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.
John Mousseau is in for Matt this week.
– We had a good trick-or-treat surprise today in the markets: we saw a great employment number
the non-farm payroll was up 128,000 when we were expecting 85,000 in new jobs
– Concerns about trade and tariffs are fading a bit, like the saying, “objects in (the) mirror are closer than they appear” but in the reverse; trade issues are not as close as they appear
– In Bonds, yields were down this week but back up a few bps today
– Munis? Down just a couple of bps this week
– We’re starting to see to with rates a pattern of two-steps-forward, one-step-back in terms of advancing since the summer lows of August
– We think this is particularly important for Munis where municipalities are coming to market for the simple reason that interest rates are very low and they’re locking in today’s low yields
– The Fed cut its rate this week and noted they are not committing to any more rate cuts which in their mind, they are accommodating the market
– This could shift the balance of the yield curve
– This will benefit banks and financial institutions
– With better financial health, we think that’s better for the overall equity markets as well
Watch in the video player above or at this link: https://youtu.be/-kbdjMzp76g
Want to contact John directly? Email him at: John.Mousseau@Cumber.com
Have a great weekend and thank you for joining John in my absence!
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/
Markets & The Deficit
The latest federal deficit numbers show the Trump budget implementation running about $1 trillion annualized. Here’s the link to a PDF that contains details and projections by the Congressional Budget Office: https://www.cbo.gov/system/files?file=2019-01/54918-Outlook-AppendixC.pdf.US stock and bond markets greeted this news with a yawn. Market agents are more focused on other things. Meanwhile, deficit warnings, intertwined with political scenarios, are thoughtful and eloquent yet remain largely ignored. Here’s a sample from the National Review, sent out by the American Enterprise Institute: https://www.nationalreview.com/corner/what-deficit/.And please remember the present trillion-dollar annual deficit of 5% of GDP is projected to continue for the next decade. And it is happening when the economy is in the longest recovery cycle in modern times.
Taxing Wealth Series
Cumberland Advisors has produced a number of market commentaries around the core theme of income, wealth inequality, and wealth taxation. In them you’ll find related data and implications of wealth tax proposals and their probable effect on markets, individuals, entrepreneurs, and businesses. Here are links to those recent writings in what forms a series of wealth tax pieces:
“Wealth Tax,” David Kotok, October 9, 2019
“Taxing Wealth Instead of Income?” Bob Eisenbeis, February 13, 2019
“Taxing Wealth Instead of Income, Part 2,” Bob Eisenbeis, October 15, 2019
“The Kiplinger Tax Map: Guide to State Income Taxes, State Sales Taxes, Gas Taxes, Sin Taxes,” David Kotok, October 25, 2019
Meet Regional Director of Investments, Todd Engelhardt
Todd Engelhardt serves as Regional Director of Investments for Southwest Florida. He is responsible for Cumberland Advisors’ service to individuals, institutions, retirement plans, and government entities. Todd speaks at investment conferences and other events explaining Cumberland’s investment philosophy and portfolio options to individuals, financial advisors and institutional clients.
Prior to Cumberland, Todd held senior positions in distribution and marketing with FleetBoston, Manning & Napier Advisors, and Fifth Third. While at Fleet, Todd was responsible for developing the institutional asset management business for over a decade. He served as National Sales Director in Fleet’s Columbia Management Group subsidiary, with responsibility for Endowment and Foundation business development. Todd also assisted in Columbia’s integration of Boston-based Liberty Asset Management, as well as a host of smaller bank investment unit acquisitions. He began his career with the management information systems consulting practice of Arthur Andersen & Co. in New York City where he worked with financial services clients.
Todd received an MBA from Rensselaer Polytechnic Institute in 1984. He has over 30 years of investment management experience.
Drop Todd a line or give him a call, he’d love to meet you: Todd.Engelhardt@Cumber.com
Think the Fed Will Be Pat for a While, Says Cumberland’s Eisenbeis
WATCH HERE (or click the embedded player above): https://www.bloomberg.com/news/videos/2019-10-31/think-the-fed-will-be-pat-for-a-while-sys-cumberland-s-eisenbeis-video
Fire and Water
Author: Patricia Healy, Post Date: November 1, 2019
The fires engulfing parts of California are feared to become the nation’s worst fire disaster, possibly surpassing 2017 and 2018 fire events. Spurred on by wind gusts of up to 80 mph, this disaster harkens back to Superstorm Sandy, which occurred seven years ago, in October 2012.
Superstorm Sandy soaked the Northeast, and its 80-mph winds caused almost $70 billion in damages per Wikipedia. It was one of the most costly natural disasters ever to hit the United States. The extent of the damage was also a function of the storm’s hitting many densely populated areas that were centers of economic activity. No one yet knows, and it will likely take some time to determine the full cost of the 2019 fires in terms of damages to homes and businesses, lives lost, and the cost of the herculean response by CalFire, municipal fire departments, and others. It is only October, while the deadly Camp fire of 2018 occurred in November, and dry conditions continue to persist. The fires this year, like Superstorm Sandy, have occurred in or near some densely populated areas with high real estate values, many businesses, and intense economic activity.
Camp Kotok Conversations
Camp Kotok alum Ann Berry, Partner, Cornell Capital, joined Rishaad Salamat and Bryan Curtis on Bloomberg’s Daybreak Asia. She says there’s more focus on fundamental business performance this earnings season. She goes on to how discussions on trade have changed. You can listen to her October 24, 2019 interview here:
We invite you to visit our YouTube channel and explore the “Camp Kotok” video playlist. This playlist is comprised of Camp Kotok interviews with guests and “campers” who participate and enjoy sharing with us. We also include panel talks, scenes from the location in Maine, and other snippets we find interesting. Enjoy! #CampKotok
Author: Robert Eisenbeis, Ph.D., Post Date: November 1, 2019
Following the FOMC’s announcement of its third consecutive rate cut after its meeting this week, speculation immediately broke out among market participants about whether additional cuts or even rate increases might be on the horizon going into 2020. However, such speculation is probably more noise than substance at this point, since the Committee’s statement was fairly clear and became even more so during Chairman Powell’s press conference. Most commentators noted the change in language from the previous statement to the current one:
“September: As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.”
“October: The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.”
But more important than the differences in the wording of the statements were several things that Chairman Powell made clear during his press conference.
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