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Weekly Market Commentary

Weekly Market Commentary 11/27/2020

-Darren Leavitt, CFA

US financial markets hit all-time highs during the week, with the Dow surpassing the 30,000 mark for the first time.  If markets can hold on to gains in Monday’s trading session, it will become the best November for market returns since 1928.  Value-oriented cyclicals continued to lead the rally, with the energy and financial sectors posting gains of 8.6% and 4.6%, respectively.  Catalysts included the GSA or General Services Administration acknowledging President-Elect Biden and making funds available to his team to start his transition to the presidency.

Biden also announced key figures to his administration, including Janet Yellen, former Federal Reserve President, to be Treasury Secretary.  Additional news on the progress for a vaccine and therapies to combat Covid-19 also provided a lift.  Astra Zeneca announced its trial had been 90% effective. However, later in the week, the company admitted they had some errors within their trial related to manufacturing and dosing, which will likely cause the vaccine approval to be delayed.  Regeneron’s antibody cocktail received emergency use approval from the FDA, which had been widely expected.  There are currently ~62 million confirmed cases in Covid-19 globally, with 1.454 million deaths.  Additional lockdown measures continue to occur across several geographies, but many news reports suggest a vaccine will become available by year-end.

For the week, the S&P 500 gained 2.3%, the Dow added 2.2%, the NASDAQ tacked on 3%, and the Russell 2000 led again with a gain of 3.9%.  The action in US Treasuries was somewhat muted in the holiday-shortened week.  The 2-year yield was unchanged at 0.15%, while the 10-year bond yield increased by one basis point to close at 0.84%.  West Texas Intermediate crude continued to rally, gaining $3.29 or 7% to close at $45.46.  Of note, there will be an OPEC meeting in the coming week where continued production limits will be discussed.  Gold continued its descent, losing 4.7% or $89.3 to close at $1783.60 an Oz.   Interestingly, Bitcoin traded north of $19,000 but subsequently sold off more than 18% before stabilizing.  There were no changes to our models last week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

 

Weekly Market Commentary

Weekly Market Commentary 11/20/2020

-Darren Leavitt, CFA

Financial markets were mixed last week.  Cyclicals continued to outperform on news that Moderna and AstraZeneca vaccine trials have shown excellent results.  3rd quarter earnings continued with better than expected results out of NVidia, Target, and Walmart.  Boeing helped the industrial sector’s performance on news that the FAA has approved the 737 Max safe to fly again.  Tesla shares rose 20% on news that the company would be included in the S&P 500 index in December.  Economic data continued to be mixed with solid housing data and disappointing retail sales data.

Investors will undoubtedly take a closer look in the coming week at the Treasury Secretary’s move on Friday to cease five emergency lending facilities under the Cares Act by the end of December.  The move comes as the Federal Reserve has pleaded for more stimulus out of congress, not less.  There was also positive news out of the EU on late Friday that suggests the EU is 95% there on a BREXIT agreement.

The S&P 500 lost 0.8%, the Dow decreased 0.7%, the NASDAQ increased by 0.2%, and the Russell 2000 led with a gain of 2.4%.  US Treasury yields fell on the week, with the 2-year note yield decreasing by two basis points to close at 0.15% and the 10-year bond yield falling six basis points to 0.86%.  Gold prices continued to fall, losing $13.90 to close at $1872.90 an Oz.  Interestingly, Bitcoin eclipsed $18,000 on the week.  Oil prices increased another 5% or $2.05 to close at 42.17 a barrel, which again helped propel the energy sector higher for a second week.  There were no changes to our models during the week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

 

Weekly Market Commentary

Weekly Market Commentary 11/13/2020

-Darren Leavitt, CFA

Financial markets rallied to all-time highs on news that Pfizer and BioNTech have a 90% effective Covid-19 vaccine.  The news induced a robust rotation trade out of Mega-cap Technology shares into value-oriented cyclicals.  Financials, energy, and industrial sectors lead the way while information technology and consumer discretionary shares lagged.  The S&P 500 gained 2.2%, the Dow rose 4.1%, the Russell 2000 increased 6.1%, and the NASDAQ fell 0.6%.  US Treasuries sold off with the 2-year note yield rising one basis point to close at 0.17% and the 10-year bond yield adding seven basis points to close at 0.89%.  Gold lost just over 3% or $65.40 to close at $1886.80, an OZ, while oil increased 8% to close at $40.12 a barrel.  There were no changes to our models during the week.

The trading week was all about receding concerns regarding the election and optimism surrounding a vaccine for Covid-19.  Election results continued to favor President-Elect Biden while the Trump campaign continued to pursue legal actions to dispute the election.  Congressional results continued to show a divided house.  Republicans picked up some seats in the lower house, but Democrats continue to hold a majority.  In the Senate, it appears Republicans will maintain the majority. Still, two contested seats in Georgia will go to a run-off on January 5th, which has the potential to change the balance.  Biden continued to build his transition team with an initial focus on creating a Covid-19 task force.

On Monday, pharmaceutical companies Pfizer and BioNTech announced they had a Covid-19 vaccine that is 90% effective.  The news spurred a massive rotation trade out of “stay at home” themed stocks into beaten-down cyclicals.  Airline stocks and other travel-related companies traded higher on the news while the technology and consumer discretionary sectors sold off.  It is expected that additional vaccine efforts will show similar successes.  Moderna and Oxford AstraZeneca could announce the results of their trials in the coming weeks.  The positive news on the vaccine front comes as infection rates continue to show dramatic increases worldwide.  In the US, daily infection rates have surpassed 180k, which has urged some states to increase lockdown mandates.  The lockdowns will likely have an economic impact, while congress continues to be at an impasse in providing another tranche of stimulus.  Federal Reserve President Jerome Powell last week warned that the next few months could be difficult for the economy.  Markets will likely continue to be volatile in the coming weeks as short-term setbacks related to regional lockdowns are balanced with the positive prospects of an effective vaccine or vaccines.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

 

 

Weekly Market Commentary

Weekly Market Commentary 11/6/2020

-Darren Leavitt, CFA

It was an extremely busy week on Wall Street.  The election results were top of mind for investors, and given the current expected outcome gave investors reason to buy risk assets.  The Federal Reserve Open Market Committee also met last week, leaving rates unchanged.  Economic data for the week continued to send mixed messages but showed surprising strength in the labor market.

The S&P 500 gained 7.3% getting back the 5.6% it lost in the prior week for the week.  The NASDAQ soared 9% while the Dow and Russell 2000 each added 6.9%.  US Treasury yields inched a bit higher, with the 2-year note yield increasing one basis point to close at 0.16% and the 10-year bond yield rising by four basis points to close at 0.82%.  Gold gained just over 2% or $42.60 to close at $19,512 an Oz.  Oil prices also bounced back during the week on news that OPEC may prolong production cuts.  WTI increased 4% to close at $37.14 a barrel.  We had some slight changes to our Blackrock models, where we reduced exposure in US government fixed income and increased exposure to equities.

A best-case scenario seemingly played out in the US elections where Congress remains divided.  The realization that a huge stimulus plan was now unlikely coupled with the likelihood that tax policy would not regress and that healthcare reforms would be measured helped spur buying.  The perceived stalemate offered Wall Street predictability and gave investors reason to buy what has been working in the market so far this year, namely, large-cap growth companies centered in the technology sector.  However, it appears President Trump will contest the election, and it is still a very close call concerning the Senate- two Senate seats in Georgia will go to a runoff in early January and could alter the current Republican majority.  Of note, Senate Majority Leader McConnell said he would like to get some lite version of stimulus passed before the end of the year. Still, with President Trump contesting the election results, this may be unlikely and could put pressure on certain parts of the market in the near term.

The Federal Reserve, Open Market Committee meeting offered very little in new news.  The Fed kept their policy rate range at 0-0.25%.  Fed President J Powell also said that the current rate of asset purchases was appropriate but left the door open to increase purchases.  It is likely that without a stimulus packaged that the Fed will need to increase their purchases but will likely wait and hope that Congress can get something put together and passed in the next few weeks.

October ISM Manufacturing was better than expected, accelerating to 59.3 versus expectations of 55.7 and the September reading of 55.4.  ISM Non-Manufacturing was a bit of a disappointment coming in at 56.6 versus the consensus estimate of 57.3 and the prior reading of 57.8.  Initial claims were a little higher than expected at 750k, but Continuing Claims trended lower to 7.285 million.  The October Employment situation report showed an increase of 683k Non-farm payrolls well above the expected 570K.  Additionally, the report showed Non-farm Private Payrolls increased by a whopping 906K versus expectations of 650k.  The report also showed the unemployment rate falling to 6.9% versus the prior reading of 7.9%.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

 

 

Weekly Market Commentary

October 30th, 2020

-Darren Leavitt, CFA

Markets sold off in what was a hectic week.  The earnings and economic calendar were stacked.  Coronavirus infection rates ticked higher and induced lockdown measures in France, Germany, and the UK, which hindered sentiment.  The uncertainties surrounding the election outcome also gave investors reason to move to the sidelines.  For the week, the S&P 500 lost 5.6%, the Dow was hit the hardest, losing 6.5%, the NASDAQ shed 5.5% falling below 11k, and the Russell 2000 gave up 6.2%.  US Treasuries offered no cover.  The 2-year note yield ticked one basis point lower to 0.15%, while the 10-year yield increased by two basis points to close at 0.86%.  Oil got hammered on the tempered economic outlook, losing 10.5% or $4.18 to close at 35.70 a barrel.  Gold managed a small gain of $3.40, closing at 1908.60.  We did have a change in our Momentum and Flex models, where we reduced our exposure in emerging markets and used the proceeds to increase our exposure to investment-grade credit.

The week started with a horrible earnings report out of German software provider SAP.  The company missed expectations and lowered expectations on economic growth concerns. The announcement set the tone in Europe’s Monday morning session; the sell-off caused additional selling overnight in US futures markets.    In the US, it was the busiest week so far for 3rd quarter earnings announcements.   The week featured several stalwart technology company results.  Interestingly, Apple, Facebook, and Amazon announced in-line to better than expected results but sold off on the notion that the results were already priced into the stocks.  Of note, many technology company CEOs were also in front of Congress during the week, answering multiple lines of questioning.  Google and Microsoft had better than expected earnings and were able to trade higher.  Twitter missed expectations and lowered guidance, which hammered the stock.

The economic calendar was full during the week and again offered a mixed bag of results.  Personal income and spending both beat expectations with gains of 0.9% and 1.4%, respectively.  The final reading of the University of Michigan Index of Consumer Sentiment came in at 81.8 versus 81.2 and up from the prior reading of 80.4.  Consumer Confidence regressed a bit, coming in below expectations at 100.9 and below the previous reading of 101.3.  Initial jobless claims were slightly better at 751k, and Continuing Claims continued to fall, coming in at 7.756 million versus last week’s number of 8.465 million.  New Home Sales data was surprisingly weak, given what has been a red hot real estate market.  Sales came in at 959k versus expectations of 1040k and the down from the prior reading of 994k.

There are plenty of uncertainties for the market to consider right now.  The election results this week will likely have a significant influence on the market.  Additionally, a large spike in Covid-19 infections caused more lockdown measures in Germany, France, and the UK.  The lockdowns will undoubtedly affect the global economy and raised questions on further lockdown measures for other countries, including here in the US.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

October 23rd, 2020

-Darren Leavitt, CFA

Markets traded sideways for much of the week as investors continued to watch Washington fail to negotiate another tranche of stimulus.  3rd quarter earnings continued to roll-out with results coming in mixed.   The familiar trade rotation out to Mega-cap tech and into value-oriented cyclicals was also on during the week.  Economic data reported was a source of encouragement, especially on the employment front.  News surrounding a Covid-19 vaccine and treatment was positive and helped market sentiment during the week.

For the week, the S&P 500 lost 0.5%, the Dow fell 0.9%, NASDAQ lagged, giving back 1.1%, and the Russell 2000 bucked the trend with a gain of 0.4%.  The US yield curve steepened with the 2-year note yield increasing by one basis point to close at 0.16%, and the 10-year bond yield jumping ten basis points to close at 0.84%.  The steepening action benefited the financial sector, which gained over 1% on the week.  The commodity complex’s price action was relatively muted, with Gold losing $1.30 to close at 1905.20 an Oz and Oil shedding $1.02 to close at $39.83 a barrel.  There were no changes to our models during the week.

For most of the week, investors watched for progress in Washington on another tranche of stimulus. By the end of the Friday session Treasury Secretary, Mnuchin, announced that there were still significant differences in the negotiations.  The Presidential debate yielded very little new information but addressed some of the political posturing in stimulus negotiations that seemed to cast even more doubt on a possible deal.  It is probably unlikely a deal gets done, but surely the rhetoric will continue to keep investors’ attention.

A blowout quarter from SNAP highlighted 3rd quarter earnings results; the stock gained over 50% following its announcement, which helped propel the communication services sector 2.1% higher on the week.  On the other side of the coin, Netflix, Intel, and American Express disappointed investors.  Next week will be another big week for earnings announcements and will showcase Apple’s results.

Initial Jobless Claims for the week showed real improvement coming in at 787k, which was better than the prior reading of 842K and the consensus estimate of 875k.  Continuing claims also showed continued improvement coming in at 8.37 million down from 9.39 million in the preceding reading.  Existing home sales came in better than expected at 6.54 million versus the consensus estimate of 6.15 million.

There was plenty of news regarding the uptick in coronavirus infections, treatment, and the pursuit of a vaccine that helped investor sentiment. Gilead’s remdesivir received FDA approval for treatment of Covid-19, AstraZeneca and Moderna announced that they might seek FDA approval for their Covid-19 vaccines as soon as the end of December, and J&J announced that it would continue its trial on its vaccine after halting the trial early last week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

October 16th, 2020

-Darren Leavitt, CFA

US Market averages were little changed for the week.  The beginning of 3rd quarter earnings started with ho-hum results from the financials, some transports also missed the mark, and a high flying cloud computing company, Fastly, fell well short of expectations.  Another failed attempt to negotiate a stimulus package was disappointing, and it now appears as though further negotiations will be is pushed back until after the Presidential election.  News that Johnson and Johnson and Eli Lilly had halted their Covid-19 vaccine trials further dampened investor sentiment.  Economic data for the week was mixed.

For the week, the S&P 500 gained 0.2%, the Dow inched higher by 0.1%, technology outperformed, and help send the NASDAQ higher by 0.8%, and the Russell 2000 gave up 0.2%.  US Treasuries advanced slightly on the week, sending yields lower.  The 2-year yield lost one basis point to close at 0.15%, while the 10-year yield lost four basis points to close at 0.74%.  Gold prices fell 1.3% or $25.60 to close at $1906.50 an Oz. Oil was little changed on the week; WTI closed at $40.85 a barrel.  There were no changes to our models.

3rd quarter earnings started in earnest last week with Citibank, JP Morgan, and Goldman Sachs reporting results.  The results did not impress investors, and perhaps more important was the cautious tone on the economy that management conveyed on their respective calls.  Earnings out of KSU and JB hunt missed the mark and caused transports to sell-off.  An inline result out of highflying cloud company Fastly coupled with management lowering estimates for the next quarter prompted some selling in the Tech sector.  We are just getting started on earnings, so results, management commentary, and guidance will continue to influence the markets over the next several weeks.

The 2nd tranche of coronavirus stimulus looks less and less likely before the election.  Both sides continue to be far apart on their packages, and now, it appears the GOP is at odds with the administration’s most recent proposals.  Market participants have been keenly focused on the negotiations and hopeful that a deal could get done; investor enthusiasm could be curbed until an agreement is forged.

Gyrations in progress for a vaccine are a certainty and will likely continue to influence markets.  Midweek J&J and Eli Lilly announced that they would halt some of their trials due to some adverse effects.  The news comes nearly a month after Astra Zeneca paused one of their trials only to see it restart after a couple of weeks.  In contrast, Pfizer announced late in the week that it may seek emergency FDA authorization for their Covid-19 vaccine as soon as the end of November.

Economic data for the week was mixed.  High-Frequency initial claims data continued to show a distressed employment market.  Data for the week showed 898k new claims for unemployment insurance above the expected 830k.  Continuing claims showed some progress coming in at 10.18 million versus last week’s 11.18 million.  Industrial production fell well short of the 0.6 estimate coming in at -0.6.  On the bright side, September Retail sales came in much better than expected at 1.9 versus estimates of 0.6.  The report showed strong spending within many consumer discretionary components, which is certainly encouraging.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

October 9th, 2020

-Darren Leavitt, CFA

Markets extended their rally last week on optimism around another tranche of stimulus.  Value-oriented small-cap cyclicals were in favor and sent the Russell 2000 up 6.4% for the week.  The S&P 500 gained 3.8%, the Dow was higher by 3.3%, and the NASDAQ increased by 6.4%.  The US Treasury curve steepened as the 2-year note yield increased by three basis points to 0.16% while the 10-year bond yield gained eight basis points to close at 0.78%.  Hurricane Delta closed down gulf coast refining, which helped send WTI up nearly 10% or $3.59, to close at $40.64 a barrel.  Gold prices increased by $18.40 to close at $1926 and Oz.

We had several changes to our models last week.  The Smart Core and Core models reduced exposure to small-cap equities and added to quality large-cap issues.  The models also increased exposure to Emerging markets where economic recoveries look more robust than in the developed international economies.  In our Flex series, we added high yield exposure and emerging market bonds while reducing exposure in long and mid-duration US Treasuries.

Investors regained optimism that a stimulus package deal was close to being inked, which helped send equity markets higher for most of the week.  On Tuesday, Trump tweeted that an agreement would not be forged until after the election and instructed his advisors to stop negotiations.  The tweet sent shares lower on Tuesday, but subsequently, they regained ground after news reports suggested that Pelosi and Mnuchin were still trying to negotiate a deal.  By the end of the week, President Trump was said to favor a much larger fiscal package than his earlier proposals.   Stay tuned.

A better than expected ISM Non-Manufacturing report also helped market sentiment.  The September report showed increased momentum in services coming in at 57.8 versus an expectation of 56; the report was even better than the August figure of 55.  On the other hand, Initial claims continued to paint a complicated employment picture.  For the week, 849k people claimed unemployment insurance versus and expectation of 837k.  Continuing claims regressed a bit from the prior week coming in at 11.979 million.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

October 2nd, 2020

-Darren Leavitt, CFA

Financial markets rallied last week, putting an end to four straight weeks of losses.  Investor optimism was stoked early in the week on news that the Administration and Democrats were working on a fiscal stimulus compromise.  Oversold conditions also prompted technical buying.  The first presidential debate yielded very little in policy clarification but instead demonstrated how ugly American politics have become.  On Friday, markets fell on news that President Trump and the First Lady had contracted Covid-19.  Additionally, it appears that many members of the administration and at least two Republican senators have also contracted the virus.  The week’s economic data was mixed with mixed signals coming from the employment situation report, initial claims, and continuing claims.

The S&P 500 rallied 1.5% for the week while the Dow gained 1.9%, the NASDAQ increased 1.5%, and the Russell 2000 outperformed by moving 4.4% higher.  US Treasury trade continued to be muted.  The 2-year note yield was unchanged at 0.13% while the 10-year bond yield ticked one basis point higher to close at 0.70%.  Gold rallied ~2% or $41.30 to close at 1907.60 an Oz.  Oil continued its downward trend losing ~8% or $3.17 to close at $37.05.  We did have a minor tweak to the Flex models last week.  We sold out of some of our US equity exposure and added a position in Japanese equities.

Markets started the week on solid footing after Nancy Pelosi suggested that a fiscal stimulus deal was still possible to attain.  Treasury Secretary Mnuchin also telegraphed the possibility of a deal.  However, by the end of the week, Pelosi’s 2.2 billion dollar proposal was dead on arrival.  A deal now appears to be more unlikely than ever given the current state of Washington.  News that the President has fallen ill to the coronavirus along with some of his staff and republican senators cast even more uncertainty on the election, a fiscal stimulus deal, and the Supreme Court confirmation hearings for Judge Amy Coney Barrett.  Market participants will undoubtedly monitor the President’s health, which will likely continue to influence the markets in the coming weeks.

The much anticipated September Employment situation report showed that Non-Farm Payrolls increased 661k, which was below expectations of 800k.  The Unemployment rate fell to 7.9% from the prior reading of 8.4%.  Initial claims for the week came in at 837k, which was slightly better than the 850k expected.   Continuing Claims continued its downward trend coming in at 11.767 million from the prior week’s 13.1274 million.   ISM Manufacturing came in at 55.4 versus expectations of 56.  We will receive ISM non-manufacturing data on Monday.

Weekly Market Commentary

September 28th, 2020

Chadd Mason, CEO The Cabana Group

Volatile Markets Continue as We Approach an All-Important Earnings Season

U.S. equity indexes continue to experience heightened volatility. This has been the case for much of September and should come as no surprise given the season and all that investors have on their plate. We have been watching the S&P 500 closely as a proxy for the broad equity market. Seven trading days ago it sliced through its 50-day moving average and ultimately held late last week at the 320 level. The drop from new highs was more than 10% and coincided with the exact level where we started the year. Since then we have seen buyers step in and push the index right back to its 50-day moving average. This is a logical place for resistance to kick in and selling to resume. This level also represents a move back up to the downward sloping trend line established when we fell from the September 2 highs.

It is noteworthy that the bounce over the past two days has occurred on decreasing volume. All these factors cause me to be skeptical of the case that the selling is over. I hope I am wrong and we can close the week back above the 50-day average, but my guess is we still need to test the 200-day moving average at 310 (SPY) before we have enough real support to move higher. Time will tell.

Earnings ultimately drive price, so it is worth discussing where we are on that front. Since the end of the second quarter, we have seen that most companies’ ability to generate profits has been severely impacted by the economic shutdown brought on by COVID. To put it simply, earnings growth has stopped and threatened to turn negative year-over-year. It is the expected growth in earnings that causes investors to pay a premium for stock. If earnings don’t rise, then investors don’t buy. This reality between earnings growth and price underpins the general disconnect between Wall Street and everyday companies. A rally to all-time highs just doesn’t make much sense given this lens. To justify prices above the February highs, investors would have to expect earnings growth above what we were seeing then. Back then, we were seeing year-over-year growth expectations approaching 10%. So, if earnings growth is flat, why would prices today move above those levels? Great question. The answer is, they won’t unless growth expectations warrant it.

Some good news is that the earnings freefall appears to have bottomed. The expectation is that growth began to resume in the third quarter. We are going to see if that expectation is correct as third quarter earnings are underway in just a few days. In all my time doing this, I don’t know that I have ever seen an earnings season as important for the overall health of the market, psychologically and otherwise. The first quarter earnings season of 2009 was huge and kick started the bull market that lasted a decade. The difference here is that in 2009 we were at the bottom with no way to go but up. Today we are at a top and have a long way to fall.

At Cabana, we remain Cautiously Bullish following reallocation to lower beta (defensive) positions last week.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

September 21st, 2020

Chadd Mason, CEO The Cabana Group

A Necessary Dose of Reality

Equity markets resumed selling after the Federal Reserve meeting last Wednesday. The 50-day moving average on the S&P 500 was promptly broken, and closed well beneath that important technical average on Friday. It appears that investors are finally concluding that the only way out of the economic hole we are in will be a tough climb.

While I don’t expect to see the lows we saw this spring, I do think (and have pointed out) there have been many warning signs that the pace of the equity market’s advance is unsustainable. We have discussed the lack of participation in the rally by important sectors such as finance, manufacturing, and industrials. Energy remains mired in a world of pain. These are not good signs when trying to support an argument for rapid growth on the horizon. The simple fact is that reality does not support all-time highs in the stock market. The disconnect between Wall Street (the haves) and “Main Street” (the have nots) is profound. Eventually that imbalance is going to show up in equity prices. On top of what I’ve described here, we are facing a traditionally difficult and volatile season for stocks, coupled with a presidential election like no other in our lifetimes. Oh, and let us not forget that little thing called the Coronavirus.

Investors have needed a dose a reality for some time now. I expect this pullback to continue and for the 200-day moving average to be tested at 3100 (S&P 500). At this writing, the major indexes have given up between 8% and 11% of their recent gains. The S&P 500 is now flat for the year and the Dow is back under water. The Nasdaq remains positive on the back of continued outperformance by big tech.

At Cabana, we are in the process of reallocating to remove risk from our portfolios, consistent with what we are seeing in the markets, as well as CARA’s signal. We are moving from our Transitional Bullish/Bullish Scene to our Cautiously Bullish Scene.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com

Weekly Market Commentary

September 14th, 2020

Chadd Mason, CEO The Cabana Group

Volatile Markets and Wildfires Continue, But Not All News is Bad

Markets continue to be volatile this week as investors try to determine whether we have come too far too fast off the March lows. The good news is that the 50-day moving average (SPY) has survived three tests in the past five trading days. For those market technicians out there, it is also notable that the relative strength index of the S&P 500 pulled back from overbought conditions at the 80 level and has held at 40. The 40 level on the RSI represents an important level of internal support. This technical fact, along with buyers stepping in at the 50-day moving average indicates that the uptrend remains intact for the time being. We are also seeing some outperformance in the Dow, which is a positive and suggests some money is moving into sectors other than big tech – another good sign. We need some participation from of the industrial, transport and financial sectors for this rally to survive and grow.

Between fires burning out of control all over northern California and Oregon, legitimate protests along with criminal riots in our cities, political division and anger, and the greatest medical threat to our society in one hundred years… I am exhausted. The “stock market” with all its up and downs suddenly feels like a warm and fuzzy place to focus one’s attention. That reality alone speaks more about the current state of our world than the stock market. At Cabana, we remain in our Bullish/Transitional Bullish Scene.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

 

Weekly Market Commentary

September 8th, 2020

Chadd Mason, CEO The Cabana Group

Stocks Enter Uncharted Waters During Most Volatile Time of the Year

Equity markets hit a wall on Thursday and selling began in earnest for the first time since March. In my opinion, the straight up move in equity indexes since the March 23 low was not supported by the country’s basic economics. I have previously discussed the lack of participation by many important sectors, as well as the idea that the “stock market” advance was actually just an incredible advance by a few huge tech companies. Last week, I suggested that the conditions were ultimately unsustainable. Eventually, even the best and highest flying of tech companies would be impacted by very basic things like unemployment, a quarantined population and many businesses still operating at half capacity or less. Over three short days we have seen the S&P 500 drop 8%, while the Nasdaq dropped nearly 11%. The adage that the higher they fly, the further they fall has meaning in the world of investing.

The S&P 500 closed today at session lows and right at its 50-day moving average. The pullback to this level represents at best a much-needed dose of reality and some healthy consolidation before markets can move higher with broad participation. At worst, the high-volume selling is the beginning of a deeper correction representing a very murky financial outlook for the remainder of the year. One thing is for sure – we are in uncharted waters during the most volatile time of the year. Top that off with the most divided nation of my lifetime, a presidential election seven weeks away that epitomizes that divide, and the worst medical pandemic in one hundred years yet to be resolved…

I remain optimistic that investors got most of it right over the past five months and that the worst is behind us. We are still very much within the medium-term uptrend and that will not change until the S&P 500 closes below 3100. That technical level represents the all-important 200-day moving average and the summer lows. If we do not hold at current levels, expect a drop to those prices in the coming weeks. That would represent a correction of 14-15% from the recent highs. Given the advance of more than 50% since the end of March, a 15% correction would seem reasonable. A drop below that level would give me pause. I would expect volatility to continue over the next few weeks as this (and other issues) get resolved.

As always, it is when things get scary that investors need a process to fall back on. “Trust the process,” is one of the most valuable pieces of advice I have ever heard. I have no idea where we will stand on many things come January 1, 2021. What I do know is that we will respond to market conditions as they evolve, and we will follow our process at Cabana. We may not catch tops or bottoms, but we will seek to avoid large losses when things are bad and stay invested to participate in gains when things are good.

We remain in our Bullish/Transitional Bullish Scene but are preparing to reallocate to remove risk across all portfolios should conditions continue to deteriorate.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

August 31st, 2020

Chadd Mason, CEO The Cabana Group

Is the S&P 500 a True Reflection of the U.S. Economy?

The S&P 500 has officially closed out weekly trading at new all-time highs. It is now up nearly 8% for the year. We have watched this “broad” index battle to pass February highs over the past several weeks. It follows the tech-focused Nasdaq, which did so earlier in the summer and has continued to plow higher on an almost daily basis. The Dow Jones lags and is still well below its February highs.

So, why is it that the Dow is so out of line compared to the other two well-known gauges of stock market performance? The reason is very simple – and a bit concerning. I touched on it last week and will provide a little more insight this week. Each of these indices are market cap weighted, which means bigger companies make up a relatively larger share of the index price performance. Currently, the S&P 500 and Nasdaq contain all the big-name tech companies. These include Apple, Microsoft, Nextflix, Facebook, Amazon and more. The Dow, however, only contains Apple and Microsoft. It is this sliver of the economy that has resulted in the incredible rally we have seen in the stock market over the past five months. It is not the “stock market” that has performed so well, but rather a very few huge companies that account for the daily cheering on CNBC. That is what is concerning. The traditional bellwethers of the U.S. economy, many of which make up the old and stodgy Dow Jones 30, are not doing nearly as well. Unfortunately, these companies are a much better reflection of what is going on in the real economy as opposed to the tech sector alone, and big tech in particular. It is for this reason I have suggested that we need to see increased participation by other sectors and industries for the broad market to continue higher. While it may be argued that technology is the new economy and nothing else matters, let us not forget that same argument was made during the high times of the tech bubble in 1998-2000. We all know how that ended. Eventually, it comes home to roost that all of the other companies out there employ many people and their businesses have been financed by many banks. At some point the weakness elsewhere reaches an inflection point, income recedes, loans dry up, and people stop buying new iPhones and ordering clothes on Amazon Prime. Be cautious when people say it’s different this time.

We are asset allocators. We use large asset class ETFs and have been able to benefit from (or at least avoid) the underperformance from the factors I have set out above. With that said, that doesn’t mean we aren’t watching it or that it doesn’t matter, because it does. We remain in our Bullish/Transitional Bullish Scene until proven otherwise.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

August 24th, 2020

Chadd Mason, CEO The Cabana Group

Tech Companies Lead the S&P 500 to Record Highs

This past week the S&P 500 battled resistance at its previous all-time highs (just below 3400). We had two consecutive record closes, only to fall back after the Wednesday release of minutes from the previous Federal Reserve meeting. Those minutes revealed just how much uncertainty exists within the minds of our central bankers. The gist is that our economy took an unprecedented beating during the second quarter and it is entirely unclear when or even if we will return to pre-COVID strength as an economy. A medical solution is the only way out at this point.

Despite the Fed’s gloomy assessment, the broad indexes closed higher on Friday and are higher again today. As of this writing, the S&P 500 is at 3420 and holding. This is certainly a good sign and strong evidence that we can go higher. I remain concerned that the bulk of the rally has occurred on the back of a select few gigantic companies. These include Amazon, Google, Apple and Netflix. The most common indexes, such as the Dow Jones, Nasdaq and S&P 500 are market-cap weighted, which means that the bigger the company, the more it makes up the index in percentage terms. These few behemoths now make up more than 20% of the entire S&P 500. This skews the performance of the index to reflect the performance of just a few companies, rather than the performance of the broader economy. Unfortunately, if you look “under the hood” you will see that the vast majority of companies are underperforming, and many remain in bear market conditions. Investors who have single stock portfolios know what I mean.

We need to see broad participation by more than just the tech sector for this rally to continue. We need small-caps and mid-caps to catch up and outperform as they typically due in a healthy economy. As I have stated the past two weeks, we need to see the financial sector participate. Banks have lagged far behind and that needs to change. Some of that is occurring today, but one day does not make a trend.

I am an optimistic investor and the glass is at least half full right now. I just would feel a lot better if some of the corporate good news was spread out a little bit. As good as Apple and Amazon are, they can’t carry the entire U.S. economy alone.

At Cabana we remain in our Bullish/Transitional Bullish Scene.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

August 18th, 2020

Chadd Mason, CEO The Cabana Group

There are Many Unknowns, but the Market Continues to March On
The S&P 500 and the Dow continue their respective attempts to break through the all-time highs established in February. Both major indices have been trading in a tight range just below those levels for the better part of the last two weeks. The tech-focused Nasdaq has already done so and has set numerous records over the summer. Small- and mid-caps have lagged shares of larger companies throughout the bounce off market lows, which began on March 23. The same can be said of energy, financials, and industrials. Real estate has faced significant headwinds due to expected foreclosures, despite favorable interest rates. If your tenants can’t pay their rent it doesn’t matter how great a deal you have on the financing side of your business. Not surprisingly, healthcare, consumer goods and technology remain sector leaders within the S&P 500.

Last week saw some profit taking in bonds, gold, and dividend payers. These assets have outperformed during the COVID-19 pandemic and the current retracement back to pre-COVID highs is a good place to reassess. The longer we can hold here without a pronounced sell off, the more likely we are for another leg up in stocks.

Make no mistake, there are many, many unknowns that investors seem to be discounting to the upside. Any number of things could occur that would result in a swift reality check and concurrent drop in prices. To me, it feels like we are in a holding pattern. Look for an end-of-week close above 3400 on the S&P and some leadership in financials for evidence that the next move up has begun. On the downside, we have room all the way down to 3200 before the current uptrend would be in jeopardy.

At Cabana, we remain in our Bullish/Transitional Bullish Scene.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

August 10th, 2020

Chadd Mason, CEO The Cabana Group

The S&P 500 Inches Closer to All-Time Highs, Encouraged by Q2 Earnings
Major equity indices are positive for the year. The Nasdaq is now at all-time highs on the back of blowout performance from Amazon, Google, Facebook and Netflix. These companies, along with the tech sector in general, have thrived amid social distancing and remote working. Technology is the driver of innovation and will continue to benefit as humans are required to adapt to the new world brought on by the COVID-19 pandemic. Another winner is Walmart, which in its efforts to keep up with Amazon has found itself capable of providing basic necessities to people through a variety of channels. The S&P 500 is within a whisker of its all-time highs reached in February. FactSet Data is reporting that of the companies which have released second quarter earnings, more than 80% have beaten sales and revenue expectations. Some of this is due to outstanding management in navigating this year’s difficult conditions and some is due to analysts having set the bar extremely low. Regardless of the reason, companies are still working and grinding forward.

President Trump unilaterally implemented additional economic relief when it appeared that neither Republicans nor Democrats could reach a consensus. At first glance, he appears to have split the difference in hopes that continued negotiation will occur behind the scenes. Whether you are a Trump fan or not, his action is necessary to prevent a cataclysmic waterfall of defaults and evictions. It remains to be seen if these types of stopgap measures can keep a severe recession or even depression at bay. In my view, we are just buying time until a medical solution is obtained.

One thing appears certain – interest rates are going to remain historically low for a very long time. Real rates (after adjustment for inflation) are deeply negative. This means that you are actually losing money by investing in many bonds, CD’s and money market accounts. That fact alone forces money into equities, preferred shares and other risk assets as investors desperately search for yield. In addition to benefitting stocks, gold has moved above 2000 per ounce. Investors are buying gold because it represents a store of value against a deteriorating U.S. dollar and interest rates are no longer a deterrence. The dollar is now at its lowest level in more than two years. While a strong dollar evidences a strong U.S. economy, a weak dollar benefits our exporting manufacturers, as well as commodity producers. This may not be a bad thing right now. Those sectors can use any help they can get.

Look for a pullback or at least a period of consolidation as the broad markets reach the February highs (3400 on the S&P 500). The ability to break through that level will likely dictate whether we have completed the shortest bear market in history or simply completed the sharpest bear market bounce in history. At Cabana, we remain in our Bullish/Transitional Bullish Scene.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

August 3rd, 2020

Chadd Mason, CEO The Cabana Group

All Eyes on Congress
Equity markets continue to push higher in the face of ongoing uncertainty. We discussed last week that the next probable stop for the S&P 500 (SPY) is the February high of 3400. We continue to move in that direction.

All eyes are currently on Congress as coronavirus relief package negotiations resume this week. It is likely priced in that the White House and congressional Democrats will come to an agreement and an additional relief bill will be passed. Failure to do so would be catastrophic to the economy. Historic numbers of Americans are out of work and all substantive relief expired over the weekend. The politicians in Washington know this, and what is taking place now is posturing. Trump and the Republican party have to enter November with some economic stability if they want any chance of getting reelected. The Democrats on the other hand understand it is their base that is hurting the most right now. So, there you have it.

We are entering a seasonally weak period in the equity markets, notwithstanding all that has happened in the past six months, and are approaching a logical spot for resistance to kick in. A pullback in prices is certainly on the table over the next few weeks. For now, we remain in our Bullish/Transitional Bullish Scene.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com

Weekly Market Commentary

August 3rd, 2020

Chadd Mason, CEO The Cabana Group

All Eyes on Congress
Equity markets continue to push higher in the face of ongoing uncertainty. We discussed last week that the next probable stop for the S&P 500 (SPY) is the February high of 3400. We continue to move in that direction.

All eyes are currently on Congress as coronavirus relief package negotiations resume this week. It is likely priced in that the White House and congressional Democrats will come to an agreement and an additional relief bill will be passed. Failure to do so would be catastrophic to the economy. Historic numbers of Americans are out of work and all substantive relief expired over the weekend. The politicians in Washington know this, and what is taking place now is posturing. Trump and the Republican party have to enter November with some economic stability if they want any chance of getting reelected. The Democrats on the other hand understand it is their base that is hurting the most right now. So, there you have it.

We are entering a seasonally weak period in the equity markets, notwithstanding all that has happened in the past six months, and are approaching a logical spot for resistance to kick in. A pullback in prices is certainly on the table over the next few weeks. For now, we remain in our Bullish/Transitional Bullish Scene.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com

Weekly Market Commentary

July 29th, 2020

Chadd Mason, CEO The Cabana Group

Trust the Process
My apologies to everyone for the late commentary this week. I spent the last five days on a golf and BBQ tour across the beautiful state of Arkansas in an RV with my son Jack. Truth be told, we only made it two nights in the RV before we had enough of the “roughing it” and moved to hotels and B&Bs. Before you think the worst of us, we did pull that 26ft RV behind my truck throughout ALL of Arkansas. So, we were somewhat legit. What a great time we had. My son is headed off to college in three weeks and I am so glad I got to have that time with him. Let us never forget what matters most – and that is our family and friends. I digress.

World equity markets, and the broad U.S. market in particular (SPY) continue to hold the breakout earlier in the month above 3200. Our ability to do so bodes well for another leg up to the February highs. We are currently 6% from that level and each day it seems more and more likely we will get there, as money continues to come in off the sidelines. The possibility that we could revisit all-time highs within five months, after all that has happened this year, is nothing short of miraculous. As I have suggested several times over the past few weeks, people will be studying the 2020 stock and bond markets one hundred years from now. The collective wisdom of worldwide investors is an amazing discounter of information, but no one could have imagined in the middle of March that so many relative unknowns could be priced in such a way that in a matter of weeks stocks could recover 100% of the February and March declines. Amazing.

So, what happens once the losses are fully erased? A retracement back to all-time highs may be a very good spot for investors to pause and begin to assess a prudent path forward. The Federal Reserve has again held rates near zero and vowed to use all tools available to support an economic recovery. The fact remains that the extent of that recovery is unknown and the damage to our economy on paper has been enormous. I never bet against Americans to find a way forward or to come out better and stronger, but getting there is going to be a fight. A move above previous highs would essentially suggest that the prospect for earnings growth going forward is better than the prospect for such growth in February – before COVID became a household word. That is also hard to imagine.

We will avoid predictions and take it one day at a time as the medical and economic reality continues to unfold. As my son frequently says, “trust the process”. At Cabana, we remain in our Bullish/Transitional Bullish Scene.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

 

Weekly Market Commentary

July 20th, 2020

Chadd Mason, CEO The Cabana Group

The S&P 500 Turns Positive for the Year
The benchmark S&P 500 index has officially broken out above 3200 and, in doing so, broken out of its two -month trading range. We have been watching this unfold for several weeks now. It appeared that the likelihood of a move to higher prices was greater than a pullback after equity markets survived several serious attempts by sellers to drive prices below 3000 and the all-important 200 day moving average.

If the current rally holds, look for money to come in from money market accounts and for a rotation into underperforming sectors. Those may include energy, mid and small cap stocks, and even dividend payers. I am certainly not counting out technology, which appears to be the path forward in many ways. I read an interesting article over the weekend that noted almost all the remarkable gains achieved by the S&P 500 since the March 23 bottom have occurred due to post and pre-market activity in the futures market. Price during regular hours has been flat. This is another indicator that many retail investors have sat the rally out and missed a huge move up in asset prices. If that is in fact the case, expect the pain of this predicament to cause prices to rise further as these sidelined bearish investors capitulate.

Just thinking about the difficulty faced by people trying to “time” the market over the past few months makes me shudder. As I have said many times before, when it gets tough, you better have a system to fall back on. Thankfully, we do. At Cabana, we remain in our Transitional Bullish Scene.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

July 13th, 2020

Chadd Mason, CEO The Cabana Group

Equity Markets Show Strength Ahead of Bank Earnings
Equity markets moved to the high end of their trading range over the past week. For those keeping track, the S&P 500 has been rangebound between 3000 and 3200 for the better part of two months. During this time, there were two occasions that sharp and rapid selling threatened to cause a break below 3000 and the all-important 200-day moving average. We held off both threats and bounced higher as buyers stepped in at that critical technical level. We have also seen two occasions where prices attempted to break above 3200 and, in doing so, turn positive for the year. The most recent of these attempts happened today. Each time the S&P 500 got its head above water, sellers stepped in and pulled prices back. The reversal today took place in the last hour of trading and it was steep and fast. This type of price action keeps the bearish case intact for the time being.

Second quarter earnings are going to kick off this week with major banks such as Goldman Sachs, Bank of America and Wells Fargo reporting. The earnings of these companies (along with many others) are predicted to be bad – historically bad… as in the worst year-over-year drop ever. It is quite possible that the market’s resilience is the result of whispers that earnings might not be as bad as analysts think. We are certainly due for some good news somewhere. Whether it is economic, medical, or even social, any good news could be a catalyst for another leg up. When and where such good news might come from is anybody’s guess.

The Federal Reserve is meeting later this month, as is the European Central Bank and the Bank of Japan. Congress here at home is said to be considering an additional relief package before its next recess. Maybe some good news will come from that. During the interim, we will monitor conditions and continue to follow our rules-based system. A part of that process is to never argue with the omnipotence of price. Price is the ultimate arbiter. Whether the strength in equity markets is deemed rational or not in the face of unprecedented economic problems matters not. It is what it is, and right now markets have shown remarkable strength.

At Cabana, CARA has acknowledged that strength and signaled a reallocation to our Transitional Bullish Scene – a return to cyclical bullish conditions. All Target Drawdown Professional Portfolios were reallocated today to add risk assets commensurate with their respective target drawdown number.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

July 7th, 2020

Chadd Mason, CEO The Cabana Group

Midyear Outlook: Acknowledging Where We Are
To start, I hope everyone had a safe and restful July 4th holiday. Time spent with family and friends is what matters most. The older I get the more that reality sinks in.

I have spent a lot of time over the past few weeks thinking about the world that we are living in and what that means for each of us as investors and as a collective society. I very much understand that it is often necessary to suffer some pain in order to grow and emerge better and stronger. This is true of human beings, our businesses, and even our country. With that said, I am 53 years old and I don’t believe I have ever felt such a divide among us. The undercurrent of frustration and anger is palpable. At least it is in Arkansas, and I suspect it is elsewhere. Between rabid political polarization, racial inequality, the COVID-19 pandemic raging in huge swaths of the country, and the never-ending onslaught of media (professional and social) – it can and does feel overwhelming. Sometimes it is important to just acknowledge where we are. That can be the first step in figuring out how we got here and, more importantly, how to get out. Let us be still for a minute or two and remember that we are all inherently good. We want the best for our children and our neighbor’s children. We are all made stronger by giving more than we receive. There are heroes all around us if we take the time to see.

The world equity markets continue to hold firm in the face of all manner of threats, domestic and biological. I suggested several times over the past few weeks that markets could move up rapidly if the major indices held above their 200-day moving averages after two rapid and steep selloffs during June. We may be seeing that start to play out now. The S&P 500 is within 2% of being positive for the year. That fact alone is amazing, and in my opinion the foundation for prices moving higher. After all, if you haven’t sold by now, what more bad news would it take? Look for a move above 322 on the SPY to cause additional money to move out of cash and back into equities.

At Cabana, we are preparing to reallocate to add risk to our portfolios, absent a sharp downward reversal over the next few days.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

June 22nd, 2020

Chadd Mason, CEO The Cabana Group

Covid-19 Cases Spike in the U.S. as Boeing Resumes 737 Max Test Flights

The S&P 500 closed on Friday just below its 200-day moving average. This was the culmination of a 5% drop for the week. The Dow and Nasdaq suffered an equally bad week. This is the second serious technical challenge that the S&P 500 has faced in the month of June. The selling was prompted by renewed fears of Covid-19 cases spiking throughout the country. We are now seeing more daily reported infections than at any other time during the pandemic. Texas, Florida and Arizona are all being hit especially hard. These states were among the first to relax restrictions and are now having to backtrack on fully opening their economies in the hopes of containing the spread. Each day it seems more and more obvious that this virus is going to be with us for the foreseeable future.

Given what we are facing medically and economically, I am frankly shocked that the markets have held up as well as they have. With that said, I never question the collective wisdom of markets themselves and continue to put my own opinions aside. I will offer a thought, which I touched on last week. When markets remain resilient in the face of bad news day after day, the risk to traders shorting the market is that eventually some good news pops up and prices surge to the upside. Right now, we are back at the low end of the trading range that has been in place for more than three weeks now, so it remains to be seen how this plays out.

This morning, Boeing announced its resumption of test flights for FAA certification of the 737 Max. This caused the stock to soar more than 10% and pulled the Dow up with it. The major indices are all up  big for the day. This is allowing the S&P 500 to jump back above its 200-day moving average and keeps the rally that began on March 23 intact. This is an important response to the selling we saw last week. It is also worth noting that we are seeing leadership within sectors that have previously been laggards. Industrials, small caps, transportation and dividend payers had a strong day. This is a very good thing and is necessary for the broad indices to move higher.

At Cabana, we remain in our Moderately Bearish Scene and are prepared to add or reduce risk in response to evolving market conditions.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

June 22nd, 2020

Chadd Mason, CEO The Cabana Group

Which Way Will the Market Break?

U.S. equity markets continue to be range bound but hold above the all-important 200-day moving average at 3000 (S&P 500). I read over the weekend that there remains a record amount of money in cash via money market accounts. The belief among the “experts” is that this is evidence that the rally off the March 23 lows was mainly the result of short covering as those traders who made money betting on stocks to go down began taking profits and covering their positions. This activity by professional traders causes the share price of equities to go up as the traders buy the shares that they had previously sold short. If there is a great deal of “short interest” and stocks begin to rise (or even appear to have bottomed), the act of taking profits by buying the shorted shares can cause the market to move up rapidly. The more short interest that exists, the more explosive the rally can become. We certainly saw a lot of people betting that the market would continue down in the middle of March and we have certainly seen an explosive rally since. The idea among the pundits who have examined this is that the rally has run out of steam and we are headed for another leg down since no new money is coming in to move prices higher. This may very well be true, but I can think of another possibility.

What if some good news suddenly shows up and the market does begin to move higher, even if on low volume? Well… I will tell you what might happen. All those people who are parked in money market accounts, and have missed out on a huge move up in stocks are going to feel pressured to move that money back into stocks, lest they miss out on even more upside. This is the primary problem with jumping out of the market and going to “cash”. It is awfully hard to know when to get back in. This record amount of cash sitting around out there represents a lot of people, professional and otherwise, who are in this predicament. If the experts are wrong and the market does break out higher, look out for a potential move much higher as the pain of sitting out becomes too great and people are forced to buy stocks.

So, which way will the market break? I don’t know and don’t care. We will be prepared either way. As long as the broad indices hold above their 200-day moving average, the chances are better than even in my opinion that it breaks up. If that happens, we are going to see a lot of people chasing a fast-moving train. At Cabana, we remain Moderately Bearish but are preparing to reallocate to add additional risk assets if prices begin moving higher.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

 

Weekly Market Commentary

June 15th, 2020

Chadd Mason, CEO The Cabana Group

Markets Show Important Reversal at Even More Important Level

Two weeks ago, we commented on the ongoing test faced by the broad indices at their respective 200-day moving average. We noted that if equity markets were able to regain and hold above that important technical level, we were likely to see prices move significantly higher as institutional money was forced off of the sidelines and back onto the playing field. Just as soon as we mentioned it, the S&P 500 did hold that level and closed out the week of June 5th above its 200-day moving average for the first time since March 4th. Prices exploded upward from the 3000 level all way to 3240 over six trading days. This move was technical more than the result of any significant improvement in underlying fundamental economic conditions, although, we did get a nice surprise with employment numbers.

As with all technical price movements, we are exposed to swift reversals as soon as the euphoria fades and profit taking by traders kicks in. Chairman Powell’s statement at the close of last Wednesday’s Federal Reserve meeting provided the impetus for just that. The selling began Wednesday afternoon and continued through Thursday and into Friday. Thursday saw all broad indices down more than 5%, for the largest one-day losses since March. The result was a plunge right back to the 200-day moving average. We saw a break below on Friday before a late afternoon rally saved a closing breach. In my mind, the fact that we were able to hold on the downside in the face of extreme volatility was a good sign. The more times we can survive a test here, the stronger the underlying market becomes. This testing of important support levels is a healthy part of the process in markets ultimately regaining their long-term footing. As you can imagine, I was very interested in how things would open this morning and watched the futures throughout the night.

Futures began dropping after midnight and by 5:00 this morning were down 3% – well below the 200-day moving average. At that point, another big leg down appeared likely today. Over the next three hours buyers stepped in and began chipping away at the losses. By the open, things were not entirely bleak and by 11:00 the S&P 500 had turned positive. By the market’s close, we had gone from down 3% in the futures market to up 1%. This is an important reversal at an even more important level. I cannot stress enough how reassuring it is to see smart money hold their ground, as well as new buyers step in, when weak hands have been washed out by a big time drop in price. We are certainly nowhere near out of the woods as an economy or a country, but recent market activity continues to impress.

At Cabana, we will continue to avoid predictions and take it day by day as the situation continues to unfold. We remain in our Moderately Bearish Scene and are prepared to reallocate in either direction as conditions warrant.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

June 8th, 2020

Chadd Mason, CEO The Cabana Group

Perception is Not Reality

We have spent the past few weeks discussing the need to have a rules-based process in place that helps to take the emotion out of investing when markets appear to disconnect from what we perceive as reality. This “perception” issue has long been studied within the field of behavioral finance and psychology. Humans are by nature risk adverse and will choose to forgo an opportunity to avoid a perceived risk. Humans also tend to perceive things to be as they think they should be. We find what we are looking for and ignore the rest. In this way, a person’s perception very much becomes their reality. These two human characteristics may have evolutionary benefits, but together they work to the detriment of many investors (professional and amateur alike).

I had a call with a client today to discuss investing more of his funds in one of our portfolios. This client is extremely smart, experienced, self-made, and wealthy. He watches the market closely and pays attention to economic data. Moreover, he has been with Cabana for some time and knows our process. By all accounts, this client has all the tools he needs to be a successful investor. There is just one problem right now. He cannot believe the market will keep going higher in the face of dire economic conditions. He “perceives” that the market is currently flawed and will inevitably collapse. He has the data to back up that perception. As we discussed his thoughts and the best way forward, it occurred to me that his perception had become more than a perception. It had become his reality. When something becomes reality for a person, it is very scary to act in opposition to that reality.

I often use the example of flying in an airplane. This is a subject that is near and dear to me. Those who know me know I don’t like to fly. I will avoid it at all costs, and it causes me days of great stress leading up to those flights that I simply must take. My perception is that flying is incredibly dangerous and something that I have no control over once I get on the plane. I perceive that traveling at more than 400 miles per hour is horrifically dangerous, not to mention doing so at 35,000 feet in the air. No one can dispute that moving at speeds of hundreds of miles an hour is exponentially more dangerous than traveling at 20 miles an hour. The same can be said of being thousands of feet off the ground. That is certainly more dangerous than keeping my feet safely planted on earth. I have carefully considered all this, and this has become my “reality”. The problem with my reality is that it only considers part of the picture. To make matters worse, it only considers the part of the picture that fits my preconceived expectations. The truth is that flying is one of the safest things that we can do. The data that I have relied on in developing my reality, is one of but a few data points that make up the much larger data set, which accurately describes the aerodynamics involved in flying. By focusing on those things that I expect to be true and that fit my narrow perception of reality, I have created my own false reality. In doing so, I have made my life more difficult than it should be. I have not enjoyed vacations to the fullest. I have forgone business opportunities. The list goes on. We can all relate to some degree to what I am describing. We all do it at various times and in various circumstances. My client is now doing it with investing. His reality is preventing him from acting objectively and continuing to invest capital into an investment process that he understands and can stick to. He knows that the key to long-term success is staying invested and compounding returns, but his new reality is in his way. He has become his own worst enemy.

This is a common problem with investors, and it is one area where a trusted advisor can help. He or she can walk through what is reality and what is perceived reality. Sometimes they overlap. It is never black and white, and that is ok. What is important is that we as advisors acknowledge what our clients are experiencing and work together to overcome it. This comes down to listening and communication. It is what separates good advisors from great advisors.

There is a very simple maxim in the investment world that perfectly summarizes the above described phenomenon and the appropriate response. The maxim is, don’t fight the tape! What that means is do not let your own perception of how things should be cause you to ignore the reality that is going on around you. Having a rules-based system does just that—and that my friends is why you must have one.

At Cabana, we remain moderately bearish and are preparing to reallocate should the rally continue.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

 

Weekly Market Commentary

June 1st, 2020

Chadd Mason, CEO The Cabana Group

The Stock Market Continues to Climb as Protests Spread Nationwide

Equity markets closed out the month of May with big gains. The S&P 500 climbed more than 5% for the month despite a lot of volatility. Swings of more than 1% a day were the norm as investors continue to try and sort through the carnage that has been the past three months. These gains are on the back of April’s rebound from the March 23 low and leave the blue-chip index down only 6% for the year. Impressive is an understatement when considering the fact that it was down 35% just over eight weeks ago.

In addition to the simple percentage gains, the S&P 500 closed the week and month above its 200-day moving average. This is likely the most important news of all. That technical barrier is watched by retail and institutional investors alike. When we are above it, many large money managers that follow rules-based systems must move back into stocks and off the sidelines. If we can hold above the 200-day moving average over the near term, we may see several big up days as cash comes out of money market accounts and back onto the playing field.

So, what is driving this obvious disconnect between the stock market and everything else going on in our country? How can the stock market keep climbing as it appears our country is falling apart? A deadly virus continues to spread among us, now having killed more people in four months than the Vietnam War did in over a decade. Unemployment is at the highest level in one hundred years. Forty million people are living off government benefits and will likely do so for the remainder of 2020 as our leaders attempt to stave off a tsunami of evictions, foreclosures, and bankruptcies, which are staring us in the face. Our national debt is many trillions of dollars and climbing. Our cities are being burned and looted as years and years of failed policies (and promises) come home to roost. Protesters of all colors and walks of life are coming together to push for meaningful change. I am afraid this change is about much more than police brutality (although that is certainly enough by itself). I am afraid that COVID-19 and the aftermath of shutdowns and layoffs has further shined a harsh light on the reality of the divide between those who have in this society and those who do not. It is a scary thing when a part of our population is living a different life altogether than most others.

Our founding fathers wrote of this threat. Many economists and scholars have opined on this phenomenon. My son Jack, who just graduated from high school, told me that he studied it as well. He learned that it was a natural progression associated with the transformation of a society from agricultural to manufacturing and then from manufacturing to technology. His class was AP Human Geography and he was studying part of what is known as the “Demographic Transition Model”. The idea is that as our society evolves, many industries and people get left behind. When their economic value becomes less relevant, the associated wages and opportunities likewise decline. As advancement becomes increasingly pronounced, more and more people are disenfranchised, and a smaller and smaller group can move forward. The effect becomes cyclical and self-perpetuating. Many wise people on both sides of the political aisle have studied this and acknowledged that over time our evolution becomes a threat to the existence of the society itself. In other words, the society becomes too smart for its own good and cannot survive. I certainly do not have any great answers to this, and as we look back over the last one thousand years of history, no one else has either.

My job is to protect my clients’ money first and grow their money second. I am not a politician and do not base our investment decisions on political policies or even how good or bad I think we are doing as a country or society. I just want to know the game we are playing and can take it from there. Are we playing basketball or football? If I know that, I know how the ball is going to bounce and I can do my job. The market is a lot like me as a money manager. It is agnostic and is just concerned with doing its job. That job is pricing assets relative to one another. Right now, the market is looking ahead through all the noise and indicating that opportunities in stocks outweigh opportunities in other assets like bonds, treasuries, commodities, and real estate. It is not concerned with the Demographic Transition Model and didn’t take AP Human Geography, but I am concerned. Not as an investor or money manager, but as an American. I love my country and can’t imagine being born anywhere else. I believe we are the best that has ever been and can and will do what no other country ever imagined. I am still concerned.

At Cabana, we remain in our moderately bearish allocation. We are prepared to reallocate again should conditions warrant.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

 

Weekly Market Commentary

May 26th, 2020

Chadd Mason, CEO The Cabana Group

What Investors Can learn from Today’s Market

Equity markets worldwide continue to climb in the face of dire economics. In two decades of investing I have never seen a starker example of investors immediately setting the bar for a worst-case scenario and then just as quickly repricing as if anything but the catastrophic appear inevitable. The last three months (and perhaps the next three) will be studied in business schools for many years to come. As gut wrenching as it has been for those of us who invest for a living, it has been equally beautiful. There are so many valuable lessons to be learned from this. It is a once in a lifetime opportunity to stand back and watch the collective behavior of the single greatest intellectual organism on earth during the most violent and sudden of economic crises. While there have been equal or worse situations thrust upon our societies, they did not occur in the age of instantaneous transfer of information. It has been truly remarkable, and the ride is still not over.

I have mentioned many times the necessity of having a repeatable investment process. It is not required that it be any one process, but in my opinion, all successful investors have a process. The more robust the process, the greater the potential for success. This is mainly true because you will stick to it through thick and thin. The sticking to it is 90% of the trick to investing. The remaining 10% is coming up with a process that you can rely on when things get scary and you want to back down because you think you know better. It is this 10% that makes an advisor or money manager worth his or her salt. I can tell you personally that every instinct in my body has said the current market is crazy and prices should not rebound like they have, but the process says otherwise, and we follow it. It doesn’t mean we will be right or wrong at any given time, but it does mean that we have that 10% that is strong enough to overcome emotion and we can act objectively when it gets tough – really tough. I have likened   investing to flying an airplane. It is simple about 90% percent of the time. Almost anyone with a little time in the seat can do it, but when that remaining 10% rolls around you better know what you’re doing.

At Cabana, we are still in our Moderately Bearish Scene after reallocating earlier in the month to add risk assets to the portfolios. We are prepared to reallocate again in either direction as conditions warrant.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

May 18th, 2020

Chadd Mason, CEO The Cabana Group

Markets Closed Up Big Today Amid Positive Coronavirus Vaccine Results

The past week saw continued volatility as equities sold off Monday, Tuesday and Wednesday just below the 200-day moving average and right at the late April highs. Major indices opened down more than 1% on Thursday and Friday, only to make their way to positive territory by the close. This is a big positive on two fronts. First, it is impressive to have a big reversal two days in a row, not to mention in the face of terrible news. It shows that bullish investors continue to step up amid pronounced selling. Secondly, the buying occurred just as the 50-day moving average was being tested. After the 200-day moving average, the 50 is the next most important. A close of the S&P 500 below its 50-day moving average would portend more selling to come.

Today, we are seeing the impacts of Friday’s reversal continue. Bullish confidence, as well as news that the biotech company Moderna has completed a successful human trial of a COVID-19 vaccine, has propelled stock indices higher by more than 3%. This is the best day we’ve seen for equities in over a month. We are witnessing perhaps the worst economic news in our lifetimes and stocks have not collapsed. In times like this a little bit of good news can do wonders for the bullish cause. It can be a very dangerous thing to be short when all the bad news is priced in. Any hint of improvement can result in massive short covering and a rapid and steep rally.

Let me be clear, we are nowhere near out of the woods as investors or as an economy, but we are holding our own. We will see if the third time is a charm and the 200-day moving average can be reclaimed. If that can happen, it will likely force a lot of cash sitting on the sidelines back into the market. We discussed this phenomenon in early 2019 as markets began to climb out of the hole dug during the fourth quarter of 2018. That commentary can be found here.

Lastly, it’s worth noting that small caps and materials outperformed today and that is also a good sign. Equities have been in a trading range for the past six weeks. A break in either direction will be significant.

At Cabana, we added risk on last week and are in our Moderately Bearish Scene. We are prepared to respond should the market move in either direction.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

April 27th, 2020

Chadd Mason, CEO The Cabana Group

Will COVID-19 Change Our World (and our Markets) Forever?

As our country begins to consider reopening for business, I am left wondering how we will forever be changed? Will we shake hands with new acquaintances? Will we travel for meetings or will we stay put and Zoom? Will home delivery of food, groceries and other goods become the norm? Will college education be an online experience? Will live entertainment and sports become a virtual event? Do any of us really need traditional offices? All of these questions and more will be answered over the next months and years. While nothing in life is black and white, humans are evolutionary beings. We adapt and change in the face of adversity. It is this continual process that ensures the survival of our species and results in us emerging stronger than ever, albeit different.

So, what does this mean for us as investors? I believe that “markets” are simply a microcosm of humans and the societies that we build. As such, they evolve and adapt as well. Like humans, markets follow certain fundamental rules, which serve the basic underlying needs of investors. In this way, the game itself never changes. While zone defense may be replaced by man-to-man coverage and the wishbone offense may be replaced by the spread, it’s still football. In the world of investing it is still all about risk and reward, choosing the most attractive asset class at a given time and putting our capital in that bucket. As we grind through economic cycle after economic cycle, we see that each major asset class (stocks, bonds, real estate, commodities and the U.S. dollar) periodically falls in and out of favor. This is true now and will be true in the future. It is a zero-sum game and each asset class is judged relative to the others. We can take comfort in the idea that just as we will emerge stronger, although a little different, so will our markets.

I have been asked a lot recently about whether this bear market is over. Bear markets in stocks are caused by a decline in the earnings of companies and the resulting decline in gross domestic product. This is otherwise known as a recession. Falling stock prices are merely a symptom of this reality. Terrorist attacks, financial crises and even global pandemics do not themselves cause bear markets. They do however hurt companies’ ability to generate and grow earnings – and that does cause bear markets. It is always about the earnings. We are just in the early innings of learning how much the coronavirus is going to hurt earnings over the next few month or years. Much of the outcome will depend upon the speed at which a medical solution is reached, as well as the changes that we as a culture adopt. There will be winners and losers. It is the search for equilibrium and the extent of lost earnings during the interim that will decide the length of this bear market. Are earnings going up or down? When they stop going down, we will know the bear market is over.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Oil Market Update

– David Young, CFA

Oil Prices: A Primer

Like many commodity contracts in the investment world, oil futures trade on a time-based curve. By this, we mean that oil futures contracts have different expiration dates. At the expiration date a contract holder takes possession of the physical commodity. You can buy or sell a contract expiring May 2020, June 2020, July 2020, and so on. The price of each contract typically differs at each expiration date because the demand for oil at a given point in time is neither static nor uniform. This is very important to note, because when you read headlines that cry out “The Price of Oil is Now Negative!”, what this really means is one oil futures contract (in this case the May 2020 contract) went negative. However, when you look at the oil futures curve for expirations beyond May, the prices are all positive.

As we will explain in more detail below, what Monday’s movement means is that extremely near-term demand for oil has declined and the cost to store it, roll the contract into the next month and put the oil in storage was higher than the market price of that oil. Monday’s unique circumstances do not mean the rest of the curve has negative prices.

What Happened to the Price of Oil?
On Monday, the oil surplus in America came to a head as the price of oil went to zero. Well, not really. The May 2020 futures contract on West Texas Intermediate (WTI) went negative. As of this writing in after-market trading (US), the price was around $-16, but this was off a low of around $-37. That is the first time in history you have seen prices that low. Essentially people who had oil to sell had to pay people to take it from them. The price that we find more telling of where the market currently stands is the June futures contract, which is in the range of $16. The positive out of this is that the June contract (and those farther into the year) is showing prices that are more realistic and they are positive.

According to Bloomberg, “Since the start of the year, oil prices have plunged after the compounding impacts of the coronavirus and a breakdown in the original OPEC+ agreement.” With no end in sight, the virus generated demand destruction for the commodity, and producers around the world continued to pump more oil than can be used on a daily basis. This supply demand imbalance has caused a fire-sale among traders who do not have access to storage. Because of this dynamic, the world’s storage facilities are filling up. Compounding this are traders who are mainly financial entities and are either unable or unwilling to own the oil and do not want to deal with finding a place to store it which is getting increasingly expensive. It is this last point that highlights the current conundrum: Storage. Within the United States, there is a dearth of locations available for the physical stockpiling of oil. Until demand picks back up, we could be looking at continued stress in the oil markets.

The NY Times reports, “The problem isn’t limited to the United States. Out of an estimated 6.8 billion barrels of storage in the world, nearly 60 percent is filled, according to data assembled by various energy consultancies. Storage is almost completely filled in the Caribbean and South Africa, and Angola, Brazil and Nigeria may run out of warehousing capacity within days.”
What Are the Long-Term Investment Implications?
For those invested in oil markets, they should be prepared for continued volatility. As 2019 ended, the world was using about 100 million barrels of oil daily, but the Coronavirus has caused the global economy to dramatically slow. According to the US Energy Information Administration, US gasoline usage is down 18% in the last 4 weeks and CNBC is reporting that oil demand is on pace decline by more than 20 million barrels per day. The leading oil producers saw this demand decline, but until very recently have not moved in a coordinated fashion to reduce supply and so with supply exceeding demand prices have dropped.

We could have a deal struck between Russia and Saudi Arabia this week or next that would lead to a curtailment in global supply vs the “false” deal announced last week. That deal attempted to cut production by about 10 million barrels starting in May, with a further 5 million cut from other G-20 countries. However, we are uncertain of the ultimate length of the COVID-19 impact on the global economy, therefore it is difficult to forecast when demand for oil will return to pre-coronavirus levels. In addition, when the global economy starts to re-open for business, the oil in storage beyond normal operating parameters will need to be used before prices really can return to some form of longer-term stability. A “real” deal is needed because until the price of a barrel of oil is in the range of $40, we believe US oil companies will struggle to make a profit.

We think the best thing that could happen for energy markets would be for American life to return to “normal”. With most of America under “Shelter at Home” orders, any return to “normal” seems light years away. While today may have been an extreme, the new reality is that until there is a cut in production from the producers in the energy space (OPEC+ and Russia), the price of oil will be diminished and so too will be the value of it.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable. No representations are made by FIA or its affiliates as to the informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates. Information presented is believed to be current, but may change at any time and without notice. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

April 14th, 2020

Chadd Mason, CEO The Cabana Group

The Investment Process Magnified to the Tenth Degree

Investors in markets of all types continue to try and assess the damage to corporate earnings that will be seen over the next few months as a result of the coronavirus. This analysis leads to repricing of all assets, not merely stocks. It is very important to understand that investments across all major asset classes are related. This is due to the constant search for yield (or return) relative to risk. As the potential for return in one asset class becomes  outweighed by risk, investors necessarily turn their attention (and capital) to another asset class. The past six weeks provide a perfect example of this. The volatility that has occurred has given us a once in a lifetime opportunity to see the investment process magnified to the tenth degree. We have seen huge moves in both directions in all major asset classes. This is the result of investors worldwide sorting through probabilities of return in the face of rapidly changing perceptions. What we are witnessing is an extreme version of the day in and day out work that is investing. At its very essence, investing is all about looking at opportunities to deploy capital and picking the opportunity that will likely grow that capital the most, without losing it if things turn out differently than we believe.

So, what is the better investment right now? Is it a stock that is undervalued and whose earnings may rebound quickly? Is it a bond issued by a large, well-capitalized company that pays interest at a rate higher than that of a risk-free Treasury bond? Is it gold which may hold its value if the economy worsens and our central bankers are forced to inject more and more capital into the economy, thereby reducing the value of a dollar? Is it real estate or other hard commodities that fulfill an omnipresent need by humans, irrespective of economic condition? Is it the U.S. dollar that represents the reserve currency of the world and is reflected in the trillions that flows into money market funds when investors are truly scared and waiting for the smoke to clear? Or perhaps it is U.S Treasury bonds that represents the safest investment of all and even pay a little bit of interest? Fortunately, the repeating economic cycle gives us a very good idea of what is likely to be attractive. This “cycle” is made up of changes in interest rates, which are responsive to supply and demand, and drive access to capital and ultimately corporate earnings. Earnings of course drive the price of stocks. Tied up in the middle of all this is inflation, which reflects commodity prices, and is also very much related to supply and demand, as well as interest rates.

If this all seems confusing and makes your head hurt, fear not, for that means that you are a relatively sane person who has chosen to do something else for a living. It is not important to know how all this works, only that it does work, and it is going on around us all the time. An investor who can capture a snapshot of the current conditions set out above has a better than fair chance of determining what assets have the best chance of return, relative to their inherent risk. The problem today is that we have never seen such a sudden and severe disruption to our trusty economic cycle. Within a matter of days, we saw both supply and demand within the world economy fall off a cliff. There was no time or even historical precedent for what interest rates would or should do. Would liquidity ultimately increase or decrease thereby causing even further disruption to companies’ ability to generate earnings? Would the drop in demand be so severe that commodity prices would fall, and the economy would enter a deflation, or would the extraordinary action of our Federal Reserve to flood the bond markets with liquidity override the deflationary pressures and result in inflation? Would inflation devalue our dollar, and would that be supportive of stock prices or simply result in a flight to gold or other hard assets as a store of value? All of these questions and more have been thrust upon the collective wisdom of millions and millions of really smart investors worldwide, with the ultimate outcome hinging in large part on a viral pandemic outside of normal human control.

As I ponder an answer to the question of what the better investment in times like this is, I can make the case for most if not all the assets set out above. That fact alone is unusual and should cause an investor of my admittedly limited intellect to step back and remember the first rule of investing. A rule that comes before all else. So much so that Warren Buffet has identified that it is also the second rule. When in doubt – try not to lose money!

The world around me appears very much in doubt. At Cabana, we remain hedged across asset classes and in a bearish allocation.

 

Weekly Market Commentary

April 7th, 2020

Chadd Mason, CEO The Cabana Group

Market Swings Continue Among Coronavirus Optimism

Equity markets continue to experience wild swings in both directions. Last week, we saw two big up days, mixed in with three down days. The S&P 500 finished down 2.5% for the week and down almost 25% year -to-date. Yesterday (April 6), those same markets jumped 7% in the face of dire economic predictions,   resulting from the coronavirus shutdown. The impetus is the hope that Europe is on the downhill side of the peak in infections, that we will follow a similar pattern, and that New York is seeing its peak right now. The buying yesterday in risk assets is pushing us right back to a 38% retracement of the selloff that began six weeks ago. For those technical analysts out there, this represents the minimum retracement (bounce) following a steep sell off that breaks support levels. We hit this same level early last week and were unable to hold before selling began again. We will soon see if that pattern repeats itself.

While I remain hopeful that some good news on the medical issues at hand will allow stocks and our society to move forward, the fact remains that this event has caused severe technical and fundamental damage to all risk assets. The fundamental damage in the form of lost earnings will not be fully known for several months. We will just start to see how bad this is hurting businesses when earnings from the first quarter begin to come in. Most analysts are predicting a second quarter loss in GDP of between 25% and 30% (Moody’s Analytics). This expected loss is simply staggering and exceeds anything seen during the 2008 recession or the Great Depression that began in 1929. The closures to business nationwide have caused more than 10 million people to file for unemployment benefits in the past two weeks alone. This is unprecedented in our history. All these factors lead me to believe that we are in for a long hard slog   before investors can even begin to fairly price assets. Until then, we will continue to see traders move markets up and down in short-term violent swings.

I had a call yesterday with an advisor partner who was receiving calls from clients watching the news and seeing a 7% rally. They wanted to know if the bear market was now over. He was spot on in explaining to his clients that daily market moves in any direction of 4 and 7% are not evidence of a healthy market. He also explained that any process-driven investment strategy, whether technical based or fundamental, would not be jumping back into risk assets with both feet.

At Cabana, we combine both technical and fundamental data within our rules-based process. We don’t predict or guess. We allocate to assets that are relatively attractive based upon what we see today. We may not catch the bottom or the top of any market, but we will certainly have a sound basis for the investments that we make. At the end of the day, that is what investing is all about. What we are seeing today are extraordinarily difficult conditions. It is going to take much more than a few days of big rallies to change that. We are in our most bearish scene and hedged across asset classes.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

March 30th, 2020

Chadd Mason, CEO The Cabana Group

Americans Come Together as Markets Close Out Worst Quarter Since 1987

Stock markets around the world are trying to stabilize after the historic drop we have seen this month. Swings of 4% a day have been the rule for more than three weeks now. The S&P 500 enters the last day of March down 19% for the year and down 12.5% for the month. This makes the first quarter of 2020 the worst quarter for U.S. equities since 1987. As bad as this sounds, we have rebounded more than 15% since the closing low seen on March 23. These facts alone evidence the extreme volatility we are experiencing. The panic selling appears to have abated for the time being. For markets to continue to recover, we either need to see a medical solution to the coronavirus, or a plausible timeline to the quarantine. If the current situation lasts months rather than weeks, the economic damage will be profound and is likely to result in much lower stock prices. The number of unemployment claims filed last week is beyond anything ever seen. This week’s number is likely to be even larger. The loss of earnings and output by our working population is incredible. The consumer makes up 70% of our economy. If 20% of those consumers are without a job for a sustained period, we are in for a world of hurt. I read over the weekend that 1 in 3 families have lost a job due to the coronavirus, and according to many, we are at only at the very beginning of the rise in cases here in the U.S. Scary stuff indeed.

Now for some good news. Last week we discussed the incredible resilience of our country and our fellow citizens. Don’t ever bet against American ingenuity. We are seeing some of that begin to take shape right now. Wartime powers are being implemented to convert our biggest industries into manufacturers of critical medical supplies. Our largest pharmaceutical companies are devoting all available resources to developing not only a vaccine, but also a treatment. Our healthcare workers are showing incredible devotion and courage – literally putting their lives on the line for the rest of us. The fortunate are donating to the less fortunate. Helping hands are being extended all around us (I apologize for the untimely metaphor). Our country is beginning to come together.

At the end of the day, I believe we are going to need help from science to stop the ongoing loss of life and associated economic destruction. How long that takes will determine the economic damage to our country. We will ultimately come out stronger, with renewed appreciation for our families, our freedom and our health. At Cabana, we will work to defend and protect our clients’ assets during what can only be described as the most difficult of times.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

March 23rd, 2020

Chadd Mason, CEO The Cabana Group

U.S. Economy and Day-to-Day Life Comes to a Complete and Sudden Halt

On behalf of everyone here at Cabana, I want to wish our clients, investor partners and friends good health and peace at this time. What we are collectively facing as a nation is in many ways unprecedented. Never has our economy and day-to-day life come to a sudden and complete halt. In the coming months, we will see many of our neighbors lose their jobs and businesses. In addition to a very real fear of disease, we will soon be forced to         confront the fear of being unable to meet financial obligations and for some, feed our families. As always, the most susceptible are the poor and disenfranchised. Our thoughts are with everyone being impacted by COVID-19.

More perspective from those who came before us:

With that said, there is always hope and perspective when we look to the past. Our parents, grandparents and great grandparents have given us a roadmap to deal with real adversity. They faced challenges, which at first must have seemed impossible. World wars, drought, depression and even sickness. In 1929, my great grandfather died of pneumonia. He caught a cold while duck hunting. There weren’t antibiotics to fight the infection in his lungs that developed over the following week. He was 35 years old and left behind a wife and four children. One of his children, my precious Mimi was four years old. The country was already in recession that January and would be plunged into the Great Depression nine months later. I cannot imagine how scared my great grandmother must have been. She was poor to begin with and suddenly faced with being alone and finding a way to support her children at the worst possible time in history. Except she wasn’t alone. She had her family and his. His brothers and sisters stepped up and made sure food was on the table and the house had heat. My grandmother told me story after story about her time as a little girl with her aunts and uncles. Her Uncle Adrian had a cement porch and he gave her a ball to bounce. They made her feel special and taken care of. She was part of something bigger than herself and she was loved. I think that time in her life was one of her favorites. She didn’t know how close to the edge she really was. My family isn’t the only one that faced very difficult times. All families did. World War II came, and men left home and fought together for their country. They died for it. During the first half of the twentieth century, polio crippled children across our country. During warm summer months the country was regularly quarantined, and each new illness brought fear that it might be polio. Since then, we have seen men sent to fight overseas time and again for popular and unpopular reasons. We have seen our major cities erupt in riots and fire. We have seen AIDS wipe out an entire generation of some of our most creative and talented. We have seen our nation attacked on its own soil by terrorists in an act so shocking it is forever etched on the minds of all those old enough to remember it. We saw our financial system collapse, resulting in a second debilitating recession within eight years. People who invested in 2000 did not make a dime for an entire decade.

We made it through all those things, and we will make it through this. The common thread among these events is that they affected all people. Just as the generations before us have shown, when we are all threatened, regardless of the source, we step up. We come together like no nation of people in the history of the world. When the times are the very darkest, Americans are at their best. This will be true again. Today, let us all commit to one another to be our very best and to help those of us less fortunate. As Mimi has always shown me, it’s not about the money either.

Market Update:

This past week, the stock market continued to fall in response to the inevitable loss in productivity and resulting corporate earnings. Equity indexes are down more than 20% for the month and more than 30% for the year. The speed and depth of this decline over the past six weeks is beyond remarkable. Never has something like this occurred from a market top, and it is further evidence of just how suddenly investors became aware of the extent to which this pandemic would damage our economy. If you were ever looking for the definition of a black swan event, this is it. Even more troubling than the fall in stock prices, is the decline we are seeing in all types of bonds, particularly those perceived as “safe” assets. Investment grade bonds, municipal bonds and even treasuries have been pummeled (while treasuries have since rebounded). In just three weeks, investment grade bonds are down 18% and municipal bonds are down 15%. High yield bonds have been hit even harder. Investors are concerned that many businesses and municipalities will not survive or will be forced into bankruptcy. This situation has become so severe that there is now very little or no market at all for these bonds. The Federal Reserve has announced a plan to backstop these assets to encourage banks and other financial institutions to buy them. Additional “unlimited” financial support was approved early this morning. We will have to see whether our central bank can push enough liquidity into that market to right the ship. Of all the things I have seen over the past month, the selloff in normally “safe” bonds is most concerning. If investors are unwilling to take positions in the bonds of the very best companies and communities, they are certainly going to be unwilling to buy stocks. Many retired people rely on these investments, and the continued unabated decline in their price needs to be resolved quickly.

Target Drawdown 7, 10, 13 and 16:

At Cabana, we modified our current allocation on Friday, March 20. All portfolios remain allocated to bearish conditions and are invested primarily in U.S. treasuries, U.S. dollar and gold. They also have a dividend stock position if the market suddenly improves. Friday’s modification was made to shorten the duration of our treasury positions in response to the extreme volatility we have seen in interest rates all along the yield curve.

I am pleased to report that our core Target Drawdown Portfolios (Target Drawdown 7, 10, 13 and 16) have remained within, or close to, their target drawdown parameters. While the target drawdown percentage is not guaranteed, it is very comforting to see our algorithm performing as designed under these conditions.

Target Drawdown Income 5 and Efficient 10:

As of this past Friday, we have taken steps to address drawdown exceeding our parameters in the Target Drawdown Income 5 and Efficient 10 portfolios. These portfolios run on a two-scene version of our algorithm and are designed to provide tax efficiency and income. They respond more slowly to changing conditions. For this reason, they did not reallocate and remove risk as quickly over the past month.

Additionally, the Target Drawdown Income 5 is made up of income-producing assets, such as dividend-paying stocks, bond ETFs and bond mutual funds. As set out above, these assets have dropped precipitously along with stocks this month in the face of panic selling across all markets. Historically, these types of assets would provide stability and perform well under deteriorating market conditions.

While the current state of events is unlike anything we have seen and there is a strong likelihood that traditional asset class relationships will return, we are not in the business of waiting and hoping that we are eventually right. We have reallocated both the Target Drawdown Income 5 and the Target Drawdown Efficient 10 to the same investments found in our other portfolios. This allocation represents our best judgement for preservation of       capital and performance should conditions persist or worsen. Additionally, we will begin using our standard fivescene algorithm with both of these portfolios going forward or until further notice. We believe that this modification will bring them in line with our other portfolios and provide the best opportunity for gains when the market bottoms and turns up. The current allocation has a dividend yield of 2.1% and is particularly attractive in this environment. This will allow income to continue to be generated for those investors seeking it. It should be noted that receipt of dividends is a huge advantage in times like this.

In Closing:

I would like to reiterate my profound thanks to the Cabana team who is working all hours of the day to update our Cyclical Asset Reallocation Algorithm (CARA) and integrate in real time what is occurring in the markets. This type of machine learning will allow us to continue to build and provide the very best asset allocation models available – no matter what is happening in the world. A special thank you to our operations and trading teams for meeting the challenge of managing more than $1 billion in assets during what can only be described as hurricane conditions. I have never been prouder to be part of Cabana.

I also want to thank our advisor partners who are fighting the good fight with us to protect their clients’ money. Their communication with us and the downstream investors is invaluable. Together we are all going to come through this better and stronger than ever. We may be battered and bruised, but we are very much alive and ready to fight another day.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

March 16th, 2020

Chadd Mason, CEO The Cabana Group

Market Volatility Spikes to Record Highs
U.S. and international equity markets dropped 11% just today and are down almost 20% this month alone. Year to date, the S&P 500 is down more than 25%. COVID-19 started in January as something that had the remote possibility of causing problems here in the United States. Today, less than three months later it has resulted in a near shut down of the entire country. Colleges are closed. Schools are closed. The NCAA tournament, as well as all other major sporting events are cancelled. Broadway is shut down. Bars and restaurants across the nation are closed. Travel internationally has been halted. Domestic flights have been slashed by as much as 50%. Major companies are working remotely. People are self-quarantining in their homes.

Never in our country’s recent history has something like this occurred. Maybe never in our entire history. This is truly a black swan event. How long it takes the medical issue to resolve is anyone’s guess, but the damage to our economy is certain. Airlines, leisure, retail and the energy sectors are going to feel real pain and solvency will become an issue if conditions persist. We have talked many times about markets being predictors, as well as aggregators, of important data. It appears markets got it right beginning in late February when this threat was perceived as being more than just a threat. I mentioned in a Special Report published on February 29, 2020 (which can be easily accessed on our blog at www.thecabanagroup.com/blog) that investors’ perception can quickly become reality. That is now firmly the case.

We received the first evidence today of the future economic ramifications and it isn’t pretty. The New York Fed Empire Manufacturing Index dropped 34.5 points, to the lowest level since 2009. We are at the point where asset preservation should be at the forefront of everyone’s mind. This too shall pass and the key going forward will be to have avoided large (perhaps insurmountable losses). No one will get through this unscathed, but we want to make sure we keep our limbs attached. A large part of doing just that is having a process in place before this type of selloff occurs. We talked earlier this month about also having perspective to take a step back and remember that we are investors, not traders. There is a big difference. True investing is all about limiting losses and staying invested for when the market turns again. It is as simple as that.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

March 9th, 2020

Chadd Mason, CEO The Cabana Group

All True Investing Takes Process and Perspective

Given the continued bloodbath we are seeing in stocks, this commentary serves as follow up to the Special Report we released just over a week ago, on February 29. In that report, we noted that all of our portfolios held within their respective target drawdown during the first week of the sell off, and that we had reallocated to positions that we believed would reduce risk should selling continue, all in the effort to protect our clients’ assets. We also noted that an explosive rally was likely early the week of March 2, due to short covering and extreme oversold conditions. Finally, we suggested that the real test would come after the rally faded and investors were left with the opportunity to resume selling. Unfortunately, the selling resumed, and by Friday, the February 28 lows were being tested. Throughout the weekend news of additional coronavirus cases worldwide consumed media. To make matters worse, on Sunday we learned that Russia and Saudi Arabia had begun an all-out energy price war. These two factors caused the S&P 500 futures market to lock limit down (trading halted at down 5%). Oil futures were down more than 20%, after an already huge drop over the preceding two weeks. It was clear last night that today would be a very ugly day for world equity markets.

As bond yields dropped to historic lows at the market open, U.S. indexes promptly fell 7% and trading was halted. This extremely rare safety mechanism was last implemented in 2011. Despite giving investors time for cooler heads to prevail, the broad indexes made no meaningful headway and ended at the lows of the day – down 8%. The continued selling in equities that we are now seeing is truly unprecedented. The fall from a market top through a correction of more than 10% and into a bear market has never happened this quickly. The S&P 500 is down 20% in thirteen trading days. While the crashes of 1929, 1987 and 2008 had drops of equal size, equity markets were already in sustained corrections. The current unabated dive from all-time highs in stocks is unequaled. The VIX (volatility index) hit levels last seen in 2008. We are seeing real panic in the stock market for the first time in a long time. It is in times like this that it is incredibly important to have an investment process in place that you understand and allows you time for perspective. At Cabana, we strive to provide just that – a process that is understandable, in addition to some perspective. In fact, all true investing takes both a process and perspective. So today, after the worst single day and worst three weeks in the stock market in a very long time, I thought I would provide a  little of both.

Our Process:  

We identify in numerical percentage terms the intended drawdown parameters of each of our portfolios. This is not a guarantee but is a clear objective that forms the basis of the investment. Our algorithm is designed to identify changes within the macro-economy and aggregate asset classes that perform relatively well at any given point in the repeating cycle, so long as the aggregated portfolio does not violate the predetermined drawdown of the portfolio. When conditions are good, the aggregated portfolio will have more risk type assets. When things    deteriorate, risk assets are incrementally removed and replaced with lower risk assets. When things improve again, risk assets are added back in. All Target Drawdown Portfolios work the same way. The amount of risk at any given time is a function of the target drawdown number (or percentage). By building portfolios with a predefined risk target at the outset, and then reallocating in response to things that matter to asset price, we attempt to remove only the amount of risk that is necessary to hold our losses around the target drawdown number. If we remove too much risk too soon, the portfolio will not be optimized for the best return when the market improves. When things get relatively bad (as they certainly are now), we want to be at or around our target drawdown when additional risk is removed. A lot like Goldilocks, we want our porridge just right. Historically, this process has been successful in removing risk as we reach our target drawdown in bad markets. This has been true over many conditions and during many crises.

We monitor drawdown from peak to trough based upon end-of-month data. In other words, the end-of-month high in the portfolio’s value marks the peak. The portfolio’s end-of-month low (no matter how many months later) represents the trough. We use end-of-month data because it is consistent with our overall GIPs performance verification. We employ independent verifiers to review end-of-month composite performance data and report returns, statistics, and drawdown. We do not report or calculate intra-month highs and lows. It is a bad idea to get too excited one way or the other over short-term swings that occur within each day, week and month. Some argue that only quarterly data should be reported but I am not that patient. For purposes of today’s perspective, I will provide gross-of-fees returns, which have not been independently verified, from intra-month highs in each portfolio, as well as longer-term performance numbers.

Some Perspective:

S&P 500

  • 2019 Return: +31.20%
  • 2020 YTD Return: -15.0%
  • Drawdown since end-of-month high (Dec. 31, 2019): -15.0%
  • Drawdown since intra-month high (Feb. 19, 2020)- 19.3%
Target Drawdown Income 5  
  • 2019 Return: +10.93%
  • 2020 YTD Return: -3.7%
  • Drawdown since end-of-month high (Jan. 31, 2020): -4.4%
  • Drawdown since intra-month high (Feb. 19, 2020): -5.6%
Target Drawdown 7  
  • 2019 Return: +21.18%
  • 2020 YTD Return: -4.5%
  • Drawdown since end-of-month high (Jan. 31, 2020): -4.7%
  • Drawdown since intra-month high (Feb. 19, 2020): -7.7%
Target Drawdown 10
  • 2019 Return: +24.94%%
  • 2020 YTD Return: -5.1%
  • Drawdown since end-of-month high (Jan. 31, 2020): -5.9%
  • Drawdown since intra-month high (Feb. 19, 2020): -10.4%
Target Drawdown 13  
  • 2019 Return: +25.44%
  • 2020 YTD Return: -7.9%
  • Drawdown since end-of-month high (Jan. 31, 2020): -8.8%%
  • Drawdown since intra-month high (Feb. 19, 2020): -13.8%
Target Drawdown 16  
  • 2019 Return: +31.59%%
  • 2020 YTD Return: -9.7%
  • Drawdown since end-of month-high (Jan. 31, 2020): -10.6%
  • Drawdown since intra-month high (Feb. 19, 2020): -15.1%
Target Drawdown Efficient 10  
  • 2019 Return: +15.02%
  • 2020 YTD Return: -7.0%
  • Drawdown since end of month high (Jan. 31, 2020): -7.1%
  • Drawdown since intra-month high (Feb. 19, 2020): -7.6%
We have been able to keep risk on in times of favorable market conditions and remove risk as things deteriorate. The hedge built into the portfolios, as well as the amount of risk removed during reallocation, is what results in the statistical linear relationship (upside and downside) within our family of portfolios. The Target Drawdown number dictates the performance of the portfolio during good times and bad. It is that simple. Our goal is to enable investors to select a portfolio that matches their risk tolerance and objectives. The higher risk tolerance investors are able to select a larger drawdown parameter, while those with lower tolerance are able to select a smaller drawdown parameter.

Since we reallocated on February 28, we have been able participate in market rallies, yet avoid most of the downside. For example, our flagship Target Drawdown 10 Portfolio has averaged 2/3 of the upside during last week’s rallies, while realizing less than 1/3 of the downside. Today, when the S&P 500 was down 8%, the Target Drawdown 10 was down 3.7%. Although there is nothing fun about being down 3.7% in a day, the portfolio is doing what it was designed to do. This is exactly the type of performance structure you want to see while staying invested during periods of high market volatility… and we remain within our monthly drawdown targets.

Our most recent fact sheets reflecting performance of all our portfolios through February can be found here.

I hope this report helps to calm some nerves that are out there, instill some confidence in the process and provide some much-needed perspective. As always, a big thank you to all our advisor partners and investor clients who continue to trust us with their hard-earned reputations and assets. Our algorithm has signaled an imminent scene change and we are currently in blackout preparing to reallocate. Once that reallocation takes place we will be in our Bearish Scene. We will continue to monitor and report our perspective as the situation progresses.

IMPORTANT DISCLAIMERS
This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

Weekly Market Commentary

February 19th, 2020

Chadd Mason, CEO The Cabana Group

Dow Plunges as Coronavirus Spreads to South Korea, Iran and Italy

As soon as we mentioned the first sign that the coronavirus was impacting earnings (Apple lowered forward guidance), the virus broke out of general containment in China and began rapidly spreading into South Korea, Iran and Italy. This news provided a significant psychological impetus over the weekend to sell risk assets in the belief that we have a true pandemic on our hands. This is a scary concept for us as humans, but is it going to bring down equity markets in and of itself?

No one knows for sure what the future will bring, but the simple fact is we are still in a growing economy and companies have continued to beat expectations on both earnings and revenue. The U.S. corporate earnings growth rate remains at a positive 8% year-over-year. The IMF is projecting international growth as well. This is not the data that bear markets are made of. That is not to say that a worldwide pandemic can’t change these positive numbers going forward, but until they do, the bull is still in the pasture. We have had an incredible run-up in stock prices over the last 13 months. We are way overdue for some pain. The coronavirus is as good of a reason as any, if not better, for some panic-induced selling. A rapidly spreading and uncontrolled “killer virus” has real sex appeal as far as the scare factor goes. Major market indexes dropped 5% over the past two trading days, wiping out the gains we achieved since 2020 began. The VIX (fear index) broke out above 23 on the back of today’s largest drop in the DOW since 2018. Bond yields collapsed even further and gold hit seven-year highs as money flowed to perceived safe havens.

I don’t know how this will ultimately play out over the next weeks and months, but I do know that times like this make having a system imperative. If you are buying or selling based on each day’s tape, you are in for some gut-wrenching times ahead. We are very likely to have more volatility like we just saw before the skies clear. Investors must take it in stride and realize we are investing for the next five years, not the next five days, or even five weeks. For those of you who are just starting out on the path and are becoming “investors” for perhaps the first time in your life, welcome to the NFL. This business is not for the faint of heart.

At Cabana, we remain in our Moderately Bullish Scene but are preparing to reallocate should conditions continue to deteriorate.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

February 19th, 2020

Chadd Mason, CEO The Cabana Group

Apple Reports Coronavirus Threat to Tech

Earnings have continued to drive equity prices higher throughout the first half of February. This has occurred in the face of a variety of external threats, including ongoing domestic political upheaval and a worldwide coronavirus epidemic.

As always, it is earnings that drive prices. The rest is just noise until the noise begins to impact earnings. I wrote on this topic several weeks ago and stated that the coronavirus won’t matter… until it matters. We just got the first evidence that it is starting to matter in a report by Apple that came out Monday. Apple has indicated that the quarantine in China will cause it to miss its first quarter revenue expectations. The lockdown in China has resulted in disruptions to both supply and demand for phones. Apple, as well as other behemoths like Amazon and Google, have played an increasingly important part of this bull market. Apple was down almost 3% on the news yesterday. Amazon and Google have barely budged, which indicates that investors are considering Apple’s problem to be isolated for now. The point here, is that all investors who sold on the initial coronavirus news have lost out on significant gains over the past few weeks (the S&P 500 is up more than 2% in February), and we are just now seeing the first signs that the coronavirus might actually impact equity markets. Once again, it doesn’t matter until it matters. We will continue to watch as this situation unfolds.

Earlier this month, we touched on bond yields. Specifically, the yield curve and its implications on future economic growth (more information on the yield curve can be found here.) The bond market has a strong tendency to forecast economic conditions before the equity market. Bond yields have continued to drop across the curve (short, medium and long term), with longer-term rates dropping more on a relative basis than short-term rates. This condition can and has resulted in an inversion whereby shorter-term bonds pay more interest than longer term rates. In general, this type of yield curve represents economic weakness in the future. With stock prices rising and bond yields dropping, we have what is called a negative divergence in market technician terms. In an increasing earnings environment, we would expect to see longer-term yields rising to reflect future growth and the inflation that will inevitably follow.

The Federal Reserve indicated last week that it was going to stay put for the foreseeable future, so it will be up to the market and investors worldwide to resolve the current dichotomy. In my opinion, something must give. Either earnings will grow, and yields will rise, or yields will continue to drop, and earnings will fall. How this gets resolved is anyone’s guess, but the answer will determine when this bull market ends.

At Cabana we remain Moderately Bullish.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

February 10th, 2020

Chadd Mason, CEO The Cabana Group

Q4 Earnings Continue to Beat Expectations and Provide Investors with Hope

U.S. corporate earnings continue to roll in beating expectations on both the revenue and sales side. The S&P 500 earnings growth rate remains at 8% annually, while year over year fourth quarter earnings saw an increase of 0.7% (according to FactSet). This is the first positive YOY quarterly growth in the S&P 500 since 2018. The growth rate has dropped in recent quarters but was still positive overall. Earnings drive current and future price. As such, it is to be expected that Q4 2019 reports would be strong given the run up in stock prices over the past six months.

With impeachment no longer a distraction and the coronavirus becoming old news, investors can now turn their attention to the prospect of continued growth. The S&P 500 aggregate forward P/E ratio is 20 and significantly above long-term averages. This implies that earnings growth will have to accelerate to justify current price as well as price gains going forward. Whether this can happen is of course anyone’s guess, but the collective wisdom of the world’s equity investors seems to think it is possible. I wrote a commentary several weeks ago suggesting that investors seemed to find conditions for growth just right. This “Goldilocks” scenario occurs when interest rates are low, inflation is contained, and companies can efficiently borrow to invest in their own products and services, thereby growing their earnings.

The one noticeable current concern for me is the flat yield curve (recently inverted). When short term rates are the same or lower than long term rates, banks cannot make money loaning money and access to capital dries up. If the growth story were as strong as the stock market seems to think it is, we would expect the bond market to have higher long-term rates. After all, who would loan their money out for ten years in return for a 1.55% return when they could invest it in a company like Apple or Amazon or even the S&P500 as a whole and experience a much better return. This bit of common-sense analysis suggests that the bond market is not as enthused about future growth as the stock markets would otherwise indicate.

We will continue to keep a close eye on this important part of the picture. At Cabana, we remain Moderately Bullish.

Key Terms:  The S&P 500 PE Ratio is the price to earnings ratio of the constituents of the S&P 500.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

February 4th, 2020

Chadd Mason, CEO The Cabana Group

The Emotional Stock Market vs. the Wise Old Bond Market

Last week, we discussed the coronavirus outbreak and implications it might have on markets going forward. I provided some statistics related to previous epidemics and the historical response to those by equity markets worldwide. That data is inconclusive at best. I ended the commentary by pointing out that this current medical crisis (like all worldwide events) does not matter to investors, until it matters. What I mean by that statement is that extraneous events don’t necessarily impact asset prices just because they happened, or just because they are scary. Events only matter if they affect the supply and demand of goods and services.

It is these fundamental underpinnings of the world economy that drive interest rates and the all-important perceived opportunity for yield, relative to a risk-free rate of return. If demand is strong, businesses will perceive an opportunity to profit by investment in their products (supply) to meet that demand and generate earnings above and beyond what could be achieved by investing the same capital in things like government bonds. When demand becomes weak, businesses may feel the possibility of generating earnings is insufficient for the risk involved in putting money toward growing their business.

It is this ongoing analysis that is played out every day and is reflected in the bond markets in general, and the yield curve in particular. It is the bond market and the yield curve that tells us what investors think about prospects for growth over the next 1 year, 3 years, 5 years, 10 years and more. Think of the stock market as a loud and sometimes argumentative teenager. It is emotional and bounces around a lot while trying to find its way. Think of the bond market as a wise old man. It doesn’t make as much noise or talk as much, but when it does speak it is worthy of attention.

Domestic and international stock markets (notably Chinese) have sold off precipitously during the past week as the coronavirus has continued to spread across the world, and global leaders have scrambled to quarantine large swaths of the Chinese and traveling population. It is now clear that the virus will infect significantly more people than the SARS virus did in 2003. Whether it is as deadly (on a relative basis) remains to be seen. Sectors with exposure to the Chinese economy, such as technology, have been hit especially hard. The energy sector, which is dependent upon Chinese demand has experienced the weakest start to a year in decades. The energy sector ETF (XLE) is down 16% in a month. Clearly, we are seeing at least the perception of demand being affected by this virus. But as stated above, stock markets bounce around a lot and perception can change overnight.

So, what says the wise, old bond market? Well, the bond market unfortunately looks like it agrees. The 10-Year Treasury Note has now dropped 40 basis points in just over two weeks. It is currently yielding 1.53%. That is a 20% move down and evidences real concern that global economic activity is going to be hurt going forward. In fact, we just saw the 90-Day and 10-Year Treasury Note invert. This means that an investor gets a better rate of return for loaning out his or her money for ninety days than for loaning it out for ten years. This is not normal and is not a good sign for economic growth going forward. This condition happened in 2018 and quickly resolved itself, which may happen again.

All things considered, I am not suggesting that we can’t or won’t find our way through this latest threat. Yesterday saw some buying in equity markets across the world and markets are up big today. Suffice to say, I am concerned that the bond market has rapidly forecast such weak demand in the face of good earnings here in the U.S. We are in the middle of earnings season and most companies are beating expectations. Bond markets often see things before everyone else does. That fact should give us pause going forward.

We remain moderately bullish for the time being at Cabana.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

January 27, 2020

Chadd Mason, CEO The Cabana Group

Markets React to the Coronavirus Fears

Just as quickly as the drumbeats of war with Iran quieted, we became overwhelmed with news of a rapidly spreading potential pandemic coronavirus. The virus started in China and has now been found in numerous countries around the world, including the United States. It is currently projected to be less severe than the SARS virus, which started in 2003 (also in Asia) and ultimately infected 8,000 people and killed 774 of those. These viruses are related to the common cold and pneumonia. The vast majority of those infected recover with mild to moderate symptoms. To put this in perspective, influenza infected more than 43 million people and killed 57,000 in 2019. The flu killed 80,000 in 2018. If you want to worry about something, the flu would be a worthy candidate.

While a worldwide health epidemic can certainly impact trade, travel and business activity, it is these factors’ impact on corporate earnings that ultimately dictate asset class performance. Equity markets around the world have sold off as word of the virus reached the forefront of our collective attention. The S&P 500 has dropped more than 3% in the past four trading days. China has dropped 10% in the face of quarantines and restricted travel during the Chinese Lunar New Year. Energy stocks have also taken a hit as investors predict reduced demand for fuel. Bond yields across the yield curve have followed suit and dropped precipitously. The 10-Year Treasury Note is trading at 1.60% after being as high as 1.90% two weeks ago.

So, is all this coronavirus concern justified or is it just a good excuse for some profit taking after a big unabated run -up in stocks? I mentioned last week that markets were priced to perfection, with investors clearly expecting strong earnings this month. According to FactSet Financial Data, 85 companies within the S&P 500 have reported Q4 2019 earnings and 62 of those (73%) have beaten earnings estimates. Out of those reporting, 57 (67%) have reported revenues above forecasts. Pretty good numbers indeed. Year-over-year average earnings growth remains at positive 8%. The question now becomes whether the fallout from the coronavirus is going to cause these numbers to fall going forward. Of course, no one knows for sure what can happen when a heretofore unknown virus makes inroads into the human population.

All we can do is look to history for some guidance (just like we did earlier this month when trying to discern whether military conflict was bad for corporate earnings and equity investments). See Page 2 for a chart courtesy of Dow Jones, which tracks U.S. market performance over the ensuing 6 and 12 months, following the occurrence of an epidemic as described by the World Health Organization. Interestingly, in almost every instance going back to 1981 and the AIDS epidemic, markets are higher after both 6 and 12 months. The same is true of international markets, as evidenced by the second chart on Page 2, provided courtesy of Charles Schwab and FactSet.

The fact is that epidemics don’t matter with respect to equity markets…until they matter! When and how they might matter is anyone’s guess. We will continue to watch earnings as they roll in and be prepared to respond to changes in the prices of broad asset classes. For now, we remain Moderately Bullish at Cabana.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

January 21, 2020

Chadd Mason, CEO The Cabana Group

The Temperature is “Just Right”

In recognition of the Martin Luther King Jr. holiday, this commentary is as of Tuesday, Jan. 21.  U.S. equity markets closed last week at new all-time highs. Foreign markets appear to be in the process of  bottoming out after several years of underperformance. We are starting to hear a lot of predictions that foreign markets are the place to be going forward. Of course, take these predictions for exactly what they  are – predictions. Nonetheless, risk on assets are continuing to see money flow in the face of strong U.S. corporate earnings. Bond yields remain subdued and rangebound. The 10-Year Treasury Note has traded between 1.70% and 1.95% for the past three months. Low interest rates in the face of positive earnings result in a “goldilocks” scenario, whereby we have a near perfect environment for equities. This condition lasted throughout 2017 and has resumed over the past few months. Commodity prices (i.e. inflation) are also in check, which takes pressure off the Federal Reserve to raise rates. Chinese markets are taking a big hit today due to fears of a SARS-like virus outbreak. Otherwise, it is hard to complain about investing around the world at the moment.

Let’s continue to watch earnings as they come in for signs that we have gotten ahead of ourselves. Prices clearly indicate that earnings are expected to be very, very good. We will take it day-by-day and follow our process. At Cabana, we remain moderately bullish.

Key Terms:  

Goldilocks Economy:

A Goldilocks economy is not too hot or too cold but just right—to steal a line from the popular children’s story Goldilocks and the Three Bears. The term describes an ideal state for an economic system. In this perfect state, there is full employment, economic stability, and stable growth. The economy is not expanding or contracting by a large margin. A Goldilocks economy is warm enough with steady economic growth to prevent a recession. However, growth is not so hot as to push it into an inflationary status. Source: Investopedia.com.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

January 13, 2020

Chadd Mason, CEO The Cabana Group

News-Driven Market Predictions Can Be a Recipe for Disaster

What a week! In just about seven days, we (the U.S.) and the world have stepped back from the brink of war with Iran, Iran has shot down a civilian aircraft killing 176 innocent people (and then lied about it), and the Iranian people have gone from marching in the streets chanting death to the U.S. to now marching in the streets chanting death to their own ruler. You just can’t make this stuff up. Not only is this an example of just how fast news events can change, but it is also a prime example of how relying on news events of any kind are a recipe for disaster when it comes to investing.

One week ago, news pundits (and so-called investment experts) on television were shouting warnings that the overbought stock market would quickly drop in the face of the military conflict in Iraq and collateral fallout. I read one article last week that said the conflict could “immediately cause a 15% correction in equities”. Along these same lines, many clients were concerned and several asked to liquidate their accounts to cash. I referred them to the commentary I wrote last Monday night discussing past military conflicts’ historical impact on the U.S. economy over the short term. More importantly, I pointed out that markets very quickly figure out what is important and what is not as it relates to the attractiveness of asset classes. This is true whether we are talking about war, natural disaster or some foreign or domestic political upheaval.

Since the market close on January 7, when the bottom appeared to be falling out of the stock market, the S&P 500 is up nearly 3% as of this writing. Anyone who sold assets because they “predicted” a particular market response have now lost 3% in returns and are faced with the incredibly difficult decision of whether to “get back in”. After all, the bullish response may now be over, and the selling could resume! This is called a dilemma and one that you do not want to be faced with.

What I have just laid out is an incredibly important lesson in investing. It is impossible to predict the stock market or any other market for that matter. If it were possible, everyone would do it and it would therefore have no value. Have a process that you believe in and can stick to. There are a million ways to be successful in investing, but every one of them has a process. Warren Buffet has a process and the fanciest market technician has a process. Find data points that are meaningful to the performance of the assets that you invest in and follow them religiously. Try to stay invested and collect dividends and interest if you can. You won’t always be right, but you will be getting paid while you wait. Staying invested is the key to long term success. Making investment decisions based on anything else is what some would call gambling. It is a fool’s game. Don’t be a fool with your money.

At Cabana, we remain in our Moderately Bullish Scene and have not reallocated.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

January 06, 2020

Chadd Mason, CEO The Cabana Group

Trusting the Markets Among Rising Middle East Tension

I hope everyone had a happy and heathy holiday! The older I get, the more I realize that we don’t get do overs in life. Let’s all strive to make 2020 the best year yet.

The new year started out with some rocky and even scary international developments. Our present conflict with Iran has caused some quick profit taking and reallocation of assets. Some of this is simply the result of an over-bought stock market while some is the result of reasonable concern over how widespread and violent this situation may get. Gold is hitting highs we have not seen since 2013, as investors move to safe haven assets. The stocks of defense contractors like Lockheed-Martin are seeing significant buying as well. Interest rates have dropped as investors assess the impact on economic growth here and abroad. So, just how bad could a war (declared or not) be for our investment portfolios?

The best we can do is look to history for some guidance. Military conflict over the past one hundred years has generally been good for the U.S. economy – at least over the short to medium term. Over the long term, there is strong evidence that war leads to increased debt, lost opportunity cost as money is directed toward select industries and away from everything else, inflationary pressures and taxes—not to mention the cost of human life. World War I, World War II and the Korean Conflict all resulted in GDP improvements and large jumps in manufacturing output during and shortly after the conflict. The first Gulf War kick started the nineties and the bull run in stocks. The same can be said of the second Iraq conflict following 9/11. U.S. equity markets bottomed in 2003 right as the U.S. military invaded Iraq. The one glaring exception is Vietnam. That conflict resulted in the U.S. stock market being mired in a recession throughout much of the 1970s. During that time, inflation was rampant leading to interest rates nearing 20%.

I am not smart enough to figure out all the reasons for these differences and won’t try. What I do know is that markets are good at figuring out if anything (even war) is helpful or harmful to companies’ ability to increase earnings, and then compare those earnings to receipt of bond interest – all relative to inflation (commodities). It is this ongoing process that leads to the valuation of asset classes. To me, this basic concept of investing is comforting. No matter the current news or state of world affairs, we only need to look for the fundamental data and it will eventually show up in the price of the assets that we follow and invest in. We don’t need to predict or guess. We just need to follow along.

Right now, corporate earnings are continuing to grow albeit at a slower rate. Currently the growth rate is around 8% year over year. Interest rates are historically low, and the yield curve is no longer inverted. Commodity prices are also low, although the price of oil is certainly in play. We monitor this data every day. This favorable data is   reflected in the strong equity markets that we continue to enjoy. If and when things change, we will know and respond. At Cabana, we remain moderately bullish.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

December 23rd, 2019

Chadd Mason, CEO The Cabana Group

2019: A Great Year for Investors of all Types

On behalf of everyone at Cabana, I would like to thank our clients and investor partners for your continued belief in us. Without you we could not do any of the things we work to do in hopes of making the world a better place. Please know that I do not take your trust for granted.

This past week has seen equity markets again move higher as 2019 comes to an end. What a great year it has been for investors of all types. Regardless of your philosophy or strategy, you would be hard pressed to have not made money in 2019. This year was as good across all asset classes as 2018 was bad. Stocks and bonds both benefited from falling interest rates, as the Federal Reserve in the U.S. and central bankers across the world scrambled to support a slowing economy caused by trade wars and a resulting manufacturing recession. This proactive action kept markets afloat long enough for prospects of a political solution to kick in. The retail investor came through in a big way by spending even when the news was bad and predictions dire.

The broad U.S. equity indexes are up nearly 30%, making it the best year for stocks since 2013. Developed markets have also done well and are up nearly 20%. Emerging markets continued to lag but appear to have bottomed in the fourth quarter of this year and are seeing buying in response to abatement of the U.S./China trade dispute. Treasuries, bonds, real estate and dividend payers are all up nicely in response to falling interest rates and a very resilient and very old bull market in stocks. GDP continues to come in right around 2%, which is frankly amazing given the hurdles we have had to clear domestically and abroad. It certainly hasn’t been as smooth as 2017, but the markets figured it out… just like always.

I will end with a post I wrote several months ago about the thing that is always most important, Invest in Yourself. I find it is easy to forget in the hustle of modern life. Have a safe and healthy holiday season. We will pick our weekly commentary back up on January 6, 2020.

At Cabana we remain moderately bullish.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

December 16th, 2019

Chadd Mason, CEO The Cabana Group

Investors Welcome a U.S.-China Trade Deal With Open Arms

Equity markets around the world continued to grind higher last week and moved up again today. The much-anticipated trade resolution with China came through over the weekend. While this has been in the works for 18 months and the deal’s substance is debatable, investors appear buoyed by the fact that we can avoid additional tariffs going into effect on December 15. Higher stock prices appear to be justified based on renewed growth prospects in the manufacturing and transportation sectors. Manufacturing in the U.S. has been in a recession all year due to trade concerns and any relief on that front is welcome. Asia’s stocks are also benefiting. China is up more than 5% for the week and 3% today.

I won’t beat this dead horse too much but our markets (and companies) need some demand from around the globe to keep this engine running. We have carried the load for 2 years and our earnings growth rate, while still positive, is falling. As we have pointed out several times in commentaries recently, price is both an aggregator of information and a predictor. The last few weeks are a good example of both as investors worldwide bought stocks in response to solid economic data in the form of employment and earnings, and at the same time are anticipating a jump start to growth from political accord and some international demand. It is always amazing to me to watch how price translates everything else.

The downside (although not really a downside economically) is that interest rates are rising in response to the current stock rally. This is resulting in a pullback in bonds and fixed income assets. Other interest rate sensitive assets like REITs and dividend payers are also underperforming the broader market, and particularly high beta risk sectors. We are happy to take this trade off anytime.

At Cabana we remain moderately bullish.

P.S.  Thanks to those advisor partners that invited us out to California last week. It was great to see some familiar faces and meet some new friends. On behalf of all our team, it is an honor and a privilege to get to work with so many great people who genuinely care about their clients and work every day to change lives for the better. Let’s keep up the good work!

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

 

Weekly Market Commentary

November 25, 2019

Chadd Mason, CEO The Cabana Group

Nasdaq and S&P 500 Reach New Highs

Markets broke out today after two weeks of digesting the October and November gains. The S&P 500 and the Nasdaq are at new all-time highs. Let’s take a look at how we got here.

First off, China issued new guidelines for protecting intellectual property, which has been a concern for companies doing business there. This apparent breakthrough on an important trade issue was the impetus for worldwide equity markets moving higher today.

I have discussed the need to watch the small-cap index (IWM), as well as transportation (IYT) for signs that the current rally has more room to run. Both indices had a big day today and are outperforming the Dow and S&P 500. Improving emerging markets (like China) serve to further strengthen the bullish case for stocks. The emerging market index (EEM) was up more than 1% today and China (FXI) was up 1.67%.

We have a shortened holiday week and expect to see low volume activity across the board. This may increase volatility, but the trend is clearly up. The technical market performance that we have seen thus far in November is impressive. Breaking through the 2900-3000 range on the S&P 500 was important and took no less than five attempts over the past two years.

I will close today by wishing everyone a happy and healthy Thanksgiving holiday. I hope everyone takes time to be grateful for the blessings of family and friends. In the grand scheme of things, those are what matter most.

At Cabana, we remain Moderately Bullish.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with  Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period. Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

 

Weekly Market Commentary

November 18, 2019

Chadd Mason, CEO The Cabana Group

Six Week Market Recap: How Fundamental Data Has Impacted Cabana’s Allocation

We hosted our monthly advisor webinar on Friday and touched on a variety of tools and resources we have in the works at Cabana, as well as the markets’ performance over the past six weeks. We often receive questions from advisors about how and when we know to reallocate portfolios, and this past week was no different. I’d like to use today’s commentary to walk through our process and how you can follow along.

Our rules-based investment process:

First, let me say that we are not psychic, and we do not have all the answers. What I believe we do well is recognize what is important and what is not. We also have a rules-based process that is integrated into our algorithm and reflects a simple but time-tested approach to investing. Our algorithm is monitoring interest rates, earnings and price. These data points form the foundation of our investment process. In other words, these simple pieces of information give us clues as to what assets will be attractive and what assets will not. When combined, they can form a powerful tool for investing. We do not always get it right nor do we expect to. We do however want to put odds of a correct decision in our favor as much as possible.

With that, let’s take a look at what we have reported in our commentaries since September. I believe it will give considerable insight into our process of allocating assets.

A look back at the past six weeks: 

September 30: We noted continued mixed messages in the market. While markets saw selling and we were in a technical manufacturing recession, jobs numbers were strong, the yield curve was improving, and we were only 2% below all-time highs in the major indexes. We called the glass “half full” and commented that dividend payers, defensive equities and real estate were attractive. Shortly after this commentary our     algorithm signaled a reallocation to less risky assets.

October 7: We felt that the jury was still out and explained that the previous six months of rangebound volatility would result in the market giving us a “verdict”. We were looking for a breakout above or below the range and provided the levels on the S&P 500 that we were watching (2720 and 3000).

October 14: We suggested that the “news” doesn’t matter. What does matter is interest rates, earnings and price. We noted that earnings would ultimately carry the day and were looking forward to the beginning of earnings season the following morning.

October 18: Our algorithm signaled a reallocation to more bullish conditions. This was primarily due to changes in price of the broad markets, as well as initial earnings reports that had come in over the previous three days. Our algorithm observed that things were “better” and that we should reallocate to assets that outperform in a “better” market environment.  We began the process of reallocating our portfolios and notified our advisor partners.

October 21: We noted stellar earnings reports from financial institutions and outperformance in the transportation sector. At that point, the yield curve had maintained a better spread between short- and long-term interest rates. We also pointed out that equity markets were right at all-time highs and we were watching for a breakout and fourth quarter rally.

October 28: The breakout above 3000 on the S&P 500 had occurred. We identified rotation into higher beta assets as further evidence that professional investors were reallocating in response to growth prospects improving. We were watching for buying in energy, commodities and transportation. As soon as we said it, that’s what occurred.

November 4: We pointed out that the fourth quarter rally was officially on us, and were watching for outperformance in risk assets like small caps, emerging markets and industrials in order to continue.

November 6: We provided a chart visually showing positive money rotation into risk assets and out of defensive positions during October and early November.

November 11: We discussed the rally and what to expect going forward. We highlighted improvements in global markets and how that could provide support to our market going forward. Lastly, we talked about how markets are forward looking and how that coincides with the performance we saw in 2018 and this year.

What’s happening now?  

As of today, 92% of companies have reported earnings. Of those, 75% have beaten estimates and 60% have reported positive sales surprises. Year-over-year earnings growth is 9%. The 10-year Treasury is at 1.81%, up from 1.55% at the beginning of September. The spread between the 10-year and 2-year Treasury has increased 20 basis points during that time. These fundamental data points are what matters and is what is driving the rally we are currently seeing in equity markets. It is also what dictated our decision to reallocate to more bullish conditions on October 18, when price improved. Since then the market has rallied almost 5%. While price had not officially broken out on October 18, things underneath the hood were getting better. Things that matter like interest rate spread and earnings. Those factors increased the chances that the improvement in price was meaningful and that a reallocation to assets that would benefit from these conditions was appropriate. As an investor, that is all you can do – gather relevant information and make investment decisions accordingly. But what is relevant information? Each of us must make that determination on our own and on our own terms.  I hope this outline, as well as review of our commentaries over the past weeks, will help our partners and clients better understand our process. We are far from perfect, but we try to always be transparent.

IMPORTANT DISCLAIMERS

 This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to       accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

November 11, 2019

Chadd Mason, CEO The Cabana Group

Money Rotation Continues to be Bullish

This past week we saw major U.S. indices tread water at their all-time highs. Underneath the hood, money is rotating from low beta assets such as bonds, real estate, utilities and dividend payers, into cyclical assets like technology, transportation, energy and industrials. Financials continue to benefit from rising long-term interest rates and a steepening of the yield curve.

While markets are taking a well-deserved rest after a particularly strong October, the money rotation taking place continues to be bullish. On Wednesday of last week, we posted a chart to our blog with performance of the various stock sectors over the past thirty days. It is worth reviewing to see this rotation in terms of real money. You can view that post here.

We are watching small caps, transportation and energy for signs of strength going forward. These indices continue to see buyers step in at any pull back and today was no exception. Investors appear to be forecasting renewed growth going forward after a slowdown here in the U.S. during 2019. As always, markets are forward looking, and that fact best explains the strong returns we have had thus far this year in the face of deteriorating economic data. It also explains the weak returns in 2018. The market in that case was looking to 2019.

I am also pleased to report that outside the U.S. we are seeing some relative strength, after two years of abysmal performance. The All Country World Index (ACWX) is now at an all-time high and the Emerging Market Index (EEM) has held its own during the October rally. Some of this is due to the possibility that trade issues with China are  being resolved and some of it is likely due to improving cyclical economic conditions around the world. Regardless of the reason, it is good to see U.S. markets getting some help.

All of this makes me hopeful that we may see more gains in all-asset portfolios before year end. At Cabana, we remain moderately bullish.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

 

 

Weekly Market Commentary

The Fourth Quarter Rally We’ve Been Hoping For

The S&P 500 and Nasdaq both closed last week at all-time highs. Several weeks ago, we noted improving conditions, which resulted in our reallocation to add risk assets back on during the week of Oct. 21. Other market participants now appear to be doing the same thing. Higher beta stocks like technology, small caps and emerging markets are outperforming defensive sectors like utilities, consumer staples and real estate. Financials are getting a boost from rising bond yields. Finally, energy and transportation stocks exploded upward today on news that a U.S.-China trade deal is imminent.

I have been hopeful that the technical indicators we’ve seen and mentioned over the past few weeks would translate to investors buying risk assets as we close out the year. Strong corporate earnings coupled with strength in employment has caused the stars to align. The fourth quarter rally we were looking for appears to have officially begun.

Look for continued strength in emerging markets, small caps and industrials as an indicator of how much momentum this rally has. The major indexes have no overhead resistance, so there is technical room to run. I will point out that we are approaching short-term overbought conditions and a pullback, or at least a pause, may be in order before we go higher.

At Cabana, we remain moderately bullish.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to       accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with            Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

Week Two of Economic Improvement

Last week, we noted overall improvement in underlying economic conditions. That trend has continued.

Earnings here in the U.S. have been better than expected, with a number of upside sales surprises. This data suggests that the ongoing trade dispute with China is having a muted impact on companies’ ability to make money. The 10-year Treasury yield continues to rise in response to improving growth prospects, and the yield curve is steepening. Today, the S&P 500 broke out to an all-time high – this is a big positive going forward. We are currently seeing a rotation into risk assets and out of safe havens. Technology, energy, financials, basic materials and industrials are beginning to outperform. Utilities, gold, real estate and bonds are falling back. These defensive sectors have been leaders for months and it is nice to see some rotation into growth assets. I mentioned last Monday that we should watch for new highs in our equity markets, coupled with strength in energy, commodities and transportation. As soon as we wished for it, we got it. Last week saw big moves in all three of those areas. Finally, it is notable that after more than two years of weakness, foreign equity markets are starting to pick up. Developed markets like Germany and Japan are improving and China looks like it may be as well. As a result, the all world index ACWX (that does not include the U.S.) is nearing a new high. I have belabored this point for more than two years, but it is worth saying again – the U.S. economy benefits when it has strong partners abroad.

At Cabana, we are in our Moderately Bullish Scene.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

October 21st, 2019

Improvements at Home and Abroad

Relatively strong earnings reports over the past week in the U.S. helped push our major stock indexes back within reach of their all-time highs. Banks and other financial firms brought in stellar reports. This has caused the financial sector to take the lead among equity components of the S&P 500. The Sector SPDR Index (XLF) is up more than 6% in the last nine trading days. The leadership in finance also coincides with a steepening of the yield curve. The 10 Year Treasury Bond is currently yielding 1.70%, while the 2 Year is yielding 1.60%. While this may not seem like a big difference, it is a vast improvement from what we have seen the past several months. A steep yield curve is good for banks, and ultimately increases money supply within the system. Make no mistake, it is a good sign when banks are doing well and consumers (and businesses) have access to loans.

On the international front, the United Kingdom’s exit (aka Brexit), from the European Union is down to the wire. October 31 is the deadline for a compromise on trade and immigration to be reached within the British Parliament and approved by the rest of Europe. A disorderly exit is not in anyone’s best interest, so you have to believe a deal will eventually be cut despite the constant back and forth by England’s leadership. Investors appear to feel the same way, seeing as the major European stock index (FEZ) is at an all-time high. Finally, China just reported the weakest growth since records have been published—going back to the early 1990’s. Chinese GPD came in at 6% and is expected to fall to 5.8% by the end of the year. The trade war with the U.S. is taking a toll on manufacturing and exports, as is a general cooling off of Chinese consumers. Chinese equity markets have been weak for the past two years and the data supports it. Given that China’s economy is not purely market driven (free), it is likely that their government will intervene at some point to try and stimulate growth. The low GDP numbers out of China also suggest they are eventually going to want to resolve the trade issues with the U.S. Just this morning, President Trump indicated that China is on track to complete a trade deal in November. Of course, it is sometimes hard to know what is substance and what is just talk.

Commodities, including energy, are still weak and evidence a lack of global demand. The transportation index (IYT)  has also underperformed, but is improving, and is up 9% in the past two weeks. We are watching for a breakout in U.S. equity indexes (SPY) just above current levels, along with some buying of commodities and transportation stocks. If all this can come together, we just might have a rally in the cards for the fourth quarter.

At Cabana we are reallocating this week to our Moderately Bullish scene in response to improving conditions.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from    proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

October 14th, 2019

Does the News Really Matter?

Equity markets set politics aside last week and focused on renewed hope of a trade deal between the U.S. and China. Initial reports were that the two countries had agreed to a “phase one” (of several) compromise. It was reported that the Chinese government would commit to the purchase of U.S. agricultural products and the U.S. would suspend implementing new tariffs later this month. The remainder of the details remain murky and after thinking it over, most commentators don’t see that much has been accomplished.

Nonetheless, investors took the communication between the two major economies as a positive and stocks bounced toward the upper end of the range we discussed last week (2720-3000 on the S&P 500). Material stocks, commodities and emerging markets were the big winners on the back of hope that the global supply chain can fire up again. Bond yields got a corresponding lift as well. It should be noted that another positive was word out of the United Kingdom that some type of Brexit resolution was in the wings.

We have discussed this type of news-driven market behavior before and it is always worth repeating that news events themselves do not make assets of any type more or less attractive. The things that matter are interest rates and earnings. If the news really matters, it will eventually show up in the hard data. As such, we are looking forward to third quarter earnings season ramping up. The big financial firms report tomorrow as well as Dow components Johnson and Johnson and United Health Group. These reports, along with others like industrial and transportation stocks, will determine just how weak the global economy is and whether we are in for rougher water in the form of rising unemployment; or whether this soft patch is just that and we have more innings to play. Unlike interest rates and earnings, price is a predictor as well as an aggregator of information. This volatile and range bound stock market tells us we aren’t ready to bet on the future, one way or another. As soon as all the above described news begins to really matter we will see it first in a price breakout, followed by confirmation in interest rates and earnings (usually in that order).

We will continue to take it day by day and honor our discipline. We are cautiously bullish following reallocation on October 4.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with  Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

October 7, 2019

Chadd Mason

The Jury is Still Out

Last week saw more of the same volatility that has plagued equity markets since April. Over the past six months there have been no less than five trends encompassing moves up/down in stock prices greater than 5%. These wild swings in stocks have been accompanied by similar moves in bond yields and bond prices. All of this “noise” in stocks and bonds has resulted in the U.S. stock market going nowhere since April 30. In fact, the S&P 500 is slightly down from that point in time.

I am a big believer in the market being a very efficient arbiter of price. Especially the price of major asset classes like broad U.S. equities, bonds, real estate and commodities. As a trial lawyer (and judge) in my former life, I can tell you that twelve people on a jury are amazingly good at seeing through the mud and getting to the truth. Investors worldwide are kind of like a huge jury working together to sort through what is real and what is not in  the never-ending quest to find the best return on an investment relative to risk. The past six months seem a lot like the jury going back to the jury room to deliberate and think through all the back and forth that has occurred during a trial. The goal being to sift through what was said, what evidence was presented, and then determine what bears on the issue at hand. In comparing investing to a trial, the lawyers are the economists, market analysts, the Federal Reserve, trade tariffs, the President, politicians here and abroad, and the omnipresent talking heads on CNBC. The evidence is data like interest rates, unemployment numbers, housing, GDP, manufacturing output as well as import and export numbers. Lastly, think of price as the jury’s verdict.

When we take a step back and look at all this, it is clear that the jury is still fighting it out among themselves and trying to reach a verdict. For those who have watched the movie “Twelve Angry Men,” you know what I mean. The verdict that our jury of worldwide investors is trying to reach is whether this bull market is over, and a recession is upon us. The sharp waves up and down in stock prices evidence a moment or two (or a month) of compelling facts being discussed that lead to a conclusion one way or another.

Unfortunately, we don’t have the all-needed unanimous decision yet that will dictate the performance of asset classes over the medium to longer term. The good news is that the longer the jury stays in the room and prices stay rangebound, the more certain the verdict will be when they break out. For those keeping track, the high end of the range is 3000 on the S&P500 and the low end is 2720.

At Cabana, we don’t predict when the answer will come. We remain prepared for either outcome while we wait. In response to the sharp sell-off that began at the end of September we have reallocated, notably removing risk in our more conservative Target Drawdown Portfolios. We are now moderately bullish.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

September 30th 2019

Eyes Wide Open and the Glass Half Full

The past week saw continued selling in U.S. equity markets. The S&P 500 ended slightly more than 2% below alltime highs. Given all the recent impeachment noise, mixed messages regarding our trade with China, the Iran crisis and more, September ended on relatively good terms for investors. While domestic manufacturing is in a technical recession and the Chicago PMI numbers released today show contraction and are the weakest since 2015, employment is strong for the time being and real estate is holding up. The yield curve has improved, which is benefiting financial stocks and banks. I commented on these data points last week and the song remains the same for now.

We have new manufacturing numbers out this week and a very big jobs report on Friday. If things are going to break down from here it will start with jobs. I am very interested to see how the trade uncertainty and overall recession fears are impacting hiring. Foreign markets, energy, commodities and transportation are weak and under performing other asset classes and equity sectors. In other words, all the players that we look to for future demand side growth are noticeably absent from the stage. The players that are on stage are the same players that have been for the past several months. Those are defensive equities (like consumer staples), bond substitutes (like utilities), dividend payers, REITs, and preferred stocks. Treasures, corporate grade bonds and junk bonds remain in uptrends and near recent highs.

We enter October with our eyes wide open and a glass that is half full (or half empty). This has traditionally been an especially volatile month and quality, value, dividends and low beta (risk) assets feel like pretty good places to be for most investors.

At Cabana, we are moderately bullish and are prepared to reallocate upon signal.

Key words:
The Purchasing Managers’ Index (PMI)
 is an index of the prevailing direction of economic trends in the  manufacturing and service sectors. It summarizes whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting. The purpose of the PMI is to provide information about current and future business conditions to company decision makers, analysts, and investors.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

September 23, 2019

Fed Cuts Interest Rates Again as We Continue to Keep our Head Above Water

During the past week, major U.S indexes reached resistance at summer highs before pulling back and churning 1.3% lower (S&P 500). On Wednesday, Chairman Powell and the Federal Reserve lowered the target federal funds rate by 25 basis points. This is exactly what bond and equity markets were pricing in, and despite some perceived hawkishness during Mr. Powell’s news conference, stocks and bonds ended up flat on the day.

Overall, we have seen some minor improvement in the yield curve inversion, which has been a major topic here and abroad over the past several weeks. Almost all past yield curve inversions have led to a recession within 24 months. The 10-year Treasury bond is now yielding 1.69% and the 2-year Treasury is yielding 1.65%. Obviously not much difference, but at least it is no longer inverted. Other parts of the yield curve still are, but the 2-10 is the area that is most closely watched.

The U.S. stock market continues to significantly outperform everyone else. China and other emerging markets are weak and well below highs reached early in 2018. Part of this is due to trade issues that remain unresolved and part is due to the strength in the U.S. dollar. A strong dollar negatively impacts commodity exporting countries, which make up much of the emerging market complex. The one exception to this is gold, as it has benefited from deflation around the world and political uncertainty. Developed economies are not doing much better. Germany is technically now in a recession and Great Britain is sure to follow, absent a Brexit deal in the next six weeks. The developed world stock index “EFA” (that does not include the U.S. or Canada) is down 13% from its 2018 high. I have commented on the relative weakness around the world many times and will not belabor the point again, other than to say we cannot grow without trading partners. At some point the U.S. consumer will blink and our earnings will fall,  without another source of demand. Of course, this reality is exactly what is being conveyed in economic data like the yield curve. It is why we watch the transportation index (IYT) so closely. It is also why we are always concerned with employment and real estate. Without jobs and a strong real estate market, the consumer does not have the financial or psychological means to carry the U.S. economy on its back. Let’s not forget that most of the average American’s net worth is in their home.

So far, we have kept our head above water in all these important areas, despite lots of clouds on the horizon. Sometimes a strong wind can blow storm clouds in another direction. We will continue to watch for the wind and hope it is a good one rather than a bad one when it comes. At Cabana, we remain moderately bullish.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

 

Weekly Market Commentary

Market Commentary for the Week Ending 9/13/2019

-Darren Leavitt, CFA

It was an exciting week on Wall Street as US markets posted their third weekly advance.  A de-escalation of trade tensions along with new central bank stimulus measures from the ECB and decent economic data here in the US pushed the S&P 500 above the 3000 level and also urged the Dow above 27,000.  For the week the S&P 500 gained 0.96%, the Dow increased by 1.57%, the NASDAQ lagged a bit but was up .91%, and the Russell impressed with an increase of 4.85%.  A noticeable trend in support of value versus overcrowded trades in high flying growth stocks and US Treasuries emerged last week.  The 2-year note yield gained 27 basis points during the week to close at 1.79%.  Similarly, the 10-year bond yield increased by 35 basis points and closed at 1.90%.  Oil prices fell 2.8% on the week to close at $54.88 as National Security Advisor, John Bolton, left the administration.  His departure led some to believe that Trump may ease some of the Oil sanctions currently placed on Iran and in turn increase supply which helped move prices lower.  Gold, considered another safe-haven asset, also fell last week.  The commodity lost roughly $15 to close just below $1500 an Oz.  There were no changes to our models last week.

A delay in an increase of tariffs on 250 billion in Chinese imports to October 15th from October 1st announced by Trump during the week along with a Chinese announcement that it would exempt tariffs on US soybeans and pork imports aided gains in the markets.  Additionally, there was some rhetoric out of Washington that suggested the administration might be open to some type of interim trade deal which also encouraged the sentiment around trade.

The European Central Bank announced last week that it would be adding more stimulus to its economy by cutting its deposit rate to -0.5% from -0.4%.  The ECB also announced that it would restart a bond-buying program also known as “Quantitative Easing” that will buy 20 billion euros per month in bonds starting November 1st.   Additionally, China reportedly is set to begin an easing cycle later in the month to further help in their stimulus efforts.  It is also widely expected that the US Federal Reserve will cut by another 25 basis points at their next meeting to be held September 17thand 18th.

The US consumer continues to be resilient.   Retail sales in August were up 0.4%, which was better than the 0.2% expected but down from the revised July figure of 0.8%.  A tight labor market continues to provide a solid backdrop for the consumer.  Initial Jobless Claims for the week came in 15k to 204K versus the expectation of 218k.  Preliminary University of Michigan Consumer Confidence also came in a bit better with a reading of 92 versus expectations of 90.2.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap week ending 9/6/2019

-Darren Leavitt, CFA

Last week, the markets had their second consecutive weekly advance.  More constructive headlines on trade negotiations between the US and China helped market sentiment.  During the week China announced that trade negotiations would resume in Washington in early October.  Additionally, Hong Kong officials announced that they would no longer pursue the controversial extradition law- this was viewed as a positive by investors as it likely takes one of the potential obstacles off the negotiation table.  Another geopolitical event that influenced markets last week was the move by the UK Parliament to block a no-deal Brexit.  The move put a strong bid into Sterling and also strengthened the Euro relative to the US Dollar.

The S&P 500 trade 1.85% higher on the week while the Dow increased 1.65%, the NASDAQ added 1.63%, and the Russell 2000 gained 0.69%.

Treasuries had a volatile week induced by a mixed bag of economic reports.  Early in the week, ISM manufacturing data came in below expectations at 49.1% versus consensus of 51.3%.  A reading under 50 signals contraction and adds to the concern on global growth.  The Fed Beige Book released on Wednesday indicated that economic activity from all of the districts showed expansion at a modest pace.  ADP employment figures were announced on Thursday and came in at a robust 195k versus the consensus estimate of 150k.  Additionally, ISM Non- Manufacturing came in at 56.4% above the 54% consensus estimate.  The better than expected number showed a nice increase within new orders.  Finally, Friday’s Employment Situation Report was mixed.  Nonfarm Payrolls came in at 130k versus expectations of 171k and Nonfarm Private Payrolls data also missed the mark coming in at 96k versus consensus estimates of 145k.  The unemployment rate held steady at 3.7%, and wages increased 3.2%.   For the week the 2-year yield gained two basis points to close at 1.52%, and the 10-year bond yield added four basis points to close at 1.55%.

Oil had a positive week closing higher by 2.5% at $56.45 a barrel.  Gold lost $14 to close at $1515 an Oz.  There were no changes to our models last week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap week ending 8/30/2019

-Darren Leavitt, CFA

After four straight weeks of declines, US markets rallied in the last week of August.  The prior week’s escalation of trade tariffs between the US and China took a bit of a siesta last week. Early in the week, Trump claimed that Chinese negotiators had called and expressed a desire to reopen talks.  Despite Trump’s claim being denied, China came out later in the week with a statement indicating they hoped negotiations would restart and be “calm” and further that they would not immediately retaliate with additional tariffs based on Trumps latest tariff increases.  All that said, the more constructive tone helped markets rally.  Additionally, month-end rebalancing also likely aided the rally.  The S&P 500 gained 2.8%, the Dow led US averages- forging a 3% increase, the NASDAQ added 2.7%, and the Russell 2000 notched a 2.4% gain.

The US Treasury market ended the week little changed.  The 2-year note yield fell three basis points to close at 1.50 while the 10-year bond yield fell one basis point to close at 1.51.  Of note, the 30-year bond yield fell below 2% during the week- and hit a record low yield of 1.94% before settling at a yield of 1.97% on Friday.  Gold lost ~$10 on the week to close at 1529.70 an Oz and Oil gained 1.7% to close at $55.06 a barrel.  We did have a couple of slight changes to the Core Satellite models last week.  We sold out of our emerging bond exposure and trimmed a little bit off our S&P position and put the proceeds into mid-duration bonds.  Please let us know if you have any questions regarding these changes.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market recap for the week ending 8/23/19

-Darren Leavitt, CFA

Investors were treated to another week of volatile markets as increased trade tensions between the US and China cast even more uncertainty on global growth.  Markets kicked off the week in pretty good form when Germany and China indicated that they would provide more stimulus to their ailing economies.  Moreover, In the US, the Trump administration promoted stimulus with the use of various tax cuts, although several plans seemed to flip flop and nothing concrete developed.  Additionally, consumer discretionary issues helped the early week advance with solid earnings results out of Target, Home Depot, and Lowes.  Investors also anxiously awaited the Fed’s end of the week annual Summit at Jackson Hole.   The event provided investors with several different Fed president’s thoughts on the current state of monetary policy and was highlighted with Chairman Powell’s speech on Friday.

Interestingly, the Fed Chairman’s statement was received as quite dovish while commentary from the Kansas City Fed President- George, Philadelphia Fed President- Harker, and Dallas Fed President Kaplan were quite hawkish.  On the economic front, the Markit Flash PMI data indicated a contraction for the first time since 2009, New Home Sales were less than expected and while the Leading Indicators figure was better than expected, 5 of the underlying sub indicators were flat or negative.  The S&P 500 lost -1.44% for the week while the Dow gave up -0.99%, the NASDAQ shed 1.83%, and the Russell 2000 tumbled -2.29%.  The yield curve had a couple of ventures into inversion mode during the week but managed to end flat on the week.  The 2-year note yield lost six basis points to close at 1.53%, and the 10-year bond yield lost one basis point to close at 1.54%.  The haven allure of gold continued put a bid into the precious metal.  Gold gained ~$30 on the week to close at 1538 an Oz.  WTI crude fell a fraction on the week to close at $54.16 a barrel.  There were no changes to our models last week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap Week ending 8/16/19

-Darren Leavitt, CFA

A volatile week of trading entertained investors as uncertainty around trade, and an inverted yield curve stoked fears of an impending recession.  The major US equity indices ended the week with losses; however, steep losses incurred at the beginning of the week were somewhat recovered on the back of better than expected retail sales (reported 0.7% vs. consensus of 0.3%- the consumer still out spending) and on the announcement that some tariffs imposed on Chinese goods would be delayed until December.  Notably, the delay of tariffs were assigned to computers and cellphones, which in turn benefited technology component manufactures such as semiconductors.    Retailer, Walmart, also helped the cause with a better than expected earnings report.

The S&P 500 lost -1.03% on the week while the Dow gave up -1.53%, the NASDAQ lost -0.79%, and the Russell 2000 shed -1.28%.  Investors once again piled into US Treasuries which sent the 2-10 year spread into negative territory for the first time since 2007.  An inversion of the yield curve has in the past has been a harbinger of a recession, generally within 18 to 24 months after the initial inversion.  The 2-year note yield lost 16 basis points on the week and closed with a yield of 1.47%.  The 10-year bond yield ended the week at 1.54%, down 19 basis points.  Both Gold and Oil were little changed on the week closing at $1508 an Oz and $54.89 a barrel, respectively.   There were no changes to our models last week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap Week ending 8/9/19

-Darren Leavitt, CFA

It was a turbulent week for investors as uncertainty on trade escalated between the US and China.  Markets started the week deep in the red with the worst single-day performance of the year on news that the Chinese had let the Yuan depreciate beyond the critical threshold of 7.  The US swiftly responded to the depreciation by officially labeling China as a currency manipulator.   Adding fuel to the fire, the Chinese also announced that it would cease buying agricultural goods from the US.  The realization that trade negotiations between the two countries are getting worse, not better, dampened global growth expectations, and induced investors to sell risk assets and seek safe-haven assets.  Despite a terrible start to the week markets stabilized mid-week.

For the week, the S&P 500 fell -0.46%, the Dow lost -0.75%, the NASDAQ shed -0.56%, and the Russell 2000 gave up -1.34%.  The yield curve continued to flatten last week, and at one point the 2-10 spread was at levels not seen since 2007.  The 2-year note yield fell 8 basis points to close at 1.63% while the 10-year bond yield fell 13 basis points to close at 1.73%.  The action in treasuries seemed only to reinforce global growth concerns and stoked recession rhetoric from some prominent market pundits.  Oil fell nearly 2% to $54.61 a barrel, the move down came despite constructive supply comments out of Saudi Arabia.  A safe-haven bid into Gold continued the metal’s recent ascent.  Gold gained $51 or 3.5% and closed at $1508 an Oz.  There were no changes to the models last week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

August 5th, 2019

Stock Market Selloff Deepens After Fed Remarks and Trade Negotiation Setback

As of this writing, stock markets around the globe are taking a beating. The selloff began on Wednesday of last week in response to Federal Reserve Chairman Jerome Powell’s comments indicating that more rate cuts are not planned, and that last week’s 25 basis point cut was simply an “adjustment”. The next day, President Trump announced a planned 10% tax on all remaining untaxed Chinese imports. He stated that this is due to China’s lack of follow through on promised agricultural purchases from the United States. Despite the reason, markets took this to be a serious setback in the ongoing trade fight with China, and stocks swooned. The selling continued Friday, resulting in the second worst week for stocks this year. Just yesterday, China responded with a devaluation of the Yuan and a prohibition of state-run businesses from buying U.S. agricultural products. Talk about fueling the fire. Today, stocks are down between 3% and 4% depending upon the sector and location.

To put the past four trading days into perspective, the S&P 500 is down more than 6.1%, the Dow is down 6.3% and the Nasdaq is down 7.8%. In response to the equity selloff, money is flowing into safe haven assets like gold and U.S. Treasury bonds. Treasury yields have dropped to the lowest levels we’ve seen since the summer of 2016. The 10-year is presently trading at 1.73%.

The trade situation is starting to feel like a real “war” with China is possible. This, coupled with continued weak economic data, warrants some real caution as we head into the most difficult stretch of the year. I stated previously that I didn’t see an imminent recession here in the U.S. as long as employment remains robust, but this type of trench warfare among the largest economies in the world has the potential to quickly change things. A test of our stock markets’ 200-day moving average appears likely over the next weeks. Emerging and other developed markets have already fallen below that critical juncture. Here at home, our markets have fallen below it twice so far this year and quickly recovered. The third time we may not be so lucky.

At Cabana, we are currently in a trading blackout and plan to reallocate later in the week to more defensive positions should the selloff continue.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from    proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visitwww.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

Market Recap for the week ending 7/26/2019

-Darren Leavitt, CFA

It was an upbeat market last week as investors continued to applaud the majority of earnings results.  A better than expected print on 2nd quarter GDP also aided the positive sentiment.  Markets were also encouraged with renewed hopes on trade negotiations between the US and China that were set to reopen over the weekend.  The S&P bounced back from last week’s loss gaining 1.65%; the Dow lagged the other averages increasing just 0.14% due to a lackluster week for component Boeing.  The NASDAQ led gainers with an increase of 2.26%, and the Russell inked a 2.01% gain.  Treasuries were somewhat muted last week; the yield curve flattened a bit with the 2-year note yield increasing by 3 basis points to close at 1.87%.  The 10-year bond was flat on the week and closed with a yield of 2.08%.  WTI crude gained 1% and closed at $56.17 a barrel.  Gold lost roughly $7 to close at 1419 an oz.   There were no changes to our models last week.

Earnings continued to roll in generally better than expected.  Google posted a stellar number last week which sent its stock price soaring and also helped to propel the communications services sector to a nearly 5% gain on the week.  Texas Instruments also had an excellent quarter and aided an already hot Semiconductor sector.  Facebook’s results produced a muted response.  We have heard results from roughly 40% of the S&P 500, so there is still quite a bit of information due from companies and will likely continue to be in focus for investors.

A better than expected print in advanced 2nd quarter GDP growth was a positive catalyst for the markets last week.  GDP for the 2ndquarter came in at 2.1% versus an estimate of 1.8%.  The reading is down from the Q1 growth rate of 3.1%, but the 2nd quarter results confirmed that the consumer is still well and out spending.  These results will likely not influence the Federal Reserve’s rate decision due on July 31st but may play into subsequent policy decisions.

Renewed negotiations between the US and China is a paramount variable for the markets to consider, but it seems most believe that very little will come of this weekend’s talks.  None the less, investors will be looking for catalysts coming out of the meetings.  The markets will also be waiting to hear from the Fed in the coming week with most expecting a 25 basis point cut on the 31st.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap for the Week ending 7/19/2019

-Darren Leavitt, CFA

Despite a relatively good start to  2nd quarter earnings season, the major indices retreated last week.  Part of the pullback was likely due to the realization that a 50 basis point cut is not likely at the end of the month and also partly due to a severe move down in oil, which hit the energy sector hard last week.  The S&P 500 and NASDAQ shed -1.2%, while the Dow gave up -0.7%, and the Russell 2000 lost -1.4%.  Treasuries were slightly bid during the week.  The 2-year note yield lost 2 basis points to close at 1.82% while the 10-year bond yield lost 3 basis points to close at 2.05%.  Gold gained nearly $20 on the week and closed at $1426.45 an Oz.  As I mentioned, Oil was hammered last week losing -7.5% and closing at $55.66 a barrel.  There were no changes to the models last week.

Earnings started off in earnest last week with the major banks reporting better than expected results.  Transports started the week off on solid footing with trucking companies posting nice results, however, CSX surprised to the downside, and the results sent the whole sector down.  Later in the week, KSU, UNP, and results from some airlines helped to right the ship.  Microsoft posted solid results while Netflix was hammered losing nearly 13% after it missed the mark.  Stay tuned; earnings will be in focus over the next several weeks.

Investors received more positive news on the economic front last week.  Retail sales came in better than expected, and the Philadelphia Fed Index was much better than expected.  The positive data squashed hopes of a 50 basis point cut later in the month.  Separately,  a news report from the WSJ last week suggested that a 25 basis point cut was already a done deal at the Fed.  The market has priced in the 25 basis point scenario, and the pullback seemed appropriate given the move we have seen over the last month and a half.

Oil and the energy complex had a tough week.  Tensions between Iran and the US came down a bit as the two sides’ echoed hopes of a peaceful agreement.  Additionally, there were no real supply disruptions as a result of Tropical Storm Barry rolling through the Gulf which had bid oil up in the prior week.  The nearly -8% loss in WTI hurt the broader energy complex- the XLE lost -1.72% for the week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation.
Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Markets Hit New Highs in the Wake of Last Week’s Fed Remarks

Chairman Powell walked the line between giving too much and too little in the way of monetary accommodation during prepared remarks to Congress last week. Markets have responded positively and are at all-time highs. We will see if we get follow through after the Fed meeting later in the month and a decision on a cut in interest rates.

The Dow industrials index has broken out and is outperforming the S&P 500 after lagging throughout the first part of 2019. The industrial sector has experienced earnings weakness related to the trade war with China. I believe it is a positive sign that we are seeing that part of the overall market turn around. We are also seeing strength in the transportation sector and the small cap index. I stated several weeks ago that if I had one wish it would be for transportation and the riskier small cap indices to catch up to the S&P 500. While they haven’t quite caught up, they are doing well. Dow theorists would love to see the transportation reach new highs parallel to the industrials.  According to Dow theory, when the industrials and transports reach new highs together, it is evidence of a new bull market.

Foreign markets continue to lag. Yesterday China reported the slowest growth since the 1990s. The trade issues are clearly adding to a weakening economy overall. The fact is that the U.S. remains the strongest economy in the world by some distance. We would benefit from some strength in the economies of our trading partners, including China. I remain hopeful that a trade resolution can be reached with China one way or the other. We received word last week that trade talks have resumed, so let’s keep our fingers crossed.

Finally, the yield curve is steepening, which is helpful to banks and other financial stocks. It is generally a good thing for the overall market when banks are making money.

At Cabana, we remain moderately bullish.

Key terms:  

The Dow theory is a theory that says the market is in an upward trend if one of its averages (industrial or transportation) advances above a previous important high and is accompanied or followed by a similar advance in the other average. For example, if the Dow Jones Industrial Average (DJIA) climbs to an intermediate high, the Dow Jones Transportation Average (DJTA) is expected to follow suit within a reasonable period of time. (www.investopedia.com)

IMPORTANT DISCLAIMERS

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visitwww.fa-mag.com for more information regarding the ranking.

The Financial Advisor Magazine 2019 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. Working with a highly-rated advisor also does not ensure that a client or prospective client will experience a higher level of performance. These ratings should not be viewed as an endorsement of the advisor by any client and do not represent any specific client’s evaluation. RIAs were based on number of clients in 2018, percentage growth in total percentage assets under management from year end 2017 to 2018, and growth in percentage growth in assets per client during the same time period.  Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement.  Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

Market Recap week ending 7/5/2019

-Darren Leavitt, CFA

I hope everyone had a great and memorable 4th of July holiday.  Despite the holiday-shortened week, markets were quite busy.   Markets surged on Monday in reaction to the outcome of the US/China trade talks at the G20 summit.  The two sides decided to continue discussions and hold off on any new tariffs.  However, the week’s initial pop was tempered with weak PMI data from Japan, China, and the Eurozone.  The S&P 500 gained 1.65% on the week while the Dow, NASDAQ and Russell 2000 added 1.21%, 1.94%, and 0.58%, respectively.  The yield curve flattened out a bit last week as the 2-year yield gained 13 basis points to close at 1.87% and the 10-year yield gained 5 basis points to close at 2.05%.  Gold was off $14 to close at $1400. Oil closed at $57.40 a barrel down just under a dollar from the prior weeks close.

As expected, the US and China agreed to continue negotiations and halt any further tariffs.  The news encouraged markets higher, especially in the more cyclical sectors.  Semiconductors soared on news that the US would rescind some of the restrictions placed on doing business with Huawei.  This single concession seemed to validate hopes for further progress in the negotiations.  However, on Friday, headlines suggested that China will insist that all current tariffs be removed if an accord is to be reached.

Weak international economic data persisted last week.  Notably, PMI figures in Japan, the Eurozone, and China remained in contraction.  Japan’s PMI came in at 49.3 down from the prior month’s reading of 49.5.  In Europe, manufacturing came in at 47.6 down from May’s reading of 47.8.  Moreover, in China, the PMI figure was unchanged at 49.4.  Exports out of South Korea also looked terrible as did factory data out of Germany.  In the US, the ISM manufacturing reading also declined on a month over month basis, but the reading continued to signal expansion.  The figure came in at 51.7 down from the prior months reading of 52.1.  The US Employment Situation Report rattled markets on Friday.  The headline Non-Farm Payrolls number came in much better than expected- 224k versus the consensus estimate of 160K.  The Unemployment number came in slightly worse than expected at 3.7% versus the consensus estimate of 3.6%.  Average Hourly earnings came in up 0.2% versus the estimate of 0.3% and is up 3.1% over the last 12 months.  Fed Fund futures erased any chance of a 50 basis point cut in July after the report was released.  Currently, Fed Fund futures indicate a 100% probability of a 25 basis point cut in July.

Of note, Christine Lagard, the current IMF president, was nominated to become the next European Central Bank President.  If confirmed she will succeed current President Mario Draghi.  Lagard is not an economist rather a politician.  While at the IMF, she has supported the use of quantitative easing and is likely to support the current dovish policy tones out of the ECB.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation.
Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

07/01/2019

Below is a snapshot of last week’s market performance and what to watch in the weeks ahead from Chadd Mason, Cabana CEO and co-founder.

Markets Rally with Hopes of a U.S.-China Trade Deal

Last week, and the entire month of June for that matter, ended on a strong note. The S&P 500 recovered almost all the May losses and stands just below all-time highs.

I commented last Monday that I sure would like to see some outperformance by the transportation index, as well as the small cap index. The transports are leading indicators of economic activity around the world and are at the front lines of the trade war with China. The small cap index represents the riskier parts of the U.S. equity market. It is a good sign when it is doing well, because it signals that investors are feeling good about growth opportunities within the economy. No sooner than I asked for it, we got it. Both the Transportation Index (IYT) and the Russell Small Cap Index (IWM) had huge weeks and closed above their respective 200-day moving averages. They are still lagging the broad indexes but have narrowed the gap.

Over the weekend, President Trump and Chinese President XI agreed to resume trade negotiations after a 7-week stalemate. Undoubtedly, the global economy would welcome a comprehensive trade deal between the world’s two largest economies. The consensus is that worldwide GDP will suffer  dramatically over the next two years should the trade war and resulting tariffs continue. Domestic and international equity markets opened up this morning with more than 1% gains. Treasury yields also rose. At the time of this writing, stocks have given up more than half of their gains as investors digest the implications of the truce. Sometimes it pays to be careful what you wish for. A more positive trade outlook could cause the Federal Reserve to hold off on an anticipated July rate cut. Markets have priced in the near certainty of some easing by our Central Bank. If that does not come to pass, we are likely to see some quick profit taking in stocks.

At Cabana, we remain moderately bullish.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana, LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visitwww.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement.  Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability. 

Weekly Market Commentary

Market Recap Week ending 6/21/2019

-Darren Leavitt, CFA

US equity markets continued to rally last week and hit record highs on dovish tones echoed from several central banks and on constructive headlines around the upcoming meeting with President Trump and President Xi at the G20 summit.  Separately, increased tensions between the US and Iran whipsawed markets after Iran shot down a US unmanned drone.   For the week the S&P increased by 2.2%, the Dow gained 2.4%, the NASDAQ was up 3.0%, and the Russell 2000 finished 1.8% higher.  US Treasuries continued to bid as well.  The 2-year note shed six basis points to close with a yield of 1.78% while the 10-year bond lost one basis point to close with a yield of 2.07.  Gold and Oil had nice gains last week.  Gold was up over $50 to close just under $1400 an Oz.  Oil rallied on the increased tensions in the Middle East and gained over 9% to $57.33 a barrel.  There were no changes to our models last week.

ECB President, Mario Draghi jump-started the week with comments that indicated the ECB would provide additional stimulus if conditions in the Eurozone do not improve.  The US, Japan, and England had central bank meetings in the week, and all seemed to suggest a more dovish stance.  The lack of inflation across the globe was a central theme.  In the US, the Fed dropped the word “patient” from its most recent policy statement and indicated that the Fed was poised to act as appropriate to sustain economic expansion.  Fed funds futures now assign a 100% probability to a 25 basis point cut in July.

Investors were pleased to hear that President Trump and President Xi will extend the duration of their meeting at the G20.  Additionally, both sides indicated that trade would be discussed between the leaders and in fact said that trade delegates from both sides would start talks before the G20.

Iran shot down an unmanned drone that they claim breached their air space.  The incident induced volatile trade and put a nice bid into oil.  The US was close to launching a military response but for the time being, has held back and instead called for more sanctions on Iran.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation.
Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

June 17th, 2019

Below is a snapshot of last week’s market performance and what to watch in the weeks ahead from Chadd Mason, Cabana CEO and co-founder

The rebound from the May selloff continues. After dropping 6.4% in May, the S&P 500 has reclaimed 4.5% of that loss in just the first two weeks of June. In doing so, that broad market index, as well as the Dow Jones and Nasdaq, have reclaimed their 200-day moving averages. We now sit approximately 2% from the highs seen in April 2019 and September 2018.

Some of the rebound over the past few weeks is likely due to oversold conditions that developed in the steep May drop. The rest is the result of the Federal Reserve hinting at a rate cut to deal with the headwinds felt from the trade tariffs with China.

For the first time in several years, corporate earnings are beginning to crack. The weakness is presently contained to the manufacturing sector, but it is a concern worth watching. Morgan Stanley just came out with a report that stated business condition sentiment dropped 32 points this month and is now at the lowest level since 2008. This indicator is also likely suffering due to the instability in present government policy. While threats of economic war and tariffs (taxes) may be fun for politicians, they are not fun for business owners who need to know the rules of the game they are playing. Our central bankers are aware of this and seem to be willing to step in.

Market participants all over the world are waiting for the conclusion of the Federal Reserve meeting on Wednesday. The bond market is pricing in a 25% possibility of a rate cut. We will have to wait and see if we get one – or at least additional comments suggesting dovish monetary policy ahead. The long and short of it is that investors are expecting some help to deal with all that is in front of us.

The rest of the world markets continue to lag behind the U.S. While we saw some outperformance in foreign markets during the first quarter of this year, it has now abated, and we have returned to the same posture that persisted during most of 2018. I would generally feel a lot better if there was some strength somewhere else in the world.

We are in the process of reallocating in response to improving technical conditions during the past week. We are moderately bullish.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana, LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visitwww.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement.  Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

 

Weekly Market Commentary

June 10th, 2019

Below is a snapshot of last week’s market performance and what to watch in the weeks ahead from Chadd Mason, Cabana CEO and co-founder.

Last week’s commentary noted that the stock market was at a critical juncture. All relevant U.S. indexes had fallen below their respective 200-day moving average in the face of the escalating trade war with China, coupled with new threats of tariffs on all goods imported from Mexico. I pointed out that the equity markets’ ability to quickly recover was important. Stocks were hammered in May and as of last week were oversold and ripe for a bounce from a technical standpoint. If buyers didn’t step in quickly, we were in danger of significant further declines over the next few weeks.

Well… I do not claim to be psychic, but last Monday’s commentary was followed up by a four-day rally, which continues today. All major equity indexes ended last week above their 200-day price averages and are once again on solid ground. The small cap index is the only exception. I would also note that the transportation index is lagging. This makes sense given it is a direct reflection of goods being shipped worldwide. Transportation is ground zero of the trade war. We will watch to see if that sector of the economy gives us any hint on the future outcome of the tariff issues.

Interest rates got a corresponding bounce, which caused a pullback in bond prices. However, with interest rates near all-time lows, dividend paying stocks, bonds, REITs and bond substitutes (like utilities) remain very attractive. Federal Reserve Chairman Jerome Powell intimated on Wednesday that a rate cut may be forthcoming in order to deal with the headwinds caused by increased taxes on goods being imported/exported. We received a tame jobs report on Friday, which further supports a dovish Federal Reserve stance on interest rates. It looks like the Fed is once again signaling a backstop on falling stock prices. I won’t get into the ongoing debate over whether this type of monetary intervention is good for the long-term health of a capital economy, but it certainly emboldens investors to keep their money in stocks.

At Cabana, we avoid investing based upon predictions, as well as investing based on how things “should be”. We play the game as it is laid out in front of us. We remain moderately bullish.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana, LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from    proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visitwww.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement.  Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

 

Weekly Market Commentary

June 3rd, 2019

Below is a snapshot of last week’s market performance and what to watch in the weeks ahead from Chadd Mason, Cabana CEO and co-founder.

The U.S. equity market selloff has continued for the third straight week. All major indexes are now below their 200-day moving averages. In just one month, the Dow and S&P 500 are down more than 7%, while the Nasdaq is down almost 12%. While all indexes remain positive for the year, the current decline is concerning to say the least.

In my opinion, this week is very important. We need to reclaim the 200-day moving average by week’s end to prevent a more significant decline. Markets are approaching oversold levels and are due for a bounce, which may help. If we can’t recover in short fashion, be prepared for further declines over the next weeks and months.

All this selling is blamed on the multiple trade wars that are now in the works. Mexico was added to China last week. Consumer discretionary stocks and technology stocks continue to see the worst of the selling. If China takes action against Apple, which is rumored, it will impact all major indexes in the United States.

Dividend payers, corporate grade bonds, treasuries and real estate are outperforming. The same can be said of consumer staples and utilities. Our readers should understand that this reflects a move away from risk by institutional traders. The big money is being reallocated to assets that do well in a weakening economy – assets that pay dividends and bond interest even if their price is no longer rising because of increased earnings. People need air-conditioning during the summer. The utilities ETF is a play on that. Additionally, people still need diapers and shampoo even in a recession. Tobacco and alcohol stocks are notoriously attractive when things get dicey. The consumer staples ETF is made up of a lot of these companies. All in all, investors are moving down the risk spectrum. Junk bonds are the next candidate likely to fall. These assets perform similarly to stocks and typically experience selling if the economy begins to slow.

Interestingly, foreign markets appear to have bottomed out at the end of May and are positive for the past week, just as the selling here has intensified. I read over the weekend that the world economy, outside the United States, has been in a recession for the past nine months and is now poised to come out of it. The price of developed and emerging markets over the past year certainly suggests this to be the case. It will be worth watching to see if the international economy begins to rebound despite the trade tariffs, while the U.S. falls into a recession induced bear market later in the year. The 10-year Treasury yield is now at levels not seen since 2017, and that is not a particularly good sign for growth going forward. Investors are currently willing to tie up their money for 10 years in return for a 2% annual yield. That is not a sign of confidence!

At Cabana, we remain moderately bullish but are preparing to once again reallocate should conditions warrant.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana, LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from    proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is    available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement.  Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the portfolios may no longer be reflective of current positions.

No client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. While loss tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account. It is the responsibility of the advisor to determine what is suitable for the client. An advisor should not simply rely on the name of any portfolio to determine what is suitable. Cabana manages assets on multiple custodial platforms. Performance results for specific investors may vary based upon differences in associated costs and asset availability.

Weekly Market Commentary

Market Recap week ending 5.24.19

Darren Leavitt, CFA

The markets continued to focus on the potential for more trade conflict between the US and China.  Conflicting headlines throughout the week brought more volatility.  Cyclical stocks took the brunt of last week’s sell-off.  The S&P 500 lost -1.17%, the Dow shed -0.69%, the NASDAQ gave back -2.29%, and the Russell 2000 was lower by -1.41%.  A haven bid in treasuries flattened the yield curve.  The 2-year note yield fell eight basis points to 2.16% while the 10-year Bond yield is decreasing by fourteen basis point to 2.32%.  Gold lost a bit of ground last week losing approximately $4 to close at 1283.65 an Oz.  Oil had its worst week in 2019 with a loss of over 6%.  WTI closed down $4.11 at $58.62 a barrel.  Increased supply data, coupled with global growth concerns, hit the commodity. Interestingly, the losses came despite increased tension between the US and Iran.

The week started with continued concerns that the Chinese would retaliate over the US ban on Huawei doing business with US companies. The fears were further exacerbated by talk that the US would impose similar restrictions on some other Chinese Tech companies.   Semiconductor names were especially hard hit as several companies decreased their earnings outlook based on the lost business from Huawei.  On Tuesday, the Commerce Department announced that it would provide Huawei with a 90-day license to do business with US companies- the headline put a bid into stocks and almost erased the prior day’s losses.  It is clear that investors will continue to focus on trade headlines and are currently fearful of a prolonged trade war and its effects on future earnings.  Additionally, trade concerns in Europe continue.  UK Prime Minister, Theresa May, announced that she would step down as PM after another failed attempt to negotiate BREXIT.

Fed Minutes from the April meeting offered no real catalyst to the market last week.  The minutes did, however, reiterate that the Fed will be patient and will likely be in a hold for the foreseeable future. Economic data last week took a back seat to trade rhetoric, but it is worth mentioning that the preliminary read on European PMI data was weaker than expected and provided another reason to be concerned on global growth.

There were no changes to our models last week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market recap week ending 5.17.19

Darren Leavitt, CFA

Investors were taken for a wild ride last week as trade negotiations between the US and China came to a stalemate.  Additionally, increased tensions in the Middle East put a bid into oil, which closed up 1.7% but also inhibited investors risk appetite.  For the week, the major averages succumbed to losses but intraday price swings throughout the week kept traders on their toes.  The S&P 500 lost -0.76%, the Dow gave up -0.69%, the NASDAQ shed -1.27%, and the Russell 2000 led declines with a loss of -2.37%.  Treasuries mimicked their equity counterparts with volatile trade.  For the week, the 2-year fell three basis points to yield 2.21% while the 10-year fell seven basis points to yield 2.39%.  Gold lost ~$12 for the week and closed at 1287 an oz.  There were no changes to our models last week.

On Monday, China announced that it would impose a higher level of tariffs on 60 billion worth of US goods.  The news sent the market sharply lower with the S&P 500 trading below its 50 day moving average. Subsequently, positive tones on trade with Europe, Canada, and Mexico helped market sentiment and encouraged the buy the dip mentality.  Tensions were increased again mid-week when President Trump signed an executive order to protect US technology interests- an action seen directed right at the Chinese and specifically toward Chinese telecom equipment company Huawei.  The news hit the semiconductor sector and dampened market sentiment again.  The markets shrugged off the tensions again on Thursday, and at one point the S&P 500 was actually up for the week- then on Friday it was reported that talks between the US and China had stalled, the news sent the market lower.

Economic data provided a mixed bag of results last week.  Housing Starts were better than expected, coming in at 1235k versus the consensus estimate of 1200k.  Jobless Claims still indicate a strong labor market with claims coming in at 212K versus the consensus estimate of 222k.  Consumer Sentiment data was also better than expected, coming in at 102.4 versus the consensus estimate of 96.9.  On the other hand, retail sales were much weaker than expected, coming in at -0.2% versus the estimate of 0.4%.  Industrial production also missed the mark, coming in at -0.5% versus the consensus estimate of 0.1%.

Finally, increased tension between the US and Iran were also on investor’s minds last week.  Saudi oil tankers and pipelines have reportedly been sabotaged; an action believed to be tied back to Iranian assets within Yemen.  The US continues to increase its presence in the region, which indicates this geopolitical variable will be with the markets for the foreseeable future.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market recap week ending 5/10/19

-Darren Leavitt, CFA

Markets had their worst week of the year due to concerns regarding the US-China trade negotiations.  The week started with steep declines after President Trump indicated that tariffs on 200 billion in goods would increase to 25% from 10% if a deal could not be struck.  Additionally, the President indicated that tariffs would be imposed on 300 billion goods in the coming months if an agreement cannot be reached.  Markets traded throughout the week with huge intraday swings as investors waited for some resolution.

China’s trade delegation was in Washington late in the week, and the dialogue was described as constructive, but no deal would be had. Increased tariffs were imposed on Friday evening.  For the week, the S&P 500 lost 2.18%, the Dow dropped 2.19%, the Russell 2000 shed 2.54%, and the NASDAQ decreased by 3.03%.  Investors sought safe-haven US Treasuries and sent the 2-year note yield down eight basis points to 2.24% and the 10-year bond yield down seven basis points to 2.46%.  Gold closed a bit higher on the week gaining ~$6 to close at 1287 an oz.  Despite increased tensions in the Middle East, Oil closed down slightly at $61.66 a barrel.  Uber, the “Unicorn” ridesharing company, came public last week with a dismal showing.  The company raised 8.1 billion, pricing 180 million shares at $45, giving the company a valuation of $82 billion.  The company broke issue (traded below its IPO price) right on the open which led to further declines and was one of the worst IPO’s that I can recall.  There were no changes to our models last week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap Week Ending 5.3.19

-Darren Leavitt, CFA

Financial markets yielded mixed results last week as investors endured a choppy week of trading.  Q1 earnings reports continued to produce better than expected results.   Investors focused on solid results out of Apple and Amazon and had to contend with a shortfall in revenue from Google.  The Federal Reserve’s two-day meeting also played a role in last week’s market action along with the much anticipated Employment Situation Report.  The Fed left the Fed Funds rate unchanged at 2.25%-2.50%.

Investors seemed inclined to take some money off the table after the Fed statement and subsequent Q&A, as Chairman Powell took the possibility of a rate cut in 2019 out of the equation.  The Statement and commentary from the Chairman were all very consistent with the last couple statements and commentary- the Fed will continue to be patient and rely on the data to dictate policy.  The Employment Situation report came in much better than expected on Friday and sparked a nice rally.   Non-Farm Payrolls came in at 263K versus the consensus estimate of 210K while Average Hourly Earnings stayed subdued at 0.2%, slightly less than the 0.3% that had been expected.  The headline Unemployment rate came in at 3.6%, the lowest level since December of 1969.  The results portend a strong consumer as the US workforce continues to show strong results and bolster consumer confidence.

The S&P 500 and NASDAQ posted slight gains of 0.2%, while the Russell 2000 outperformed, gaining 1.4% on the week.  The Dow lost a bit of ground closing down 0.1%.  The US Treasury market trade was also quite choppy during the week and closed with a slightly flatter curve.  The 2-year yield gained 5 basis points on the week, closing with a yield of 2.32%.  The 10-year gained 2 basis points and closed with a yield of 2.53%.  Oil continued to come under pressure last week on further supply concerns and declined just over a dollar to close at $61.93 a barrel.  Gold also lost a bit of ground closing down $7.35 at 1281.35 an oz.  We had a number of changes to our models last week.  We sold out of positions in domestic and international real estate and out of our position in 7-10 year duration treasuries.  We added exposure to our current position in the S&P 500 and to our long duration bond position.  Additionally, we opened positions in European equities and Investment Grade Corporate paper.  Please let us know if you have any questions regarding the changes.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap Week ending 4/26/19

-Darren Leavitt, CFA

The broader indices inked new all-time highs last week as Microsoft, Facebook, and Amazon all posted better than expected earnings.  The S&P gained 1.2% but was outpaced by the Nasdaq and Russell 2000 which posted gains of 1.9% and 1.6%, respectively.  However, the Dow struggled as key components MMM, Intel, and Exxon Mobile missed on earnings and or lowered estimates for the coming year.  The yield curve steepened last week with the 2-year closing down 11 basis points to yield 2.27%, the 10-year shed 5 basis points to close at 2.51%.

US equities and Bonds were also helped by better than expected economic data.  Q1 GDP increased at an annual rate of 3.2% well ahead of the consensus estimate of 1.9%.  The report was accompanied with the GDP Price Deflator which came in at 0.9% lower than the consensus estimate of 1.4%.   Nice growth without inflation put the goldilocks scenario in play and gave investors more reason to buy.  Additionally, better than expected New Home Sales, Consumer Sentiment, and Durable Goods Orders also helped investor sentiment.

The strength of the US economic data provided quite a contrast from than the international economic data released last week.  For instance, South Korea GDP missed the mark, the German IFO Business Climate Index indicated it was still in decline, and the Bank of Japan indicated that it would keep its rates low until at least 2020 on growth concerns.  The international data coupled with cautious commentary from multinationals such as Intel and MMM on their outlook for China warrants some concern but perhaps brings another set of buyers to the US markets namely foreigners who seek higher yields and better economic growth prospects here in the US.  There were no changes to our models last week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap week ending 4.18.19

-Darren Leavitt, CFA

The holiday-shortened week was an interesting one but produced a mixed bag of results for the major indices.  The S&P 500 lost 0.1% on the week while the Russell 2000 lost 1.4%.  The Dow outperformed with a gain of 0.7%, and the NASDAQ tacked on 0.2%. US Treasuries were essentially flat last week with the 2-year yield closing down one basis point at 2.38% and the 10-year yield unchanged at 2.56%.  Oil was little changed closing up a bit at $64.03 a barrel.  Gold lost $20 on the week to close at 1275.85/oz.  There were no changes to our models last week.

Despite the rather anemic moves in the market last week, there was plenty of information for investors to contemplate.  Corporate earnings on the margin appeared better than expected and produced nice moves in the industrial and transportation sectors.  Financials had mixed results but bounced later in the week after a rough start.

On the corporate news front, semiconductors continued to do well and took favorably to the announcement that Qualcomm and Apple had finally resolved their longstanding dispute on patent infringement.  The announcement sent shares of Qualcomm soaring.  Intel also had a nice move after the company announced that it would no longer participate in the 5G modem market.  On the other hand, the Healthcare sector continued to struggle on concerns related to the political focus on the high cost of healthcare and this focus will likely put many of these companies in the crosshairs of political rhetoric.  Two high profile IPOs also came to market last week and had very impressive gains on their debuts.  Zoom Video (ZM) priced at $36 and closed 72% higher at $62.  Pinterest (PINS) priced at $19 and closed 28% higher at $24.40.

There were a couple of economic data points announced last week worth mentioning.  First, there were better than expected GDP numbers out of China.  Q1 GDP increased 1.4% quarter over quarter, growing 6.4% year over year, which was a bit better than the 6.3% expectation.  It appears that the stimulus that the Chinese have been putting into their market is getting some traction from the last few economic reports.  In the US, March Retail Sales stood out.  The 1.6% gain was much better than the 0.9% that had been expected and seemed to refute the poor showing in the prior months.  Additionally, Initial Claims, a leading indicator, were down 5000 to 192,000- the lowest reading since September of 1969!

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap for the Week Ending 4-12-19

-Darren Leavitt, CFA

It was a mixed performance for the major averages last week.  The S&P 500 gained 0.5%, the NASDAQ added 0.6%, and the Russell 2000 was up 0.1%, while the Dow lost 0.1%.  Treasuries lost more ground last week, the 2-year yield increasing 5 basis points to 2.39% while the 10-year yield increased 6 basis points to 2.56.  Oil continued to climb, adding 1.3% on the week to close at $63.91a barrel.  There were no changes to our models last week.

Investors received the first bit of Q1 earnings last week out of JP Morgan and Wells Fargo- both banks earnings came in better than expected and helped to propel the market through the key technical level of 2900 on Friday.  Earnings will continue to be in focus through the next several weeks with more financials due to report Monday morning.  Additionally, a massive acquisition in the energy sector also helped push the market higher.  Chevron announced that it intends to acquire Anadarko Petroleum for $33 billion.  Also of note, was the announcement from Disney regarding the details of their new streaming service.   The street was impressed with the offering and sent Disney shares soaring 11.5%.

It was fairly quiet on the macro front last week.  Decent export data out of China was countered with the IMF lowering global growth expectations.  Central bank rhetoric was more of the same with patience on rates remaining the mantra.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap for the Week ending 4.5.19

-Darren Leavitt, CFA

The stock market started the second quarter with nice gains and forged new highs for 2019.  The S&P 500 gained 2.1%, the Dow increased 1.9%, the NASDAQ added 2.7%, and the Russell 2000 outperformed with a gain of 2.8%.  The S&P 500 has enjoyed 7 straight sessions of gains.  On the other hand, US treasuries gave up some ground last week.  The 2-year yield increased 7 basis points to close at 2.34% while the 10-year note yield increase 9 basis points to close at 2.5%.  Oil soared to new highs for 2019 with WTI closing at just above $63 a barrel.  Gold lost $3 on the week to close at 1295/oz.

The week started with better than expected manufacturing data out of China with their PMI figure coming in at 50.5 versus an expectation of 49.5.  The reading indicates growth again in manufacturing rather than the most recent contractionary figures we have seen out of China.  Additionally, markets were bolstered with a better than expected ISM number.  The reading for March came in at 55.3 versus a consensus estimate of 54.

Constructive tones out of the continued trade negotiations between the US and China also provided a tailwind for the markets.  Reports indicate the two sides are close on an agreement; in fact, later in the week, President Trump indicated we would know if a deal will be made in the next 4 weeks.  The two sides continue to be at odds regarding issues related to technology transfers and how the trade deal will be enforced.

Fridays much anticipated Jobs report also provided some fuel for the market.  Non-Farm Payrolls for March came in at 196k versus the consensus estimate of 160k.  The strength in the March number diminished the dismal reading for February which had come in at 20K but was subsequently revised to 33k.  The strong headline number was also accompanied by a benign reading on a wage growth with Average Hourly Earnings increasing by 0.1% versus an expectation of 0.2%.  The unemployment rate held steady at 3.8%.

We had a number of changes to our tactical models last week.  The most significant change was the move out of our corporate bond position with those proceeds going into the S&P 500 and into long duration US treasuries.  Additionally, we sold out of our position in international bonds and reduced exposure in international real estate while slightly adding to US real estate and to mid duration US treasuries.  Please let us know if you have any questions regarding the models and the most recent changes.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap Week ending 3.29.19

-Darren Leavitt, CFA

Markets had nice gains last week as investors seemed to shrug off the most recent concerns over global growth.  The S&P 500 gained 1.2% on the week, gaining just over 13% for the first quarter.  The Dow added 1.7%, the NASDAQ increased 1.1%, and the Russell 2000 outperformed with a gain of 2.3%.  Treasury yields came off their lows in the second half of the week but still posted nice gains for the week with the 2-year and 10-year yields both off 5 basis points and closing with yields of 2.27% and 2.41%, respectively.  Gold lost about $10 for the week and closed at 1298/oz.  Oil gained just over a dollar on the week and closed at just over $60/barrel.  There were no changes to our models last week.

Trade negotiations between the US and China ramped up again last week as US officials met with their counterparts in China last week.  The rhetoric was constructive, and talks will continue this week in Washington.  On the other side of the pond, three votes on Brexit were once again shot down.  A number of indicative votes on different proposals yielded nothing other than a clear view that all side were still far apart on a resolution.

Economic data in the US was kind of a mixed bag last week.  The final reading of the Michigan Index on Consumer sentiment for March was a bit better at 98.4 versus the expectation of 97.8.   However, the Consumer Confidence data came in at 124.1 versus the consensus of 132 and the lower than the February figure of 131.4.  Personal income and spending both missed the market coming in at 0.2% and 0.1%, respectively versus an expectation of 0.3% for both indicators.  New Home sales for February increased by 4.9% or 667k units versus expectations of 618k units.  Housing starts and building permit figures missed their marks.  Finally, the 3rd estimate of fourth-quarter GDP was revised lower to 2.2% versus expectations of 2.6%.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap Week ending 3.22.19

-Darren Leavitt, CFA

It was another extremely busy week for Wall Street.  Investors received the latest statement from the Fed Reserve Open Market Committee that appeared to be more dovish than anticipated.  Additionally, there were a number of corporate catalysts last week along with a full suite of global economic data that on the margin reinforced some concerns on global growth.   Technically, the S&P 500 extended last week’s highs and booked a new high for the year only to see those gains dissipate and close again at the key level of 2800.  The S&P 500 lost -0.8% on the week while the Dow was off -1.3%, the NASDAQ shed   -0.6% and the Russell 2000 underperformed with a loss of -3.1%.  Global bonds were well bid last week.  The 2-year note lost 12 basis points for the week and closed with a yield of 2.32%.  The 10-year closed down 13 basis points for the week to yield 2.46%.  Of note, the 3- month US T-bill and the 10-year bond yield spread inverted for a brief period last week and the German 10-year yield went into negative territory, something that has not been seen since 2016.  Oil increased by 0.8% for the week with WTI closing at 59.01 a barrel.  Gold was also up for the week, gaining just over $13 to close at 1308/oz.  There were no changes to our models last week.

As anticipated, the Fed left the Fed Funds rate range unchanged at 2.25% to 2.5%.  However, the FOMC dot plots did change from their December outlook on rates.  The committee no longer sees 2 hikes in 2019 but instead forecast the need for no rate hike this year.  Additionally, they only indicate 1 hike in 2020.  The Fed also indicated that it planned to end its balance sheet runoff at the end of September 2019.  The Chairman, J Powell, remarked that he thinks the policy rate and the US economy are in a “good place” right now.  The announcement and the subsequent statement put a bid into the equity and treasury markets.  A more dovish Fed has been a good thing for the markets over the last 10 years, but their most recent stance has some wondering about the state of the economy and the effectiveness of the “Fed Put.”  As I mentioned earlier, the 3 Month-T-bill and 10 Year Bond yield spread inverted last week- the San Francisco Reserve bank thinks this spread measure has been the most reliable among different term spreads in predicting an impending recession.  The flatting curve hit financials hard last week with Regional banks underperforming their money center counterparts as they arguably relay more heavily on the net interest margin.  The S&P 500 financial sector lost 4.9% for the week.

Growth concerns were reinforced with some of the global economic data that was reported last week.  Japan and South Korea export data were weak, but concerns were catalyzed on Friday with weak manufacturing data out of the Eurozone.  Eurozone PMI missed the estimate of 49.5 and came in at 47.6.  Similarly, German PMI continued to contract and came in at 44.7 versus the February reading of 47.6.  The French PMI indicated that manufacturing there was now contracting as well with a reading of 49.8.  The data set intensified the bid into government bonds on Friday and sent the German 10-year yield into negative territory.  Some corporate news seemed to collaborate the weak data.  Fed Ex missed estimates and lowered their full-year 19 guidance.  Fed EX Management indicated a weak global environment with trade uncertainty as one of the culprits.  Nike met expectations for the quarter but also indicated slower growth going forward.  On the other hand, Micron had a great quarter and suggested that the Semis cycle may bottom in the next quarter- they provided an encouraging outlook for a sector- which has continued to be on fire.  Separately and of note, was the announcement by Biogen that they would halt phase 3 studies of its Alzheimer’s drug- this company is a pretty influential component within the healthcare indices.  Also of note, is the action in the IPO area of the market.  We saw a very good IPO last week in Levi- the company priced its offering at $17 and it closed up nicely at $22.65 for the day.  Lyft and Uber are close to coming public too.  Lyft appears to be having no problem with investor interest with an over 20 billion dollar valuation.

Technically the market looked like it was going to break out last week.  The S&P 500 made a new high on the back of the more dovish Fed statement.  However, the market could not hold those gains as the weaker economic data on Friday knocked the S&P back to a key level of 2800.  The next few trading sessions could be critical for the market technically.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap for the week ending 3.15.19

-Darren Leavitt, CFA

It was an extremely busy week for the markets.  Central bank news, corporate headlines, trade negotiations, technical variables, and a full dose of economic data were in play last week.  The market shrugged off the prior week’s losses and had an impressive move higher.  The S&P 500 gained 2.9%, the Dow increased 1.6%, the NASDAQ outperformed and was up 3.8%, while the Russell 2000 notched a 2.1% gain for the week.  The long end of the curve outperformed the front end.  The 2-year closed unchanged for the week at 2.44% while the 10-year yield declined by 4 basis points to close at 2.59%.  Gold was off slightly for the week closing down roughly 4 bucks to 1295/oz.  Oil gained just over 2 dollars and closed at 58.39 per barrel.  There were no changes to our models last week.

The week started with a buy the dip mentality after the prior week’s five-day sell-off.  Investors seemed encouraged Monday morning by a 60 Minutes interview of Fed President, J Powell, where he reiterated a patient stance and strengthened the notion of the “Fed Put” for the market.  Later in the week, officials within the Chinese central bank expressed expanding their use of monetary policy to stimulate their economy.  Additionally, the Bank of Japan met last week and as expected did nothing to its policy rate.  The BOJ did express concerns on the slowdown in overseas economies and the impact it has had on their exports and production.  The dovish tone out of central bankers last week certainly helped the market rally.

There was a ton of corporate news last week.  The headliner had to be Boeing which was atop the headlines in most every session last week.  Of note, and encouraging for bulls too was the fact that markets were able to rally in the face of an influential component like BA selling off significantly.   Upgrades by the street for influential components like Apple and Facebook along with a major M&A deal from Nvidia also helped fuel last week’s gains.   Investors applauded Broadcom’s earnings announcement which helped the Semiconductor’s, which have just been on fire.

Trade drama continued with Brexit votes stealing headlines throughout the week.  In the end, it appears that the UK will seek more time from the EU to carve out an exit agreement.  Essentially kicking the can down the road for a couple more months.  US/China negotiation news flip-flopped through the week but showed “concrete progress” on Friday.

Perhaps the most influential variable in last week’s market action was the move up and over 2800 for the S&P 500.  It has been a key area of resistance with 2813 and 2818 also being widely followed.  The break above these thresholds is impressive and certainly could be a sign of more strength.  The market set a new intraday high for the year at just over 2828 coincidentally the VIX fell to its lowest level of the year to levels not seen since October of 2018.

Economic data continued to show signs of weakness in manufacturing.  The Empire State Manufacturing Survey came in at 3.7 versus an expectation of 10.  Industrial production data also missed the mark coming in at 0.1% versus an expected increase of 0.4%.  New home sales were also a bit of a disappointment and hindered the home builders last week.  New home sales declined 6.9% on a month over month basis and decreased 4.1% on a year over year basis.  On a brighter note, a preliminary read of the University of Michigan Consumer Sentiment was better than expected, coming in at 97.8 versus the consensus estimate of 94.9.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap Week ending 3.8.19

-Darren Leavitt, CFA

Economic growth concerns along with the inability of the S&P 500 to maintain a key technical level hobbled the market last week.  The market lost ground for five consecutive days.  For the week, the S&P 500 and Dow lost -2.2% while the NASDAQ gave up -2.5% and the Russell 2000 fell -4.3%.  Treasuries were bid higher as investors sought safe haven assets.  The 2-year yield decreased 11 basis points and closed at 2.44% while the 10-year shed 13 basis points and closed at 2.63%.  There were no changes to our models last week.

Weak economic outlooks took hold of investors last week. The European central bank cut its forecast for 2019 GDP to 1.1% from its December estimate of 1.7%.  The ECB also announced that there would be no further rate hikes in 2019 and that they would introduce a targeted long-term refinancing operation later in the year.  Additionally, the Organization for Economic Cooperation and Development reduced its outlook for global GDP to 3.3% from 3.5%.  These forecasts were also accompanied by some weak economic data.  China Export data was especially ugly with February data showing a decline of 20%.  The Employment Situation report in the US also turned heads as the headline, Non-farm payrolls came in at 20k which was well below estimates.  However, the overall report did show a drop in the unemployment rate and a nice uptick in average hourly earnings.  The Beige book revealed slight to moderate growth in 10 of 12 districts.  It was certainly a week of half empty sentiment.  That said, the ISM non-manufacturing data looked pretty good at 59.7 versus the estimate of 57.2- the new orders component was especially encouraging.

Technically the market has run into a very heavy line of resistance at just above 2800.  The S&P was bought up to the level but has failed there and now given up its 200-day moving average.  The market has been overbought and probably needs to come back a bit- 2600 seems like an interesting level, and the market will likely find some key technical support there.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap Week ending 3.1.19

-Darren Leavitt, CFA

Last week the proposed increase of trade tariffs on China was postponed while negotiations continued between the countries. Markets continued to view the negotiations as constructive although comments from US Trade representative Lighthizer during his testimony in front of Congress on trade seemed a bit less optimistic.  Enforcement is still seen as a major hurdle.

Investors also heard testimony from Fed President Powell on Monetary policy.  Markets welcomed his comments that the Fed was close to a plan that would end the balance sheet runoff and the Fed would remain patient on rates.  No real change here- but his comments seemed more impactful on markets than some of the other headlines that hit last week.

The political theater was also on full display last week with Trump’s former personal lawyer Cohn testifying before Congress.  Trump’s visit to Vietnam to meet with North Korea’s leader Kim Jong Un was prevalent in the headlines but offered very little impact to the markets.

Economic data was mixed last week.  The advanced reading on Q4 GDP was a bit better than expected at 2.6% vs. the consensus estimate of 2.4%.  The Chicago PMI was also better than expected, coming in at 64.7 vs. 57.5.  On the other hand, the ISM Manufacturing Index missed expectations coming in at 54.2 vs. 56.   The University of Michigan’s index of consumer sentiment was also light at 93.8 vs. 95.6.  Internationally, PMI’s in China and Japan both were disappointing with the former showing its third month of contraction.

The S&P 500 gained 0.4% for the week while the NASDAQ increased by 0.9%.  The Dow and Russell 2000 were essentially flat.  The S&P 500 was able to close above the 2800 level on Friday, but that level continues to be a major level of resistance and will be a key level for the markets over the coming weeks.  Treasury yields continued to tick up last week.  The yield on the 2-year gained 7 basis points and closed at 2.55% while the 10-year increased 10 basis points and closed at 2.76%.  Gold struggled last week losing $23 to close at $1299 an ounce.  Oil was off slightly for the week and closed at $55.81 a barrel.

We had some significant changes to the model last week that have positioned our models in a more conservative posture.  The largest move was out of emerging markets and into US corporate paper.  We also sold out of our positions in Gold and long duration US treasuries. Additionally, we reduced our position in US real estate.  The models added a position in International bonds and increased positions in international real estate and 7-10 year duration US treasuries.  Please let us know if you have any questions about the models and or the recent changes.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap Week ending 2/22/19

-Darren Leavitt, CFA

The markets were relatively quiet last week as investors waited for any news stemming from the ongoing US-China trade negotiations.  Investors were also treated to a full dose of Fed rhetoric along with the FOMC minutes from last month’s meeting.  Additionally, the last bit of corporate earnings continued to roll in with some notable movers and global economic data for the week was somewhat disappointing.  The holiday-shortened week saw the Dow forge its ninth straight weekly gain, something not seen since the mid-’90s.  The Dow and S&P 500 increased by 0.6%, the NASDAQ gained 0.7%, and the Russell 2000 continued its recent outperformance adding 1.3%.   The yield curve steepened slightly with the 2-year note losing 4 basis points to yield 2.48% while the 10-year bond lost 1 basis point to yield 2.66%.  Gold gained $10 for the week, closing at 1332 and Oz.  Oil increased by ~$1.75 and finished the week at $57.25.   There were no changes to our models last week.

Investors continued to keep watch on trade negotiations between the US and China.  It appears some progress was made last week and markets were encouraged that the negotiations were extended for an additional couple of days.  However, details remain elusive.  Trump did announce that it was likely that he and his counterpart Xi would meet later in March and continued to suggest that the March 2nd deadline could be extended.  Separately, the markets were somewhat discouraged by Trump’s assessment of the ongoing trade negotiations with the EU.  And finally, it appears Prime Minister, May, will be seeking a 3-month extension on the BREXIT deadline to continue negotiations.

There was very little reaction to the FOMC minutes as they echoed pretty much what we have been hearing from the Fed over the last couple of months.  Investors also heard from a number of different governors last week which also yield very little in terms of new news.  Fed President J Powell will be in front on Congress this week for his semiannual monetary policy testimony.

On the corporate front, Walmart had an outstanding quarter and blasted higher on its earnings report.  Interestingly, the report contradicted last week’s horrific retail sales figure and provided some cover for the consumer discretionary sector.  On the other hand, consumer staple, Heinz, blew up on bad earnings, a dividend cut, and the announcement that the SEC was looking into their books.  The stock lost nearly a third of its value on Friday.

Global economic data announced last week was disappointing.  German and South Korean PMI’s were both weaker than expected.  This week we will get Chinese and European Union PMI figures.  In the US the Philadelphia Fed index was notably weaker than expected- it came in at -4.1 versus a consensus of 14.  The index saw significant declines in all of its components.   Existing home sales were also disappointing, coming in at 4.94M versus a consensus of 5.05M.  Leading Indicators for January were also soft and came in at -0.1% versus an expectation of 0.1%.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap Week ending 2.15.19

-Darren Leavitt, CFA

Markets enjoyed a nice rally last week.  The Russell 2000 led the way with a gain of 4.2%, the Dow added 3.1%, the S&P increased by 2.5%, and the NASDAQ advanced 2.4%.  Treasuries sold off a bit last week with the 2-year yield increasing 6 basis points to close at 2.52% and the 10-year yield advancing 4 basis points to close at 2.67%.  Gold and Oil were up on the week and closed at $1322 an Oz and $55.56 a barrel. There were no changes to our models last week.

Sentiment on trade was optimistic as the US and China met for another round of negotiations.  Trump was constructive on the ongoing discussions and is reportedly considering a 60-day extension to the deadline of March 2nd.  Markets were also relieved that Congress had passed a government spending resolution and that the President was on board with the resolution.  Additionally, the market seemed unfazed with Trump’s declaration of a national emergency on the southern board- it was widely expected after the budget resolution’s funding of the border wall fell well short of what the administration had been looking for.  One other thing worth mentioning out of Washington last week was the proposed bill by Senator Marco Rubio that would effectively tax buybacks the same way dividends are taxed.  If passed this would certainly have long-term implications for the stock market but had very little influence on last week’s market action.

Central bank rhetoric continued to be quite dovish as bankers continued to discuss the end of balance sheet normalization and in Europe talk of an actual move to expand their balance sheet further.  Economic data reported last week seems to align with this more dovish tone.  Specifically, Retail Sales for December decreased by -1.2% versus an expectation of +0.2%.  Industrial production also fell short of expectations coming in at -0.6% versus a consensus of +0.2%- the data suggested weakness in most durable goods industries with motor vehicle assemblies taking a notable hit.    A preliminary read of the University of Michigan’s February consumer sentiment was a bit better than expected, coming in at 95.5 versus a consensus of 95.  Interestingly, inflation expectations fell to the lowest level in the last 50 years.  This is quite evident in the Fed funds market where pricing shows no expectation for another rate hike this year.

On the technical front, the S&P was able to break through resistance at its 200-day moving average (2743) and extend the move higher.  The move prompted a bout of short covering and likely has caused many investors who have been on the sidelines to rethink their cash/defensive positions- the so-called pain trade.  2800 is the next level of key resistance and will likely be a difficult one to get through.  The market is clearly extended here, and if combined with the backdrop of a slowing economy, decelerating earnings and the fact that yields have not increased alongside the equity markets move- warrants caution.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap for the week ending 2/8/19

Darren Leavitt, CFA

Anxiety over trade and concerns regarding future earnings growth subdued markets last week.  Additionally, the 200-day moving average on the S&P held as a line of resistance and induced some technical selling.  The S&P 500 closed essentially flat for the week up 0.05%; the Nasdaq outperformed gaining 0.47%- its 7th consecutive weekly advance, the Dow increased by 0.17%  and the Russell 2000 lagged, losing -.073% on the week.  Treasuries advanced again last week with the 2-year yield falling 4 basis points to 2.46% and the 10-year yield losing 6 basis points to 2.63%.  Gold and Oil were down slightly for the week, closing at $1314 and $52.76, respectively.  There were no changes to our models last week.

Trade continues to be top of mind for investors.  Last week sentiment reversed to the half-empty kind.  The rhetoric out of Washington suggested that the US and China were still far apart on a number of issues.  Markets also took pause as news suggested that the countries leaders would not be meeting before the March 1st deadline.  The markets also had to contend with renewed concerns on US/EU trade negotiations where it was suggested that very little progress had been made.   Brexit offered very little to the uncertain outlook for trade.  The next few weeks will be crucial for trade and will continue to command much of the market’s attention.  US trade delegates will be headed to Beijing this week to continue talks.

About two-thirds of the S&P 500 have reported 4th quarter earnings so far.  It appears that the results are a bit better than average when you compare the results based on the historical percentage of upside results versus misses.  That said, the current quarter is the worst quarter over the last 5 quarters when you compare the same figures.  Many companies have also used this earnings season to recalibrate expectations for the coming quarter and year, and it appears that this recalibration may result in negative earnings growth for the next quarter.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap for the Week ending 2/1/19

-Darren Leavitt, CFA

It was, as expected, a hectic and interesting week in the financial markets.  A steady stream of earnings announcements and economic data were just part of the story in last week’s action.  An FOMC meeting decision along with renewed US/China trade negotiations in Washington and another set of votes in the UK Parliament also influenced the markets.    In the end, the US markets were able to once again ink a nice gain for the week.  The S&P 500 led the way with a 1.6% increase, the Dow and Russell 2000 each gained 1.3% and the NASDAQ was up 1.4%.  Treasuries endured a wild ride but also managed to post excellent gains for the week.  The 2-year note fell 10 basis points during the week to close at a yield of 2.50%.  Similarly, the 10-year bond fell 6 basis points last week and closed with a yield of 2.69%.  Oil was slightly higher on the week with WTI closing at $55.28 a barrel.  Gold added ~$23.00 for the week and closed at $1321.85 an Oz.

There were a ton of earnings announced last week and to say the least it was all a bit confusing.  On the one hand, we had companies that have recently been hammered such as  Apple, AMD, FB, and GE-announce better than “feared” results.  AMD was up 20% post-earnings, Apple, Facebook, and GE also had very nice gains.  On the other hand, NVidia (which has been crushed recently too) offered worse than expected results, so the market took away half of it’s most recent gains following their announcement.  CAT had terrible guidance, and Microsoft (which has held up relatively well) reported disappointing results.  Boeing, Exxon Mobil, and Chevron all posted great results and were awarded nice gains following their announcements.  It is difficult to discern any definite conclusions from the earnings posted last week.  On the margin, management teams have taken the opportunity to lower expectations, and for some, these revisions were better than had been feared, but the growth outlook still appears to be a concern.

The US economic calendar last week was full and offered up a mixed set of data.  The week started with a disappointing Consumer Confidence reading of 120.2 versus expectations of 125, the previous result of 128.1 was also revised lower to 126.1.  The volatility in the market late in the year coupled with concerns surrounding the government shutdown likely influenced the metric and perhaps could curtail demand for consumer discretionary items.  Chicago PMI was also a bit of a disappointment coming in at 56.7 vs. 60, still indicating growth but with growth decelerating.  New Home Sales came in at 657k better than the 550k expected- however, it is worth mentioning that the better than expected number did come in with housing prices falling. The employment situation report came in much better than expected.  Nonfarm Payrolls increased 304k versus the expectation of 180k.  Nonfarm Private Payrolls came in at 296k versus the expectation of 170k.  Average hourly earnings were a bit less than expected up 0.1% versus the expectation of 0.2%.  The Average Workweek was in-line at 34.5 hours, and the Unemployment rate ticked a bit higher to 4% versus 3.9%.  ISM Manufacturing and University of Michigan Consumer Sentiment were both a bit better coming in at 56.6 and 91.2, respectively.

I thought the most significant influence on the market last week was the FOMC rate decision and the subsequent press statement from Fed Chairman Powell.  Ironically the rate announcement and statement were very much in-line with expectations and just reiterated the dovish tone we have heard over the last month- but provided a nice rally on Wednesday, the market closed up 1.6%.   The message:  The Fed will be patient and will move based upon incoming data; the normalization of the balance sheet is not on “autopilot” and this policy could be suspended if need be.  Powell seemed very scripted and pretty much gave the markets exactly what they wanted to hear.

Renewed negotiations on trade started up again on Wednesday in Washington.  The tone felt optimistic this week, and the sides appeared to be making some progress.  That said, we all know there is a lot of work to do on this front and plenty of variables that could derail the talks, illustrated by the announcement on Friday that the DOJ had filed for the extradition of the Huawei CFO from Canada for IP theft among other infractions. The Brexit saga also continued last week with the approval of a Parliamentary amendment to allow May’s government to renegotiate a deal with the EU.  The EU has said it will not renegotiate the deal.  Stay tuned.

We did have a number of changes to our tactical models last week.  Our Alpha Growth strategy that had been playing defense for most of fourth quarter and January moved out of 7-10 year duration Treasuries and into Emerging markets.  EM has been acting relatively well over the course of the last few months and is perhaps poised to do well if a trade deal is struck and US rates stay in check.  Our Tactical Growth model also reduced its exposure to 7-10 year duration Treasuries and added to Gold, International Real Estate, and US Real Estate.  Additionally, our Tactical Bond strategy sold out of its position in International Developed Bonds and placed those proceeds into Emerging Market Bonds.  Net-net, the changes position our models to benefit from a more constructive market, playing more offense than defense and seeking continued recent outperformance in the emerging markets.  Please let us know if you have any questions regarding these changes.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap for the Week Ending 1/25/19

-Darren Leavitt, CFA

The markets closed Friday with a nice gain, but for the week the markets were generally flat.  The S&P 500 lost 0.2% on the week while the Dow and NASDAQ each gained 0.1%.  The Russell 2ooo was unchanged for the week.  US Treasuries ended the week with slight gains with the 2-year yield falling to 2.60% and the Ten-year yield falling to 2.75%.  Corporate earnings announcements continued to be a focus for investors and on the margin seemed to be better than expected last week.  Solid results out of the airlines helped to lift the transports higher.  American Airlines, Southwest and JetBlue all beat expectations.  Union Pacific also had a nice report.

Similarly, Starbucks reported better than expected top and bottom lines and provided better than expected guidance for 2019.  Despite Intel’s disappointing results, the Semiconductor sector had a fantastic week.  Texas Instruments, Xilinx, Lam Research and Teradyne all posted nice gains for the week and propelled the Philadelphia Semiconductor Index up over 6% for the week.

While earnings results seemed to stoke some optimism for economic growth, comments from ECB President, Mario Draghi’s tempered that optimism when he acknowledged that the EU economies might continue to need significant stimulus.  In Europe, Brexit still looms, and with the hard exit deadline fast approaching, will likely further play on market sentiment.  Interestingly, the announcement on Friday that the US Government would be reopened for business was a non-event for the market.   However, what did garner some attention and market action was a Wall Street Journal article that suggested that the Fed was close to finishing up the normalization of their balance sheet.  This is considerable and a completely different stance than what had been taken by Fed Chairman Powell’s statement from the Fed’s December meeting where he had suggested this policy was on “Autopilot.”  There were no changes to our models last week.  This is going to be a busy week with a number of heavyweight corporate earnings announcements.  The Fed is also scheduled for a rate decision on Wednesday although it is unlikely that there will be any change.  The economic calendar is also full, Consumer Confidence, Personal Income, Personal Spending, and Non-Farm Payrolls are scheduled to be announced.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap for the week ending 1/18/19

-Darren Leavitt, CFA

Despite somewhat disappointing corporate earnings results and a failed Brexit vote, markets continued to rally last week.  The S&P 500 gained 2.9% for the week while the Dow, NASDAQ, and Russell 2000 increased 3%, 2.7%, and 2.4%, respectively.  The markets were able to shrug off some disappointing news and instead focused on reports that the Trump administration’s trade negotiations had yielded some positive results.  Specifically, reports indicated that the administration would drop current tariffs on Chinese goods in return for China to effectively import enough goods over the next few years to eliminate the US/China trade deficit.

The week also produced some decent economic data which seemed to relieve some economic growth fears that had weighed on investors sentiment in the last part of 18.  Technically the market was also able to go through and hold its 50-day moving average and in turn induced some short covering which helped to propel the market even higher.  The positive tenor was most evident in the more cyclical sectors, with the materials, industrials, tech, and financials all having a strong showing last week.  Notably, the financials, despite a mixed bag in earnings results, were able to continue their rally and have now gained nearly 9% in the month of January.  On the other hand, Treasuries continued to struggle.  The 2-year note yield increased 6 basis points to close at 2.61%, while the 10-year bond yield tacked on 8 basis points to close at 2.78%.  Oil continued to be bid with WTI closing just shy of $54 a barrel.  API figures showed a decent draw in oil inventories and the Baker Hughes Rig count figure was also off significantly, which seemed to temper supply concerns.  There were no changes to our models last week.  Please let us know if you have any questions.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap for the week ending 1/11/19

-Darren Leavitt, CFA

Constructive rhetoric from US/ China trade negotiations along with more dovish iterations from Fed officials helped markets continue their rally last week. The S&P 500 gained 2.5% for the week while the Dow, NASDAQ, and Russell finished the week with gains of 2.4%, 3.5%, and 4.8%, respectively.  The S&P 500 is up over 10% from its Christmas Eve low and in my opinion appears to be a bit over-bought here.  Treasury yields inched higher last week.  The 2-year yield added 7 basis points and closed at 2.55%.  The 10-year added 4 basis points and closed at 2.70%.  Oil traded above $50 a barrel, up for eight sessions in a row before giving some back on Friday.  Gold finished the week slightly higher at $1289 an oz.  Earnings kick off in earnest next week with a number of large banks set to announce their 4th quarter results.  There were no changes to our models last week.

Weekly Market Commentary

Below is a snapshot of 2018’s performance and what to watch in coming year from Chadd Mason, Cabana CEO and co-founder.  

Looking back on 2018…

Equity markets ended the year down across the board. International markets fared the worst, all down double digits. U.S. markets performed best of all, but still finished with the worst returns since the 2008 financial crisis. Huge price swings characterized the last two weeks of trading in 2018. The new year has given us more of the same, in that we’ve seen equity markets drop 3% one day and surge 3% the next. Some buying is to be expected due to the extreme oversold technical            conditions, which is the result of sustained selling over the past three months.

In my opinion, the overall volatile market behavior is consistent with the early stages of a bear market. Our algorithm suggests the same. This is characterized by a bounce in equity prices from oversold conditions, followed by selling as prices meet areas of resistance that were previously areas of support in the bull market (until broken). Assets that are hit the hardest during the downturn typically outperform during rallies. These presently include commodities, energy and international equities. We do not make predictions and try to take each day as it comes, while remaining fully invested in the assets that have the best chance of relative performance. These can be offensive or defensive at any given time. Currently, our portfolios are in what we call a “transitional bearish scene,” and we are invested in a variety bonds, fixed income and dividend paying equities, as well as       commodities, energy and some emerging markets. While these positions may seem inconsistent, they all work together to      provide hedges in both directions as equity and debt markets cycle through the current conditions. This allocation seeks to avoid big losses on the down days and participate in some gains on the big up days. This rather simple strategy is what allows us to stay invested, and just as importantly, it is a critical component for adhering within our portfolios’ target drawdown percentage (even in very volatile markets).

How did we get here?

At the beginning of the October selloff I advised our clients that we would reallocate to more defensive positions, in the event that economic conditions worsened. At that time, we had no knowledge of just how steep the selloff to come would be. In fact, I was hopeful that the selling in early October was simply a quick and sharp decline that would be followed by a recovery and     year-end rally.

During the fourth quarter, there were two particular events that I was watching for and commented on several times, most     notably on October 29 and November 26. The first was whether buyers would step into the oversold equity market and not only buy the dip but hold on to the position through the typical bounce. I was worried that if they bought and then sold, it would be strong evidence of a change in behavior since the last rally began in 2016. The second thing I was watching for was behavior in the bond markets. I was particularly interested in whether bond investors were taking money out of the equity market and      buying longer-term bonds. As markets swooned during October, we did not initially see a commensurate pullback in long-term yields, consistent with a bear market on the horizon. I am a big believer in watching the bond market, as I think monetary supply drives earnings. Where interest rates are going can tell us a lot. Based upon these two outstanding pieces of the puzzle, I held out hope for a return to the bull market, despite following our rules and moving to more defensive positions. Since that time, we have seen these two questions answered definitively. Every dip that was bought, was immediately sold – until even the dips were sold. This is what happens when stocks break trend and technical support levels. We not only broke the October lows that     started all this, but also the February lows (that really started all this)! Just as importantly, bond yields collapsed as fast as they rose earlier in the year. The 10-year Treasury bond dropped from 3.25% to 2.58% in two months. This evidences that bond     investors have forecasted low growth or a recession in the future – to such a degree that they are willing to tie their money up for ten years in return for a 2.58% annual yield. I believe these two early indicators forecast slower growth, or worse during 2019. We won’t bet our clients’ money on it, but we will be prepared for it.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana, LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its      publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of         consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visitwww.fa-mag.com for more information regarding the ranking.

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a     specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the     portfolios may no longer be reflective of current positions.  

Weekly Market Commentary

-Darren Leavitt, CFA

Markets started 2019 in the same manner it left off in 2018, with extreme volatility.  A preannouncement from Apple, a much stronger than anticipated jobs report, and a more measured tone out of Fed Chairman Powell, provided investors plenty to contemplate in the first few trading session of the New Year.  The S&P 500 gained 1.73% for the week, the small-cap Russell 2000 led markets increasing 3.2%, the NASDAQ was up 1.73%, and the Dow rose 1.27%.   Treasuries, which have been exceptionally well bid for the last couple of months, had a very volatile week as well.  Gains in Tresuries seen early in the week were essentially erased by the week’s end.  The 2-year yield closed on Friday at 2.48% while the 10-year closed at 2.66%.  Oil continued to bounce last week with WTI gaining nearly $3.00, closing at $48.03.  Gold inched a bit higher too, up $5.00 for the week to close at $1285.60 an ounce.  It is also worth mentioning the volatility seen in the currency markets this week, notably the extreme move seen in the Yen early in the week.  The move was considered to be kind of a “Flash Crash”- trading desks were light in Japan due to holiday which allowed algorithmic trading to take control of the wheel as markets transitioned in overnight sessions.   The move may portend something more significant for the currency markets, and undoubtedly continued strength in the Yen is something to watch.

A negative preannouncement from Apple on Wednesday night led to sharp declines in the markets on Thursday. Markets were able to shrug off weak economic data out of Asia during the Wednesday session, but Apple’s announcement reinforced economic growth concerns particularly within the Chinese economy.  Apple lowered Q1 revenue to $84 billion from a range of $83-$93 billion versus a consensus estimate of $91.37 billion.  The revenue miss was attributed almost entirely to a shortfall in iPhone sales within China.  The announcement echoes statements from some of Apple’s key supply chain vendors and will most likely led to more preannouncements in the coming weeks from multinationals doing business in China.

As I mentioned, markets opened back up on Wednesday to the news that Chinese manufacturing is in contraction for the first time since May of 2017.  On Thursday, the US ISM Manufacturing Index for December was released and showed a decrease to 54.1% versus an expectation of 57.8% and a November reading of 59.3%.  These two indicators fueled more growth concerns.  However, on Friday the Employment Situation report contradicted these growth concerns with a solid set of numbers.  Nonfarm payrolls came in at 312,000 versus expectations of 180,000.  November and October nonfarm numbers were also revised higher.  December private payrolls increased to 301,000 versus expectations of 175,000 and November and October numbers for this indicator were also revised higher.  The unemployment rate ticked a bit higher to 3.9% versus consensus estimates of 3.7%.  The December average workweek came in line at 34.5 hours, but December hourly earnings continued to increase with a rise of 0.4% month over month versus a 0.3% estimate.  There is no wonder why there is so much confusion in the markets right now.

On the back of a great jobs report, Fed Chairman Powell’s comments at the American Economic Association annual meeting on Friday helped to spark a massive rally.  Specifically, the Chairman backed off his “autopilot” statement related to the normalization of the balance sheet and indicated that the Fed would not hesitate to change the current path if needed.

We had a few changes to our models at year end.  We added exposure to international Real Estate with the ETF, RWX.  We reduced some exposure to Gold and slightly reduced our exposure to the S&P 500. Additionally, we introduced our FIA Lite models that aim to service accounts between $10,000 and $25,000.  These models combine passive and tactical elements and were added to address some of the issues that face smaller sized accounts.  Please let us know if you have any questions regarding these changes, we are happy to discuss in more detail if you have any questions.  Happy New Year!

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Market Recap week ending 12/28/18

-Darren Leavitt, CFA

Wow, what a week for the markets- if you were out for the holidays you missed a historic week on Wall Street.  Extremely oversold conditions coupled with year-end portfolio rebalancing and the fact that many were out for the holiday produced some crazy market action.  A continuation of the prior week’s sell-off ensued on abbreviated Monday session with the S&P 500 closing down 2.9%.

Concerns regarding the government shutdown, an impromptu call made by Treasury Secretary, Steven Mnuchin, to the CEO’s of the six largest US banks, and rumors that Trump was going to replace Fed Chairman Powell fueled the sell-off.  However, the markets ripped higher on Wednesday gaining 5% across all the major indices.  Oversold conditions, short covering, and some favorable commentary about holiday retail sales from Amazon cranked out one of the best single day moves in history.

On Thursday, the markets spent most of the day in the red losing as much as 2.9%, but in the last 90 minutes of trade, the markets had a massive reversal closing up 0.9%.  Interestingly there was no apparent catalyst for the move.  Friday’s session also produced whipsaw action for investors and ended off 0.10%.  For the week the S&P 500 gained 2.86%, the Dow added 2.75%, the NASDAQ increased 3.97%, and the Russell 2000 increased by 3.55%.  Despite the higher move in equities, safe-haven Treasuries were resilient.  The 2-year note yield closed at 2.52%, and the Ten-year closed at 2.74%.  There were no changes to our models last week.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

Weekly Market Commentary

Below is a snapshot of last week’s market performance and what to watch in the week ahead from Chadd Mason, Cabana CEO and co-founder.
I would like to start this week’s commentary off by thanking all of our clients for their support and trust in us. I got into this business because of a series of unfortunate events that occurred when my family trusted a professional adviser and bank. I saw my grandfather’s estate cut in half during the 2000-2002 bear market. I truly believed that there was a better way, and I was going to find it. We have spent the better part of the past two decades working to do just that. A lot of so-called professional advisers tout their abilities and smarts, whether they work for big famous firms, or have the latest mousetrap, but at the end of the day the proof is in the pudding. Everyone is a genius when markets are going up. The true test of an adviser’s worth is when things get tough – like really tough. At Cabana, we built everything we do with this in mind. So first and foremost, I want to say how much I appreciate you being our partner in this greatest of endeavors called investing. Now let’s talk numbers and the state of the current market.

According to Deutsche Bank, 2018 officially has been the worst year for investors of all types and across all investments since 1901, when such records started being kept. You read that correctly – this year has been worse than 2008, worse than 2002, and worse the Great Depression. Below is a Bloomberg and Morgan Stanley chart of asset class performance over the past 15 years (Exhibit 1), which provides a good visual depiction of what I am talking about. As you can see, EVERYTHING is in the red. The investments at the bottom did the worst and the ones at the top did the best (relatively speaking). I have commented on this over the past few weeks and things have just gotten worse – a lot worse! As of market close on Christmas Eve, the U.S. stock market was down 21% since October 1. It was down 16% in December and 10% in the past week alone. Huge widely held stocks like Apple, Google and Facebook are down 37%, 24% and 43% from highs made in the second half of this year. This now qualifies as tough – really tough.

On August 20, I pointed out that the U.S stock market was the only market in the world that was holding up and the divergence between the U.S. equity market and other asset classes was the greatest in fourteen years. I worried that we had “a lot of weight pulling in the opposite direction.” Something had to change. Either other asset classes had to catch up or the U.S. market would fall. Unfortunately, it was the latter, but it was no surprise to us and we were prepared. As of this writing we have reallocated all of our portfolios twice since then (once in early October and again last week). We do this so that we are continually working to take risk off the table as investment conditions deteriorate. The more conservative the portfolio, the quicker risk is removed during reallocations. We want to always stay invested, but rotate into those investments that perform relatively well in a bad environment. Even if no asset is making money, we always want to be in the things that are losing the least. Our ultimate objective is to keep our portfolios within their target drawdown number. This number ranges from 5% in our most conservative portfolio to 20% in our most aggressive portfolio. The number represents in percentage terms how much each portfolio can be expected to drop when things get tough, like really tough, like 2018 tough. We compute the change within each portfolio at the end of every month. It is this rather simple idea that makes us who we are and why I think you picked us as a partner. If we can manage risk, our clients stay invested, and over time are able to take advantage of improving market conditions. I believe this is a recipe for investing success. So, while the U.S. stock markets have fallen off a cliff and dropped more than 20% in the past 90 days we have been reallocating and protecting against losses, consistent with the target drawdown of our portfolios. Below is how Cabana’s portfolios have performed since October 1 and YTD (through Monday, Dec. 24), net of all estimated fees and commissions, including up to a maximum 2% fee.

•Cabana Core Tactical Income 5 since October 1: -7.6%
•Cabana Core Tactical Income 5 YTD: -5.2%
•Cabana Core Tactical 7 since October 1: -7.5%
•Cabana Core Tactical 7 YTD: -6.9%
•Cabana Core Tactical 10 since October 1: -10.7%
•Cabana Core Tactical 10 YTD: -8.6%
•Cabana Core Tactical 13 since October 1: -14.1%
•Cabana Core Tactical 13 YTD: -12.9%
•Cabana Core Tactical 16 since October 1: -16.7%
•Cabana Core Tactical 16 YTD: -15.3%
•Cabana Core Tactical 20 since October 1: -15.7%
•Cabana Core Tactical 20 YTD: -14.9%

While we are not making money, we are losing a lot less than the broad U.S. and international equity markets. Just as importantly, we are staying within or around our target numbers, even in the worst investment conditions we have seen in a long, long time.

We have a week left of trading in the month and anything can happen, but I am extremely proud of what we have accomplished this year. I hope seeing this will provide some relief and perspective. We are not perfect, but I promise you we care and fight for you and your money every day.

I hope that everyone is taking some time to enjoy family and friends this holiday season. Those are always the things that matter most.

IMPORTANT DISCLAIMERS

This material is prepared by Cabana, LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its  publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.

This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of      consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at www.adviserinfo.sec.gov/.

The Financial Advisor Magazine 2018 Top 50 Fastest-Growing Firms ranking is not indicative of Cabana’s future performance and may not be   representative of actual client experiences. Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com for more information regarding the ranking.

No current or prospective client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for any investor. Asset allocation and diversification will not nec-essarily improve an investor’s returns and cannot eliminate the risk of investment losses.

Cabana’s performance returns included in this material are estimates that have been calculated using actual account performance. The returns have not been independently examined by Cabana’s third-party GIPS (Global Investment Performance Standards) verification firm. Independently examined returns will be available in January. For additional information about Cabana and our performance methodology, please  visit www.cabanaportfolio.com

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). In addition to the firm’s third-party verification, six of Cabana’s core portfolios have been performance examined consistent with GIPS® standards. The Global Investment Performance Standards are a trademark of the CFA Institute. The CFA Institute has not been involved in the preparation or review of this report/advertisement. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. Verification does not ensure the  accuracy of any specific composite presentation unless an independent performance examination has been conducted for a   specific time period. Past performance is not indicative of future results. Due to various factors, including changing market conditions, the  portfolios may no longer be reflective of current positions.

Weekly Market Commentary

Market Recap Week ending 12/21/2018

-Darren Leavitt, CFA

Last week Wall Street posted its worst weekly performance in a decade.  The Fed’s decision to raise the federal-funds target range by 25 basis points to 2.25%-2.5%, along with political discord in Washington sent indices to their lowest levels of the year.  The S&P 500 lost -7.05%, the Dow surrendered -6.87%, the NASDAQ lost -8.36%, and the Russell 2000 fell -8.41%.  International developed and emerging markets lost too but performed slightly better for the week losing -4.80 and -3.29%, respectively.  Investors continued to seek refuge in Treasuries which in turn flattened the 2-10 yield curve at one point to a mere 11 basis points.  At week end, the 2-year yield closed at 2.63%, and the 10-year yield was 2.79%.  Crude oil continued its decline with February futures falling to $45.70 a barrel on Friday.  The US benchmark for Crude-Oil prices is off over 41% from its October highs.

Concerns regarding economic growth were intensified as financial conditions appear to be tightening and monetary policy assessed as too restrictive.   On Wednesday, the Federal Reserve increased rates by 25 basis points and suggested they were poised to raise rates two more times in 2019.  Going into the meeting, the probability of a hike was just north of 70%. However, the expectation had come down from ~95% in just the last couple of weeks. The outlook for rate hikes going forward was more dovish than the Fed’s prior expectations but perhaps not dovish enough for investors.   The Dot Plot which lays out the aggregate rate expectations of all the Fed governors was reduced from 3 to 2 in 2019.  Concerns regarding the reduction of the balance sheet or quantitative tightening seemed to catalyze the sell-off on Wednesday afternoon.  The policy to unwind the balance sheet has been in place for some time now and has been running on “Autopilot.”  When asked about whether or not the Fed would pause on the reduction of the balance sheet, Powell seemed dismissive to the notion.  On Friday, New York Fed President, John Williams, tried to tone done this stance by indicating that the Fed is listening to the market and is not inflexible with regard to the path of the balance sheets runoff.

Politics offered more concerns for investors last week.   The threat of a partial government shutdown over the funding of a border wall and the abrupt resignation of Defense Secretary, James Mattis, gave more reason for investors to pause.

Technically the market has appeared to be oversold, but any bounce has been met with more selling pressure.  The market breached its February lows which most likely activated stop orders which led to more selling.  Cyclical sectors have been hardest hit.  Fed Ex and Micron were two notable companies that reported earnings last week that offered more concerns on the global economy’s growth outlook.  Alternatively, Nike reported much better than expected results which perhaps paints a better picture regarding the state of the consumer.

There were no changes to our models last week.  Our Tactical models have been playing defense for quite some time and have benefited from outsized positions in US and international treasuries/bonds.  I am sure that many of you will be getting calls from clients regarding the markets most recent activity, we are here to help with any questions you might have.  Happy holidays, we wish you and yours the very best for 2019!

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of FIA or its affiliates.  Information presented is believed to be current, but may change at any time and without notice.  It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.