The Cumberland Advisors Week in Review is a recap of news, commentary, and opinion from our team.
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.
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.
Welcome back from Thanksgiving!
This week, we talk about:
-What might be coming up next week that could be a cause for concern
-What we see this week in the market that we liked, including
—Small Cap & Mid Cap continue their bid (they had been poor relative performers vs. S&P/Large Cap)
—Biotech in particular had a nice bid this week
-On the international scene, the August bottom in Europe looks like it’s holding
—Much of the negative rates we’ve seen have improved
-Asia may continue to win/lose, reacting to trade talks
Watch in the video player above or at this link: https://youtu.be/yVz47LfUHuw
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
Or email us at firstname.lastname@example.org or give us a call at (800) 257-7013
Yahoo Finance Highlight: The trade war rages on Nov 22, 2019
Watch the video from Yahoo Finance at this link: https://finance.yahoo.com/video/trade-war-rages-141444340.html
Yahoo Finance’s Adam Shapiro, Julie Hyman, Dan Roberts and Cumberland Advisors Chairman & CIO David Kotok discuss how the trade war has ruined relations between the U.S. and China and how [Continued…]
On December 12th, UK voters will participate in a general election to determine the composition of the next government. The manifestos of both the Conservative Party and the Labor Party contain elements that should concern investors. Jeremy Corbyn’s hard-left Labor Party intends to convert the UK into a socialist economy through sweeping nationalizations (railways, broadband [Continued…] https://www.cumber.com/cumberland-advisors-market-commentary-uk-voters-dilemma-johnson-or-corbyn/
Negative-interest-rate policies (NIRP) have been criticized by some (me included) and pursued by others, including Europeans aligned with former European Central Bank (ECB) president Mario Draghi. However, growing numbers of Europeans are becoming disenchanted with NIRP, and some are now shifting away from it. In our view, negative rates have, predictably, damaged growth for over five years. The ECB’s new president, Christine Lagarde, seems to understand that she faces a daunting task in extricating ECB policy from reliance upon negative rates.
Here is an excerpt from her first speech:
“In my view, since our challenges are common ones, we must meet them with a common response. This involves moving towards a new European policy mix, which has a number of key elements. The first is monetary policy, which I start with because it is my area of responsibility and which will undergo a strategic review due to begin in the near future.”
Hat tip to Kevin Humphreys for the reference. Kevin is manager, European money markets, for BGC Partners. He is based in London. Kevin has kindly given us permission to share his observations with our readers. We completely agree with his view.
“Having had a few references of late from board members to potential side-effects of European Central Bank monetary policy, it was perhaps of little surprise that the ECB in their financial stability report should highlight that sub-zero interest rates have forced large investors to take on more risks and businesses to take on more debt. Equally unremarkable were the other two main observations, that bank profitability prospects have weakened and that mispriced assets may represent a vulnerability.
The MoneyShow Orlando 2020
John R. Mousseau, CFA, will be joining a large gathering of members of Wall Street’s financial community in Orlando this winter season for The MoneyShow Orlando 2020. The three days of the conference will focus on new investment ideas that address the current economic and geopolitical environment and will feature tools, strategies, and advice which may help you better position your portfolio.
John will be a featured speaker, giving a review of the bond market in the past year (2019) and what we should expect from the bond market in a presidential election year.
To join John in February 2020 or learn more, please visit: https://conferences.moneyshow.com/moneyshow-orlando/
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.
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/
From Yahoo Finance
Charles Schwab is reportedly buying TD Ameritrade. “The hidden piece of this for investors is the yield on the money market fund, the yield on the sweep,” @CumberlandADV Chiarman David Kotok says. “And they tend not to look at it, and so there’s a widening margin.”
Highlight: Charles Schwab is reportedly buying TD Ameritrade. “The hidden piece of this for investors is the yield on the money market fund, the yield on the sweep,” @CumberlandADV Chiarman David Kotok says. “And they tend not to look at it, and so there’s a widening margin.” pic.twitter.com/HxwdouQX1p
— Yahoo Finance (@YahooFinance) November 21, 2019
Negative interest rates aren’t working
Excerpt from ForexLive’s “Negative interest rates aren’t working”
Nov, 25 2019
Author: Adam Button
There haven’t been any victories in the negative-rate world.
The ultimate test of any theory is in the results.
The idea behind negative interest rates is that they will spur borrowing and economic activity, leading to inflation and a weaker currency.
It may be too soon to judge the results but the early returns are poor. Earlier this month the CME looked at the results of negative rates in four regions: the eurozone, Japan, Sweden and Switzerland. They all went negative between 2014 and 2016.
None of the four “have achieved their inflation targets as a result of negative deposit rates,” the CME writes.
Moreover, the negative-rate experiment so far has failed to stimulate growth sustainably. Early returns in Japan, the eurozone and Sweden were solid but GDP has slumped back close to zero.
David Kotok of Cumberland Advisors is out with a paper attacking negative rates.
The notional pricing of the trillions of dollars and euros in swaps and derivatives is thrown into disarray. As a result, the banks and market agents sponsoring those derivatives must raise their pricing to protect themselves from this added risk induced by NIRP. When they raise their pricing, they add to transactional costs and therefore suppress economic activity at the margin. That is a reason NIRP slows growth and raises risk.
Read the full article at ForexLive’s website: https://www.forexlive.com/news/!/negative-interest-rates-arent-working-20191125
In Case You Missed It…
Florida’s Red Tide: Possible causes, Who’s to blame?
Jim Roemer (A.K.A. Dr. Weather) has been forecasting for the commodity and ski industry for over 30 years . He splits his time between Sarasota, Florida and Vermont, and has a deep passion and concern about the environment and climate. We found his work titled, “Florida’s Red Tide: Possible causes, Who’s to blame? Implications to humans and how it can be resolved,” to be interesting and of interest to our audience. With his permission and our thanks to Jim, we share it with you today. You can find out more about Jim Roemer at his website, https://www.bestweatherinc.com.
Florida’s Red Tide: Possible causes, Who’s to blame?
Implications to humans and how it can be resolved
As a steward of trying to bring more awareness to people about global warming and protecting our environment, seeing and smelling, the Red Tide Algae in Florida, is particularly bothersome.
THE FIRST THING you notice is the smell. It’s not a scent, exactly, but a tingling in the nose that quickly spreads to the throat and burns the lungs. But then you see the carcasses.
I moved to Florida 10 years ago to enjoy the Florida beaches, but have seen first hand how Red Tide has gotten worse over the years. In the past, hurricanes such as Katrina, Irma, etc. were thought to add to the problem, but actually, we need some sort of tropical weather system to churn up the waters. This would potentially mix up and move toxins, if only temporarily. It’s ironic to think about a hurricane actually benefiting Florida, after the many disasters the Sunshine State has witnessed over the years. However, a weak system could actually be beneficial to Florida.
RED TIDE–“It’s killing sea life, battering our economy and making people sick,” says a recent Florida TV ad. “Red tide continues to devastate our area. And many feel it’s fair to blame Rick Scott.” The blame assertion is lifted from an Orlando Sentinel editorial, which appears on screen.
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