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.
-Small caps continue to get a bid
-Barbells can be used with equities – I explain.
-We want to continue to stay flexible
-What will the third decade hold for us? Being flexible is our approach.
-Respect valuation and momentum.
-Broadening our view of what’s working needs to be respected
-See you next week!
-Update on Bond Market: Yield curve flattened this week
-COVID events taking a toll, bringing yields down a bit
-Higher than expected jobless claims this week
-Munis: Big demand, yields down, last stretch of supply, some deals 15-20 times oversubscribed
-NJ Bonds were in demand: 25B in orders for a supply of 4B. That is a lot of demand for a pandemicly affected security.
-There is an ongoing demand for yield out there, even for pandemicly affected issuers if the price is right.
-What’s hanging over the Muni Market? Discussions between Fed Chairman Powell and Treasury Secretary Steven Mnuchin.
-Mnuchin would like to wind down some programs, I explain.
-Important thing to remember: The Muni Market is functioning great. Not many issuers have has to go to the municipal liquidity authority.
-If there is any back-off in the Muni Market, it’s probably a good opportunity to buy some bonds at higher yields
-We wish you the best of holidays
Stay safe, healthy, and have a great weekend.
-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) 257-7013Other questions or comments? Email us at firstname.lastname@example.org or give us a call at (800) 257-7013.Contact Matt or any one of our advisors by following this link: https://www.cumber.com/our-people/
Patricia Healy Featured
CUMBERLAND COMMENT: Government employment falls
Nov 16, 2020
The positive jobs growth news, showing an increase of 638,000 jobs in October and a full 1 percent reduction in the unemployment rate to 6.9%, masked a decline in government employment. Private jobs were up by 906,000, led by an increase of 271,000 in hospitality and leisure, a sector that has been hit particularly hard by pandemic shutdowns. Government jobs, however, fell by 268,000. The majority of the losses were in state and local education, 61,000 and 98,000, respectively. The loss of 147,000 temporary 2020 census workers contributed to a net loss in federal employment of 138,000. The loss of public education jobs as well as private education job losses of 21,500 is likely reflective of the extent of remote learning and the reduced need for support staff.
State and local employment constitute 13% of the total non-farm payroll, and slow growth in state and local employment after last decade’s financial crisis contributed to a slow recovery.
John Mousseau Quoted
Muni yields fall as new-issues oversubscribed; ICI reports inflows
Nov 18, 2020 – By Chip Barnett, Christine Albano
Dan Urbanowicz, director and fixed income portfolio manager at Washington Crossing Advisors said “following-through on the $38 billion in orders for New Jersey’s GO deal yesterday, most of the new issues today, including Massachusetts GO, are oversubscribed and repricing 5 to 10 basis points lower in yield.”
Elsewhere, market technicals are being impacted by the COVID-19 climate.
“We’re seeing a renewed supply/demand imbalance in the market,” he said.
The significant oversubscription was a sign of the times, according to John Mousseau, president of Cumberland Advisors.
“Pandemically affected yield sells,” he said after the pricing.
Full article (Paywall): https://www.bondbuyer.com/news/muni-yields-fall-new-issues-oversubscribed-inflows-return
David R. Kotok Quoted
The US economy is about to shrink, JPMorgan warns
Nov 20, 2020 – By Matt Egan, CNN Business
The federal government can’t agree on how to treat the renewed economic weakness. Republicans and Democrats have repeatedly failed to reach a deal on new fiscal relief, setting up a scenario where 12 million Americans could lose benefits by the end of the year.
“Congress has failed the country,” said David Kotok, chief investment officer of Cumberland Advisors.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, slammed Congress for an “appalling dereliction of duty.”
The Treasury Department added to the mess Thursday by yanking $455 billion of funds the Federal Reserve was using for emergency lending programs. The Fed issued a statement opposing the move, marking a rare public dispute between the central bank and Treasury Department -— in the middle of a crisis, no less.
Treasury Secretary Steven Mnuchin said those funds can be used by Congress to stimulate the economy, but there’s no guarantee a deal can be reached there. And this is a bizarre time to remove ammo the Fed is using to fight the crisis.
“Trump would have signed a bill pre-election. Now he is unpredictable and our national government seems to be in chaos,” Kotok said.
David R. Kotok Cited
USF Nursing Course to Address Covid-19, Burnout
Nov 20, 2020 -By Hannah Wallace
This February, the USF College of Nursing will offer a series of virtual courses for frontline nurses about staying safe and healthy—both physically and mentally—while working in a pandemic. “Frontline Nursing During Covid-19: A New Paradigm” will address pandemic-related concerns like Covid-19 pathology, self-care and risk-mitigation, empowerment and self-advocacy, identifying limitations and asking for help.
The continuing-education webinars will be made available free for registrants throughout the country, thanks to a donation from Sarasota’s David Kotok and Christine Schlesinger. Nurses who complete the program will be eligible for continuing-education credits, which are a necessary part of license renewal.
John Mousseau Quoted
Holiday calendar slumps to $1.2B; munis firm after week-long rally
Nov 20, 2020 – By Chip Barnett, Christine Albano
The long end of the municipal market firmed Friday as the expected new-issue calendar slipped to about $1 billion for the Thanksgiving-shortened trading week.
Yields on top-rated bonds fell about a basis point on AAA scales as yields fell about eight to 13 basis points in total since Nov. 13.
Treasury yields slipped as stocks turned mixed Friday while the markets watched the disagreements between the White House and the Federal Reserve over emergency lending programs such as the Municipal Liquidity Facility.
“The market is in full holiday mode,” John Mousseau, president of Cumberland Advisors, said Friday, noting the $3.7 billion New Jersey general obligation deal had tremendous follow-through when it broke free to trade Thursday but otherwise munis were quiet..
“Most people are looking to the period after Thanksgiving,” to get back into the market when new issuance picks up between then and the next holiday season, Mousseau said.
Full article (Paywall): https://www.bondbuyer.com/news/holiday-calendar-slumps-to-1-2b-munis-firm-after-week-long-rally
Cumberland Advisors Market Commentary offers 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. Our readers appreciate its timeliness, depth of analysis, and quality of research.
To read current and past commentaries, visit https://www.cumber.com/category/market-commentary/
A Bleak Short-Term COVID Outlook, Then Recovery Dawns Fact is, during the darkest hours before light breaks, dawn is already racing toward us across the surface of the turning world. That’s an image – a reassuring metaphor – that can sustain us now. America’s darkest hours in the COVID-19 pandemic lie just ahead, over the […]
Municipal bond ratings are affected by the preparedness of the issuers for severe weather, the impacts of climate change, and other factors that may affect credit ratings. Cumberland Advisors takes a keen interest in the micro and macro details surrounding municipalities and weather events. Our colleague Bob Bunting, meteorologist, professor, and former executive at both […]
Will the NASDAQ crash? We get that question often. Here’s a Bloomberg discussion on that subject and a Bloomberg chart comparing the NASDAQ bubble 20 years ago with the NASDAQ spike this year: “Nasdaq-100 Stumbles Near Dot-Com Era Record Versus Dow,” https://theonedave.tumblr.com/post/634605567333236737/nasdaq-100-stumbles-near-dot-com-era-record-versus. And here’s a Cumberland commentary we wrote at the peak of the NASDAQ […]
Investors and clients ask about the transportation sector and specifically airlines. The outlook is dependent on travelers’ perceived personal safety (COVID vaccines and treatment options) in addition to economic recovery that can generate the incomes to cover the costs. There isn’t much more we can add to that investment perspective. We do field direct questions […]
Last week, the Ant Group was expected to list in Shanghai and Hong Kong the largest IPO in history. However, on Tuesday, November 3, the Shanghai Stock Exchange announced it had postponed the company’s listing, citing “major issues” that might cause it “not to meet the listing conditions or disclosure requirements.” The IPO listing was […]
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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.