Cumberland Advisors Market Commentary – Cash or No Cash? Optimist, Pessimist or Realist?

At any given time, there are at least four or five people (and often up to six or seven) working on our ETF trading accounts and strategies. We continually challenge each other as part of our investment process. We debate all points of view, and we freely express differences of opinion. We try to read the gamut of analytic literature and listen to diverse outlooks.

Market Commentary - Cumberland Advisors - Cash or No Cash - Optimist, Pessimist or Realist

Matt McAleer, whom you meet for a few minutes every Friday via the Cumberland YouTube channel (https://www.YouTube.com/CumberlandAdvisors), is a veteran of nearly three decades of markets. He has long been and remains on the firing line as a money manager. He contributes to our ongoing discussion. He recently dropped a pearl of wisdom, and I asked him to put it in a written note.

Matt wrote:

“I found these two recent articles extremely interesting. Because I tend to lean pessimistically about the markets and risk – probably from trading through 2001/2 and 2008/9, when I started my own company – I purposely spend time reading/contemplating leanings opposite to mine. I have discovered outstanding traders that I enjoy reading because they trade real capital and thus must consider risk. Here are links to a couple interesting articles.”

“2020: What a Time to Be Alive,” by Morgan Housel
https://www.collaborativefund.com/blog/2020-what-a-time-to-be-alive/

“Investors Run from Stocks at Record Pace,” from Ciovacco Capital Management
https://www.ccmmarketmodel.com/short-takes/investors-run-from-stocks-at-record-pace

Matt’s point is well taken. We glean the biggest, most useful picture by seeking different viewpoints.

Punditry practitioners and analysts have a bias toward finding faults and risks. And the writers and talking heads who do not manage money as professionals are really just proffering opinions. It is different when you make your living having to decide what to buy-sell-hold and when to do it. And it is different when you have to determine if and when you are wrong and how and when to take losses.

A similar difficulty occurs when markets are setting new highs and the professional wonders where the top will be and how stretched valuations are. Think about this question when the 5 largest stocks are 1/5 of total market weight and are in the highest beta sector.  Remember cash is zero beta: The S&P 500 index of all 500 stocks has a beta of 1; those 5 largest stocks have a beta above 1.5.

So far, this 2019–2020 stock market rally has been fierce. It started at the low point on Christmas Eve in 2018. Since then, the bias toward the large-cap tech sector has dominated the market. Consider that there are four companies with market caps above $1 trillion. They are Amazon, Apple, Microsoft, and Alphabet (Google). A fifth large-cap stock, Facebook, sits at a mere $700 billion. The total of the FAAMG stocks now equals about 19% of the market capitalization of the S&P 500 Index. The other 495 stocks make up 81% of that market cap. And the market cap-to-GDP ratio is the highest in the entire history of the American stock market while the profit share of that GDP is stagnant except for the benefit of the tax cuts.

The five FAAMG companies are all stellar business operations. They all have multidimensional and multinational business reach. They are all growing despite their enormous size.

So the question facing investors is not if these are viable companies, and not if they are making or losing money, and not if they have adequate capital. Those answers are “Yes!” The questions facing the investor are (1) how do I deal with momentum, and (2) how high is the price before it represents an extreme valuation.

Both questions are subject to robust debate. Please note that you could have had this debate months ago when the prices were lower. And also note that you may have it again months from now when prices may be higher. Pundits and analysts can talk and write all day long about risks and issues. They do not face the buy-sell-hold decisions that a professional money manager faces every single day.

In today’s world, the momentum issue is the most difficult one. We know momentum is powerful. We know it can continue for much longer than folks expect. We do not know when it will change, and we can only guess at the catalysts for change.

In today’s world a special factor is the policy of the world’s central banks. In the United States, the Federal Reserve has been expanding the size of its balance sheet and is maintaining interest rates at a very low level. The policy interest rate in the United States is below the various inflation rates, which means that the use of money (in real terms) is free. When that happens, asset price momentum is upward and will likely continue to be upward as long as money expands and the cost of money is next to zero.

In Europe and Japan, policy is expansive, and the cost of money is free or subsidized by negative interest rates. Remember, when the interest rate is negative, the theoretical asset price can go to infinity. With the usage of cross-currency interest-rate swaps, there is a clear transmission mechanism such that the negative rates in Europe and Japan end up raising asset prices in the United States.

In sum, this stock market is driven by momentum, and it is a force that must be respected. The market could go higher or much higher. It could stumble into a serious correction. We saw a 20% correction within the last two years. To be sure, this stock market could go both much higher and much lower in the coming year.

Meanwhile, we have some cash in reserve, and we are worried about the extended market behavior of FAAMG and its secondary effects on the broader indexes. Our ETF selection is defensive. Our quantitative strategies hold cash or defensive and lower-beta positions.

Twenty years ago, we faced a problem with the NASDAQ market top and the tech stock bubble. At that time (April 1, 2000), we wrote a piece entitled “Will the NASDAQ sell-off become a crash? A Value Perspective.” Here is a link to our archive. https://cumber.com/pdf/Cumberland-Advisors-April-2000-Will-the-NASDAQ-sell-off-become-a-crash.pdf. The circumstances today are different, and history never repeats itself exactly, though it often “rhymes.” We shall see.

For serious readers we offer three research papers. Here are the titles and links.

“Quantitative Easing and Exuberance in Stock Markets: Evidence from the euro area”; Tom Hudepont, Ryan van Lamoen and Nader de Vette; DNB Working Paper No. 660, De Nederlandsche Bank, December 2019.
https://www.dnb.nl/binaries/Working paper No. 660_tcm46-386407.pdf

“Asset Price Bubbles and Systemic Risk”; Markus Brunnermeier, Simon Rother, and Isabel Schnabel; NBER Working Paper No. w25775, April 1, 2019.
https://www.nber.org/papers/w25775.pdf

“The Long-Run Effects of Monetary Policy”; Oscar Jorda, Sanjay Singh, and Alan Taylor; Working Paper 2020–01, Federal Reserve Bank of San Francisco, January 2020. https://www.frbsf.org/economic-research/publications/working-papers/2020/01/

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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Cumberland Advisors Market Commentary – Coronavirus #1 with updated death toll

At Cumberland, we take time to track viral outbreaks for two reasons: (1) Epidemics and pandemics do have market consequences and raise risk, and (2) they can be deadly. SARS, bird flu, Zika, Ebola, and more make the list of outbreaks we have followed closely. In the case of Zika, we wrote a detailed pamphlet chronicling the failures of governments in response to the mosquito-borne virus.

Market Commentary - Cumberland Advisors - Corona Virus & Markets

External shocks can derail economic trends and abruptly alter market sentiment. Not all risk is economic policy or monetary.  The iconic “Spanish flu” of 1918 is a historical example. So when I see a communicable disease vector spring up, I pay attention. I am a risk manager. And risk is a four-letter word that comes in various forms and with various vectors. In a stock market where the dominant factor is price momentum, the impact of a change occurring in an external risk vector or a natural risk phenomenon is intensified. The novel Chinese coronavirus currently making headlines is now serious enough to have market impact. Here’s the Wall Street Journal at 6:43 AM EST on Tuesday, Jan. 21:

“Global stocks dropped on Tuesday, led by Asian markets, amid concerns about the rapid spread of a potentially deadly pneumonialike virus originating in central China.” (“Global Stocks Drop Amid Outbreak of Deadly Virus in China,” Wall Street Journal, Jan. 21, https://www.wsj.com/articles/global-stocks-drop-amid-outbreak-of-deadly-virus-in-china-11579601534?mod=hp_lead_pos2)

Confirmation of the first confirmed case in the US impacted markets immediately yesterday, with airline and travel stocks taking a hit. See “Dow’s five-day win streak comes to an end after report of first coronavirus in the US,” https://www.marketwatch.com/story/dow-futures-pull-back-as-stock-market-stages-pause-from-record-setting-rise-2020-01-21.

Writing in Bloomberg’s “Points of Return” on Jan. 22, John Authers goes into greater depth on how significant the effects of a new epidemic scare can be on markets: “…nobody can answer how severe the problem could become, and nobody beyond a few experts in epidemiology and public health has much ability even to try.”

While pointing out that we cannot yet size up the public health challenges the new virus will pose, Authers examines how the Ebola scare in 2014 affected markets, concluding, with some compelling charts and data, that 2019-nCoV “could create quite a lot of damage.” (Bloomberg “Points of Return” is a daily newsletter available by subscription only.)

Most of us know coronaviruses in the form of the “common cold” that occasionally afflicts us with a stuffy nose, clogged sinuses, and a sore throat. Our colds are inconvenient and mildly miserable to endure, but hardly ever serious. It’s important to remember that the deadly six-month SARS outbreak of 2003 was also caused by a coronavirus. The new coronavirus originated in the city of Wuhan and seems to have as its epicenter a now-closed seafood market where live exotic animals were also sold for human consumption. CNN obtained a video of that market taken before the outbreak resulted in its closure. CNN correspondent Kristi Lu Stout tweeted that video here: https://twitter.com/klustout/status/1219078782549725184?s=21, demonstrating the close contact shoppers and workers had with wild animals, one of which perhaps carried the novel virus.

The South China Morning Post summarized the world’s list of known coronaviruses:

“The strain of coronavirus found in Wuhan – named 2019-nCoV by the WHO – is the seventh of its kind to be identified.

“Of the six others, four cause only minor respiratory symptoms similar to those of a cold and two, while SARS and MERS (Middle East respiratory syndrome) are deadly, with the latter accounting for more than 850 deaths around the world since 2012.”

(“China coronavirus: at least three suspected cases found in Shenzhen, Shanghai, sources say,” South China Morning Post, Jan. 18, https://www.scmp.com/news/china/society/article/3046681/china-coronavirus-least-three-suspected-cases-found-shenzhen)

The new virus, dubbed 2019-nCoV, is now spreading beyond China. It does not appear to be as deadly as SARS was, but it is associated with fever, cough, shortness of breath and pneumonia, and, as of January 22, 17 deaths (“As New Virus Spreads from China, Scientists See Grim Reminders,” https://www.nytimes.com/2020/01/22/health/corona-virus-china.html). “Much remains to be understood about the new coronavirus, which was first identified in China earlier this month. Not enough is known about 2019-nCoV to draw definitive conclusions about how it is transmitted, clinical features of disease, or the extent to which it has spread. The source also remains unknown,” the World Health Organization said Friday. (“China’s coronavirus cases likely grossly underestimated, study says,” CNN, Jan. 18, https://www.cnn.com/2020/01/18/asia/china-coronavirus-study-intl/index.html)

As Chinese epidemiologists work to assess and stem the virus’s spread and better gauge its severity, the US CDC is monitoring the outbreak (https://www.cdc.gov/coronavirus/2019-ncov/index.html) and offering guidance to travelers (https://wwwnc.cdc.gov/travel/notices/watch/novel-coronavirus-china). Five US airports will now screen passengers arriving from Wuhan for the virus: JFK, San Francisco International, Los Angeles International, Chicago’s O’Hare, and Atlanta’s Hartsfield-Jackson. (https://www.washingtonpost.com/nation/2020/01/21/us-screenings-coronavirus-expanded-airports-atlanta-chicago/). However, screenings may well broaden as the virus spreads geographically.

A rapid test for the virus has been developed by researchers from the German Center for Infection Research and virologists at Charite Hospital in Berlin. (http://www.cidrap.umn.edu/news-perspective/2020/01/japan-has-1st-novel-coronavirus-case-china-reports-another-death)

Case counts quadrupled between January 11, when 41 cases had been identified (https://www.wsj.com/articles/china-says-person-infected-with-new-coronavirus-has-died-11578709453?mod=article_inline), and January 20, when the number of confirmed cases reached 218. By January 22 the number more than doubled again, to 481. New cases emerged in Beijing (5), Shanghai (1), Shenzhen (3), and Guangdong Province (14). Nine cases have been confirmed in Asian countries outside Mainland China: Macau (1), Hong Kong (1), Taiwan (1), Thailand (4), Japan (1), and South Korea (1), all of them involving people who are either from Wuhan or have visited the city (https://www.bbc.com/news/world-asia-china-51171035). Health officials in Australia and the Philippines are also investigating suspected cases of the virus.

The first US case was reported on January 21, in the State of Washington. The patient had recently returned from Wuhan (https://www.cdc.gov/media/releases/2020/p0121-novel-coronavirus-travel-case.html).

The World Health Organization (WHO) is meeting today, January 22, in Geneva to decide whether to declare the outbreak an “international public health emergency” – a rare move that has only been used a handful of times, for the swine flu, Ebola, and Zika outbreak (“WHO Could Declare Wuhan Coronavirus a Global Emergency,” https://foreignpolicy.com/2020/01/21/wuhan-coronavirus-china-global-emergency-pneumonia-world-health-organization-who/).

At least fourteen healthcare workers have fallen ill (as of January 20), confirming, as has other evidence, that the virus is capable of human-to-human transmission. Infectious disease experts at Hong Kong University estimate that the Wuhan virus had likely already spread to 20 other cities in the interval between January 1 and January 17, suggesting that those cases will continue to be detected in the coming days (https://www.scmp.com/news/hong-kong/health-environment/article/3047022/wuhan-coronavirus-20-other-cities-china-affected).

Containment of the virus at this point, despite detection efforts that are always thwarted by the delay between infection and the onset of symptoms that screening efforts might catch, will be difficult, though detecting and slowing transmission remains key to both heath and economic outcomes. Complicating matters, China is about to undertake its annual Spring Festival. Anna Fifield of the Washington Post reports, “Under the best of circumstances, the Spring Festival in China is a logistical exercise of mind-blowing proportions: hundreds of millions of people traveling via planes, trains, buses, and taxis to return to their hometowns to ring in the new lunar year with their families.” (https://www.washingtonpost.com/world/asia_pacific/china-virus-surge-in-new-cases-raises-concerns-about-human-transmission-ahead-of-holiday-travel-season/2020/01/20/06d077fc-3b6a-11ea-971f-4ce4f94494b4_story.html)

All that travel will accelerate the spread of the virus.

On October 18, 2019, the Johns Hopkins Bloomberg School of Public Health and Center for Health Security, the World Economic Forum, and the Bill and Melinda Gates Foundation conducted a pandemic exercise based on the scenario of a deadly novel coronavirus. The exercise identified significant gaps in the world’s pandemic preparedness and led to a number of recommendations, which can be accessed here: http://www.centerforhealthsecurity.org/event201/event201-resources/200117-PublicPrivatePandemicCalltoAction.pdf. The document is useful as readers seek to enumerate the economic risks that a deadly pandemic can entail.

The less prepared that nations, international organizations, businesses, and NGOs are for a pandemic, the greater the economic risk that communicable disease threats pose. Preparedness or lack thereof is also a key part of risk calculation.

We continue to monitor the news flow and market risk attached to the 2019-nCoV virus vector. We have made no changes yet in portfolios in our US ETF or quantitative strategies.

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.

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.




Cumberland Advisors Market Commentary – No Conspiracy at St. Louis Fed.

In my opinion the speculation about a conspiracy at the St. Louis Fed may be fodder for internet speculation, but it is simply not true. There is coincidence in timing of unrelated announcements.  We believe it is pure coincidence.

Market Commentary - Cumberland Advisors - No Conpiracy at St. Louis Fed

Here’s the fact set.

1. On January 16, 2020, the St. Louis Fed discontinued the series entitled “Adjusted Monetary Base.” This series of data (eight separate time series) has a very long history and was regularly used by many market practitioners. It was one of the series that led to negative or bearish conclusions by many active market practitioners. On the same date, the St. Louis Fed also discontinued the “Adjusted Reserves” series. This move is consistent with the first discontinuance and stopped another eight lines of data.

2. Nearly Coincident with the discontinuance, the Trump administration officially advanced Christopher Waller’s name for a vacant position on the Board of Governors of the Federal Reserve. Waller is the EVP and director of research at the St. Louis Fed. The administration also nominated Judy Shelton, US executive director for the European Bank for Reconstruction and Development. For months, Waller and Shelton had been informally discussed as potential Trump appointees, so the official action was not a surprise. The timing of announcement was a surprise to some folks.

3. Coincident with these events, some in the financial press speculated that St. Louis Fed President James Bullard was a possible contender for consideration as Fed chairman in a second Trump term. Trump has repeatedly bashed Fed Chair Powell. Bullard was a dissenter on a policy vote at a time when Trump was advocating more Fed easing and Bullard was taking a “dovish view”. All this is a matter of established record. The press speculation surfaced because Judy Shelton, a former Trump campaign advisor who has called for lower interest rates and more coordination between the Fed and other parts of the government, has also been a target of such media discussion. So her nomination triggered another round of speculative press comments on whether she or someone else may succeed Jay Powell in a Trump second term.

4. The St. Louis Fed has discontinued data series many times. Readers can go to the St. Louis Federal Reserve Bank’s website and search on the term discontinued and see the list. Also, the Fed doesn’t always issue an immediate explanation as to why a series is discontinued. A search of the website found no release or advisory about the discontinued “Adjusted Monetary Base” series, but that is not unusual.

5. The St. Louis Fed is a frequently used source of data worldwide. The reserve bank’s FRED database is held in the highest regard by economics and financial-market practitioners. The bank is believed to hold itself scrupulously above political influence, and its managers and staff are professionally dedicated to accuracy and transparency. I personally believe that is the case.

So what’s the big deal?

Detractors try to lump Trump, Bullard, Waller, and the data series discontinuance together in a conspiracy theory. I don’t believe it. They argue that the data series casts the economy in a negative light and is damaging to Trump politically. Maybe it is and maybe not; but it has widespread use (or it did), and the indicators did point in negative directions.

I think that the timing was, in fact, merely coincidental and that Jim Bullard and Chris Waller may not have even known about the timing of the discontinuance. Or they may have seen some internal note at the bank and may not have paused to reflect on how every single item in central banking is highly politicized these days. Given this reality, the public affairs folks in the reserve banks might do well to issue an explanation when they change a data series or discontinue it.

My friend and fishing buddy Doug Ramsey, at the Leuthold Group, writes, “This isn’t the first time the Fed has erased its footprints. Near the end of QE, the Fed discontinued dozens of data series related to bank reserves, including a long-time favorite among stock market students called ‘Net Free Reserves.’” Doug also guesses that this discontinuance is the work of a “staffer or young economist.”

Here’s my bottom line.

There’s no cabal or conspiracy at the St. Louis Fed. It is true that Fed’s communications policy was not sensitive to the intense scrutiny and could have improvement. This is true at the Board of Governors in Washington and at the twelve regional reserve banks. The Fed could introduce a notice or survey period before making changes in data or when discontinuing a series. This notice is especially needed for those series used by market practitioners. In the case of the “Adjusted Monetary Base,” we’re talking about a series with a 100-year history and many prominent data users.

In my view, To cast aspersions about Bullard or Waller or others in the Fed is to take advantage of asymmetric media speculation. First, these officials should not respond to such speculation, and that makes them convenient targets for political detractors. Second, there is no evidence to suggest that the Fed’s very high ethical standards have been compromised. Last, it would be most helpful if certain Washington politicians stopped bashing the central bank in social media. That ill-informed bashing clearly doesn’t alter the policy decisions of the central bank, nor should it. And it clearly does introduce highly charged political invective that further damages the political and social compact on which the success of our nation depends.

I’ve personally found the St. Louis Fed to be very responsive to any questions and would recommend any reader take them to the Fed via the St. Louis Fed website: https://www.stlouisfed.org

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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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.




Cumberland Advisors Week in Review (Jan 13, 2020 – Jan 17, 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

 



Rosenberg Research Report (Jan 06, 2020) – The Year Ahead 2020

Author: David R. Kotok, Post Date: January 16, 2020

Market-Commentary-Large-LinkedIn-Guest-Commentary

My friend and fishing buddy David “Rosie” Rosenberg has launched his own eponymous economic consultancy. Here’s his website link: https://www.rosenbergresearch.com. Rosie has given us permission to share his year-end review with our readers. Here’s a thought-provoking trove of information and we provide a small excerpt below (full review including charts is in linked PDF). If […]

Puerto Rico Earthquakes – Insult to Injury

Author: , Post Date: January 15, 2020

Market Commentary Puerto Rico For the people of Puerto Rico, natural disasters have become all too commonplace. Two years ago there was Hurricane Maria, which claimed thousands of lives and caused billions in damages. Now the island has experienced a series of earthquakes (the largest being a magnitude 6.4), which have again caused destruction and again brought fear and […]

The Trade Policies

Author: Robert Eisenbeis, Ph.D., Post Date: January 14, 2020

Cumberland Advisors' Robert "Bob" Eisenbeis, Ph.D. Beginning in 2018, in a long sequence of actions, the US enacted tariffs on goods from a number of countries besides just China. In some cases the affected countries responded with their own retaliatory tariffs on US products. As a consequence of the timing and the short periods that many of the tariffs have been […]

2019: Bonds Roar Back

Author: John R. Mousseau, CFA, Post Date: January 13, 2020

2019 Bonds Roar Back 2019 saw bond yields turn around from their climb in 2018 and move lower. Since the Federal Reserve changed their language last December to being accommodative and data-driven, we have seen yields across the board come down a lot. There is no question that this drop in yields was driven, in large part, by what […]

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


In Case You Missed It…

Clams or Gold

Author: Robert Eisenbeis, Ph.D., Post Date: July 12, 2019

Cumberland Advisors' Robert "Bob" Eisenbeis, Ph.D. Johnny Hart, the creator of the comic strip BC, created an economy in which clams served as currency. Clams were plentiful, so no one ran out of currency, except that an occasional clam had cartoon legs and opted for a different career. A currency in the form of a good is of course nothing new [Continued…]

Clams Or Gold Responses

Author: Robert Eisenbeis, Ph.D., Post Date: July 23, 2019

Market-Commentary-Large-LinkedIn-Guest-Commentary We received several comments from readers concerning some of the key points in our recent commentary “Clams or Gold.” Below is an abbreviated version of the questions, to which responses are then supplied. Comment: You may have seriously misled readers because both the purity of the official gold bullion and measurement of ounces have remained [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.

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.




Cumberland Advisors Guest Commentary – Rosenberg Research Report (Jan 06, 2020) – The Year Ahead 2020

My friend and fishing buddy David “Rosie” Rosenberg has launched his own eponymous economic consultancy. Here’s his website link: https://www.rosenbergresearch.com.

Rosenberg Research

Rosie has given us permission to share his year-end review with our readers. Here’s a thought-provoking trove of information and we provide a small excerpt below (full review including charts is in linked PDF).

If you like what you see, he is offering a 30-day trial. The website will tell you what to do.

We wish our friend good luck and thank him for allowing us to introduce him to our readers.

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


2019 IN CONTEXT: RALLIES EVERYWHERE!

I have to admit that this is right up there with the most challenging ‘year-aheads’ I have ever prepared. The similarities to year-end 2007 and today are remarkable, as are the differences. The confidence bands around any forecast at any time are typically wide, but they are wider now than in 2008.

Back in December 2018, the market had experienced an abrupt 20% decline as the trap door opened underneath the equity market. The panic seemed like the beginning of the end of the bull market and economic expansion. Perhaps it was. Most stocks were heading into bear market terrain, and the credit markets absolutely froze right up. The combination of global trade friction, and the last Fed tightening move of the cycle, conspired to generate a risk-off investment backdrop that didn’t come to a complete halt until Jay Powell and crew issued a mea culpa of sorts shortly thereafter. If you recall, it was leaked that Treasury Secretary
Mnuchin was on the phones talking to the major banks, in a sign that the fabled ‘plunge protection team’ was getting ready to put a floor under the situation. The rally back to the highs was as breathtaking as the plunge was ominous.

There has never been a year in modern history like we saw in 2019. The safe-havens rallied, with gold up 18% and the long Treasury bond delivering a near-18% total return. And the pro-cyclical asset classes also rallied in size, with the S&P 500 triggering a total return of over 30% and Baa credit spreads tightening by more than
70 basis points in the corporate bond market. I should add in the oil price jumping more than 30%, though this was much more of a supply story than one of global demand.

While the equity market recovery suggests that it was a mistake to have believed it was the end of the economic expansion a year ago, Treasury bonds have proven to be a great place to invest through 2019. Economic fundamentals also fly in the face of the new equity market highs that have occurred since the trough at the very
end of 2018. <Continued…>

Continue reading the Rosenberg Research Report in PDF form here: https://www.Cumber.com/pdf/Rosenberg-Research-Report-(Jan-06,-2020)-The-Year-Ahead-2020.pdf


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.




Market Commentary: Puerto Rico Earthquakes – Insult to Injury

For the people of Puerto Rico, natural disasters have become all too commonplace. Two years ago there was Hurricane Maria, which claimed thousands of lives and caused billions in damages.

Market Commentary Puerto Rico

Now the island has experienced a series of earthquakes (the largest being a magnitude 6.4), which have again caused destruction and again brought fear and uncertainty. Our hearts go out to the people of Puerto Rico, our fellow Americans. The devastation hits especially close to home for Cumberland as many of our employees have family that call the island their home.

Governor Wanda Vazquez has declared a state of emergency. Total damage estimates remain uncertain at this point, though the damage is likely much more limited than the devastation Maria caused. The initial damage estimate of $110 million was made after the magnitude 6.4 quake that shook the island on Tuesday, January 7th, but before the 5.9 quake that followed on Saturday, January 11th, along with numerous other aftershocks. Time will tell the longer term damages to the island’s economy and future.

According to FEMA, President Trump has approved an emergency declaration, allowing direct federal assistance for emergency measures to protect lives, property, and public health. The Commonwealth awaits a major disaster declaration from the president. Federal dollars will likely flow to the Commonwealth to rebuild what has been damaged or destroyed. The rebuilding that occurs after a disaster and the flow of federal dollars, insurance proceeds, and additional workers generally boosts the economic activity of an area. That expectation is being borne out by the better-than-expected revenues the Commonwealth has clocked post Maria. The resilient folks on the island will move forward together and find ways to adapt.

Power and water have been restored to many, but the systems remain fragile, and power in some areas was lost again after Saturday’s 5.9 quake. The United States Geological Survey (USGS) is forecasting a 68% probability of a magnitude 5.0 earthquake in the coming week, with aftershocks to continue, at a decreasing frequency, for the next 30 days. So the island isn’t out of the woods yet.

For Cumberland’s Insured Puerto Rico Strategy the earthquakes are less significant. To note that fact is not to downplay the damage to both people and property. Our strategy depends on the financial health of carefully selected municipal insurers. In particular, Assured Guaranty has significant claims-paying resources and is proactive in its approach to managing its book of business, including its exposure to Puerto Rico. We continue to believe the insurers utilized in the strategy remain sufficiently capitalized and able to pay principal and interest when due.

Patricia M. Healy, CFA
Senior Vice President of Research & Portfolio Manager

Shaun Burgess
Portfolio Manager & Fixed Income Analyst


Upcoming Virtual Event

Is Productivity Growth Dead?
Structural and Cyclical Factors Impacting Growth Discussed

David Kotok invites you to join the Global Interdependence Center for a live Virtual Event webcast that will explore why labor productivity is so weak and what policy and economic factors are likely to impact future productivity growth.

Date: Thursday, January 23, 2020 Time: 12:00 PM – 12:30 PM

GIC welcomes Jeffrey Korzenik, Chief Investment Strategist & Senior Vice President, Fifth Third Bank, and Donald Rissmiller, Founding Partner of Strategas and GIC Chairman Emeritus, who will offer their insights on this important economic topic. The call will be moderated by Bill Kennedy, GIC Vice Chair of Programs.

The audio for this virtual event will be conducted via the web and telephone dial-in from 12:00 p.m. Eastern/9:00 a.m. Pacific/5:00 p.m. London. Q&A and presentation materials will be made available during the call via the web. Dial-in information will be distributed via email in the days leading up to the event.

Speakers:
Global Interdependence Center live Virtual Event: Is Productivity Growth Dead?

Complimentary Registration: https://www.interdependence.org/events/is-productivity-growth-dead/


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.




Cumberland Advisors Market Commentary – The Trade Policies

Beginning in 2018, in a long sequence of actions, the US enacted tariffs on goods from a number of countries besides just China. In some cases the affected countries responded with their own retaliatory tariffs on US products.

Cumberland Advisors' Robert "Bob" Eisenbeis, Ph.D.

As a consequence of the timing and the short periods that many of the tariffs have been in place, the data available to assess the tariff impacts are relatively limited in terms of the products impacted and other economic factors like consumption and employment. The scope and scale of the tariffs have been large, with a total of over 20,000 products (12,043 imports and 8,073 exports) amounting to over $400 million in goods being impacted [4](I)(II). Because of this, there has been a recent explosion of research designed to assess the impacts that the recent series of tariff restrictions and changes have had on various segments of the US economy.

The purpose of this commentary is to summarize what the most current research shows the impacts of the 2018–2019 tariffs to be. No attempt is made to assess the wisdom of the current tariff policies; our aim is instead to provide evidence in an effort to improve the quality of the debate. We purposely do not review the past historical work on tariffs and instead concentrate on empirical work completed and/or published during 2019 in order to consider only the most recent evidence on the current round of tariffs. In addition, we only discuss research conducted by academic researchers and those from policy-neutral organizations like the Federal Reserve System. The unique feature of most of this work is the large micro-time series data sets employed, which cover a large number of products on either a weekly or monthly basis. Finally, the work by necessity looks at the short-term impacts. Some of the work also attempts to project longer-term impacts using econometric models; however, the results are mainly suggestive and not as definitive as the short-term results are. The work focuses on three primary impact channels: efforts to provide protection for domestic industries, impacts of increasing costs for imported inputs to production, and competitive effects of retaliatory tariffs on both domestic and overseas markets.

The current tariff “war” began on January 23, 2018, when the US imposed a 30% tariff on solar panels and 20–50% tariffs on washing machines. China is the leading producer of solar panels and is also the largest exporter of washing machines to the US, followed by Mexico and South Korea. The first study of the current round of tariffs focused on washing machines and has probably the longest data series to date on a single good [7](III). Through December 2018 the authors found that the US tariffs resulted in an 11% increase in the price of washing machines and, interestingly, an 11% increase in the price of dryers, which are complementary goods, even though there were no tariffs imposed upon dryers. This percentage translates into an estimated $86 increase in the price of washers and a $92 increase in the price of dryers, or about $1.5 billion annually. Interestingly, the price increases were not limited to imports: The prices of domestically produced brands also increased from 5% to 17%. As a result of the tariffs, the domestic production of washing machines increased, resulting in job growth within the US, but at a cost. Comparing the increased tariff revenues on about $82 million netted against the increased cost to consumers of washing machines, the authors estimated that the net tariff-adjusted costs were about $817K per job annually[7].

Subsequent studies have taken a broader look at the impacts of US tariffs in an attempt to determine (a) the effects on prices paid by US consumers, (b) the impacts on goods prices resulting from retaliatory tariffs, (c) the distribution effects of tariffs on industries and sections of the country, (d) the impacts on domestic employment, and (e) the costs to producers to reorganize supply chains to utilize potentially cheaper sources (termed dead-weight loss). Each of these is considered below.

All of the studies reviewed that considered the impacts of tariffs on imported goods prices concluded that the tariff costs imposed by the US were nearly 100% passed on in the form of higher costs and were absorbed in part by importers and in part by U.S. consumers, but were not paid by goods exporters to the US [1,2,3,4,5,6,7](IV). It was estimated that imports of varieties (goods and their close substitutes) declined by about 32% while imports of those goods specifically targeted by tariffs declined by about 2.5%. In dollar terms, imports declined about $51 billion, or about 0.27% of GDP.[4] To be sure, some domestic producers did benefit from the tariff protections, but those gains appear to have been offset by losses to other producers.
When retaliatory tariffs were put in place, especially those imposed by China, US exports on those goods exposed to tariffs were reduced about 75%, of which China accounted for about 50–60%, or about $15 billion through the end of 2018 [5]. But on balance, considering both the gains to protected producers and costs due to higher import costs, there was a net loss to the US of about $7.2 billion, or 0.04% of GDP, which in the aggregate is small relative to the size of the US economy [5]. In terms of incremental costs to consumers, it is estimated that the 2018 tariffs increased costs to consumers in two ways – the increase in prices cost $282 per household annually, and efficiency losses added an additional $132 per household for a total of $414 per household per year [1]. The proposed additional 2019 tariffs on another $200 billion of goods are estimated to cost an additional $831 per household per year [1]. On a more micro level, a study comparing the effects of China’s retaliatory tariffs on economic outcomes at the county level found evidence of significant negative effects on consumption, employment, and exports for those counties with relatively higher production of goods that were exposed to the tariffs compared to counties with low exposure. The quantitative estimates implied a negative impact on consumption of from minus $20 billion to minus $54 billion and a reduction in consumption per worker of from minus $630 to minus $1600 based upon model confidence intervals.[10] One clear conclusion is that tariffs had distributional impacts, with both winners and losers being impacted, and the losses were broad-based but disproportionately affected the Midwest due to retaliatory tariffs. [4]
Two other current studies also addressed the impacts of the tariffs on employment and wages [6,9]. One of these studies focused on the impacts of the tariffs on manufacturing, and the results suggested that, on balance, employment was negatively impacted and was down about 1.4% [6]. The other study estimated that employment was negatively impacted by about 199,000 full-time jobs and that the imposition of retaliatory tariffs cost an additional 41,000 jobs [9].

The work so far suggests that the current round of tariffs and the retaliatory responses have imposed numerous costs on US consumers and our economy in the form of higher prices, welfare losses, and reduced employment. Virtually every county in the US has been negatively impacted in some way [4,10]. Also, there is evidence that the counties that have been most negatively impacted by retaliatory tariffs were specifically targeted for political reasons by the foreign countries that applied the tariffs on US exports [5]. Furthermore, the areas most impacted were in the central Midwest [5]. Admittedly, the work so far has by necessity focused on the short-term impacts of the tariffs, and we will have to wait to see what the second- and third-round effects ultimately turn out to be as producers and importers adjust their supply chains and develop new markets for goods. The one positive is that the overall quantitative impacts on GDP are small to date because trade is a small portion of GDP and the affected goods are a small portion of that trade. However, this fact in no way minimizes the significance of the costs to those firms whose markets have been disrupted or destroyed or to the citizens who have lost their jobs.

Robert Eisenbeis, Ph.D.
Vice Chairman & Chief Monetary Economist
Email | Bio

To ensure that we have not missed important work on tariffs, we encourage readers to send unbiased references and papers that can be incorporated into updates of this initial tariff assessment.

  1. (1.)Amiti, M., S. J. Redding, and D. Weinstein (2019a): “The Impact of the 2018 Trade War U.S. Prices and Welfare,” Working Paper 25672, National Bureau of Economic Research.
  2. (2.)Amiti, M., S. J. Redding, and D. Weinstein (2019b): “New China Tariffs Increase Costs to U.S. Households,” Liberty Street Economics, Federal Reserve Bank of New York, May 23, 2019, https://libertystreeteconomics.newyorkfed.org/2019/05/new-china-tariffs-increase-costs-to-us-households.html.
  3. (3.)Cavallo, A., G. Gopinath, B. Neiman, and J. Tang (2019): “Tariff Passthrough at the Border and at the Store: Evidence from US Trade Policy,” Working Paper 26396, National Bureau of Economic Research.
  4. (4.)Fajgelbaum, Pablo D., Pinelopi K. Goldberg, Patrick J. Kennedy, and Amit K. Khandelwal. 2019. “The Return to Protectionism,” National Bureau of Economic Research Working Paper 25638.
  5. (5.)Fetzer, Thiemo and Carlo Schwarz, “Tariffs and Politics: Evidence from Trump’s TradeWarsk,” CESIFO Working Paper 2019-7553 (online publication), October 2019.
  6. (6.)Flaaen, A. and Justin Pierce, “Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector,” Finance and Economics Discussion Series, Divisions of Research and Statistics and Monetary Affairs, Federal Reserve Board, 2019-086.
  7. (7.)Flaaen, A. B., A. Hortac¸ and F. Tintelnot (2019): “The Production Relocation and Price Effects of U.S. Trade Policy: The Case of Washing Machines,” Working Paper 25767, National Bureau of Economic Research.
  8. (8.)Thiemo Fetzer and Carlo Schwarz, “Tariffs and Politics: Evidence from Trump’s Trade Wars, CESIFO Working Paper No. 7553, October 2019.
  9. (9.)York, Erica, “Tracking the Economic Impact of U.S. Tariffs and Retaliatory Actions,” Tax Foundation, December 16, 2019, https://taxfoundation.org/tariffs-trump-trade-war/.
  10. (10.)Waugh, Michael, “The Consumption Response to Trade Shocks: Evidence from the US-China Trade War, NBER Working Paper 26353, National Bureau of Economic Research, December 2019.
(I) For a detailed breakdown of the series of tariffs imposed by the US, see https://en.wikipedia.org/wiki/Trump_tariffs.
(II) The retaliatory tariffs have on agricultural products have been well documented, but there has been little academic research looking specifically at the impacts that we have been able to discover.  Therefore, the impacts of those tariffs are not discussed at this time.
(III) The authors note several advantages of focusing on washing machines, including the nature of the product, the fact that there was a clear complementary good in the form of dryers, and the relative concentration of production in only a few countries [6].
(IV) The studies differ to some extent as to the split between how much of the costs were absorbed by importers and how much was passed on to consumers. The differences are explained in part by differences in the goods that were targeted, the availability of substitute goods, the extent to which the targeted products were inputs to the production of final goods as opposed to final goods themselves, and the degree to which producers could change production facility locations to avoid the tariffs.

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.




Cumberland Advisors Market Commentary – 2019: Bonds Roar Back

2019 saw bond yields turn around from their climb in 2018 and move lower. Since the Federal Reserve changed their language last December to being accommodative and data-driven, we have seen yields across the board come down a lot.

2019 Bonds Roar Back

There is no question that this drop in yields was driven, in large part, by what were low or negative yields in Europe and Japan. The 10-year Treasury started the year at 2.70% and ended the year at 1.90% after making a low in early September at 1.45%.

The drop in Treasuries in the latter part of the summer was dramatic. We saw the 10-year Treasury move from a 2% yield to 1.50% in the space of two weeks as US yields moved to catch up on the downside with European and Japanese yields.

Muni yields also saw a significant drop in the year, with 10-year AAA muni yields moving from 2.28% to 1.44% and 30-year AAA munis moving from 3.02% to 2.09%. The drop in muni/Treasury yield ratios was impressive, with the 10-year yield ratio moving from 84% to 76%; but just as impressive was the 30-year muni ratio/Treasury’s moving from 100% to 88%.

What are some of the takeaways?

* The flattening Treasury yield curve – which was such a source of concern in the summer – unflattened. As we have written, we never saw the flattening curve as much of a concern, because it was accompanied by long yields falling as opposed to short-term yields being jacked up by the Fed. Indeed, the Treasury yield spread between the 2-years and 10-year has risen from a minus 5 basis points in late summer to 26 basis points currently.

* Inflation has remained steady. Core inflation began the year at 2.2%. The trailing twelve-month is 2.3% as of November. This means that the 10-year bond REAL yield went from +50 basis points to -40 basis points currently. We know that negative REAL yields generally don’t last. They didn’t last in 2016, and we don’t think they’ll last now. Election years tend to be volatile in that regard.

10yr US Treasury Yield vs Core CPI

* The muni story was impressive. Not only did ratios drop, but muni supply ended up an impressive $424 billion after 2018’s $338 billion. The increase really came from two sources. Issuers took advantage of low rates just to sell new money, locking in almost historically low long rates. But we also saw a phenomenon that wasn’t being considered in the higher interest-rate environment of 2018. That is, issuers used the taxable bond market to advance refund older higher-coupon debt, to the tune of $70 billion taxable issuance in 2019. The 2017 tax bill took away tax-exempt advance refundings. However, with the drop in rates, many issuers could issue taxable paper and refund bonds that might have had 4.5%+ original yields and 2–3 years left to call dates. The cost savings on out years more than make up for the negative interest-rate differential between taxable muni rates and Treasury rates.

* Demand continued to be voracious for munis in high-tax states such as California, New York, and New Jersey. The 2017 tax bill eliminated deductions for state income taxes and local property taxes, so there are few places other than munis from which to get a tax-free income flow. Also, bond fund inflows were dramatically higher than in 2018. We expect this demand to continue, although shorter-term tax-free yields are very expensive – look at the end of the year shorter-maturity ratios in the mid-60 percentiles!

* The terrific stock market of 2019 (S&P up 31%) bolstered municipal pensions. But the lower interest rates will hurt discounted liabilities as well as assumed returns going forward.

As we move into 2020, the negative real yields in Treasuries are causing us to play defense in bonds. That means a continuation of a barbell strategy, with some longer paper offset by shorter defensive structures. Given that the Federal Reserve cut the fed funds target three times in 2019 (the rate now sits at a target range of 1.50–1.75), we feel the Fed will play a pat hand for the most part in 2020, in part because they want to see what the effects of their rate cuts are and also because, in an ideal world, they would like to stay out of the political fracas.

Presidential election years are always interesting and usually volatile. We will keep everyone informed.

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




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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Cumberland Advisors Market Commentary – ESG Investing. Also Brazil.

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 target objectives. That also means an allocation away from the bad actors who fail to qualify with high ESG scores.

Market Commentary - Cumberland Advisors - ESG

At Cumberland, three ETFs that we include in our US-focused ETF portfolio are focused on water, solar, and wind power. It is important to note that there are a number of choices in the ETF space and diligent research is needed to dig into the underlying securities. One example of a rejection we made is a so-called environmental fund that purports to hold a heavy weight in electric utilities. When we dug deeply, we found indirect exposure to coal-fired power plants as a generation source. Who’s kidding whom? The same care is needed in the electric vehicle space, where a company’s policy around charging stations may create a favorable location developed by a coal-fired power source. That may make the car owner “feel good” about ESG, but the seriousness of the environmental issue is violated if the electricity is furnished by a polluting generator.

The country governance test can be even more difficult. Cumberland looks at various metrics in determining where we take on exposure. Of course, a lot of this research is necessarily subjective, and that is particularly true in the emerging markets. A new ETF was recently launched that tries to quantify governance risk in the portfolio. The symbol is FRDM, and the full name is Alpha Architect Freedom 100 Emerging Market ETF. FRDM describes itself as follows:

“FRDM follows the theme of ‘life and liberty.’ The fund examines emerging markets stocks for factors by which its index measures this theme. In measuring the right to life, the listed factors include absence of terrorism, human trafficking, torture, and political detentions. For measuring liberty, the fund uses the following factors: rule of law, due process, freedom of the press, freedom of religion, and freedom of assembly. Lastly, to gauge property, the factors are marginal tax rates, access to international trade, business regulations, established monetary and fiscal institutions, and size of government. Based on the above factors, FRDM selects 100 securities for inclusion.”

We do not currently hold FRDM in managed accounts because we have certain seasoning rules and liquidity requirements and the ETF is too new for us to take on a position. However, our managed ETF international accounts own some of the same countries and I own some personally.

Now let’s get to a bad actor and the ongoing saga of poor governance.

We continue to monitor reporting on the destruction of the Brazilian rainforest and the political and scientific response to it in Brazil, the US, and elsewhere in the world.

Let’s start with a newly published study by Thomas Lovejoy of George Mason University and Carlos Nobre of the University of Sao Paulo, as reported in the Washington Post on Dec. 20, 2019. Their decades-long research now strongly indicates that the Amazon has come to a tipping point, beyond which deforestation and other rapid changes in the Amazon threaten to turn large areas of the rainforest into savanna, devastating indigenous cultures and wildlife and releasing additional billions of tons carbon into the atmosphere.

“The precious Amazon is teetering on the edge of functional destruction and, with it, so are we. Today, we stand exactly in a moment of destiny: The tipping point is here, it is now,” the scientists wrote in an editorial in the journal Science Advances. (“Top scientists warn of an Amazon ‘tipping point’,” https://www.washingtonpost.com/climate-environment/top-scientists-warn-of-an-amazon-tipping-point/2019/12/20/9c9be954-233e-11ea-bed5-880264cc91a9_story.html)

An article from NASA’s Earth Observatory gives us a deeper, more detailed picture of the progression of the devastation of the Amazon, drawing on Landsat satellite data. The article explains, “Landsat has taken a snapshot of every part of the Amazon rainforest every two weeks for 47 years, creating the world’s longest, most consistent record of change in the region.” In the 2000s NASA also conducted the Large-Scale Biosphere-Atmosphere Experiment in Amazonia (LBA), which studied how Amazon ecosystems are interconnected and how they react to rapid deforestation, climate change, and drought cycles. (“Making Sense of Amazon Deforestation Patterns,” https://earthobservatory.nasa.gov/images/145888/making-sense-of-amazon-deforestation-patterns?src=eoa-iotd – hat tip to reader David Kruschwitz)

In a Nov. 22, 2019, interview with Science magazine, Philip Fearnside, a scientist at Brazil’s National Institute of Amazonian Research, stated that while development in the Amazon, most of it illegal, destroyed more than 9700 square kilometers of rainforest in the year ending in July – an increase of 30% from the previous year and the highest level of deforestation since 2007–08 – the additional damage that has occurred since August 1 now totals at least 3929 square kilometers, putting deforestation for the 2019–2020 fiscal year on track to be even worse than last year’s. (“Brazil’s deforestation is exploding – and 2020 will be worse,” Science, Nov. 22, 2019, https://www.sciencemag.org/news/2019/11/brazil-s-deforestation-exploding-and-2020-will-be-worse)

Presumably, this interview put Dr. Fearnside at some professional risk, since his colleague Dr. Ricardo Galvão was ousted as director of Brazil’s National Institute for Space Research (INPE) on Aug. 2, after he went head to head with President Jair Bolsonaro over the validity of satellite data that revealed the accelerated deforestation. (“Brazilian institute head fired after clashing with nation’s president over deforestation data,” Science, Aug. 4, 2019, https://www.sciencemag.org/news/2019/08/brazilian-institute-head-fired-after-clashing-nation-s-president-over-deforestation)

Bolsonaro’s most recent pronouncement on the degradation of the Amazon is that “Deforestation and fires will never end; it’s cultural.” (“Brazil’s Bolsonaro calls Amazon deforestation ‘cultural,’ says it ‘will never end’,” Washington Post, Nov. 20, 2019, https://www.washingtonpost.com/world/the_americas/brazils-bolsonaro-calls-amazon-deforestation-cultural-says-it-will-never-end/2019/11/20/ba536498-0ba3-11ea-8054-289aef6e38a3_story.html)

In response to the fires and international pressure over them, Bolsonaro called out the Brazil Armed Forces, which operated until Oct. 24 and, according to the Defense Ministry, made 127 arrests, resulting in more than $33 million in fines. However, the operation also allowed the Armed Forces to further consolidate its already extensive presence in the region. (“After Brazil’s Summer of Fire, the Militarization of the Amazon Remains,” Foreign Policy, Nov. 19, 2019, https://foreignpolicy.com/2019/11/19/militarization-amazon-legacy-brazil-forest-fire-bolsonaro/)

There has been political backlash against Bolsonaro and the fires, both in Brazil and around the world. Brazilian ex-president Luiz Inácio Lula da Silva has decried the Bolsonaro administration’s environmental and social policies and vowed to “battle for democracy.” Lula, who was released from prison just two weeks ago after serving a sentence on corruption charges that he and his supporters claim were trumped up, told The Guardian, “Bolsonaro has already made clear what he wants for Brazil: he wants to destroy all of the democratic and social conquests from the last decades.” (“Exclusive: Bolsonaro is turning back the clock on Brazil, says Lula,” The Guardian, Nov. 22, 2019, https://www.theguardian.com/world/2019/nov/22/exclusive-bolsonaro-is-turning-back-the-clock-on-brazil-says-lula-da-silva)

As for the official US response, we can only point to the fact that when Bolsonaro addressed the UN General Assembly on September 24, 2019, in New York (claiming that the Amazon “remains pristine and virtually untouched,” that Brazil is one of the best countries in the world at protecting its own environment, and that fires are not destroying the Amazon), he said he was “especially grateful” to President Trump for his support over the fires. “[President Trump] well epitomized the spirit that must prevail among UN member states: respect for the freedom and sovereignty of each of us,” he said. (“Brazil’s president attacks Amazon rainforest ‘lies’ and thanks Trump for support,” CNBC, Sept. 25, 2019, https://www.cnbc.com/2019/09/24/brazils-president-attacks-amazon-rainforest-lies-thanks-trump.html)

Now consider this irony. Trump and Navarro launch a trade war, and the most efficient world exporter of soybeans is stymied. The US held that efficient producer/exporter position before Trump’s trade war got in the way. The trade war encourages the Chinese capital flows to Brazil to finance soybeans, giving the Chinese a less confrontational source. Hence the burning of Brazilian forests is accelerated, to create more land for agriculture and the export of soybeans to China.

Meanwhile, the US expands it budget to send taxpayer money to American farmers as a subsidy because they are denied income by the trade war. Most of the farms receiving this aid are large ones rather than family farms, and American farm bankruptcies are up 24% despite the aid (“Farm Bankruptcies Rise Again,” https://www.fb.org/market-intel/farm-bankruptcies-rise-again). Trump’s tariffs are having significant effects on overall US GDP, jobs, and wages, too. See “Tracking the Economic Impact of U.S. Tariffs and Retaliatory Actions,” Tax Foundations, Dec. 16, 2019, https://taxfoundation.org/tariffs-trump-trade-war/.

Further complicating matters, on Dec. 2 Trump reinstated tariffs on steel and aluminum from Argentina and Brazil, criticizing the countries for devaluing their currencies to hurt US farmers. However, his action fails to account for the fact that in the first 10 months of 2019, Brazil shipped $25.5 billion in farm products including soybeans and pork to China – more than 10 times the value of steel and iron products sold to the US. (“Trump Ties Brazil, Argentina Steel Tariffs to U.S. Farm Woes,” Bloomberg, Dec. 2, 2019, https://www.bloomberg.com/news/articles/2019-12-02/trump-to-restore-tariff-on-steel-shipped-from-brazil-argentina-k3obsetn)

Think about the US-China-Brazil dynamic in the longer term. The forests in Brazil take generations to regenerate (if they are not lost forever). The capital investment made in Brazil by the Chinese is longer-term, so that the competitor we created is now in place with a large sunk cost. Now what happens if there is a trade settlement, and US soybean farmers try to sell to China again but run up against a strong new competitor in Brazil?

In a further irony, Bloomberg reports that Brazil is counting on demand for “green” debt by global investors to help raise funds for large infrastructure projects, including a multi-billion-dollar railway across a portion of the Amazon. In the past, Brazil has also used “green” securities to finance agricultural exports. (“Brazil Hopes Green Debt Will Help Fund $3.1 Billion Amazon-Crossing Railway,” Bloomberg, Nov. 28, 2019, https://www.bloomberg.com/news/articles/2019-11-28/brazil-hopes-green-debt-market-will-fund-amazon-crossing-railway)

Brazil is also now seeking international aid in preserving its forest while at the same time promoting economic and social development in the Amazon. On Nov. 20, Environment Minister Ricardo Salles said Brazil would call on rich nations at the United Nations COP25 conference, held Dec. 2–13, 2019, in Madrid, to provide $100 billion a year to help Brazil and other developing nations preserve their natural resources, as promised under the 2016 Paris Agreement. (“Brazil to Ask Rich Countries to Help Pay for Amazon Protection,” The Wall Street Journal, Nov. 20, 2019, https://www.wsj.com/articles/brazil-to-ask-rich-countries-to-help-pay-for-amazon-protection-11574278849?mod=searchresults&page=1&pos=6) However, along with the many other failures to act at COP25, little was done to advance the fund. Instead, a work group was formed to take up the issue again next year. Vulnerable nations were said to be appalled at this lack of progress. (“COP25: Self-serving G20 spites youth, humanity, world at climate talks,” Mongabay, Dec. 17, 2019, https://news.mongabay.com/2019/12/cop25-self-serving-g20-spites-youth-humanity-world-at-climate-talks/)

The issues we raise are global in scope; and they are complex, both in geophysical, geopolitical, and moral terms. We may criticize the behavior of the Brazilians or the Chinese; but, along with the Brazilians and the Chinese, we continue to increase our greenhouse gas emissions. The gap between those growing emissions and the levels that would be necessary to rein in global warming are the subject of the United Nations “Emissions Gap Report,” the 2019 edition of which was issued on Nov. 26. (“10 things to know about the Emissions Gap 2019,” UN Environment Programme (UNEP), https://www.unenvironment.org/news-and-stories/story/10-things-know-about-emissions-gap-2019)

The US’s per capita emissions are greater than those of any other nation and twice as high as China’s. Our emissions were reduced by 20% over the past two decades but have been on the rise again since 2017.

Financial Times Image - Greenhouse Gas Emitters
Source: Financial Times, https://www.ft.com/content/30d2692a-0faa-11ea-a225-db2f231cfeae

The worsening of carbon dioxide emissions is, of course, not the only environmental problem exacerbated by the rollback of regulatory enforcement and protection during the Trump Administration. Writing on the Medium site, Andrew Winston cites data from a National Bureau of Economic Research study on particulate matter air pollution in the United States. The Oct. 2019 study determined that “eroding air quality was linked to nearly 10,000 additional deaths in the U.S. relative to the 2016 benchmark.” (“The Biggest News and Health Story in the U.S. That Nobody Paid Attention To,” Medium, Nov. 26, 2019, https://medium.com/@AndrewWinston/the-biggest-news-story-in-the-u-s-that-nobody-paid-attention-to-904ca67d6b34)

Washington Post Image - Air Pollution

We may count ourselves fortunate that in this country we have government and private institutions that can bring serious scientific expertise to bear in analyzing the environmental challenges we face, and that we have free access to much of the data and conclusions they produce. In Brazil and many other places in the world, citizens may not have such resources.

But let’s not forget that scientific research and communication to the public, particularly with regard to climate change, are under attack here, too. Writing on the Politico site, Helena Bottemiller Evich states,

“Sen. Debbie Stabenow, ranking member of the Senate Agriculture Committee, … publicly released a list of more than 1,400 climate studies that Department of Agriculture researchers have published during the current administration after POLITICO reported that USDA buried its own research and failed to release its plan to study the issue….

“The trove of studies by USDA researchers carry warnings about climate change that the government is largely not communicating to farmers and ranchers or the public. The list published includes research showing that climate change is likely to drive down yields for some crops, harm milk production, and lead to a drop in nutrient density for key crops like rice and wheat.”

Clearly, we are up to our collective ears in environmental alligators, and “draining the swamp” is not proving to be a very effective strategy.

Reader Jim Sidinger wrote to bring the moral and practical dilemma we all face into even sharper relief:

“One issue that I have not been able to figure out, however, is that of the moral issue of my decision (as a member of an advanced economic society) that the farmer in the Amazon, or the people of India and China do not have the right to try to bring their situations up to our economic level, when we used these same ‘dirty’ methods on our way up to ours – albeit years ago before we realized what harm we were doing.

“I don’t believe there is enough currency/resources in the G7 to continue our society and give that Amazon farmer and the 3+ billion people in China and India our standard of living without some additional farmland and the use of ‘dirty’ energy. I know we are trying to save them, along with ourselves, by greenhouse gas mitigation. But do we have the moral right to keep them back, economically, in the name of planetary salvation? Am I really saving me at their expense?”

We thank Jim for his thoughtful comment. Brazil is not an isolated case: It is emblematic of a global issue. We could look at Borneo and palm oil as readily as we can at the Amazon and soybeans and beef (“Borneo is burning: How the world’s demand for palm oil is driving deforestation in Indonesia,” CNN, Nov. 2019, https://www.cnn.com/interactive/2019/11/asia/borneo-climate-bomb-intl-hnk/). The Amazon fires and others blazing around the world, along with climate change impacts already underway, raise economic, moral, and existential questions that require intelligent, committed responses. Can there really be any economic winners on a planet that becomes far less livable and less productive because of runaway climate change?

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.

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.