This Week in the Market

With Scott McCaghren and Tony LaPorta

This week’s commentary covers a multitude of issues that is inherently relevant to the domestic equity markets. We are currently engulfed in an investment environment that is highly unpredictable. This is not to paint a negative picture on the future; rather, to provide some substance as to WHAT WE NEED TO KNOW. We maintain our positioning in the portfolios because we believe that we have the proper allocations. We believe that expected returns will overcome doubts and uncertainty. However, we also have to evaluate the possibility of market uncertainties, we have to evaluate the burden that those uncertainties always bear on the stock market.

 

These are very complex evaluations to say the least:

  1. US/China phase one trade deal continues to be incomplete, with seemingly future snags

  2. US/China trade war has weighed heavily on corporate foreign and domestic decisions

  3. Lack of economic growth in China, Europe and Japan has bolstered US dollar valuations

  4. Ongoing impeachment inquires and uncertainty coupled with looming government shutdown

  5. Global monetary expansion policies with seemingly no justification as to WHY?

  6. Domestic debt levels that have further steepened the yield curve (FYI- to cover the 2019 debt would require all taxpayers to fork over 57% in additional taxes)

  7. Supply and Demand mismatch in T-bills coupled with another repo spike

  8. Credit quality of corporate credit has tightened, meaning BBB is starting to look more like CCC

  9. Inclining global negative yielding debt

  10. Declining domestic corporate profits

  11. Current housing price crash in Australia, Canada and Sweden

  12. “Brexit” drama continues with little end in sight

 

This was not meant to paint a negative picture for our portfolios; rather, it was to highlight the ABSOLUTE necessity to have some protection built inside. As you will hear in the audio portion “These are not our father’s markets”. The key will be to navigate the volatility that we will surely see over the next 12 months.  We have constructed the portfolios to achieve just that. Yes, during major market upswings you will see less participation. However, we are in protection mode and why not? We have provided 12 bullet points above as to why you would want to be positioned this way. Do we want to see a market correction? OF COURSE NOT. But we must be prepared for all scenarios that these changing times can and will throw at us. TRUST THE PROCESS

 

As always, we continue to monitor all equity, treasury, commodity and currency conditions in order to efficiently deploy capital as well as protect invested assets.

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