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Weekly Market Commentary
The Fed and rate cuts are back driving financial markets. A series of inflation reports suggested the disinflation trend may have stalled above the Fed’s target inflation rate. That raised doubts about the amount and timing of future Fed rate cuts. That concern was exasperated by Fed Chairman Powell’s speech on Thursday at the Dallas Regional Chamber wherein he stated, “the economy is not sending any signals that we need to be in a hurry to lower rates”. Overseas, relative economic conditions remain unchanged.
The S&P 500 ended the week at -2.05% with Foreign Developed at -2.56% and Emerging Markets at -4.45%, the latter perhaps exacerbated by concerns over the possible Trump tariffs. In the US, Large Caps... (click for more)
Benefits of Tactical
CLIENT-CENTRIC INVESTING:
UTILIZING TACTICAL MANAGERS TO IMPROVE RISK/RETURN
Characteristics of Client Portfolios
The most common method for building multi-asset portfolios is based on Modern Portfolio Theory (MPT). The biggest issue we have with this approach is that it is not aligned with most investors’ view of risk. MPT utilizes a process that seeks an efficient portfolio with a given level of risk measured by return volatility. This misalignment manifests itself when the market is down 36%, and a portfolio is down 33%. In this case, the manager is patted on the back (receives a bonus) for outperforming their benchmark, and the investor is out 1/3 of their investment… (click for more)
Monthly Market Commentary
The economic data reinforced the view of a bifurcated economy. Manufacturing remains recessionary, while Services unexpectedly moved higher in growth mode. Job growth rebounded from August’s weak level, although the makeup reinforced the bifurcation; healthcare, social assistance and government accounted for 40% of the new jobs with leisure and hospitality another 30%; manufacturing and transportation/ warehousing shed jobs. Inflation appears to be stuck at the plus 2.5% level, which reawakened concerns about future Fed rate cuts. As a result, the yield on the 10 Year Treasury rose throughout the month. Further compounding the yield rise was concern over potentially inflationary policies promulgated... (click for more)