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.
This week we talk about:
-The 10 & 30 year bonds – where they were and are now
-We like to look at the Utility Index – John explains
-We are playing “Defense” in Bonds
-John explains what it means for Cumberland to be defensive and our barbell strategy
-Different types of bonds have “life preservers” and John explains this
-Matt talks about the types of signals Cumberland Advisors pays attention to
-Leo Chen Ph.D.’s work is briefly discussed
-What are call buyers telling us?
-Is there too much optimism in the market?
-How about gold?
Watch in the video player above or at this link: https://youtu.be/b5zMJ62xwx4
Contact John Mousseau with any comments for him at: John.Mousseau@Cumber.com
Have a great weekend and thank you for joining me along with John.
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
Farmers & Credit Issues
While Washington (politics and baseball) dominates the headlines, the American farmer continues to be bludgeoned by the Peter Navarro-designed and Donald Trump-approved trade war. The last two years have seen a significant erosion in US agricultural exports, and farmers have been badly hurt.
We have written many times about time lags in trade policy. It takes a year or more to get from tweeting threats to actual and measurable destructive outcomes. So here’s an update on outcomes of Navarro’s advice for the broad-based tariffs, which advice Trump followed. In doing so, Trump invited retaliatory tariffs on Agriculture and Aquaculture. Nearly every economist I’ve met advised against Navarro’s policy prescription. At this summer’s gathering in Maine, only 1 supported Navarro; 36 opposed; 3 were unsure.
The following report, detailing sharply rising farm bankruptcies, the impact on farmer’s income and more, is from the American Farm Bureau. It is loaded with information. When you read it, please ask yourself what soybeans (agriculture) or lobsters (aquaculture) have to do with intellectual property rights and 5G development.
Trump continues on a self-destructive path that is also taking down American farming. Notice the state-by-state details in the report and please muse on the potential Electoral College outcome in next year’s election. Please read the first three paragraphs if you’re short on time.
Now here’s the Farm Bureau: https://www.fb.org/market-intel/farm-bankruptcies-rise-again
Opportunities in Japan for Global Equity Investors
The Bank of Japan at its October 30–31 Monetary Policy Committee meeting kept its policy unchanged while indicating it was willing to lower interest rates further into negative territory from their current low levels if needed to maintain progress towards the 2% inflation objective. The decision not to cut rates at this time was based on the Bank’s belief that the Japanese economy is strong enough to get through the current period of weak global demand. The economy has indeed encountered a “speed bump” that can be attributed to the rise in Japan’s sales tax from 8 to 10 percent on October 1, the major typhoon Hagibis, and the global slowdowns in trade and manufacturing. In addition, economic growth across the Asia region has been weakened by the US-China trade war.
According to the Jibun Bank Flash Japan Composite PMI (Purchasing Managers Index) reported by Markit, the Japanese economy slipped into contraction in October. Manufacturing new orders declined at the steepest pace in almost seven years, while “the service economy exhibited a remarkable degree of resilience.” The consumer sector has been one source of support for the economy as wage growth has been supported by labor shortages. Retail sales surged by over 9% in September in anticipation of the sales tax increase but appear to have fallen off in October. The labor shortages together with capacity constraints have also encouraged business investment.
Financial Literacy & Predatory Lending
Author: David R. Kotok, Post Date: November 7, 2019
The Military Lending Act caps annual interest on loans to military members at 36% and offers other safeguards. Now, lawmakers are proposing to extend that protection to veterans and others. NPR reports: https://www.npr.org/2019/11/07/776769597/a-ban-on-high-cost-loans-may-be-coming
How do people wind up with “High-Cost Loans” in the first place? If a lack of financial literacy is the cause, there are resources available at various levels of understanding to educate and enlighten. If you know of anyone needing a primer on financial literacy, the Federal Reserve Bank of St. Louis offers an online course, “Paying & Receiving Interest” at this link: https://www.econlowdown.org/interest?p=yes
Ready for more advanced topics? Then join Cumberland Advisors for the 2020 event, “Financial Markets and the Economy – Fourth Annual Financial Literacy Day”, at the University of South Florida Sarasota-Manatee (USFSM) for a deep dive into the Bond Market where we’ll examine the categories of debt and the influences on them including budget deficits and larger issues like central bank QE and its impacts on interest rates for this debt before diving into Real Time Payments (RTP) where Bitcoin, Libra, Venmo and new versions of electronic money are having an increasing impact. We’ll cap off the day’s event with a Keynote Speech from Loretta Mester, President of the Federal Reserve Bank of Cleveland.
If you’re interested in learning more about financial markets and the economy, please join us on Friday, February 14, 2020 for our annual conference. Learn more or register here: https://www.interdependence.org/events/browse/fourth-annual-financial-literacy-day/
Camp Kotok Conversations
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.
The Greater Sarasota Chamber of Commerce, along with nearly 500 business and community leaders, celebrated local small businesses by awarding five category winners and one Top Honor Small Business of the Year at the 29th Annual Frank G. Berlin Sr., Small Business Awards on June 14. Cumberland Advisors won in the “Professional Services Business of the Year” category. We’re proud to display our award and this plaque at the office. Thank you Sarasota!
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.