The Fed’s Corporate Credit Facility

On June 15, the Federal Reserve published revised terms and conditions for what it calls its Secondary Market Corporate Credit Facility, which is a special-purpose vehicle (SPV) created to purchase in the secondary market corporate debt that meets certain eligibility requirements. See https://www.newyorkfed.org/markets/secondary-market-corporate-credit-facility/secondary-market-corporate-credit-facility-terms-and-conditions. Included will be individual corporate bonds, certain exchange-traded funds (ETFs), and bond portfolios that track a broad market index. The US Treasury will contribute about $25 billion in capital to provide loss protection to this SPV; and it is anticipated that this vehicle and another SPV, the Primary Market Credit Facility, could reach a combined size of $750 billion.

The market index that the bond portfolios must track has been created by the Federal Reserve and is now being published on the website of the Federal Reserve Bank of New York, which is administering the program. The securities in that portfolio must meet the program’s eligibility criteria for purchase. Just to mention a few of the more important requirements, entities must have a credit rating of at least BBB-/Baa3 as of March 22, 2020; they must be US-chartered companies, and eligible securities will be those with less than 5 years remaining maturity. The details on the names of the entities meeting the criteria, their industry category, and weights are provided. The information offered so far does not disclose how the weights were determined or how and under what circumstancesthe other end of the scale in terms of index weights, 54 firms are listed whose weights each are less than .01%. Among these are Boeing, Lockheed, Northrop Grumman Systems, CBS, Starwood Hotels, Quaker Oats, Blue Cross Blue Shield, Nomura America Finance, and Consolidated Rail Corp, just to name a few.

Another interesting feature of the list is that while the Fed says it will not purchase securities of foreign institutions, the index of securities eligible for purchase as noted earlier contains the US-chartered subsidiaries of foreign institutions. In addition to the names of the auto companies mentioned above, other notable entities include Komatsu Finance America, American Honda Finance, Daimler Finance, Nissan Motor Acceptance, three subsidiaries of Anheuser-Busch now owned by INBEV, three US subsidiaries of Germany’s Fresenius AG, and ABB Finance US, a subsidiary of the Swiss company ABB Ltd. In many instances, the parent companies issue dollar-denominated debt in the US as well as guarantee the debt of the issuing subsidiary. To the extent that the Fed creates a market support system for the subsidiaries of foreign institutions, the strength of the parent is improved, and indirect subsidies flow to foreign entities even though the Fed is not purchasing their debt directly. It is hard to justify such subsidies in the name of supporting a market.

It is also important to ask the question, “What problem is the bond-purchase program attempting to solve?” The Fed argues that it is trying to ensure the smooth functioning of the bond market; but it has provided little or no evidence of problems, especially in 2020 after the pandemic hit the economy. In fact, the SFMA (Securities Industry and Financial Markets Association) reports that corporate debt issuance for each month in 2020 through June exceeded monthly totals for the comparable period in 2019. Year-to-date issuance in 2020 was $1.2 trillion, compared with $660 billion in 2020, an 89.2% increase (https://www.sifma.org/resources/ research/us-fixed-income-trading-volume/). This volume is quite surprising given what has happened to the US economy because of the pandemic. Moreover, the program has only been in place a short while and as of July1 totaled only about $10 billion.

One case study is especially relevant here. Boeing’s problems have been well documented for over a year as its sales have crashed due to problems with its 737 Max aircraft. The pandemic has contributed to both a broad-based decline in air traffic and a cutback in acquisition of aircraft, and the end is not in sight. Yet in late April, Boeing had a blockbuster debt issuance of $25 billion, bringing its total outstanding debt burden to $54 billion and increasing its projected interest expense from $722 million in 2019 to $1.2 billion in 2020 (https://www.forbes.com/sites/jeremybogaisky/2020/05/01/boeing-25-billion-debt/#40d246041f88). To be sure, the issue came at a large interest cost of about 5%; but considering the fact that Boeing is extremely risky, that the deal was even consummated suggests that financial markets are functioning.

In the face of a questionable rationale, the expansion of the Fed’s activities beyond the Treasury market represents a slippery slope that puts the Fed at risk of committing to more such activities in the future, especially if Congress regards the Fed as a cash cow whose activities don’t involve Congressional funding of projects, as it did when it raided the Fed’s capital surplus to fund a highway bill in 2015 and again in 2018 to help fund the Economic Growth Act of 2018. Moreover, the Fed now finds itself in the business of picking corporate winners and losers. Firms whose debt is eligible for purchase receive a subsidy that is not available to all, and with little or no oversight. Finally, the relationship with Goldman Sachs also raises issues. Goldman is a primary dealer with access to the primary dealer credit facility, but it also owns a bank that has access to the discount window at subsidized rates. This close relationship ranks it, along with JPMorgan Chase and BNY Mellon (who provide the plumbing for the tri-party repo market), among the three institutions that are most likely to be too big to fail under any foreseeable circumstance.

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




Bloomberg Radio Interview: David Kotok – Health Care Will Be 20% of This Country’s GDP

Bloomberg Radio Interview: David Kotok – Health Care Will Be 20% of This Country’s GDP

June 11, 2020 – Running time 07:32

David Kotok, Chairman & Chief Investment Officer at Cumberland Advisors, on credit spreads and the Fed. Hosted by Vonnie Quinn and Paul Sweeney.

David Kotok Interview

LISTEN HERE: https://www.bloomberg.com/news/audio/2020-06-11/health-care-will-be-20-of-this-country-s-gdp-kotok-radio

NOTE: 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.


If you like podcasts, check out this one from July 2015 featuring David Kotok talking about his background and Camp Kotok with Barry Ritholtz. They also talk about the history of Cumberland Advisors since its founding, and delve into fundamental principles of investing and valuation: https://www.stitcher.com/podcast/bloomberg/masters-in-business/e/48339521

Radio Player Banner - Listen Now

More “Masters in Business” podcasts here:
http://www.bloomberg.com/podcasts/masters-in-business/




Bloomberg Daybreak Australia: David Kotok Discusses Dislocation in Markets/Economy

Bloomberg Daybreak Australia: David Kotok Discusses Dislocation in Markets/Economy

May 27, 2020 – Running time 48:27 – David joins at the 8:20 mark

David Kotok, Chairman & Chief Investment Officer at Cumberland Advisors, discusses markets, market dislocation, the economy, coronavirus, growth rates, liquidity, the bargain he sees in municipal bonds, and more. Hosted by Haidi Stroud-Watts.

Bloomberg Daybreak Australia with David R. Kotok (05-27-2020)

Watch in the embedded player or view here: https://www.bloomberg.com/news/videos/2020-05-27/-bloomberg-daybreak-australia-full-show-05-27-2020-video


NOTE: 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.


If you like podcasts, check out this one from July 2015 featuring David Kotok talking about his background and Camp Kotok with Barry Ritholtz. They also talk about the history of Cumberland Advisors since its founding, and delve into fundamental principles of investing and valuation: https://www.stitcher.com/podcast/bloomberg/masters-in-business/e/48339521

Radio Player Banner - Listen Now

More “Masters in Business” podcasts here:
http://www.bloomberg.com/podcasts/masters-in-business/




Bloomberg Radio Interview: David Kotok on Fed News

Bloomberg Radio Interview: David Kotok on Fed News

April 29, 2020 – Running time 08:03

David Kotok, Chairman & Chief Investment Officer at Cumberland Advisors, discusses the latest Fed news with Doug Krizner and Juliette Saly on Bloomberg Daybreak Asia.

David Kotok Interview

LISTEN HERE: https://www.bloomberg.com/news/audio/2020-04-30/david-kotok-on-fed-news-radio?sref=XreMbXAF

Bloomberg Radio 20200429 (Kotok)

NOTE: 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.


If you like podcasts, check out this one from July 2015 featuring David Kotok talking about his background and Camp Kotok with Barry Ritholtz. They also talk about the history of Cumberland Advisors since its founding, and delve into fundamental principles of investing and valuation: https://www.stitcher.com/podcast/bloomberg/masters-in-business/e/48339521

Radio Player Banner - Listen Now

More “Masters in Business” podcasts here:
http://www.bloomberg.com/podcasts/masters-in-business/




Bond Markets Through the Coronavirus – John Mousseau

Money Show Webinar - Bond Markets Through the Coronavirus with John R. Mousseau, CFA

Join John R. Mousseau, president & CEO of Cumberland Advisors, as he walks you through the analysis of treasury, taxable, and municipal markets, federal monetary policy, and administration of fiscal policy.


Watch in the embedded player or here:  Bond Markets Through the Coronavirus


Learn more about John Mousseau here: https://www.cumber.com/team/john-r-mousseau/


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 Week in Review (Apr 20, 2020 – Apr 24, 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.

Thank you for joining Cumberland Advisors for this end-of-week update on market conditions, bonds & equities with me, Matt McAleer, and John Mousseau.

John Mousseau leads today on this week’s video.He talks about:
-Period of normalcy this week for bonds.
-Key for this week: Deals came to market and got done easily. Most municipal bond deals were oversubscribed and that’s a good sign. We had stability in the markets.
-The real issue this week is Senate Majority Leader Mitch McConnell’s talk of states declaring bankruptcy instead of getting federal aid. There are a number of problems that this scenario raises.
-John wrote a commentary this week about McConnell’s statement and the link is here if you missed it: https://www.cumber.com/cumberland-advisors-market-commentary-mcconnell-as-meredith-whitney/

I’m next with my take on markets this week. My take on a few things:
-Another volatile week.
-What’s positive and negative this week?
-The market was able to price in the volatility in oil.
-Very interesting in what’s going on with transportation. What’s under the hood?
-What are we seeing in biotech? Medical devices?
-What is VIX trying to tell us?

Once again, we shot our own video this week. Thank you for taking the time to join us.

Please reach out with any questions/comments you may have about this week’s
update; we appreciate your calls, comments, and emails.

Watch in the player above or at this link: https://youtu.be/uv59KJMqi_Y

Have a safe weekend,

-Matt McAleer

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

Other questions or comments? Email us at info@cumber.com 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/


Money Show Webinar - Bond Markets Through the Coronavirus with John R. Mousseau, CFA

Watch John’s April 23, 2020 presentation,  “Bond Markets Through the Coronavirus” here: https://www.cumber.com/bond-markets-through-the-coronavirus-john-mousseau/


Cumberland Advisors In The News

Fed Following WWII Model to Control Yield Curve

Bloomberg Radio – April 21, 2020

David Kotok, Chairman & Chief Investment Officer at Cumberland Advisors, discusses bond markets, the Fed and current investment outlook. Hosted by Lisa Abramowicz and Paul Sweeney.
Running time 07:36 – Play Episode: https://www.bloomberg.com/news/audio/2020-04-21/fed-following-wwii-model-to-control-yield-curve-kotok-radio


McConnell’s bankruptcy suggestion boomerangs

by Brian Tumulty – The Bond Buyer – April 24, 2020

Critics say Senate Majority Leader Mitch McConnell’s suggestion that Congress should allow states to file for bankruptcy would undermine efforts to quickly restart the economy and could damage the municipal market. John Mousseau, president and chief executive officer and director of fixed income at Cumberland Advisors, likened McConnell’s comment to the 2010 prediction by Meredith Whitney, a noted bank analyst, predicting hundreds of billions of dollars of municipal defaults were coming. They never materialized. She caused lots of market damage and outflows from municipal bond funds before sanity resumed and yields moved lower than they had been before she made her remarks, according to Mousseau. Senate Democratic Minority Leader Chuck Schumer said the backlash “has given even more momentum for state and local assistance,” making McConnell “increasingly isolated.” [Continued behind Paywall at The Bond Buyer…]


Lots of Muni Bonds Are Going to Be Just Fine

by Barry Ritholtz – April 13, 2020

(Bloomberg Opinion) — In an extraordinary attempt to help the economy in the midst of the coronavirus economic downturn, the Federal Reserve’s balance sheet has ballooned to more than $6 trillion.

How this has affected fixed-income pricing, yield, risk and even trading is the subject of this week’s Masters in Business interview with John R. Mousseau, president, chief executive officer and director of fixed income at Cumberland Advisors. Mousseau also is the co-author of the book “Adventures in Muniland: A Guide to Municipal Bond Investing in the Post-Crisis Era.”

He notes the current slump is very different from the 2008-09 financial crisis. That event was driven by credit deterioration and mortgage defaults. Things only came to a head only after defaults soared and bond markets developed liquidity problems after the collapse of Lehman Brothers. In the fixed-income world today, the coronavirus pandemic is characterized mostly by economic paralysis, but so far not mass defaults.

Full story at Yahoo Finance: https://finance.yahoo.com/news/lots-muni-bonds-going-just-153254865.html

More News About Cumberland Advisors Here: https://www.cumber.com/news


Cumberland Advisors Market Commentary

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 www.cumber.com/category/market-commentary/

 


 

Cumberland Advisors Market Commentary – The UK Economy Falls Off the Cliff; Brexit Negotiations Resume

Author: William Witherell, Ph.D., Post Date: April 24, 2020

Market Commentary - Cumberland Advisors - The UK Economy Falls Off the Cliff; Brexit Negotiations ResumeThe economic situation in the UK has worsened dramatically in just the month and a half since our March 4th commentary on the subject. Last week, the Bank of England’s (BOE) governor, Andrew Bailey, told journalists that he did not disagree with the Office for Budget Responsibility’s forecast of a 35% decline in the UK’s [Continued…]

Cumberland Advisors Market Commentary – McConnell as Meredith Whitney

Author: John R. Mousseau, CFA, Post Date: April 23, 2020

Market Commentary - Cumberland Advisors -McConnell as Meredith Whitney (Mousseau)Senate Majority Leader McConnell yesterday was reported by Bloomberg News as saying that he “would certainly be in favor of allowing states to use the bankruptcy route” rather than giving them a Federal bailout. This reminded us of 2010 when Meredith Whitney, a noted bank analyst, predicted that there would be hundreds of billions of [Continued…]

Cumberland Advisors Market Commentary – About Masks – (Plus a personal note)

Author: David R. Kotok, Post Date: April 22, 2020

David Kotok - About MasksStraight Talk on Masks from Anthony Fauci – In a widely shared YouTube interview with Lilly Singh, Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases (NIAID) and a member of the White House coronavirus task force, explained the rationale for wearing face masks. He also explained why the CDC didn’t initially suggest [Continued…]

Cumberland Advisors Market Commentary – COVID – 19: Health Recovery and Economic Recovery Go Hand in Hand

Author: Peter A. Gold, Esquire & Jeffrey P. Gold, MD, Post Date: April 20, 2020

COVID - 19: Health Recovery and Economic Recovery Go Hand in Hand There is a lot of competing information in circulation relating to the current coronavirus pandemic and there is now a rush to offer opinion on how to best reopen economies and communities in a safe manner. It is our honor and privilege to introduce you to the following authors who also happen to be brothers. [Continued…]

Cumberland Advisors Market Commentary – Sturm und Drang & Beethoven’s Pastoral

Author: David R. Kotok, Post Date: April 19, 2020

Sturm und Drang & Beethoven’s PastoralSurprisingly, the German term Sturm und Drang originated with the American Revolution in 1776. The term first appeared as the title of a play by Friedrich Maximilian Klinger. The setting of the play is the unfolding American Revolution, in which, says Wikipedia, “the author gives violent expression to difficult emotions and extols individuality and subjectivity [Continued…]

 

Cumberland Advisors Market Commentary – Narrow Banks

Author: Robert Eisenbeis, Ph.D., Post Date: April 17, 2020

Narrow Banks

In a move largely overlooked due to the virus pandemic, on March 25, Judge Andrew L. Carter, Jr., of the United States District Court for the Southern District of New York dismissed a case filed by principals of The Narrow Bank (TNB) against the Federal Reserve Bank of New York (https://www.tnbusa.com/wp-content/uploads/2020/03/2020.03.25-TNB-Order.pdf). What is The Narrow [Continued…]

Cumberland Advisors Market Commentary – Fed Goes to War

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

Fed Goes to War

The April 12, 2020, posting on the Money, Banking and Financial Markets site, entitled “The Fed Goes to War: Part 3,” expands on the discussion of the extraordinary measures taken recently by the Federal Reserve. Let me offer a personal endorsement: I find the site consistently and exceptionally helpful. Much has already been written about about this expansion of the Fed’s arsenal and the list of new facilities. Essentially, the playbook for last decade’s Great Financial Crisis has been reopened, and a whole new set of tools has been added. [Continued…]

 

The CDC Foundation

Author: David R. Kotok, Post Date: March 23, 2020

CDC Foundation Dr Judy Monroe & David KotokDear readers. The CDC Foundation is not widely known. It’s a 501(c)3 that was created by Congress as a special charitable agency. The Foundation works right alongside the CDC and other national health agencies but is an independent charity. It has a special-purpose charter. Its purpose is to respond rapidly to threats like COVID-19 or [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 Market Commentary – McConnell as Meredith Whitney

Senate Majority Leader McConnell yesterday was reported by Bloomberg News as saying that he “would certainly be in favor of allowing states to use the bankruptcy route” rather than giving them a Federal bailout. This reminded us of 2010 when Meredith Whitney, a noted bank analyst, predicted that there would be hundreds of billions of dollars of municipal defaults in 2011. She caused lots of market damage and outflows from municipal bond funds before sanity resumed and yields moved lower than they had been before she made her remarks. The Senator is trying to take a page from her playbook.

Market Commentary - Cumberland Advisors -McConnell as Meredith Whitney (Mousseau)

Cumberland wonders what the majority leader had in mind, in that his statement is at best disingenuous and at worst inflammatory at a time when both houses of Congress, the administration, and the Federal Reserve are all engaged in the business of helping all parts of the economy get through the economic downturn caused by Covid-19.

We did not notice any market reaction on Wednesday April 22, in the wake of McConnell’s statement, apart from a drop in price that was consistent with the drop in US Treasuries. This doesn’t mean that he cannot cause damage with ill-considered remarks.

There are also two legal problems with McConnell’s position. First, it is not possible for states to declare bankruptcy under current law. This means that laws would have to be changed. That is unlikely given the current makeup of Congress, especially when they are concentrated on getting the economy over the hump of the virus.
Secondly, to meet conditions of insolvency, states would have to prove they have exhausted all other means to satisfy debts. Those would include reducing their workforce, selling state-owned property, etc. In other words, the states could not prove they were insolvent.

Given the fact that the Treasury has committed to helping the municipal bond market by a purchase program and that the Federal Reserve has committed to buying notes out to two years issued by states, counties, and cities, the Senator’s remarks seem particularly counterproductive, given the need to restore economic stability to individuals, private businesses, and state and local governments.

If the muni market had any substantial sell-off based on these irresponsible remarks, it would be yet another opportunity to buy longer paper at extremely attractive yields. We will keep our readers informed of developments.

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.

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.




Bloomberg Radio Interview: Saudis Are Going In For The Kill, Targeting U.S. Oil (Podcast)

Bloomberg Radio Interview: Saudis Are Going In For The Kill, Targeting U.S. Oil (Podcast)

April 21, 2020 — Running time 26:59

John Kilduff, Founder of Again Capital, on the oil market collapse, and what comes next. David Kotok, Chairman & Chief Investment Officer at Cumberland Advisors, discusses how the Fed is trying to control the yield curve. Eric Fine, Portfolio Manager: Emerging Markets Fixed Income Strategy at Van Eck Global, on the mixed bag in emerging markets. Ira Jersey, Chief US interest rate strategist for Bloomberg Intelligence, discusses LIBOR vs SOFR, and the flight to Treasuries. Hosted by Lisa Abramowicz and Paul Sweeney.

David Kotok Interview

LISTEN HERE: https://www.bloomberg.com/news/audio/2020-04-21/saudis-are-going-in-for-the-kill-targeting-u-s-oil-podcast

NOTE: 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.


If you like podcasts, check out this one from July 2015 featuring David Kotok talking about his background and Camp Kotok with Barry Ritholtz. They also talk about the history of Cumberland Advisors since its founding, and delve into fundamental principles of investing and valuation: https://www.stitcher.com/podcast/bloomberg/masters-in-business/e/48339521

Radio Player Banner - Listen Now

More “Masters in Business” podcasts here:
https://www.bloomberg.com/podcasts/masters-in-business/




Bloomberg Radio Interview: Fed Following WW II Model to Control Yield Curve

Bloomberg Radio Interview: David Kotok on Fed Following WW II Model to Control Yield Curve

April 21, 2020 – Running time 07:36

David Kotok, Chairman & Chief Investment Officer at Cumberland Advisors, discusses bond markets, the Fed and current investment outlook. Hosted by Lisa Abramowicz and Paul Sweeney.

David Kotok Interview

LISTEN HERE: https://www.bloomberg.com/news/audio/2020-04-21/fed-following-wwii-model-to-control-yield-curve-kotok-radio

NOTE: 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.


If you like podcasts, check out this one from July 2015 featuring David Kotok talking about his background and Camp Kotok with Barry Ritholtz. They also talk about the history of Cumberland Advisors since its founding, and delve into fundamental principles of investing and valuation: https://www.stitcher.com/podcast/bloomberg/masters-in-business/e/48339521

Radio Player Banner - Listen Now

More “Masters in Business” podcasts here:
http://www.bloomberg.com/podcasts/masters-in-business/




Cumberland Advisors Week in Review (Apr 13, 2020 – Apr 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.

Thank you for joining Cumberland Advisors for this end-of-week update on market conditions, bonds & equities with me, Matt McAleer, and John Mousseau.

David Kotok also shot a video to accompany his commentary this week which you can see below.

I’m first up with my take on markets this week. I made it into the office with John Mousseau today though we sit about 50ft apart. We remain cautious and shoot our videos separately.

Next, John tackles the bond market. We’re still getting great feedback about the Federal Reserve’s unprecedented action last week. If you haven’t read it, Cumberland Advisors preceded their move with a public commentary and call to action entitled, “A Proposal for the Coronavirus Anticipation Note (CAN)” on April 01, 2020. Let us know what you think: https://www.cumber.com/cumberland-advisors-market-commentary-a-proposal-for-the-coronavirus-anticipation-note-can/

We all shot our own video this week and we appreciate you taking the time to join us.

Please reach out with any questions/comments you may have about this update, we always appreciate your calls, comments, and emails.

Watch in the player above or at this link: https://youtu.be/dkV9PjXfR6U

Have a safe weekend and thank you for joining us at Cumberland Advisors.

-Matt McAleer

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

Other questions or comments? Email us at info@cumber.com 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/

 


Cumberland Advisors In The News

Lots of Muni Bonds Are Going to Be Just Fine

by Barry Ritholtz – April 13, 2020

(Bloomberg Opinion) — In an extraordinary attempt to help the economy in the midst of the coronavirus economic downturn, the Federal Reserve’s balance sheet has ballooned to more than $6 trillion.

How this has affected fixed-income pricing, yield, risk and even trading is the subject of this week’s Masters in Business interview with John R. Mousseau, president, chief executive officer and director of fixed income at Cumberland Advisors. Mousseau also is the co-author of the book “Adventures in Muniland: A Guide to Municipal Bond Investing in the Post-Crisis Era.”

He notes the current slump is very different from the 2008-09 financial crisis. That event was driven by credit deterioration and mortgage defaults. Things only came to a head only after defaults soared and bond markets developed liquidity problems after the collapse of Lehman Brothers. In the fixed-income world today, the coronavirus pandemic is characterized mostly by economic paralysis, but so far not mass defaults.

Full story at Yahoo Finance: https://finance.yahoo.com/news/lots-muni-bonds-going-just-153254865.html

Court rules Puerto Rico residents eligible for SSI program

by Robert Slavin – April 14, 2020

A federal appeals court has upheld a decision that people in Puerto Rico are eligible for the Supplemental Security Income program.

As many as 700,000 people may be impacted by Friday’s ruling from the U.S. Court of Appeals for the First Circuit. The Social Security Administration runs SSI, which provides money to low-income people who are disabled, blind, or over 65. It also provides money to families with disabled children.
The appeals court ruling may impact as many as 700,000 people in Puerto Rico.Bloomberg News

Puerto Rico currently has a program jointly funded with the federal government that provides funds to these groups.

According to Jenniffer González-Colon, Puerto Rico’s non-voting representative in Congress, the average SSI beneficiary receives $553 monthly, whereas the average beneficiary under the Puerto Rico program receives $77 monthly. The maximum income permitted for an individual to qualify for SSI is $750 per month, compared to a maximum of $65 per month for the Puerto Rico program.

Cumberland Advisors Portfolio Manager Shaun Burgess said that he expected SSI to have more impact by allowing the local government to save money on the existing program than as a stimulus on the local economy. Cumberland owns insured Puerto Rico bonds.

Read the full story at The Bond Buyer: https://www.bondbuyer.com/news/court-rules-puerto-rico-residents-eligible-for-ssi-program

More News About Cumberland Advisors Here: https://www.cumber.com/news


Cumberland Advisors Market Commentary

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 www.cumber.com/category/market-commentary/

 


Cumberland Advisors Market Commentary – Narrow Banks

Author: Robert Eisenbeis, Ph.D., Post Date: April 17, 2020

Narrow Banks

In a move largely overlooked due to the virus pandemic, on March 25, Judge Andrew L. Carter, Jr., of the United States District Court for the Southern District of New York dismissed a case filed by principals of The Narrow Bank (TNB) against the Federal Reserve Bank of New York (https://www.tnbusa.com/wp-content/uploads/2020/03/2020.03.25-TNB-Order.pdf). What is The Narrow [Continued…]

Cumberland Advisors Market Commentary – Fed Goes to War

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

Fed Goes to War

The April 12, 2020, posting on the Money, Banking and Financial Markets site, entitled “The Fed Goes to War: Part 3,” expands on the discussion of the extraordinary measures taken recently by the Federal Reserve. Let me offer a personal endorsement: I find the site consistently and exceptionally helpful. Much has already been written about about this expansion of the Fed’s arsenal and the list of new facilities. Essentially, the playbook for last decade’s Great Financial Crisis has been reopened, and a whole new set of tools has been added. [Continued…]

Cumberland Advisors Market Commentary – A Very British Affair — Living with COVID-19 in the UK

Author: Kevin Humphreys, Post Date: April 15, 2020

A Very British Affair — Living with COVID-19 in the UK

Kevin Humphreys is a long-time commentary subscriber from the other side of the pond. He is a London-based independent financial market analyst and commentator with 23 years of trading and management in tier 1 UK banks followed by another 10 years in broking, management and market analysis roles, specializing in Eurozone and UK markets. Kevin [Continued…]

Cumberland Advisors Market Commentary – Governors and the States

Author: David R. Kotok, Post Date: April 13, 2020

Market Commentary - Cumberland Advisors - Governors and the States“Governor Gavin Newsom said that he would use the bulk purchasing power of California ‘as a nation-state’ to acquire the hospital supplies that the federal government has failed to provide. If all goes according to plan, Newsom said, California might even ‘export some of those supplies to states in need.’ “‘Nation-state.’ ‘Export.’ “Newsom is accomplishing [Continued…]

Cumberland Advisors Commentary – The Biblical Rembrandt

Author: David R. Kotok, Post Date: April 12, 2020

Rembrandt - Christ Before Pilate

In Amsterdam in 1632 , a talented young artist, Rembrandt Harmenszoon van Rijn, was commissioned to produce five etchings of biblical scenes. Rembrandt was born in 1606 and this was his breakthrough engagement, at age 26. His patron was Stadtholder Frederik Hendrik, Prince of Orange, the Dutch sovereign. Rembrandt was inspired by Rubens’s altarpiece in [Continued…]

Cumberland Advisors Market Commentary – Repos Revisited

Author: Robert Eisenbeis, Ph.D., Post Date: April 9, 2020

Market Commentary - Cumberland Advisors - Repos RevisitedOn March 12, a Wall Street Journal headline announced, “Fed to Inject $1.5 Trillion in Bid to Prevent ‘Unusual Disruptions’ in Markets” (https://www.wsj.com/articles/fed-to-inject-1-5-trillion-in-bid-to-prevent-unusual-disruptions-in-markets-11584033537). The inference was that the Fed was embarking upon a massive injection of funds into short-term money markets. That is, the first three offerings of $500 billion each were but the first [Continued…]

Cumberland Advisors Guest Commentary – Timely Data Matters

Author: Samuel E. Rines, Post Date: April 8, 2020

Guest Commentary - Timely Data MattersMy friend and Camp K veteran, Sam Rines ( Chief Economist at Avalon Investment and Advisory), has an excellent discussion on high frequency data and how critical it is in the current environment. He is kind enough to give us permission to share the entire piece entitled, “Timely Data Matters,” with our readers. Thank you, [Continued…]

Cumberland Advisors Market Commentary – WW2 versus WWC: The Doolittle Moment

Author: David R. Kotok, Post Date: April 7, 2020

WW2 versus WWC - The Doolittle Moment 1280x720

We’re going to look at World War 2 (WW2) versus the World War COVID-19 (WWC) events now unfolding and see what we can glean about markets, economies, interest rates, inflation rates, and the overall outlook. Let’s start with the stock market. We expect this will be a multi-part series. Below is a chart that shows [Continued…]

The War in Europe

Author: William Witherell, Ph.D., Post Date: April 3, 2020

The War in EuropeDuring the first quarter of 2020, Europe once again found itself to be in the center of a global war, this time against an invisible, very deadly enemy, the virus SARS-CoV-2, which causes COVID-19. At the end of the quarter, on March 31, the 19 countries of the Eurozone had 359,296 confirmed cases of the [Continued…]

The CDC Foundation

Author: David R. Kotok, Post Date: March 23, 2020

CDC Foundation Dr Judy Monroe & David KotokDear readers. The CDC Foundation is not widely known. It’s a 501(c)3 that was created by Congress as a special charitable agency. The Foundation works right alongside the CDC and other national health agencies but is an independent charity. It has a special-purpose charter. Its purpose is to respond rapidly to threats like COVID-19 or [Continued…]


John Mousseau will be part of a MoneyShow presentation next week (Apr 23, 2020 1:00 PM – 7:30 PM EDT) and his talk will be Bond Markets Through the Coronavirus. He’ll cover analysis of treasury, taxable, and municipal markets, federal monetary policy, and administration of fiscal policy. More info, talks by other speakers, and registration can be found here: Resetting Your Portfolio in a Changing World


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.