulf-Oil Threat

In the most recent issue of Foreign Affairs (July-August, 2012) Kenneth Waltz argues why Iran should be allowed to get the bomb. In the previous issue, Jacques Hymans argues why the Iranian leadership will “botch” it up and fail to get the bomb. Strategists may debate with words. Iran advances with centrifuges. [Continued…]

 


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

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Taking a look at the president’s pocket veto

The Sarasota Herald Tribune featured this commentary in their business section. Read at the Herald site (https://www.heraldtribune.com/business/20200106/taking-look-at-presidents-pocket-veto) or below. Enjoy!


We’ve received a number of emails about legal and, specifically, constitutional issues. We’re not constitutional lawyers: We are activist citizens, and we do read the constitutional literature. And we do examine the actions of our federal, state, and local governments as part of our work in the investment advising business. Financial markets are dependent on rules and law and governance, so to ignore them is a professional mistake. That is why Cumberland engages lawyers and research services who counsel about legislative initiatives and how they impact markets.

Market Commentary - Cumberland Advisors - The Pocket Veto - Kotok

As we can see from the impeachment proceedings, it is easy to find constitutional and legal questions about which experts disagree. We’re in the midst of that sort of conflict now as the impeachment process unfolds. We will witness American history being made via the technical procedures of the House as it passes articles of impeachment and the Senate acts as a jury while the chief justice of the Supreme Court presides over the impeachment trial.

Meanwhile, we’re also concerned when we see that so many of our fellow citizens cannot even name the three branches of government. That is distressing to us and to many with whom we discuss the importance of civics and governance and education. Please remember that the G in ESG investing stands for governance. So we’ve decided from time to time to venture outside of the investment world and attempt some commentary on the history of an issue as it relates to our unique American constitutional and governance framework. That leads us to today’s commentary.

On Nov. 27, President Trump signed into law the Hong Kong Human Rights and Democracy Act (HKHRDA) and one other bill pertaining to the Hong Kong demonstrations. We wrote about that action in the investment context as we were watching it unfold in the midst of a high degree of US-China Trade War uncertainty. Financial market agents were speculating on whether or not China would respond with more than the threatening words they issued about American interference with their internal affairs. Clearly Chinese leaders were annoyed by the congressional actions about Hong Kong.

Several days earlier, Trump was asked whether he would sign the legislation or veto it, and his 11th hour response speaks to the difficult decision he had to make:

“We have to stand with Hong Kong, but I’m also standing with President Xi. He’s a friend of mine. He’s an incredible guy, but I’d like to see them work it out. But I have to stand with Hong Kong. I stand with freedom… but we are also in the process of making the largest trade deal in history.” (https://thehill.com/opinion/international/471860-trumps-monumental-decision-on-hong-kong)

A number of readers wrote to ask why the president didn’t resort to a middle course that might have at least slightly eased relations with China – that is, why didn’t he utilize the pocket veto?

To understand why he didn’t, let’s review the fundamentals of the pocket veto and its use by US presidents.

Wikipedia gives us this definition: “A pocket veto is a legislative maneuver that allows a president or another official with veto power to exercise that power over a bill by taking no action (instead of affirmatively vetoing it).” (https://en.wikipedia.org/wiki/Pocket_veto?scrlybrkr=aa9f908d)

Use of the pocket veto is sanctioned by the US Constitution. Article 1, Section 7 states:

“If any Bill shall not be returned by the President within ten days (Sundays excepted) after it shall have been presented to him, the same shall be a Law, in like manner as if he had signed it, unless the Congress by their Adjournment prevent its return, in which case it shall not be a Law.”

In other words, when Congress passes a bill and sends it to the president, he or she has ten days to either sign it into law or veto it (by not signing it and returning it to Congress). If, however, the president fails to act, the bill automatically becomes law, unless Congress has adjourned during the ten-day period, preventing the president from returning the bill, in which case the bill dies (in the president’s “pocket”) and a pocket veto has occurred.

Now, you might ask, “To avoid the possibility of a pocket veto, why wouldn’t Congress simply avoid sending any bill to the president within ten days of adjournment?” But as anyone acquainted with legislative deliberateness in Washington DC will tell you, a lot of bills get approved in the eleventh hour of a congressional session, when our hard-working congresspeople are more than ready to get out of town but don’t want to appear to have been sitting on their hands.

Presidents have taken advantage of this situation, starting with President James Madison in 1812. President Franklin Roosevelt was the runaway champion of the pocket veto: During his twelve years in office, from 1933 to 1945, he vetoed 635 bills, 263 of which were pocket vetoes. President Eisenhower utilized the pocket veto 108 times; but its usage by subsequent presidents declined, possibly because Congress finally woke up to the fact that, way back in 1938, the Supreme Court had ruled that when Congress was not in session it could designate agents on its behalf to receive veto messages from the president. (https://en.wikipedia.org/wiki/Pocket_veto?scrlybrkr=aa9f908d#United_States)

George W. Bush and Barack H. Obama both had no pocket vetoes, but President Bush did attempt one. In December 2007 Bush returned H.R. 1585, the National Defense Authorization Act for fiscal year 2008, to Congress and claimed that he had pocket vetoed it, even though the House of Representatives had designated agents to receive presidential messages before adjourning. House Speaker Nancy Pelosi responded: “Congress vigorously rejects any claim that the president has the authority to pocket veto this legislation and will treat any bill returned to the Congress as open to an override vote.” However (and possibly for the final time in the current era), wiser heads prevailed, and the House leadership chose the alternative course of referring the vetoed bill to committee to fixing the provision Bush had objected to. (He had claimed that the bill “would risk the freezing of substantial Iraqi assets in the United States” and thereby “expose Iraq to new liability of at least several billion dollars by undoing judgments favorable to Iraq.”) A revised bill was formulated, quickly approved by both houses, and signed by the president on January 28). (“President’s Disputed Pocket Veto Yields Quick Compromise,” The Wilson Center, July 7, 2011, https://www.wilsoncenter.org/publication/presidents-disputed-pocket-veto-yields-quick-compromise)

Yes, legislative sausage-making can be a messy business. (Cf. “If Only Laws Were Like Sausages,” New York Times, Dec. 4, 2010, https://www.nytimes.com/2010/12/05/weekinreview/05pear.html)

Getting back to President Trump’s predicament, he probably ruled out a pocket veto of HKHRDA for the obvious reason that although Congress did adjourn for Thanksgiving on the same day that HKHRDA’s passage was officially confirmed, the recess was for only four days, until Dec. 2, not the ten days required for a pocket veto to be valid.

As for a regular presidential veto, Trump would have observed that there was overwhelming congressional support for the measure, including by all 100 members of the Senate. (“Congress would override Trump if he vetoes Hong Kong support, says Republican leader,” Defense News, Nov. 23, 2019, https://www.defensenews.com/congress/2019/11/23/congress-would-override-trump-if-he-vetoes-bill-denouncing-chinas-crackdown-in-hong-kong-says-top-republican/)

So despite Trump’s concern about the potential impact of HKHRDA on his China trade deal, there was no way he was going to come out looking good at home – either with Congress or the public – unless he signed the bill.

Many thanks to Lisa and Charley Sweet for their help with this commentary.

And finally, from all of us at Cumberland Advisors as we close out 2019 and look forward to 2020, Bonne Année! Best Wishes for a Happy New Year!

David R. Kotok
Chairman and Chief Investment Officer
Email | Bio


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

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Instant View: Iran Missile Attack Roils Financial Markets

Excerpt from…

Instant View: Iran Missile Attack Roils Financial Markets

Cumberland-Advisors-David-Kotok-In-The-News

Jan. 8, 2020 – By Reuters

SINGAPORE — An Iranian rocket attack on U.S. forces based in Iraq has sent markets into turmoil and investors racing for safety. Here are analyst views on the market moves:

SEAN CALLOW, FX ANALYST, WESTPAC, SYDNEY

“The weight of money is counting on a replay of the price-action on Monday. Essentially people are betting that this is not going to be our main focus three months from now.”

DAVID KOTOK, CHIEF INVESTMENT OFFICER, CUMBERLAND ADVISORS, FLORIDA

“The market looks at…single events and doesn’t say it is a sequence intensifying to larger scale war. It is pricing in tension and risk but not the development of larger scale war.”

Read the full article at: The New York Times


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Bloomberg Markets: The Close Full Show with David R. Kotok (Video)

Bloomberg Markets: The Close Full Show with David R. Kotok

January 6th, 2020

Bloomberg Markets The Close Full Show (1_6_2020) - Kotok

David Kotok joins Bloomberg’s Scarlet Fu and Romaine Bostick bring you the latest news and analysis leading up to the final minutes and seconds before the closing bell on Wall Street. Today’s show tackles Boeing’s finance problems, Middle East tensions. and CES Guests Today: David Kotok of Cumberland Advisors, Fmr. NY Fed President Bill Dudley, Brenda Shaffer of Georgetown University, Author Abigail Wen, Chris Grisanti of Grisanti Capital Management, Cristiano Amon of Qualcomm, Jonathan Golub of Credit Suisse Securities (Source: Bloomberg)

Watch the show in the player or at Bloomberg: https://www.bloomberg.com/news/videos/2020-01-07/-bloomberg-markets-the-close-full-show-1-6-2020-video


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

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4Q 2019 Review: Total Return Tax-Free Municipal Bond

The municipal bond market saw interest rates back up very slightly in sympathy with the Treasury market during the fourth quarter of 2019.

John R. Mousseau, CFA

Ten- and thirty-year AAA tax-free yields started the quarter at 1.42% and 2.01% respectively. As the curtain dropped on 2019 they closed at 1.44% and 2.09%. However the ratio to Treasury yields fell, with the ten- and thirty-year muni/Treasury yield ratios starting the quarter at 85% and 95% respectively and ending the quarter at 76% and 88%. This reflected ongoing demand for tax-free bonds in the wake of the 2017 tax bill, which eliminated deductions for state taxes and local property taxes.

Muni bond supply ended the year at approximately $400 billion. This was higher than we projected at the start of the year. Though tax-free advance refundings are significantly reduced because of the 2017 tax bill, municipalities decided to sell new issues to take advantage of the very low interest rates we witnessed this summer, with thirty-year AAA yields hitting 2% as thirty-year Treasuries also went briefly below 2% yields. Taxable refundings also picked up significantly when Treasury yields fell. This meant that taxable muni rates were still lower than the original tax-free yield on bonds that were being refunded.

The first quarter of 2020 should see the trend of higher supply being met by demand, particularly the ongoing demand for tax-free bonds in high-tax states such as California and New York.

John R. Mousseau, CFA
President, Chief Executive Officer & Director of Fixed Income
Email | Bio

See John talk about the year 2019 in bonds at the link or in the player below: The Year 2019 in Bonds recapped by John Mousseau


 


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

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Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




4Q2019 Review: International ETF

As noted in our Q3 review, the foreign equity markets showed strong resilience in the face of constant headline news throughout 2019.

Matthew C. McAleer - Executive Vice President & Director of Equity Strategies

As noted in our Q3 review, the foreign equity markets showed strong resilience in the face of constant headline news throughout 2019. Both developed and emerging markets rallied sharply through December as both trade and political risk fears began to recede. In our minds, it is a positive that the deep negative interest rate environment has begun to reverse. It should be noted that the German 10Y Gov’t Bond yield has rallied sharply from -.70bps in September to -.18 bps today (Dec. 30th). Perhaps the markets are sniffing out better growth or the central bank negative rate experiment is over. A more normalized yield environment reduces the unknown to some extent.

For much of Q4, the developed nations led by Europe and Japan dominated the emerging markets from a performance standpoint. This action began to reverse itself in December, with Asia showing strong demand. It is difficult to comprehend how poorly the foreign equity markets have performed over the past decade. Many markets are trading at or below their 2007-2012 levels. With multiple foreign governments and banks discussing increased fiscal stimulus vs. the failed monetary stimulus, we are encouraged that an intermediate to longer term bottom may have occurred in August 2019. From an allocation standpoint, broader global strength could be helpful to investors much like we witnessed from 2003-2007.

We close the year overweight Europe, Taiwan, and Canada on the developed side, while long areas of Asia in the EM.

 

Matthew McAleer
Executive Vice President & Director of Equity Strategies
Email | Bio
__________________________________________________________________

Cumberland Advisors invites you to join Matt each Friday on YouTube and hear about Cumberland’s week in trading. Visit and/or subscribe here: https://www.YouTube.com/CumberlandAdvisors

In addition to Matt, it’s that time of year when the rest of the Team at Cumberland Advisors provide their Q4 Reviews. We may discuss what we favor, cash positions, warning signs, and what we see as opportunities. Read more Q4 Reviews to learn about the thinking behind our positioning of portfolios and how we execute strategies at our website: https://www.cumber.com/2019-q4-reviews/


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




4Q2019 Review: Puerto Rico

As we reflect on a tumultuous fourth quarter for the Commonwealth of Puerto Rico, early progress in 2019 in the island’s bankruptcy brought optimism, however that optimism has since turned to frustration as headway has slowed, uncertainty has increased, and questions remain unanswered.

Market Commentary Puerto Rico

October saw the release of a plan of adjustment to restructure the island’s public debt and pension liabilities. Though opposed by many creditors, the plan did provide a basis and a structure for court-ordered negotiations. We did not expect negotiations to go anywhere, however, unless questions regarding the validity of certain debts were answered. Our expectations were confirmed as the negotiations have yielded little except a recommendation from mediators for litigation regarding debt validity to move forward.

One of the most pivotal questions to date will be answered sometime in 2020. Following oral arguments, the Supreme Court is expected to rule regarding whether Puerto Rico’s FOMB officials are territorial or federal representatives and therefore whether they were appointed appropriately. What the justices decide remains to be seen, but the ramifications of their decision could be enormous.

2020 is set to be a crucial year for the Commonwealth, as we may finally get much-needed answers. Although this year did bring us closer to a conclusion, an exit from bankruptcy remains a long way off.

Our Puerto Rico Insured Bond strategy continues to look for opportunities in the space although we tread very carefully due to acceleration risks.

Shaun Burgess
Portfolio Manager & Fixed Income Analyst
Email | Bio


In addition to Shaun’s commentary here, it’s that time of year when the rest of the Team at Cumberland Advisors provide their Q4 Reviews.

Market Commentary - Cumberland Advisors - 2019 Q4 Strategy Reviews

We may discuss what we favor, cash positions, warning signs, and what we see as opportunities. Read more Q4 Reviews to learn about the thinking behind our positioning of portfolios and how we execute strategies at this link: https://www.cumber.com/2019-q4-reviews/


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




4Q2019 Review – US Equity ETF

In 4Q 2019 markets continued to react to the buffeting news flow as an array of headlines besieged investors.

Cumberland Advisors - Quarterly Review - US ETF

Brexit, the Trump Trade War, energy sector write-offs (Chevron), political attacks in the healthcare sector, Fed policy debate and proposed wealth taxation were among the many worrisome topics.

Meanwhile, US stock markets reached all-time highs, and that strength broadened to include small- and mid-cap stocks. As this is written, the rally broadening seems intact.

Impeachment proceedings are ignored by markets – there doesn’t seem to be any market-moving news flow from the House’s actions. Whether or not that changes in the Senate in January is an open question.

Markets seem to have discounted the USMCA. We are pleased to see it advance. We expect final passage and believe it is good for all three countries. There isn’t much that has changed between old NAFTA and new USMCA. Political forces will exaggerate the benefits. But there are benefits, and they should help the stock markets in all three countries.

We head into 2020, leaving a 2019 that was surprisingly profitable. We don’t expect a repeat in 2020. A high single-digit return for the US stock market is our goal. We also expect more volatility as presidential politics grow yet more heated and chaotic.

David R. Kotok
Chairman of the Board & Chief Investment Officer
Email | Bio

In addition to David’s commentary here, it’s that time of year when the rest of the Team at Cumberland Advisors provide their Q4 Reviews.

Market Commentary - Cumberland Advisors - 2019 Q4 Strategy Reviews

We may discuss what we favor, cash positions, warning signs, and what we see as opportunities. Read more Q4 Reviews to learn about the thinking behind our positioning of portfolios and how we execute strategies at this link: https://www.cumber.com/2019-q4-reviews/


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.




4Q 2019 Review: International Equity Markets

International equity markets – that is, stock markets outside the US – finished the year robustly, with the iShares MSCI All Country ex US ETF, ACWX, gaining 7% in the 4th quarter on a total return basis. For the year as a whole, ACWX gained 16.5%. While this was less than the US market’s 28.3% gain as measured by the S&P 500, it was still a strong advance for a year marked by a slowdown in global economic growth, fears of recession, and the US-China trade war. The sustained attraction of equities can best be explained by the historically low interest rates fed by accommodative monetary policies around the globe, together with international equities having an average yield of 2.4%.

Market Commentary - Cumberland Advisors - William 'Bill' Witherell - Will Emerging-Market Equities Finally Outperform in 2020

The fourth quarter saw emerging markets recovering from their underperformance earlier in the year. The iShares MSCI Emerging Markets ETF, EEM, gained 10.2% in the quarter, permitting this market sector to complete the year with a respectable 14.5% annual gain. In Asia China, Taiwan, and South Korea all outperformed, and in Latin America Brazil led the recovery as international trade concerns eased and economic reform efforts advanced.

Advanced-economy equity markets in Europe, North America, and Asia continued to hold up in the fourth quarter despite slowing overall economic growth, with sharper declines in the manufacturing sector, which were offset by continued strong consumer demand. Late in the quarter, the easing of the trade confrontation between the US and China, reduced Brexit uncertainty, and agreement by Congress on a replacement for the NAFTA trade agreement all improved market sentiment. The iShares MSCI EAFE ETF, EFA, which covers all advanced-economy equity markets outside of North America, gained 6.8% for the quarter and 17.4% for the year 2019.

The factors that supported international equity markets in 2019 are expected to continue in 2020, with the slowly growing European and Japanese markets avoiding recession and the emerging-market economies on average growing somewhat more rapidly than they did in 2019, perhaps at an average 4.5% pace as compared with 4.1% in 2019%. Monetary policies look likely to remain accommodative for some time, while fiscal stimulus in Europe, Japan, and the US is expected to increase. There will continue to be downside risks, including possible reheating of US-China trade frictions and other disputes, the likely difficult US-Europe trade negotiations, and geopolitical risks (North Korea, Iran). Any one of these could trigger a market correction.

Bill Witherell, Ph.D.
Chief Global Economist & Portfolio Manager
Email | Bio


Sources: Financial Times, CNBC.com, Yahoo Finance


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Vanguard’s market forecasts for 2020 and beyond? Higher, but not as juicy as the 2010 decade.

Excerpt from…

Vanguard’s market forecasts for 2020 and beyond? Higher, but not as juicy as the 2010 decade.

Cumberland-Advisors-David-Kotok-In-The-News

December 31, 2019 – by Erin Arvedlund

Inflation

Retirees and other investors feel they’re paying more for everyday items, especially health care and tuition, even though the Federal Reserve claims inflation is hovering around 2% annually.

Jim Bianco, of Bianco Research, wrote on Nov. 29: “The Fed instituted its inflation target in January 2012, targeting a year-over-year [rate] at 2%. The Fed can contort themselves all they want but they have not been successful in hitting this target. Looking forward, inflation expectations suggest the Fed will struggle to hit their 2% goal.”

Bond investor David Kotok of Cumberland Advisors said measures of inflation he tracks mostly confirm that view, although there are indications that a little more inflation could be forthcoming in 2020.

“We think some more inflation could show up in 2020 if we didn’t have the Trump trade war dynamics interfering with economic cycles. Instead, we have sluggish capital expenditures as business agents defer decisions because of high and rising Trump uncertainties,” Kotok said.

Read the full article at: The Philadelphia Inquirer


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

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Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.