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Weekly Market Commentary

Weekly Market Commentary – 8/5/2022

-Darren Leavitt, CFA

Despite a cautious start to the week, US equity markets posted gains for the third week. A tepid ISM manufacturing report coupled with uncertainties surrounding House Speaker Pelosi’s visit to Taiwan initially keep investors sidelined. A benign reaction by China to Pelosi’s visit, along with another week of better than expected earnings, coaxed investors off the sidelines and into buy mode. However, an extremely strong Employment Situation Report stalled the week’s rally on Friday as investors backed off the notion that the Federal Reserve would pivot away from its hawkish monetary policy.

The S&P 500 gained 0.4%, the Dow fell 0.1%, the NASDAQ added 2.2%, and the Russell 2000 rose by 1.9%. 87% of S&P 500 companies have reported second-quarter earnings. 75% of those companies have beat earnings expectations by an average of 3.4%, while 70% have beat top-line estimates by an average of 3.5%. Energy and Healthcare companies have reported the best results for the quarter.

US Treasuries got hammered on the stronger employment data. The 2-10 spread inverted to thirty-nine basis points, suggesting the economy could be headed into a recession. The 2-year yield increased by thirty-three basis points to 3.23%, while the 10-year yield increased by twenty basis points to 2.84%.

Concerns regarding global economic growth hit oil prices. WTI fell 10%, closing at $88.73 a barrel. A technical break below $92 a barrel, along with OPEC+’s announcement that they would increase production by 100,000 barrels a day, provided more reason to sell crude. Gold prices increased by $7.30 to 1790.30 an OZ. Copper prices increased fractionally, closing at $3.57 an Lb.

Economic news was highlighted by the Employment Situation Report. Non-Farm Payrolls increased by 528k, much more than the forecast of 250k. Similarly, Private Payrolls increased by 471k versus the estimate of 200k. The Unemployment rate fell to 3.5% from 3.6%. Average hourly earnings ticked up 0.5% on a month-over-month basis; the street was looking for an increase of 0.3%. On a year-over-year basis, wages have increased by 5.2%. Initial claims for the week were in line with estimates at 260K, while Continuing Claims ticked up to 1416k from the prior week’s reading of 1368k. ISM Manufacturing came in at 52.8%, down from June’s 53%. ISM Services was better at 56.7%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 7/29/2022

-Darren Leavitt, CFA

Investors faced the busiest week of the year as 175 companies representing 50% of the S&P 500’s market capitalization reported 2nd quarter earnings. The results were mixed and produced drastic swings in share prices. Microsoft and Alphabet reported “better than feared” results, while Amazon and Apple provided better than expected results. Chevron and Exxon both crushed their earnings estimates. On the other hand, Meta, Walmart, Shopify, Roku, and Intel were disappointments. Growth issues outperformed over value, and the Mega-caps outperformed their counterparts.

Investors were also faced with the July Federal Open Market Committee’s decision on monetary policy and the subsequent statement from Fed Chairman Jerome Powell. The Committee unanimously decided to increase the policy rate by 75 basis points to a range of 2.25% to 2.50%. The market rallied on the Fed Chairs’ comments that it may be appropriate to wait and see how inflation has been impacted by the front loading of the Fed Funds rate. The Chairman also suggested that the Fed would be data-dependent and willing to go another 75 basis points in the September meeting. However, it will not telegraph its policy to the markets as it has over the last several years. The results will increase the importance of data analysis by the street and likely cause more volatility around key economic reports. Unfortunately, the Fed continues to be in a rock and hard spot as they try to thwart inflation by tightening financial conditions while, at the same time, the markets are loosening financial conditions.


Economic data for the week was highlighted by the advanced reading of 2nd quarter GDP, which showed a contraction of 0.9%. The street had been looking for growth of 0.5%. The final reading of Q1 GDP showed a contraction of 1.6%. If the Q2 readings continue to show contraction, there is an argument that we are technically in recession. The debate of whether or not we are in a recession will take on many forms, but the most prominent rebuttal to the notion that we are currently in a recession is based on a continued strong employment market. Initial claims for the week came in at 256k versus the street’s estimate of 253K. Continuing claims fell by 25k to 1.359M. Inflation data included the Federal Reserve preferred measure of PCE, which came in at 0.6%, in line with estimates but up 6.8%, the highest level since 1982. Core PCE was also in line with expectations at 0.5%. The Employment Cost Index ticked higher to 1.3% versus the consensus estimate of 1.1%. Personal Income increased by 0.6%, slightly higher than the 0.5% consensus. Personal spending increased by 1.1%, which was also higher than estimated. The final reading of the University of Michigan’s Consumer Sentiment plummeted to 51.5%, the 2nd lowest reading ever.

The S&P 500 gained 4.3%, the Dow rose 3%, the NASDAQ increased by 4.7%, and the Russell 2000 added 4.3%. The US Treasury curve inverted further, with the 2-year note yield falling nine basis points to 2.90%. The 10-year yield fell fourteen basis points to 2.64%. As mentioned before, the lower rates across the curve loosen financial conditions. Oil prices traded fractionally higher. WTI increased by $0.61, closing at $98.55 a barrel. Gold prices increased by 4.7% or $80.2 to $1783 an Oz.  Copper prices soared by 10.5% to close at $3.57 an Lb. The US dollar weakened against the majors and lost significantly against the Japanese Yen.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 7/22/2022

-Darren Leavitt, CFA

US financial markets rallied over the week despite increasing economic growth concerns. A very weak BofA Fund Manager Survey validated a sense that some, if not most, of the coming economic weakness has been priced into the market. The survey showed high cash levels, low equity exposure, and high expectations for recession. The negative sentiment provided contrarians a reason to step in and buy the market. US economic data was weaker than expected and highlighted by a weakening housing market, increasing initial claims, and a service contraction. Q2 earnings continued to roll in. Tesla and Netflix provided an upside catalyst for growth stocks, while Snap Chat’s dismal quarter hammered the social media issues. Travel-related names fell on airline earnings and an equity raise by Carnival Cruise. CSX and Union Pacific helped the industrials move higher on better-than-expected earnings. However, Verizon and AT&T missed their marks.

Lockdown measures in China aimed at curbing Covid infections continued to dampen supply chain sentiment. In Europe, the ECB raised its policy rate for the first time in eleven years by a higher than anticipated 50 basis points. The rate hike came as Italian Prime Minister Mario Draghi failed to form a coalition government and announced his resignation. Interestingly, the ECB will continue its QE program, perhaps to keep peripheral sovereign spreads in check.

The S&P 500 gained 2.5%, the Dow rose 2%, the NASDAQ added 3.3%, and the Russell 2000 tacked on 3.6%. The volatility continued in the rates market as the 2-year note yield fell by fourteen basis points to 2.99%. The 10-year bond yield lost fifteen basis points closing at 2.78%. The curve’s inversion also portends economic weakness being priced into the market. Oil prices fell for another week. WTI prices fell by $3.18 or 3.2% to $94.76 a barrel. Of note, the Nord 2 pipeline, which had closed for service, reopened at 40% capacity, which surprised many energy traders. Gold prices climbed $16.50, closing at $1719.30 an Oz.  Copper prices increased by 2.7% or $0.09 to $3.32 am Lb. This week, the dollar weakened against the majors as the Euro found some footing off the ECB’s rate hike decision.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 7/15/2022

-Darren Leavitt, CFA

It was an extremely busy week on Wall Street with a full calendar of economic data and the start of 2nd quarter earnings. Growth concerns fostered more selling in equities and commodities while the long tenures of the yield curve rallied. US dollar strength continued as the Euro broke parity with the Dollar on rate differentials and concerns related to a breakdown of Italy’s parliament. Prime Minster Draghi penned his letter of resignation after losing support from his major coalition party, but the Italian President dismissed the resignation. US President Joe Biden was in the Middle East, where there were hopes that meetings with the Saudis would yield an announcement of increases in oil production, but no announcement was made.

The S&P 500 fell 0.9%, the Dow shed 0.2%, the NASDAQ lost 1.6%, and the Russell 2000 gave up 1.4%. The US Treasury curve inverted significantly over the week as the 2-year note yield increased by one basis point to 3.13%. The 10- year yield fell by seventeen basis points to close at 2.93%. The inversion suggests that Fed will continue on its path of rate hikes at the expense of economic growth in the future. This notion of slower economic growth has impacted commodities as well. Over the last month, we have seen oil and industrial metals sell-off. Oil prices fell 7.2% or $7.66 to close at $97.94 a barrel but had traded as low as $92 and change. Copper prices fell 8% on the week closing at $3.22 an Lb. Gold prices fell by $39.8 or 2.2% to $1702.8 an Oz. Dollar strength has impacted commodities as well. Generally speaking, a strong dollar weakens commodities. The Euro/Dollar cross broke parity this week while the Japanese Yen fell to 138.56 against the Dollar.

Economic data was highlighted by a stronger than expected June CPI print. The headline number came in at 1.3% versus the street’s expectation of 0.9%. On a year-over-year basis, prices were up 9.1%, the highest reading since 1982. Core CPI that excludes food and energy was up 0.7% in June, which was also higher than expected. Energy prices increased 41.6% year-over-year, while food prices increased by 9.1%. The shelter index was up 5.6%, and Used Car prices were up 7.1% from a year ago. The June Producers Price Index (PPI) was also hotter than expected at 1.1% the street was looking for 0.8%. The reading is up 11.3% year-over-year. The two inflation readings prompted an increased probability of a 1% rate hike by the Federal Reserve in a couple of weeks. Retail sales in June were better, coming in at 1% versus 0.8%. The Preliminary July reading of the University of Michigan’s Consumer sentiment saw a surprise uptick to 51.1% on lowered inflation expectations.

2nd quarter earnings kicked off with disappointment from financial stalwarts JP Morgan and Morgan Stanley. The CEO of JP Morgan reiterated his concerns for the economy and the uncertain environment. The earnings results and commentary put pressure on the financials. On Friday, Citigroup announced an excellent quarter, and Wells Fargo indicated that their Net Interest Margin would increase by 20% over 2021. The news helped markets rebound on Friday. Additionally, United Healthcare beat on the top and bottom lines and provided better than expected guidance for the coming quarter and full year.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 7/8/2022

-Darren Leavitt, CFA

The holiday-shortened week saw the US stock market bounce while US Treasuries gave up the bulk of their prior weeks’ gains. Economic data was highlighted by the June Employment Situation report that showed stronger than expected payroll figures. Non-Farm Payrolls increased by 372k versus the consensus estimate of 250k. Similarly, Private Payrolls increased by 382k versus expectations of 275k. The Unemployment rate stayed at 3.6%, and Average Hourly Earnings were up 0.3%, in line with the street consensus.   The FOMC minutes from the June meeting were released and showed the Fed is comfortable with its restrictive monetary policy.   The committee acknowledged that it is appropriate to temper economic growth to get inflation in check. Currently, the market has priced in a 75 basis point hike at the July meeting.

The S&P 500 rose 1.9%, the Dow added 0.8%, the NASDAQ led with a gain of 4.6%, and the Russell 2000 tacked on 2.4%. Cyclical sectors were in favor throughout the week. Semiconductor stocks stood out after Taiwan Semiconductor posted an impressive quarter. 2nd quarter earnings will start up this week, with some large banks set to report mid-week.   The impressive rally in US Treasuries last week was erased this week. The 2-year yield increased by twenty-nine basis points to 3.12%. The 10-year yield increased by twenty-one basis points to 3.10%.

The 2-10 spread inverted, and with the Federal Reserve poised to raise rates in their next meeting, it could become more inverted. Oil prices traded below $100 a barrel on economic growth concerns but traded higher in the week’s back half. WTI closed down $3.41 or 3.1% to $105.06 a barrel. The price of gold fell 3.6%, or $65.40, to close at $1742.60 an Oz.  Copper prices declined, closing off $0.11 to 3.51 an Lb. The US Dollar was well bid, especially against the Euro. The Euro/$ cross closed at 1.0175. The British Pound sold off in front of the resignation of Boris Johnson but managed to regain the 1.20 level after the resignation was formally announced.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 7/1/2022

-Darren Leavitt, CFA

Markets took a step back after the prior week’s impressive rally. The same culprits showed up to dampen investors’ appetite for risk assets- growth concerns, inflation, and hawkish central bank rhetoric. Economic data was notably skewed to the negative and highlighted by a very weak consumer sentiment reading. The Atlanta Fed’s estimate of 2nd quarter GDP was slashed to -2.1%, and their third estimate of Q1 GDP was revised to -1.6%. If the 2nd quarter GDP is, in fact, negative, it suggests the economy is already technically in recession. Semiconductors took the brunt of this week’s selloff, falling 9.3%, as Micron and Taiwan Semiconductor reduced their outlook and fostered concerns for corporate earnings growth. The Core PCE and GDP Price Deflator continued to show inflation well above the Fed’s mandate and induced more hawkish comments from Fed officials. San Francisco Fed President Mester announced that she was comfortable with a 75 basis point hike in the July meeting. At an ECB forum, Chairman J Powell reiterated that price stability was paramount even at the cost of economic growth.

The S&P 500 fell 2.2%, the Dow lost 1.3%, the NASDAQ led declines giving back 4.1%, and the Russell 2000 shed 2%.   Countercyclical sectors such as Utilities, Consumer Staples, and Healthcare outperformed. Consumer Discretionary, Financials, and Large Cap Growth issues underperformed. Growth concerns coupled with the notion that inflation may have peaked put an excellent bid into US Treasuries. The 2-year note yield fell twenty-three basis points to 2.83%. Similarly, the 10-year yield fell twenty-four basis points to 2.89%. The price of WTI increased by $1.00 to $108.67 a barrel and helped the energy sector bounce. Gold prices fell by $21.6 or 1.1% to $1808 an Oz.  Copper prices continued to fall and may also be an indication of slower growth. Copper prices fell 3% to 3.62 an Lb. Crypto traded lower, with Bitcoin trading below 19k at one point. Grayscales’ bid to have an SEC-registered Spot Bitcoin ETF was rejected by the SEC and subsequently challenged by Grayscale. Finally, the US dollar was stronger against the majors.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 6/24/2022

-Darren Leavitt, CFA

In a holiday-shortened week, financial markets bounced out of extreme oversold conditions.  Mega-cap growth stocks outperformed value issues, mid-caps, and small caps.  The Fed Chairman was on the hill in front of the Senate Banking Committee for his semiannual testimony in front of the Senate Banking Committee.  J Powell offered up what most expected, a stern position to combat inflation and o the realization that it would be difficult to avoid a hard landing.  Most of what was said was already priced into the market.  A rebound in the market also comes as a quarter-end and semiannual end approach.  Many institutional investors are likely to rebalance their models due to the enormous moves we have seen in certain parts of the market.

The recent sell-off in energy issues that coincide with the nice movements we saw this week in infotech and consumer discretionary may be evidence of this rebalance.  Economic data for the week was mixed.  A surprisingly strong May New home sales helped extend the rally on Friday, while global PMI data generally was weaker than the prior month’s data.  The final reading of the University of Michigan’s Consumer Sentiment indicator fell to 50, well below last year’s reading, which came in at 85.5.  The sentiment is at the lowest level since 1978.

The S&P 500 gained 6.4% and closed above 3900.  The Dow got back 5.4%, the NASDAQ was up 7.5%, and the Russell 2000 added 5.8%.  The Treasury market rallied across the curve in volatile trade. Growth concerns sent the 2-year note yield to 2.90% before settling down twelve basis points to 3.06%.  The 10-year yield fell eleven basis points to 3.13%. Oil prices were also quite volatile, falling at one point by nearly 7% only to recover to a fractional loss.  WTI closed at $101.53 a barrel.  Copper prices fell below $4 an lb, losing 9.2% to $3.74 an lb. Bitcoin found some footing after a brutal month.  As I write, the cryptocurrency is higher by ~$2000 from the prior week.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 6/17/2022

-Darren Leavitt, CFA

Investors sent global markets lower on recession fears induced by tighter central bank policies. The Federal Reserve announced that they would raise their policy rate by 75 basis points to a target of 1.50% to 1.75%. The Fed lowered its real GDP estimate for 2022 to 1.7% from 2.8%. A median forecast of the terminal rate increased markedly to 3.8%, and Fed Chair J Powell insinuated it could go higher if needed to thwart inflation. A surprise 50 basis point hike by the Swiss National Bank perhaps was the most telling of the current inflation environment. The tightening move by the Swiss was the first in 15 years and one that, in the past, would be scrutinized over the likelihood of strengthening the Franc. The Bank of England raised by 25 basis points and lowered its GDP estimate for 2022. Brazil raised by 50 basis points in a surprise move. Japan did not change its policy rate and said it would continue to manage its yield curve through quantitative easing measures. The Yen was hammered on the announcement.

No asset class other than the US dollar escaped the week’s sell-off. Commodities sold off on the notion that weaker economic growth would bring less demand. OPEC+ lowered its oil demand forecast for 2022 based on global growth concerns. Protectionist rhetoric from the Biden administration that would limit fuel exports did not help matters. Australia announced that it would curb coal exports. The energy sector took the brunt of this week’s sell-off, losing 17.29%. Energy companies were targeted by congress with a letter from President Biden that said current margins were too high. Additionally, congress introduced legislation that could place a windfall profit tax on energy companies.

Cryptocurrencies also had a tough week after Celsius, a lender in Crypto, announced that it would suspend withdrawals and transfers on its platform. The announcement follows the breakdown of stable coin Terra Luna a few weeks ago and casts doubt over the crypto landscape. As I write, Bitcoin has traded off ~25% for the week and trades just above 19k.

Fears of a recession have also started to impact Wall Street’s earnings expectations. For example, despite better-than-expected earnings from many steel producers this week, analysts lowered their ratings and forward estimates based on a slower economic growth outlook. Revisions to estimates will likely continue a be another headwind for investors over the next several quarters.

The S&P 500 lost 5.8%, the Dow shed 4.8%, the NASDAQ fell 4.8%, and the Russell 2000 plunged 7.6%. The US Treasury market was also extremely volatile over the week. The 2-year note yield increased by fourteen basis points to close at 3.18% but traded at a high of 3.43%. The 10-year yield rose by eight basis points to 3.24% after trading at 3.50% earlier in the week. Oil prices fell 10.1% on a dampened demand outlook. WTI closed at $108.46 a barrel. Gold prices traded 1.8% lower to $1840.50 an Oz.  Copper prices fell 6.4% to $4.02 an lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -6/3/2022

-Darren Leavitt, CFA

Wall Street ended lower for the week as investors heard more hawkish rhetoric from Fed officials and economic warnings from two prominent CEOs.  The holiday-shortened week produced another tranche of mixed Q1 earnings results that further tempered future earnings expectations.  The EU announced that they would curtail imports of Russian oil by 90% in the next six months, while OPEC + announced that they would increase production in July and August.  Headlines also suggested that President Biden would travel to Saudi Arabia in July to meet with Crown Prince Mohammed bin Salman.  The economic calendar was full and came in with stronger than expected results.

The S&P 500 lost 1.2%, the Dow shed 0.9%, the NASDAQ gave up 1%, and the Russell 2000 outperformed with a 0.3% decline.  US Treasuries sold off across the yield curve as Fed officials reiterated that more rate hikes are needed to curb inflation.  Fed Governor Waller suggested the Fed would need to tighten well beyond the neutral rate, while Governor Brainard commented that she did not think a pause in September was necessary.  The 2-year yield climbed twenty-two basis points to 2.67%.  The 10-year yield increased by twenty-two basis points and closed at 2.94%.  Despite the announcement of more production coming on line, Oil prices rallied.  WTI increased by $4.47 or 3.8% to close at $119.22 a barrel.  Given the positive price action, the energy sector was the best performing sector for the week, up 1.2%.  Gold prices were flat, closing at $1851.20 an Oz.  Bitcoin prices started the week strong but sold off with other risk assets later in the week.  Bitcoin is currently trading at $29,548, up roughly $600 from last week.  Surprisingly, Vix, the volatility index, has come well off its most recent highs and sits just below $25.  The US Dollar was also stronger this week.

Economic data was highlighted by the May Employment situation report, which was stronger than expected.  Non-farm Payrolls increased by 390k versus the estimate of 310K.  Similarly, Private Payrolls increased by 333k, better than the expected 300k.  The Unemployment rate was unchanged at 3.6%.  Average hourly earnings rose 0.3% less than the 0.4% the economists had expected.  The average hourly work week was in line with the consensus estimate of 34.6.  ISM Manufacturing showed an increase from the prior reading at 56.1%.  ISM Non-Manufacturing went the other way, decreasing to 55.9% from the previous reading of 57.1%.  Consumer Confidence for May surprised to the upside coming in at 106.4 versus 104.1.  Initial claims came in at 213K, while Continuing claims came in at 1309k, the lowest level since 1969.  Unit labor costs for the first quarter came in hotter than expected at 12.6% the consensus was for an 11.6% increase.  Finally, the S&P Case-Schiller Home Price Index increased by 21.2% in March.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -5/27/2022

-Darren Leavitt, CFA

Happy Memorial Day, and thank you to all that have served our great country.

Global financial markets rallied as buy the dip investors finally showed up on Wall Street. US Markets were especially strong after losing for seven consecutive weeks. Market sentiment is quite negative, and the market was very oversold, which created a ripe environment for a bounce. Q1 earnings continued to come in mixed as management teams tempered expectations for the coming quarter and full year on continued concerns regarding the supply chain disruptions and higher inflation. However, this week we saw initial sell-offs in earnings news from some prominent names reverse to sizeable gains; NVidia and Dicks Sporting Goods are two examples, perhaps another indicator of an intermediate low. An ease in Covid lockdown measures in China also buoyed markets on the notion that the supply chain could now start to normalize. Economic data showed a slowdown in housing, a slight pullback in inflation, and deteriorating consumer sentiment.

The S&P 500 gained 6.6%, the Dow rose 6.2%, the NASDAQ outperformed with a 6.8% advance, and the Russell 2000 was higher by 6.5%. The yield curve steepened as Treasuries inked the third week of gains. The 2-10 spread widened week-over-week to 28 basis points from 21 basis points. The 2-year yield fell twelve basis points to 2.46%, while the 10-year yield declined by five basis points to 2.74%. FOMC minutes released on Wednesday showed that the Fed is inclined to increase rates at the next two meetings by 50 basis points and showed no real support for a 75 basis point move. The minutes were as expected but seemed to provide the market with some solid footing concerning the policy rate. The lower move in yields also curbed the US Dollar’s appetite, which fell against the Yen, Euro, and British Sterling for a second week. Gold prices increased by $11 and closed at $1851.40 an Oz. Oil prices rose 4.2% or $4.70 to close at $114.75. The move in oil helped propel the energy sector higher by over 8% for the week.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -5/20/2022

-Darren Leavitt, CFA

US markets continued to sell off while developed international and emerging markets traded higher. Disappointing Q1 earnings results from the retailers cast some doubt on the health of the US consumer and highlighted the ramifications of inflation on margins. Additionally, hawkish tones from several Fed officials dampened market sentiment and bolstered recession fears. Economic data for the week was worse than expected and added to growth concerns.

The S&P 500 lost 3% and at one point entered bear market territory, which is defined as 20% below its most recent high. The index climbed above that mark on Friday on volatile trade. The Dow gave u0 2.9%, the NASDAQ shed 3.8%, and the Russell 2000 fell 1.1%. Energy, healthcare, and Utilities gained on the week. Oil prices were flat on the week losing $0.27 and closing at $110.05 a barrel. Gold prices traded higher by 1.7% or $32.10 to close at 1840.40 an Oz. Treasuries were higher for a second week in a row. The 2-year yield fell by three basis points to 2.58%, while the 10-year yield fell by seven basis points to 2.79%. Notably, two weeks ago, the 10-year yield touched 3.20%. The US dollar traded lower against the Euro, Yen, and the British Pound.

A host of earnings from the retail sector were disappointing and highlighted some of the investor’s fears about the economy. Ross Stores, Target, and Walmart all expressed concerns regarding higher prices and the current supply chain. Transportation costs were more elevated in the quarter and dampened margins. Consumer behavior changed to be more conservative as consumers moved away from buying discretionary and leaned toward staples. Ross stores which cater to a lower-income cohort, saw sales fall as their target consumer dealt with higher prices at the pump and grocery store. Retail Sales came in at 0.9% versus expectations of 1.1%, while the ex-auto figure came in line with expectations of 0.6%.

Fed Chairman Powell reminded the markets of his most recent FOMC comments. The Fed is determined to get price stability and will do so at the risk of putting the economy into a recession. Hawkish comments from Chicago Fed President Evans suggested that the Fed may need to tighten more than the neutral rate by seventy-five basis points. Evans reportedly thinks the neutral rate is 2.25-2.50%. The current Fed Funds rate is 0.75%-1%, with an expected 50 basis points hike in the next three meetings and then an additional 25 basis points. The notion of more than that spooked markets. Ironically, the Treasury market rallied this week.

Initial claims were slightly higher on the week at 218k while Continuing claims continued to regress. Higher interest rate expectations sent mortgage rates to a 13-year high and curbed mortgage applications which fell 11% for May. Housing starts and building permits also came in below expectations. Existing home sales also missed the mark as inventory of houses for sale picked up. The Consumer Board’s Leading Economic Index fell to -0.3% versus expectations of 0.1%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -5/13/2022

-Darren Leavitt, CFA

Investors endured another tough week as financial markets continued to digest robust inflation data, mixed Q1 earnings, and fears that global growth will continue to slow. Economic data was centered on the global consumer and producer prices. Volatility continued to ramp up as multiple asset classes sold off. Russia warned of military and technical consequences if Finland and Sweden continued to pursue NATO inclusion. Rumors of more Covid lockdowns in China stoked further fears of supply chain disruptions.

The S&P 500 lost 2.4% and at one point breached the 4000 level while approaching a year-to-date loss of 20%. The index was able to rebound on Friday to avoid Bear market status. The Dow fell 2.1%, the NASDAQ sold off 2.8%, and the Russell 2000 gave up 2.6%. Action in Treasuries continued to be volatile, but a bid came into them after the 10-year hit 3.20% on Monday. The 2-year yield fell by eight basis points to 2.59%, while the 10-year yield lost eighteen basis points to close at 2.94%. A flight to quality coupled with a renewed sense of peak inflation helped flatten the curve. Gold prices fell 3% or $54.70 to $1808.3 an Oz. Oil prices were flat for the week despite the IEA lowering its demand forecast for crude based on slower global growth. Additionally, the Saudis lowered prices on crude sent to Asia on weaker demand out of China. WTI closed at $110.32 a barrel. Copper prices fell .08 to $4.16 an Lb. This week, the cryptocurrency market was extremely interesting as Terra Luna, a stable coin tied to an algorithm pegged to the dollar, lost its peg and subsequently wiped out 36 billion in value. The losses sent other cryptocurrencies lower as investors sought answers to Luna’s downfall.

Q1 earnings continued to be mixed. Growth stocks continued to take the brunt of lowered forward guidance. Factset has tracked how many companies have referenced inflation on their quarterly conference calls, and at the current pace, it will most likely be the most on record. Not surprisingly, profit margin guidance from Q1 earnings calls has also come under pressure.

Inflation data continued to be top of mind for investors. The US CPI data came in slightly higher on a month-over-month basis but showed signs of moderating over the prior year-over-year figures. Headline CPI came in at 0.3% versus 0.2% MoM and 8.3% vs.8.5% YoY.  Core CPI increased 0.6% vs. 0.5% MoM and 6.2% vs. 6.5% YoY.  Similarly, headline PPI came in line at 0.5% but moderated to 11% from 11.5% on a year-over-year basis. Core PPI was 0.4% vs. 0.7% and came in at 8.8% vs. 9.5% YoY.  Export and Import prices also showed moderation and helped with the peak inflation narrative. Initial claims and Continuing Claims showed a strong labor market.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -5/6/2022

-Darren Leavitt, CFA

It was an extremely busy and volatile week on Wall Street.  The Federal Reserve’s May FOMC meeting statement was top of mind for investors and came in as expected.  However, post statement Q&A added some unforeseen variables to consider and ignited market volatility over the rest of the week.  Q1 earnings continued to roll in with mixed results and tempered guidance for the coming quarter and the rest of the year.  China extended lockdown measures and saw its manufacturing contract further.  The economic data calendar was stacked and headlined by the April Employment Situation report.

The final tally for the market’s weekly performance does not tell the whole story of the wild swings incurred throughout the week.  The S&P 500 lost 0.2% for the week but saw a nearly 10% swing from Wednesday to Thursday.  The Dow gave back 0.2%, the NASDAQ shed 1.5%, and the Russell 2000 sold off 1.3%.  The US Treasury market was also very volatile throughout the week.  A steepening of the curve saw the 2-10 spread widen to forty-nine basis points.  The 2-year yield fell by three basis points to close at 2.67%.  The 10-year yield increased by twenty-four basis points to 3.12%- the highest yield since 2018.

Oil prices gained $4.97 or 4.7% to close at $110 a barrel.  The commodity was propelled higher after the EU said it would phase out the use of Russian Oil over the next six months and other refined products over the next year.  The Energy sector rallied on the move, gaining 10.2% for the week and taking the YTD gain to 49.2%.  Gold prices fell by $28.30 or 1.4% to $1883 an Oz.  Copper prices fell 4% to $4.24 an Lb.  Bitcoin fell ~ $3k to $35,925 as risk sentiment faded.  The US dollar was stronger, gaining ground against the Pound and Yen while losing a bit against the Euro.  Vix spiked on the week as investors sought downside protection.

As expected, the Federal Reserve increased its policy rate by 50 basis points and laid out a plan to normalize its balance sheet over the next several months.  The Fed will initially start by letting 30 billion in Treasuries and 17.5 billion in Agency MBS roll-off.  Those caps will be raised to 60 billion and 35 billion in three months, respectively.  Markets rallied during the Q&A session as Chairman J Powell pushed back on the notion of a 75 basis point hike at the June meeting.  Additional comments regarding the neutral rate seemed to infer that much of the Fed’s work has already been priced into the market and added to the dovish tone.  However, the Chairman did suggest that 50 basis point hikes were on the table for the next several meetings and that the Fed was prepared to tighten above the neutral rate if needed to get price stability.  Interestingly, Fed Fund futures priced an above 80% probability of a 75 basis point hike in the June meeting after the Chairman’s comments.

The Employment Situation report showed robust payroll gains.  Non-Farm payrolls increased by 428k, and the street was looking for 395k.  Similarly, Private payrolls increased by 406k versus expectations of 390k.  The Unemployment rate stayed at 3.6%.  Average hourly earnings increased by 0.3%, lower than the 0.4% expected and the 0.5% increase in March.  The Average workweek stayed at 34.6 hours.  The Labor Participation rate continued to be disappointing, falling to 62.2, a full percentage lower than the reading pre-pandemic.  Initial Claims increased 19k to 200k while continuing claims fell by a similar amount to 1.384 million, the lowest level since 1970.  ISM Manufacturing and Services data regressed to 55.4 and 57.1, respectively.  Pricing pressure, supply chain issues, and a tight labor market were cited as reasons for the pullback.  Preliminary Q1 unit labor cost came in much higher than expected at 11.6%, and the street had been looking for an increase of 7.3%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

 

 

Weekly Monthly Commentary

Weekly Monthly Commentary – April ’22

-Darren Leavitt, CFA

Global financial markets had a rough month in April. Inflation continued to be top of mind for investors as data continued to show historic increases in prices. The Federal Reserve still appears to be behind the curve in combating inflation, but throughout the month, Fed officials provided multiple indications that more action would be taken. The more hawkish rhetoric took a toll on the yield curve, which saw massive swings over the month. The headwind of higher interest rates also continued to hit global equities. The S&P 500 could not hold critical areas of technical support, which left the index vulnerable to a late-month sell-off.   Q1 earnings started with mixed results and were on the margin disappointing for the mega-cap leadership names, i.e., Apple, Google, Facebook, Amazon, and Microsoft.

China’s zero Covid policy continued to wreak havoc on the global supply chain as major factories shut down. China did respond with more monetary stimulus and a pullback on its most recent regulatory crackdown. The Russian and Ukraine war continued without a resolution, contributing to global inflation woes. Russian atrocities against Ukraine induced more sanctions and invoked international calls for more military and humanitarian aid.

Economic data showed inflation running hot in multiple data series. Data also showed a slowdown in manufacturing and services while the labor market continued to be tight. Interestingly, sentiment indicators and retail sales have held up nicely.

The S&P 500 lost 9.11%, the Dow gave back 5.29%, the NASDAQ decreased by 13.51%, and the Russell 2000 shed 10.86%. International developed markets lost 7.61%, while emerging markets pulled back 7.67%. Technically, the S&P 500 became vulnerable to more losses as the index broke down below its 200-day moving average of 4495 and then through the support of its 50-day moving average of 4418. Currently, the market looks oversold, and many contra indicators suggest we could see a bounce.

The yield curve was all over the place in April. We started the month with an inverted curve where the 2-10 spread went negative. The inversion was short-lived, and then we saw the 2-10 spread expand back to 38 basis points only to have it compress again. For the month, the 2-year yield increased forty-one basis points to 2.69%, while the 10-year yield increased by fifty-six basis points to close at 2.89%. It is widely accepted that the Fed will raise its policy rate by 50 basis points in the May meeting and start to normalize its balance sheet by $95 billion a month.

Oil was one of the only assets to gain in the month. Oil prices increased 4.5% or $4.60 to close at $105.03 a barrel. Gold prices fell 2.1% or $41.70 to $1911.30 an Oz.  Copper prices fell 7% or $0.34 to $4.41 an lb. The dollar continued its strength against other majors. The $/Yen climbed north of 130, the lowest level since 2002. The Euro/$ fell to 1.0565, the lowest level since 2016.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -4/22/2022

-Darren Leavitt, CFA

Financial asset classes had a tough week as global growth concerns were stoked by more hawkish commentary from Fed Presidents and mixed earnings results from corporate America. Economic data showed mixed results in the US housing market, a pullback in services, and a strong labor market. US markets failed to hold keep technical levels while the US 10-year approached 3%. No progress was made in negotiations between Russia and Ukraine, in fact, Russia telegraphed wider ambitions outside of Ukraine which may involve action in Moldova where there is another Russian separatist enclave.

The S&P 500 lost 2.8%. The index could not hold its 200-day moving average of 4497 and broke down further to lose support at its 50-day line of 4413. The inability to maintain these levels may portend more weakness on a technical basis. The Dow shed 1.9%, the NASDAQ led losses with a decline of 3.8%, and the small-cap focused Russell 2000 gave back 3.2%.

There was a lot of Fed speak throughout the week and, on the margin, came across as more hawkish. Early in the week, St. Louis Fed President suggested that the Fed Funds rate should be at 3.5% by the end of the year, meaningfully higher than what is currently priced into the market. Similarly, Fed Chairman J. Powell added he was not ready to declare that we have seen the peak in inflation and went on to say that the Fed could tighten more after reaching the neutral rate.   Chicago Fed President Evan and Atlanta Fed President Bostic delivered a less hawkish tone. Mary Daly, San Francisco Fed President, said she supported a 50 basis point hike in the May meeting and suggested the Fed’s policy rate ending the year at 2.25% to 2.5%- in line with the current market outlook. The 2-year note yield, which is most sensitive to the Fed’s policy rate, rose by twenty-seven basis points to 2.72%. The 10-year yield increased by eight basis points to close at 2.91% but had an intra-week high of 3%. The 2-10 spread, which had widened over the last couple of weeks, compressed back to 19 basis points flattening the yield curve.

Commodities that had been a haven came under pressure too.   Gold lost 2% or $40.90 to close at $1933.60 an Oz. The oil trade was quite volatile over the week; WTI ended down 3.7% or $3.92 at $102 a barrel. Industrial metals, along with mining stocks, pulled back as well. Copper prices fell 3%, closing at $4.57 an Lb. The US Dollar appreciated relative to the Yen, Euro, and hit levels not seen against the Pound since 2020.

Q1 earnings continued to roll in with mixed results. Tesla beat on revenues and earnings, then suggested that its goal was to have an average of 50% growth in deliveries over the next several years. The stock price surged on the news. Airline stocks were given a boost after the mask mandate on planes was dropped. American, United, and Alaska Air posted excellent results and offered encouraging outlooks. Results out of the financials continued to show differences. Bank of America posted better results while broker, Charles Schwab, missed the mark. IBM posted a nice number but was overshadowed by a horrible quarter and outlook from Netflix. Net Subscribers fell for the first time in 10 years for the streaming service and the company’s forecast for the next quarter called for a steeper decline. Disney, Roku, Fubo, and Meta fell in sympathy.

March Housing Starts increased by 0.3% or 1.793 million on an annually adjusted basis, better than the expected 1.75 million. Building Permits increased by 0.4%, or 1.873 million. The bulk of these increases came from Multi-family.  March Existing Home sales fell by 2.7%, or 5.77 million; the street looked for 6.2 million. The shortfall comes as mortgage rates have increased to 11-year highs. Preliminary April IHS Markit Manufacturing and Services showed Manufacturing expanding to 59.7 from 58.5 but Services trending in the other direction at 54.7 versus last month’s reading of 58. Initial Jobless Claims fell by 2000 to 184k. Continuing Claims fell by 58k to 1.417 million- the lowest level since February 1970.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -4/15/2022

-Darren Leavitt, CFA

First-quarter earnings season kicked off with mixed results from the financials and positive results from the airlines. The holiday-shortened week found US equities taking one step forward only to subsequently move two steps back. Robust inflation data steepened the yield curve and hit growth issues particularly hard. Technically the S&P 500 could not regain its 200-day moving average (4495), and perhaps more troubling was the regression below its 50-day moving average (4418).

The S&P 500 lost 2.39%, the Dow gave up 0.39%, the NASDAQ fell by 3.93%, and the Russell2000 was able to inch higher by 0.52%. Whipsaw action in the US Treasury market ended with a significant steepening of the curve. A couple of weeks ago, the 2-10 spread inverted, but now the 2-10 spread has gone to thirty-eight basis points. It is also worth mentioning that there is no inversion across the curve. The 2-year note yield decreased by seven basis points to close at 2.45%. The 10-year yield hit a high for the year, increasing seventeen basis points to 2.83%. The increase in yields also pushed the average 30-year mortgage to 5%, a level not seen in eleven years. Gold prices increased by 1.5% or ~$30 to $1974.50 an Oz. Oil prices rebounded by 7.8% on the week, with WTI closing at $105.92 a barrel. Copper prices were unchanged on the week.

Inflation data released for the week included March CPI and PPI. Headline March CPI came in at 1.2%, slightly less than the street estimate of 1.3%. However, the reading was up 8.5% on a year-over-year basis, the largest increase since 1981. Core CPI, which excludes food and energy, also came in below expectations at 0.3% and showed a meaningful move on a YoY basis of 6.5%. Headline PPI came in hotter than expected at 1.4% and Core PPI was much higher than expected at 1%. On a year-over-year basis headline, PPI increased by 11.2%. Interestingly, the market rallied on the news as a peak inflation narrative made its rounds. Perhaps we do get some inflation relief but it appears inflation will likely be elevated for longer than most had anticipated. Other economic data indicated the economy was still on solid footing. Markets sold off on the news, and growth stocks again to the brunt of the sell-off. March Retail sales came in at 0.5% versus expectations of 0.6%. The Ex-auto reading came in at 1.1% versus the estimate of 0.9%. The labor market continued to be tight. Initial Claims were up 18k to 185k, and Continuing Claims fell by 48k to 1.475 million. Preliminary April University of Michigan Consumer Sentiment came in at 65.7, above the consensus estimate of 58.8 and the prior reading of 59.4.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -4/8/2022

-Darren Leavitt, CFA

Fed rhetoric sent yields higher across the curve, with longer duration Treasuries taking the brunt of the sell-off. Higher yields pressured growth stocks and favored defensive sectors such as the Utilities, Staples, and Health Care. The Russian and Ukraine war took a turn for the worst as Russian atrocities against Ukrainian civilians continued. The international community acted with more sanctions and called for war crimes to be brought against Vladimir Putin in the International Criminal Court.   China continued its Covid lockdown of cities, including Shanghai. The prolonged shutdown of manufacturing there continues to hinder the supply chain. It has also induced the PBOC (Peoples Bank of China) to reduce reserve requirements on banks again to add stimulus to the economy.

The S&P 500 lost 1.27%, the Dow fell 0.28%, the NASDAQ sank 3.85%, and the Russell 2000 tumbled 4.6%. The influential large-cap growth names came under the gun again, as did Small-caps on valuation concerns related to a higher interest rate regime. Information Technology led declines along with Communication Services and the Consumer Discretionary. Interestingly, Financials also fell during the week even as the yield curve steepened, which is generally thought to be a positive catalyst for the banks. The 2-yield increased ten basis points to 2.54%; the 10-year yield climbed thirty-four basis points to 2.71%. As yield rise on bond, bond prices fall. Oil traded lower on the week, with WTI losing 1.3% or $1.36 to close at $98.18 a barrel. However, the Energy sector gained 3.2% even as Energy Executives were scrutinized on recent outsized profits by Congress. Gold prices increased by $19.20 to $1944.80. Copper prices were up fractionally. Bitcoin fell nearly 10%, closing at $42,508.

Several Federal Reserve members were on the podium last week, and all came across as Hawkish. Vice-Chair Brainard spoke in front of the release of the March FOMC minutes and essentially stole the thunder from the minutes. She outlined that the Fed would start to normalize its balance sheet much faster and more aggressively from the prior normalization period. The minutes detailed a program that would let 95 billion roll off the balance sheet- 60 billion in Treasuries and 35 billion on Agency Mortgage-Backed Securities. The minutes also confirmed the Fed’s desire to increase its policy rate by another 50 basis points in their next meeting. The markets sold off on her comments and continued to sell off the next day after the FOMC minutes were released.

Economic data continued to show hot inflation metrics and a very tight labor market. The ISM Non-Manufacturing Index came in at 58.3%; the street had been looking for 57%. A measure above 50 indicates the economy’s services component is expanding, while a reading less than 50 indicates contraction. Underneath the hood, the Prices Index component increased 83.8%, the second-largest increase on record. The hotter report also stoked the sell-off in Treasuries. Initial Claims fell to 166k versus the estimate of 200k. Continuing claims came in at 1523K, a touch higher than the prior reading of 1506k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -4/1/2022

-Darren Leavitt, CFA

Financial markets started the week with a strong rally on the back of what appeared to be constructive negotiations between Russia and Ukraine.  However, progress was refuted as the week moved forward, and financial markets gave up most of their gains.  The EU followed the US and warned China of helping Russian war efforts.  China announced that it would allow Chinese companies listed in the US to provide financials to US regulators.  The announcement helped to lift Chinese ADRs.  Global economic data continued to show hotter than expected inflation and a slight tick down in manufacturing and services.

The S&P 500 gained 0.1%, the Dow gave back 0.1%, the NASDAQ rose by 0.7%, and the Russell 2000 added 0.6%.  Real Estate and Utilities led while Financials and Energy lagged.  The 2-10 spread inverted, which some believe is a harbinger of recession.  The 2-year yield increased by fourteen basis points to 2.43%, while the 10year yield decreased by eleven basis points to 2.38%.  Oil prices fell 14.5% or $14.29 to close at $99.54 a barrel.  The Biden administration announced that it would release 1 million barrels a day from the Strategic Petroleum Reserve-an unprecedented move that saw several other developed nations follow suit.  OPEC+ also announced that it would increase production by 32000 barrels a day to 432,000.  Gold prices fell 1.3% or $27.30 to 1925.60 an Oz.  Copper prices were unchanged on the week closing at 4.69 a Lb.  Bitcoins rose by ~$2000 t $46,383.

Another strong Employment Situation Report highlighted economic data.  Non-Farm Payrolls increased by 431K while Private Payrolls increased by 426k.  The unemployment rate ticked down to 3.6% from the prior reading of 3.8%.  Average Hourly Earnings increased by 0.4%, which was in line with expectations and up 5.4% on a year-over-year basis.  The Average Work Week came in at 34.6 versus the estimate of 34.7.  Initial Claims came in at 202k, and Continuing Claims fell to 1307k.  March Consumer Confidence surprised to the upside coming in at 107.2, better than the expected 106.9.  The Federal Reserve’s preferred inflation measure, PCE, came in line at 0.6%, while the Core number, which excludes food and energy, came in at 0.4%.  The Core reading was up 5.4% year over year and was the highest reading since 1983.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -3/25/2022

-Darren Leavitt, CFA

It was a hectic week for investors as US financial markets tried to post a second consecutive week of gains. Geopolitics continued to influence market action. President Biden traveled to Europe to meet with NATO allies, the European Union and finished the week visiting Poland.   Strategists from Citibank and Bank of America had significant calls on the Federal Reserve’s policy rate path, which sent rates higher across the curve. Economic data showed a strong labor market, a tepid housing market, and weakening consumer sentiment.

The S&P 500 gained 1.8% and regained its 200-day moving average of 4476. The Dow added 0.3%, the NASDAQ outperformed with an advance of 2%, and the Russell 2000 lost 0.4%. The US yield curve shifted higher and inverted at 3’s & 5’s versus the 10-year. The 2-year yield increased by thirty-three basis points to 2.29%, while the 10-year yield rose by thirty-four basis points to 2.49%. Oil prices increased by 10.5% or $10.80, with WTI closing at $113.83 a barrel. Multiple factors played into the oil trade this week. A ban of Russian oil from the EU was sidelined. There was an attack on a Saudi oil field that pressured supply concerns. There was rhetoric around another release of the Strategic Petroleum Reserve, and Chevron was given clearance to restart operations in Venezuela. Gold prices rose by $22 to $1952.90 an Oz.  Copper prices fell by $0.4 to $4.69 an lb. Bitcoin gained nearly $3000 on the week, closing at $44,686. Of note, the $/yen closed at 122.11, and the Euro/$ fell to 109.86 on the divergence of central bank policy.

President Biden met with his counterparts in the EU and NATO to discuss the war in Ukraine. Officials warned Putin on the use of unconventional weapons and reiterated that any attack on a NATO member would be met with severe consequences. The President also warned China on helping Russia and outlined export controls on Chinese goods as a deterrent. The war has entered its fifth week with millions of refugees fleeing to Poland, where Biden finished his European trip. While in Poland, the President called Putin a war criminal and suggested that Putin be ousted from office. The administration later toned down the call for regime change which was then echoed by some European leaders.

Citibank and Bank of America strategists had significant calls on the Federal Reserve’s policy rate. The calls induced volatile trade in the US Treasury market that continued to see losses. Citi sees four consecutive fifty basis point rate hikes followed by two twenty-five basis point hikes. BofA sees fifty basis point hikes in the June and July meetings, followed by twenty-five basis point hikes at each subsequent meeting this year. The calls dampened sentiment on the Consumer Discretionary sector and the Homebuilders. 30-year mortgage rates increased to 4.375-4.75%.

Global preliminary PMIs were mixed. In the US, March PMI Manufacturing came in at 58.5 versus February’s 57.5. The Non-Manufacturing reading was also better than the prior month at 58.9. The labor market continued to show record strength. Initial Claims fell by 28k to 187k, the lowest reading since September 1969. Continuing Claims fell by 67k to 1.35 million, the lowest level since January 1970. The tight labor market further stoked wage inflation fears. Housing data came in less than expected. New home sales fell by 2% to an annually adjusted rate of 772k the street was looking for 820k. February Pending home sales fell 4.1%. The final reading of the University of Michigan’s Consumer sentiment fell to 59.4 versus the prior reading of 62.8. This is the lowest reading since October of 2012. Interestingly, 32% of the respondents thought their financial condition would worsen in the coming year, the highest level ever seen since the data set was created. The outlook on inflation relative to wages was cited as the decline.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -3/18/2022

-Darren Leavitt, CFA

Global financial markets registered significant gains for the week. Investors continued to watch for any progress on negotiations between Russia and Ukraine. Central bank policy came in as expected, which helped lift markets. After significant declines to start the week, China also announced numerous measures to stabilize its markets. Economic data was highlighted by a better than expected Producers Price index print.

The S&P 500 gained 6.2%, the Dow rose 5.5%, the NASDAQ climbed 8.2%, and the Russell 2000 jumped 5.4%. The US yield curve flattened further with the 2-10 spread compressing to nineteen basis points. Talk around the shape of the yield curve will likely start to gain headlines as it appears the curve is poised to invert. The 2-year yield increased by twenty-one basis points, closing at 1.96%. The 10-year yield rose by fifteen basis points to close at 2.15%. Oil prices closed 5.5% lower on the week, closing at $103.03 a barrel. EIA inventories showed a build in crude, and lighter rhetoric out of Russia on demands related to an Iran nuclear deal likely had some impact on prices. Gold prices fell by $57.9 or 3% to $1930.9 an Oz. Nickel trade continued to be very volatile, with the London Metal Exchange halting trade several times over the week. Risk-on sentiment bolstered trade in crypto, with Bitcoin prices advancing by 7.7%.

Negotiations between Russia and Ukraine came and went without a resolution. There were reports that the two sides had come closer, but Russia later refuted those reports. The war now enters its 4th week, with Russia continuing to launch missiles at Ukrainian targets. Russia announced targeting arms being sent into Ukraine and attacked facilities very close to Poland’s border. US and NATO have continued to send arms into Ukraine, including drones,  anti-aircraft missiles, and anti-tank weapons.   US intelligence announced that it was also likely that Putin would increase threats regarding the use of nuclear weapons. President Biden met with his Chinese counterpart Xi to discuss China’s intentions to aid Russia. The two leaders left the meeting with no assurances.

The Federal Reserve announced this week that it would increase its policy rate by twenty-five basis points, in line with expectations. The Fed’s dot plot, which telegraphs the policy rate path, suggests that the Fed will raise rates six more times this year. Fed Chair J Powell pushed back on the likelihood of a recession in the coming year but did agree that the increase in rates would likely dampen economic growth. The Chairman also said that the Fed would start to have their balance sheet run-off after the May meeting. The Bank of England announced a twenty-five basis point hike while the Bank of Japan made no changes to its policy rate.

Chinese manufacturing came back online despite the zero-Covid policy. Additionally, the Chinese government stabilized their equity markets, announced they would end the crackdown on internet platforms, provided a backstop for their real estate markets, and announced they would work with the US regulators regarding Chinese listed stocks in the US.

Economic data for the week was mixed. The Producers Price Index for February showed an increase of 0.8% on a month-over-month basis which was less than the expected 1% increase. The Core measure increased 0.2% versus the estimate of 0.7%. February Industrial Production came in lighter than expected at 0.5%. The labor market continued to be firm, with Initial Claims coming in at 214k and Continuing Claims falling to 1419M. Housing data showed Starts of 1769k versus the estimate of 1685K and Building Permits of 1859k versus 1850k. Existing Home Sales came in at 6.02, less than the expected 6.17m. Retail Sales were also disappointing, coming in at 0.3% versus the street’s estimate of 0.6%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

 

Weekly Market Commentary

Weekly Market Commentary -3/11/2022

-Darren Leavitt, CFA

Investors started the week facing $130 a barrel crude as the US announced an embargo on Russian oil.  Europe also announced that they would begin to taper their dependence on Russian energy, albeit a process that will likely take years.  Higher oil exacerbated inflation fears and sent markets lower.  As the week progressed, there were hopes that diplomacy would extend a cease-fire.  The first round of talks ended with no resolution and was followed by another failed attempt later in the week.  Russia continued its move to take Kyiv while shelling indiscriminately.  More sanctions were announced throughout the week, with prominent global corporations also announcing they would cease doing business with Russia.  The Russian stock market remained closed while the Ruble continued to plunge.

Inflation concerns attached to higher oil prices were stoked by another hot CPI print that showed inflation increasing the most in 40 years.  Food and energy showed meaningful increases, with gasoline prices up 38% on a year-over-year basis.  The Federal Reserve will meet next week and is expected to raise its policy rate by 25 basis points.  The European Central Bank’s meeting ended with no change to their policy rate and announced they were on pace to finish their asset purchasing program by the end of the third quarter of 2022.  President Lagarde also suggested that part of the supply chain was healing, and that inflation would moderate.  She expects inflation to fall below 2% in 2024.  South Korea announced that their semiconductor exports had increased by 28.5% yearly, giving some weight to the idea that parts of the supply chain may be healing.

The S&P 500 lost 2.9%, the Dow shed 2%, the Nasdaq fell 3.5%, and the Russell 2000 gave back 1.1%.  The energy sector was the only sector up with a gain of 1.9%.  Consumer Staples fell by 5.8%, while the Information Technology sector lost 3.8%.  US Treasuries also sold off on the prospects of higher inflation but provided some cover on days where safe havens were sought.  The 2-year yield increased by twenty-six basis points to 1.75%.  The 10-year yield increased by twenty-eight basis points, closing at 2%.  Despite the initial surge in oil prices, crude ended the week off 5.4%.  WTI closed at $109.10 a barrel.  Gold prices gained just over 1% or $22.20 to close at $1988.8 an Oz.  Perhaps the craziest action in the commodity market was in Nickel which surged to over $100,000 a metric ton on a short squeeze that required the London Metal Exchange to close trade.

Economic data was headlined by the CPI, which, again, came in hot.  The labor market continued to be strong.  Initial Claims data showed 227k new applications versus the expectation of 217k.  Continuing Claims to 1494m.  The preliminary University of Michigan’s Consumer Sentiment indicator fell to 59.7 versus the estimate of 61.8, constrained by the prospects of higher inflation.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -3/4/2022

-Darren Leavitt, CFA

Financial markets continued to be volatile as investors assessed the ramifications of the ongoing war in Ukraine.  International sanctions roiled the Russian ruble and kept the Russian equity markets closed.  Commodity prices continued to soar, and safe-haven assets found a bid on the uncertainties of war.  Fed Chairman, Jerome Powell, was in front of congress and endorsed a 25-basis point rate hike at the March meeting while recognizing the geopolitical backdrop.  The Chairman also left the door open for a 50-basis point hike in subsequent meetings.  Economic data for the week was highlighted by a strong Employment Situation report and a weaker than expected ISM services report.

The S&P lost 1.3% for the week, the Dow also fell 1.3%, the NASDAQ shed 2.8%, and the Russell 2000 lost 2%. The US Treasury market had another week of significant swings.  The 2-year yield fell ten basis points to 1.49%, while the 10-year yield fell by twenty-seven basis points to 1.72%.  Oil prices increased 26% in volatile trade over the week, with WTI closing up $24.15 to $115.75 a barrel. Big swings in oil prices came on the back of news that the US and Iran had forged a deal on Iran’s nuclear program, possibly allowing sanctions on oil to be removed. Gold prices increased by $79.2 or 4.1%.  Copper prices rose 10% to $4.923 an Lb.

Russia’s war on Ukraine induced more international sanctions, including blocking Russia’s access to SWIFT, the system used in international banking settlements.  Several global corporations also announced that they would stop operations within Russia, including energy companies Royal Dutch Shell and British Petroleum.  Even as Russia’s central bank tried to defend the currency by increasing its policy rate to 20%, the ruble continued its decline.  Markets sold off hard on the news that Russian troops had taken Europe’s largest nuclear power plant and reports that the plant was on fire. Two sets of negotiations ended with minimal compromise as the war moved into its second week.

Economic news was mixed with solid labor data and mixed ISM data.  Non-farm payrolls increased an impressive 678k versus expectations of 390k.  Private payrolls increased by 654K versus the expected 375K. The Unemployment rate fell to 3.8% as expected, while average hourly earnings were flat.    ISM manufacturing data continued to be in expansion mode at 58.6%.  ISM non-manufacturing surprised to the downside at 56.5% the street was looking for 62%.  I miss on services is concerning given services account for over 70% of the economy.  Initial claims came in at 215k, again showing a tight labor market.  Continuing claims were unchanged at 1.476m.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -2/25/2022

-Darren Leavitt, CFA

The uncertainty of the ramifications of a Russian-induced war led to massive swings in the global financial markets. Generally speaking, markets do not like uncertainty. While Russia’s move into Ukraine was well telegraphed, the multiple scenarios that may play out in the coming months and years have investors contemplating their current investment exposures. The Russian invasion comes when global economies are trying to heal from the pandemic and are concerned about inflation. For the most part, international central banks have sounded the need to tighten their monetary policies and now may need to temper these initiatives. Multiple sanctions and curbed capital movements aimed at Russia will impact various markets differently and likely impede parts of the supply chain. That said, markets had already discounted some of these implications. For instance, Oil and Natural Gas had traded meaningfully higher before the invasion and subsequently fell on the news of the war.   Similarly, a massive reversal in the stock markets on Thursday seemed to say Putin’s actions had already been priced into the markets. However, this is a fluid situation and undoubtedly will bring more volatility to the markets.

The S&P 500 gained 0.8% after being down as much as 5.4%. The Dow lost 0.1% while the NASDAQ and Russell 2000 gained 1.1% and 1.6%, respectively. There were significant shifts in the US Treasury curve as investors initially sought safe-haven assets and then reversed course. The 2-year note yield increased twelve basis points on the week and closed at 1.59%. The 10-year yield rose six basis points to 1.99%. Investors also sought out Gold after Russian troops entered Ukraine, bidding the precious metal to over $1970.00 an Oz, but a similar reversal occurred and saw gold the week at $1887.40 an OZ. Oil prices took the same path, trading north of $100 a barrel but closing unchanged on the week at $91.59 a barrel.

Despite it being a holiday-shortened week, the economic calendar was packed. The Fed’s preferred measure of inflation, the PCE, came in a bit hotter than expected. The headline was up 0.6% vs. expectations of 0.5% and up 6.1% on a year-over-year basis- the largest YOY gain since 1982. The Core PCE came in inline at 0.5% and up 5.2% year-over-year. February Consumer Confidence was better than expected at 110.5 but lower than the January reading of 111.1. The final February reading of the University of Michigan’s Consumer Sentiment was also better than expected at 62.8. January Personal income was unchanged but better than the expected decline of 0.3%. Personal spending increased 2.1% in January. Initial claims came in at 232k while continuing claims moved to 1.476M.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -2/18/2022

-Darren Leavitt, CFA

Global financial markets traded lower for the week as Russian-Ukraine tensions dominated headlines. The Federal Reserve’s policy rate path continued to be debated off the back of another hot inflation print of the Producers Price Index. Fourth Quarter earnings reports were mixed for the week; however, growth stocks continued to be hammered, even on solid results.

The S&P 500 fell 1.6%, the Dow lost 1.9%, the NASDAQ shed 1.8%, and the Russell 2000 gave back 1%. The Treasury curve steepened slightly as the 2-year note yield declined five basis points to 1.47%. The 10-year yield fell three basis points to 1.93%. Gold prices increased by 3% or $57.4 to close at $1899.60 an Oz. Oil prices fell 2% or $1.88 to $91.21 a barrel. The move-in oil prices over the week were interesting. On the one hand, you had the Russian-Ukraine influences, while on the other hand, there seemed to be meaningful progress with the Iranian nuclear negotiations.

The ebb and flow of diplomacy concerning Russia and Ukraine have led President Biden to conclude that the Russians will invade Ukraine imminently. During the week, investors were encouraged by reports that some Russian troops had finished their training and were leaving the border. These reports appear to have been false; in fact, it seems more soldiers have been called to the border along with logistical support such as emergency medical personnel. Narratives of a false flag approach by the Russians have also been given more weight as shelling in Eastern Ukraine has increased. Additionally, it was reported that Russian hackers had impeded Ukrainian government operations, banking institutions, and utilities. Secretary of State Blinken is set to meet with his Russian counterpart Lavrov next week for further diplomacy. The Olympic winter games close on Sunday, and some have suggested that Putin would wait for the Olympics to close before starting his offensive.

A hotter than expected Producer Price Index reading did very little to the Treasury markets for several reasons. A safe-haven bid was ever-present in the markets given the increased geopolitical tensions, and perhaps the path of Federal Reserve policy has already been priced into the market. Several investment banks have revised their estimates of the Fed Funds rate. Goldman now sees seven rate hikes, while JP Morgan estimates nine. It is almost certain that the upcoming March meeting will have a change to the policy rate- most likely an increase of 25 basis points. However, a week ago, the probability of a 50 basis point hike was 98%. The probability has fallen this week to 21.1%.

Growth stocks were hammered again this week despite falling interest rates. Fourth Quarter earnings for the week were mixed, but some excellent reports in growth names meant very little as investors continued to sell the space. NVidia and Draft Kings were two such examples of excellent announcements.

Another strong PPI print highlighted the economic calendar. Headline January PPI came in at 1% on a month-over-month basis and was up 9.7% year-over-year. The Core PPI was up 0.8% in January and up 8.3% from a year ago. January Retail Sales came in better than expected at 3.8% the street was looking for 2.3%. January Industrial Production came in at 1.4% versus the consensus estimate of 0.5%, and Capacity Utilization was also better at 77.6%. Housing data was mixed. Housing Starts missed the mark at 1638k while Building Permits were better at 1899k. Existing Home Sales topped estimates at 6.5M. Initial claims regressed for the first time in three weeks, coming in at 248k while Continuing Claims fell to 1.593M.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -2/11/2022

-Darren Leavitt, CFA

US equity markets struggled to gain any footing as concerns regarding record inflation along with worries about an imminent Russian invasion of Ukraine kept a lid on investor sentiment. Fourth-quarter earnings continued to be on the margin better than expected; however, the price action following the announcements seemed to be tempered on the prospect of higher rates. Technically, the S&P 500 traded most of the week within the bounds of ifs 200-day (4451) and 50-day (4608) moving averages but fell below its 200-day support on Friday.

The CPI or Consumer Price Index showed the hottest print on inflation in 40 years on Thursday. The headline number showed prices had increased 0.6% over the prior month but 7.5% on a year-over-year basis. The Core CPI, which excludes food and energy prices, also increased by 0.6% month-over-month and was up 6% year-over-year. Initially, markets took the news in stride. However, St. Louis Fed President Bullard indicated that given the hot print, he was now inclined to see the Fed raise the policy rate by 100 basis points by June and was open to a 50 basis point move in the March meeting. His statements hammered the markets. Equities fell alongside US Treasuries- the US 2-year spiked 24 basis points, the most significant daily increase since the financial crisis. On Friday, Treasuries found some bids as San Francisco Fed President Daly and Richmond Fed President Barkin pushed back on the need for a 50 basis point increase at the March meeting.

Markets continued to monitor Russia and contemplate the prospects of an invasion into Ukraine. Multiple sources cited that an invasion of Ukraine was imminent, which induced governments worldwide to recall their embassy personnel from Kyiv.  NATO allies and diplomats from Japan and South Korea are still engaged in talks but seem to have rendered very little in assurances. On the other hand, Putin has gained quite a bit in these negotiations and may step back to attain other concessions.

The S&P 500 lost 1.8%, the Dow fell 1%, the NASDAQ gave up 2.2%, and the Russell 2000 bucked the trend gaining 1.4%. The US Treasury curve flattened over the week. The 2-year note yield rose twenty basis points to 1.52%. The 10-year note yield increased three basis points to 1.96% and traded through 2% for the first time since the pandemic. The 2-10 spread was compressed to forty-four basis points. Oil prices increased fractionally. WTI closed up $0.79 to close at $93.09 a barrel. Gold prices rose 1.8% or $33.40 to $1842.20 an Oz.

The previously mentioned CPI highlighted economic data. Initial claims and Continuing Claims showed an improving labor market. Initial Claims came in at 223K, better than the 234k forecast. Continuing Claims came in at 1.621M. Preliminary February University of Michigan Consumer Sentiment fell to the lowest level since November of 2012.   The reports showed sentiment at 61.7% versus the estimate of 67.5%. Inflation has downgraded the survey’s feelings toward personal finances, which could dampen consumer spending.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary -2/4/2022

-Darren Leavitt, CFA

Global markets continued to be volatile but managed to post nice gains in the first week of February. Month-end rebalancing coupled with oversold conditions helped the S&P 500 maintain support at its 200 day moving average (4444). Fourth-quarter corporate earnings continued to roll in with mixed results. Geopolitics stayed in the mind of investors as there were plenty of matters to consider.   Global central bank policy announcements along with a full calendar of economic data were also influential factors to consider in this week’s trade.

Fourth-quarter earnings announcements for the week were all over the place. Bulls and Bears exchanged body blows as influential corporations such as Meta, Google, Amazon, Ford, and Starbucks announced varied results. Google and Amazon shined as their results showed the leverage in their business models. Meta, formally known as Facebook, lost 25% of its value as it struggled on multiple fronts. Honeywell, Air Products, Ford, Clorox, and SBUX declined on higher input costs, which impacted margins and cited persistent supply chain disruptions as the main culprit.

Tensions continued to mount concerning Russia’s actions around Ukraine. Mid-week, UK fighter planes were scrambled to intercept Russian military planes as they approached UK airspace without authorization, reminding everyone again of the potential for conflict. The Olympic Games in Beijing opened on Friday but not before a strong political statement was made by President Xi Jinping, where he offered his full support of Putin about Ukraine and NATO expansion. The US also announced that it had executed a mission in Syria that resulted in the death of the leader of ISIS. Prime Minister Boris Johnson faced another setback in the UK as several key aides resigned.

The Bank of England announced this week that it would increase its policy rate by 25 basis points. Given the current inflationary environment, the European Central Bank made no change to its policy rate but left the door open for a 2022 hike. Federal Reserve rhetoric throughout the week backed off the notion of a 50 basis point hike to the Fed’s policy rate in March. However, the strong Employment Situation Report announced on Friday increased the odds of a 50 basis point rate hike in March to 38%. January Non-Farm Payrolls increased 467k, much more than the expected 180k. Also of note, the December and November payroll numbers were revised much higher. Similarly, Private Payrolls blew away estimates coming in at 444k and had upward revisions for the prior two months. The Unemployment Rate inched higher to 4% from the previous level of 3.9%. Average Hourly Earnings were higher than expected at 0.7%, the street had been looking for 0.5%. Earnings are up 5.7% on a year-over-year basis. ISM Manufacturing was lower than the prior reading but still showed expansion at 57.6%. Notably, the prices component increased to 76.1% from 68.2%, again showing the rise of input costs. ISM Non-Manufacturing declined from the prior reading but is still in expansionary mode at 59.9%. Initial Claims and Continuing Claims moved lower this week as Covid infections declined.

The S&P 500 gained 1.55%, the Dow rose 1.05%, the NASDAQ increased 2.4%, and the Russell 2000 tacked on 1.7%. The US Treasury curve moved higher as the 2-year, 10-year, and 30-year yields rose by 15 basis points on the week. Not surprisingly, the bulk of the move came on Friday on the back of the much stronger employment report. The 2-year yield stands at 1.32%, while the 10-year yield closed at 1.93%. Oil prices increased by another 6% or $5.56 and closed north of $90 a barrel. Gold prices were up 1.3%, closing at 1808.10 an Oz.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 1/28/2022

-Darren Leavitt, CFA

A hectic week on Wall Street featured the Federal Open Market Committee meeting statement, more fourth-quarter corporate earnings reports, and increased geopolitical tensions with Russia.

The Federal Reserve appeared to be more hawkish at the end of their two days of meetings. Chairman Powell acknowledged that changes to the policy rate were needed to address the current inflation environment but admitted the path of the policy was uncertain given the current state of the economy. The market has now priced in five rate hikes in 2022, with a very high probability that the first hike will come in March. The Fed now expects its asset purchasing program to end at the beginning of March. Interestingly, the Chairman now expects the supply chain to normalize toward the end of 2022 versus his prior expectation of midyear.

109 S&P 500 components are expected to release their Q4 results in the upcoming week. 33% of the S&P 500 constituents have reported fourth-quarter earnings. According to Factset, 77% of the companies have reported better than expected earnings, and these results have been on average 4% better than the consensus estimates. 75% of these companies have also reported better than expected revenues that were on average 2.5% higher than the consensus estimate. Currently, the market is expecting 5.6% EPS growth in Q1 and 4.3% in Q2.   The 12 month forward P/E is now 19.2x down from December’s level of 21.3x due to the price decline in the index.

Tensions continued to mount as Russia appeared more likely to invade Ukraine. Russia has continued to send troops and military equipment to the Ukrainian border as diplomatic talks have continued to yield very little. President Biden had a call with the Ukrainian President mid-week where he said an invasion was imminent. The US and other NATO members have now started to send weapons to Ukraine in response. Tensions between China and the US related to Taiwan also flared up last week as US diplomats met with Taiwanese officials in South America. If all this was not enough, North Korea added to tensions after another test launch of missiles.

The S&P 500 gained 0.8% for the week, the Dow rose1.3%, the NASDAQ was flat, and the Russell 2000 lost 1%. The S&P 500 continued to find support at its 200-day moving average. The yield curve continued to flatten. The 2-year note yield increased eighteen basis points to 1.17%, while the 10-year yield increased by three basis points to close at 1.78%—the spread between the 2’s and 10’s compressed to just 61 basis points. Oil continued to move higher and almost hit $89 a barrel before moving off those highs. WTI prices gained 1.8% or $1.55 to close at $86.74 a barrel. Gold prices fell 2.5% or $47.10 to $1784.60 an Oz.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 1/21/2022

-Darren Leavitt, CFA

It was another brutal week for investors as global markets continued to sell-off. Concerns regarding the path of global central bank policy and a lackluster start of fourth-quarter earnings weighed on sentiment. Furthermore, it appears more likely that Russia will invade Ukraine as talks between the US and other NATO allies have yielded very little assurances. Comments made by President Biden on Wednesday seemed to concede an inevitable Russian invasion that induced wide criticism. At the same press conference, Biden also acknowledged that his “Build Back Better” plan was dead in the water but hopeful that some of the underlying initiatives could move forward.   The market’s technicals added fuel to the sell-off as the S&P 500 fell below its 200-day moving average. The economic calendar was light and highlighted by housing data.

The S&P 500 lost 5.7% for the week, its worst week since March of 2020. The Dow fell 4.6%, the NASDAQ was off 7.6%, and entered correction territory for the year. The Russell 2000 shed 8.1%. US Treasuries continued to sell-off at the beginning of the week but found a bid late in the week as investors sought safe-haven assets. The 2-year note touched 1.08% but closed the week up three basis points to 0.99%. The 10-year yield fell two basis points to 1.75%. Oil continued higher on geopolitical tensions. WTI increased $1.29 or 1.5% to close at $85.16 a barrel.  Gold prices increased $15.5 to $1831.70 an Oz.

The debate regarding global central bank policy paths continued to weigh on investors. The Federal Reserve meets next week and will announce its policy statement on Wednesday. Will the Fed appear more hawkish and push up its timeline to end QE and start rate hikes sooner than March, or will the Fed lean towards their prior policy statement, which has QE ending in March and the door open for a change in policy rates after that? Currently, there is an 84% probability the Fed will increase its policy rate by 25 basis points in March. As we have mentioned before, the divergence of Global Monetary policy will be an important factor to consider this year. China cut two prime rates this week and announced that it was likely that they would lower their reserve requirements, adding stimulus to their economy.

This week, fourth-quarter earnings provided very little help, even though the results were not that bad. Margin compression will continue to be a significant theme for earnings season. We have seen increased wages at many banks, increased content costs at streaming services companies like Netflix, and increased raw material costs at manufacturers. Stay tuned as earnings may be what helps turn the tide in the market.

It appears increasingly more likely that Russia will invade Ukraine. Talks between NATO nations and Russia have yielded very little, although they continue to leave the door open for further dialogue. The US has reportedly started to send weapons to the Ukrainian government to help against an invasion. Still, comments made by President Biden seemed to concede that a Russian move would only result in stiff economic sanctions. A conflict would have profound implications for the energy market, specifically on crude oil and natural gas. Interestingly, Russia banned the use of Cryptocurrencies this week, perhaps to thwart capital outflows prompted by the potential for international sanctions. Bitcoin lost over 17% this week as investors fled risk assets.

Technically, the market could not regain its 50-day moving average last week, which left the door open for more selling. Last year the market seemed bulletproof when testing the 50-day but buy the dip buyers have been absent in January. The S&P 500 closed just under its 200-day moving average for the first time since March 2020. Growth stocks have taken the brunt of this sell-off but appear well oversold here. If the selloff continues, it will need to bring in other parts of the market, which was apparent in last week’s sell-off. It is also worth noting that safe-haven assets got a bit of a bid last week, which was absent in the first two weeks of January.

Housing data highlighted economic data for the week. Housing Starts came in line at 1702k units while building permits exceeded expectations at 1873K. Existing home sales were a bit lite coming in at 6.18M versus estimates of 6.5M. Initial claims and Continuing claims regressed this week, most likely due to increased coronavirus infections. Initial claims increased to 286k while Continuing Claims increased to 1.635M. EIA inventories of Crude showed a build of 515k barrels and Nat Gas inventories showed a draw of 206 bcf.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 1/14/2022

-Darren Leavitt, CFA

US Financial markets fell across the board as investors got a full dose of Federal Reserve rhetoric and were underwhelmed by the start of fourth-quarter earnings. The S&P 500 was also unable to bounce off its 50-day moving average, leaving the door open for further declines.

It was a busy week in Washington where Fed Reserve Chairman Jerome Powell and Vice-Chair nominee Lael Brainard underwent their confirmation hearings. Both nominees sounded relatively hawkish and reinforced the Fed had the tools to combat inflation. J Powell again telegraphed that the Fed’s asset purchase program would likely conclude at the end of March and that increases to the policy rate would likely follow. Interestingly, he pushed back the timeline of the Fed’s balance sheet normalization process to later in the year, which differed from the FOMC December minutes released last week. The Federal Reserve’s governor vacancies also gained headlines. President Biden announced that he would nominate Sarah Bloom Raskin to be Fed vice-Chair of Supervision. The President also nominated Lisa Cook and Phillip Jefferson to become Fed Governors.

Investors were disappointed by the start of the fourth-quarter earnings season as many of the financials failed to impress. JP Morgan, Citibank, and Blackrock announced mixed results and fell hard in trade. Wells Fargo reported better than expected earnings and trade higher after their conference call. The financial sector had solid returns last year and has started 2022 on solid footing as higher interest rates are seen as beneficial to their business models.

The S&P 500’s inability to recover and gain off its 50-day moving average (4681) has, to some, left the door open for further declines curbing investors’ appetite to buy the recent dip. Rotation out of growth-oriented issues with high valuations continued as investors favored cyclical issues. The energy sector continues to be bought and gained 5.2% on the week. Miners and the broader commodity complex also showed nice gains.

The S&P 500 lost 0.3% while the Dow gave back 0.9%, the NASDAQ shed 0.3%, and the Russell 2000 fell 0.8%. The US Treasury curve flattened over the week as the policy rate-sensitive 2-year note yield increased by nine basis points to close at 0.97%. The 10-year yield was unchanged on the week at 1.77%. Gold prices rose 1.4% or $26.80 to close at $1816.2 an Oz. Oil price increased 6.3% or $4.95 to $83.87 a barrel. Copper prices increased slightly to 4.42 a Lb.

A jam-packed economic calendar was highlighted by the Consumer Price Index (CPI) and Producer Price Index (PPI). Headline CPI grew at 0.5% in line with estimates and was up 7% on a year-over-year basis, the sharpest 12-month increase since 1982. Core CPI that excludes food and energy came in at 0.6%, slightly higher than the consensus estimate of 0.5%. The Core reading was 5.5% higher year-over-year, the largest increase since 1991. Headline PPI increased 0.2%, well short of the 0.4% expected, while Core PPI came in line at 0.5%. Interestingly, in both inflation reads, dampened oil prices at the beginning of December strongly influenced the readings. Oil prices have subsequently advanced markedly, which could lead to higher readings for January. The preliminary reading of the University of Michigan’s Consumer Sentiment was 68.8, down from December’s final reading of 70.6, most likely due to increased inflation expectations. Retail Sales missed the mark coming in at -1.9%, the street had been looking for a gain of 0.2%. On the labor front, Continuing Claims fell to 1.559 million another pre-pandemic low while Continuing Claims were higher than expected at 230k.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 1/7/2022

-Darren Leavitt, CFA

US financial markets fell in the first week of 2022 after the S&P 500 hit an all-time high on Monday. The release of the December Federal Open Market Committee minutes revealed a much more hawkish Fed. It caused concerns regarding the path of interest rates, which hammered growth stocks and induced a familiar rotation into cyclical issues. Suggestions that the Fed would start reducing its balance sheet sooner and faster than the previous period of normalization caught investors by surprise and sent US Treasury yields materially higher. Economic data released for the week only helped bolster the argument for higher rates. Fed Funds futures now suggest a 75% probability that the Fed will increase rates by 25 basis points in their March meeting just as their asset purchase program is scheduled to end. A report out of Bank America conveyed the Fed would likely raise rates by 25 basis points in March and subsequently raise rates by the same amount over the next eight quarters.

Interestingly, the trade out of growth-oriented issues and into cyclicals comes as new Coronavirus infections in the US topped 1 million in a single day. Some estimates suggest that 80% of the US population will have contracted the Omicron variant by the end of February. The rapid rate of infections has inhibited workers from coming back to work, and in Germany and Japan, more lockdown measures have been instituted.

The S&P 500 lost 1.9% for the week. The Dow fell0.3%, the NASDAQ lead declines with a 4.5% loss, the Russell 2000 gave back 2.9%. The US yield curve moved significantly over the week. Of note, the S&P 500 closed just above its 50-day moving average, which has been a solid area of support. A significant breach below this level may bring a more powerful downward market move. The 2-year yield increased fourteen basis points to 0.87%, while the 10-year yield increased a whopping twenty-six basis points to close at 1.77%. The 10-year had touched 1.80%, close to the high yield set last year, and opened the door for 2%. Oil prices moved higher over the week, closing up over 5% to $78.94 a barrel. Gold prices moved in the opposite direction, falling 2% or $38.7 to $1789.4 an Oz. Bitcoin fell over 10% closing down $5,123 to $41,918.

Economic data was headlined by December ISM Manufacturing and the December Employment Situation Report. ISM Manufacturing came in slightly weaker than expected at 58.7%; the street was looking for 60.3%- however, the print still points to expansion. Underneath the number, there were signs that price pressure was improving on an improved supply chain. The Price index came in at 68.2%, down from the prior reading of 82.4%. The Employment situation report showed 199k nonfarm payrolls were created in December; economists expected 475k. Private payrolls increased by 211k versus the consensus estimate of 420k. The Unemployment rate fell to 3.9% from the prior level of 4.2%. Average Hourly earnings were higher by 0.4% above the forecast of 0.3%, and the previous reading was increased to 0.4% from 0.3%. The Average Workweek came in at 34.7, in line with the prior report.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 12/31/2021

-Darren Leavitt, CFA

Financial market action in the final week of the year was relatively muted.  A mild Santa Clause rally did ensue as seasonal factors such as rebalancing and window dressing kicked in.  Investors got a full dose of coronavirus news as the Omicron variant continued to spread rapidly.  The CDC announced that asymptomatic people could reduce isolation time to 5 days from 10 days and is also expected to include the cohort of 14-15-year-olds for eligibility to receive a booster shot.  Still, many flights were canceled due to the virus, and New Year’s festivities were curtailed, giving some pause to the reopening trade.

The S&P 500 gained 0.9% for the week and closed the year 26.9% higher.  The Dow added 1.1%, the NASDAQ declined by 0.1%, and the Russell 2000 rose by 0.2%.  Trading in the US Treasury market was quiet, the yield on the 2-year note increased four basis points to 0.73%, and the 10-year yield increased by two basis points to 1.51%.  Oil prices increased by $1.53 or ~2%, with WTI closing at $75.15 a barrel.  EIA oil inventories showed a larger draw than expected at 3.58 million barrels.  Gold prices increased by $16.2 to close at $1828.10 an Oz.  Copper prices increased by 1.5% or $.0694 to $4.463 a Lb.  Bitcoin tumbled 8% on the week and closed the year at $47,052.

Economic data was positively skewed for the week.  In the labor market, Initial Claims and Continuing Claims trended lower to 198K and 1.716m, respectively.  The S&P Case-Shiller index increased 18.4% in October, while Pending Home Sales decreased 2.2% in November.  Finally, the Chicago PMI rose to 63.1, better than the consensus estimate of 61.5.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 12/23/2021

-Darren Leavitt, CFA

The holiday-shortened week produced another all-time high for the S&P 500 as investors looked past the ramifications of the Omicron variant and bought last week’s market dip.  Technically, the S&P 500 had fallen below its 50-day moving average, which over the last year has been a level where investors have been rewarded for moving back into stocks.  News related to Omicron dominated the headlines throughout the week, with massive spikes of reported infections but appeared to come with less severe illness.  The CDC said that the Omicron variant is now the dominant strain of the Coronavirus and represented 73% of new infections in the US. President Biden announced that he would utilize FEMA to support multiple fronts to areas most affected by the virus.  Additionally, he announced that the government would supply half a billion at-home rapid tests this winter and add more than 10,000 new vaccination sites across the country.  Investor sentiment was further bolstered when the President announced no new lockdown measures.  News from last weekend that Senator Joe Manchin from West Virginia would not support the Build Back Better bill hit certain parts of the market, but news that the door might still be open for further negotiations helped push stocks higher.  Economic data for the week was positively skewed.

The S&P 500 gained 2.28% for the week while the Dow added 1.65%, the NASDAQ increased 3.19%, and the Russell 2000 rose 4.75%.  The US Treasury curve steepened a bit as the yield on the 2-year note increased five basis points to 0.69%, and the 10-year yield rose by nine basis points to close at 1.49%.  Oil prices increased 3.7%, or $2.69, to $73.62 a barrel.  Gold prices increased by $6.9 to close at $1811.90 an Oz.  Copper prices were also higher by 2.3%, closing at $4.394 a Lb.  Risk-on sentiment bleed into the Crypto markets, with Bitcoin gaining 8.8% or $4,144.4 to $50,996.40.

Economic data announced over the week was encouraging for the most part.  On the labor front, Initial Claims came in at 205k, which was in line with estimates.  Continuing claims fell by 8k to 1.859 million.  The third estimate of Q3 GDP came in at 2.3% better than the consensus estimate of 2.1%.  The GDP Deflator, which measures prices for all goods and services that encompass GDP, showed an increase of 6%, slightly higher than the expected 5.9%.  Personal Income rose 0.4% over the prior month versus an estimated 0.5%.  Personal Spending came in line at 0.6%.  Headline PCE came in at 0.6% and grew 5.7% year-over-year, higher than 5.1% in the prior month.  Core PCE, which excludes food and energy, came in at 0.5% versus an estimate of 0.4% and rose 4.7% over the last year.  New Home sales were 12% higher month-over-month to a seasonally adjusted figure of 744 units which was less than the expected 770k units.  The final reading of the University of Michigan’s Consumer Sentiment for December came in at 70.6 versus 70.4 and was better than the November reading of 67.4.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

-Darren Leavitt, CFA

US equity markets fell across the board as global central banks moved to decrease their quantitative easing initiatives.  In the US, the Federal Reserve announced that it would double the pace of its taper to $30 billion a month and conclude its asset purchase program by the end of March 2022.  The Fed kept its policy rate in place but revealed their dot plot that forecasts three rate increases in 2022.  The Bank of England surprised the market with a 15 basis point increase in their policy rate.  The European Central Bank laid out its plan to taper, but its asset purchasing plan will remain in place until at least 2023.  The Bank of Japan, as expected, did nothing to its policy rate but did announce a plan to reduce its amount of “emergency” purchases.  The differences in global central bank policy will be a significant theme to watch in the coming year and will undoubtedly influence multiple asset classes.

Concerns over the economic recovery due to the rapid spread of the Omicron variant continued to impact markets.  A South African study indicated that Omicron spread 70% faster than the Delta variant, but the illness was less severe, and hospitalization rates were much lower.  There was also news that the Chinese developed Sinovac vaccine appeared to be ineffective against the Omicron variant. The CDC announced that it preferred the Pfizer and Moderna vaccine over Johnson and Johnson’s vaccine because of higher efficacy rates and fewer adverse effects.  The corporate world also took notice of the variant, with several companies delaying the timing of employees coming back to the office.  Economic data released over the week was mixed.

The S&P 500 lost 1.9% as investors took profits in Mega Cap growth stocks.  The Dow shed 1.7%, the NASDAQ led declines with a loss of 3.7%, and the Russell 2000 gave up 1.7%.  Interestingly, yields fell across the US yield curve in a flattening trade.  The 2-year note yield fell two basis points to 0.64%, while the 10-year yield fell nine basis points to close at 1.40%.  The lower yield moves came on the heels of a less hawkish tone from Fed Chairman Jerome Powell.  Oil prices fell 1% to close at $70.93 despite a larger than expected draw on inventories and a very bullish call from Goldman Sachs.  Gold prices increased $20.20 or 1.1%, closing at $1805 an Oz.  Cryptocurrencies continued to be volatile- Bitcoin fell by $725 to close at $46,852.

Economic data was highlighted by the Producer Price Index, which came across higher on both the headline and Core.  Headline PPI came in at 0.8% versus expectations of 0.5% and was up 9.6% year-over-year.  The Core PPI came in at 0.7% versus the consensus estimate of 0.4% and was up 7.7% year-over-year.  Retail Sales for November missed the mark coming in at just 0.3%; the street was looking for 1%.  The miss in sales may be due to demand being pulled forward due to perceived supply constraints.  November housing data was better than expected.  Housing Starts came in at 1679K versus the estimate of 1560K, and Building Permits came in at 1712k versus 1620K.  Initial Claims move up a bit in the prior week to 206K economists were looking for 192k.  Continuing Claims improved, coming in at 1.845 million, down from the last week’s reading of 1.999 million.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 12/10/2021

-Darren Leavitt, CFA

US equity markets rebounded nicely over the week as fears of the Omicron variant subsided.  It appears the variant, while more contagious, is less severe.  Sentiment was also bolstered by Pfizer’s preliminary findings that their vaccine regiment neutralized the variant and curbed severe illness.  Markets also took some solace in progress made by Congress regarding the debt ceiling that is set to expire on December 15th.  Economic data was headlined by another hot CPI that showed the highest year-over-year increase since 1982.  That said, markets took the print in stride as the increase was widely expected.

The S&P 500 gained 3.8% to set another all-time high, the Dow added 4%, the NASDAQ increased 3.6%, and the Russell 2000 tacked on 2.4%.  In the Treasury market, the front of the end continued to sell-off as traders expect the Fed to announce their plans to accelerate the pace of the taper.  The Federal Open Market Committee (FOMC) will provide its most recent views on the economy and its policy this coming Wednesday.  The 2-year yield increased eight basis points to close at 0.66%.  The 10-year bond yield rose 15 basis points to 1.49%, essentially giving back all the gains made in the prior week.  Oil prices increased 8.5% or $5.65 to close at $71.70 a barrel.  EIA crude oil inventories showed a slight draw for the week.  Gold prices were essentially unchanged for the week closing at $1784.8 an Oz.

Inflation data dominated last week’s economic data.  CPI increased 0.8% over the previous month, higher than the consensus estimate of 0.6%.  On a year-over-year basis, consumer prices rose 6.8%.  Core CPI, which excludes food and energy, came in at 0.5%, in line with expectations.  The Core number increased 4.9% over the prior year.  Initial claims fell to 184k versus the estimate of 223k.  Continuing claims regressed a bit coming in at 1.992 million.  Preliminary University of Michigan’s Consumer Sentiment rebounded to 70.4 from November’s final reading of 67.4.  Next week, we will get a read on: Producer Prices, Retail Sales, and various housing data.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 12/3/2021

-Darren Leavitt, CFA

Markets continued to be volatile in the first week of December.  Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen struck a more hawkish tone during their semiannual testimony in front of Congress. Powell’s suggestion that the word transitory should be dropped when discussing the current inflationary environment rattled the bond market, and his suggestion to hasten the pace of the QE taper sent a message to the market that the Fed may be on the cusp of a policy mistake. Rates on the front of the curve were noticeably higher, while the back of the curve rallied on the notion of a policy mistake.  Growth-oriented issues took the brunt of the market’s decline as valuations metrics were questioned. If Fed speak was not enough, a new variant of Covid dubbed Omicron emerged as a prominent concern, varying opinions emerged about the new variant’s effects on the economy, public policy, and fostered debate around the future of Covid mutations.  Politicians were able to pass a stopgap bill to keep the government funded but seemed further apart on Biden’s “build back better” initiative.  However, the agreement to fund the government did not address the pending debt ceiling issue, which is set to expire on December 15th.  Economic news showed progress in the services part of the economy but also delivered a disappointing Employment Situation Report that may push the Fed to rethink its current policy path.

For the week, the S&P 500 declined 1.2%, the Dow lost 0.9%, the NASDAQ fell 2.6%, and the Russell 2000 lagged again with a loss of 3.9%.   High valuation sectors were called to the mat on a more hawkish Fed- higher rates call into question higher valuations.  Interestingly the bond market went the other way suggesting the Fed’s most recent assessment is wrong.  The 2-year note yield, which is more influenced by Fed policy, increased by eight basis points to 0.58% while the 10-year yield fell eleven basis points to 1.34%- the flattening move was even more pronounced in the 30-year yield that fell sixteen basis points to 1.67%.  Gold was little changed on the week, falling fractionally to $1785.70 an Oz.  Oil continued its recent descent with a 2.6% decline.  OPEC +’s meeting yielded no change to the existing policy that is set to increase supply by 400k barrels in January of 2022.

Economic data was mixed.  The Employment Situation Report came in below expectations and cast some doubt on the recent rhetoric out of the Fed.  Non-Farm Payrolls came in at 210k, well below the forecast of 540k.  Private Payrolls also missed estimates coming in at 230k versus the consensus estimate of 500k. Preliminary Consumer Sentiment out of the University of Michigan fell to 109.55 from 111.  On the other hand, ISM services picked up and were much better than expected.  Services make up over 70% of our economy, and the pickup is an excellent sign.  Interestingly, we also saw a pickup in services in global ISM data.  High-frequency labor data showed better than expected Initial claims while again showing Continuing Claims trend to lower levels.  Next week all eyes will be on the CPI (Consumer Price Index) data along with Consumer Sentiment data.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 11/26/2021

-Darren Leavitt, CFA

The holiday-shortened week turned into a wild ride for investors as a new variant of Covid upended the reflation trade, which sent volatility through the roof.  The new variant called Omicron was first discovered in South Africa. Scientists are still assessing the variant, but reports that it may be more contagious than the Delta variant and concerns that our current vaccine arsenal may be ineffective prompted the notion of more national lockdown measures. Recall Austria recently instituted a nationwide lockdown, and it now appears more likely that other European nations may take similar measures. Early in the week, the S&P 500 was able to forge another record high.  President Biden’s nomination of Jerome Powell as Federal Reserve Chairman and Lael Brainard as Vice-Chair seemed to soothe markets.  An announcement from the US and four other countries to tap their Strategic Petroleum Reserves was also taken in stride; oil traded up on the news- perhaps on expectations that OPEC + might curtail their production next year.

The S&P 500 lost 2.2% for the week, the Dow gave back 2%, the NASDAQ fell 3.5%, and the Russell 2000 sank 4.1%.  US Treasuries trade was extremely volatile.  On Friday, the 2-year note yield fell fourteen basis points and ended the week one basis point lower at 0.51%.  Similarly, the 10-year note, which touched 1.70% early in the week, closed down six basis points at 1.49%. Notably, the probability for a Fed Funds rate hike in June of 2022 decreased from over 80% to just under 40%.  Oil prices tumbled on Friday, losing 13%, and were down 10% for the week.  WTI closed at $68.17 a barrel.  Gold prices fell 3.2% or $59.5 to close at $1792.30 an Oz.

On Wednesday, an economic data dump was highlighted by a Continuing Claims number that came in at 199k, well below the estimate of 260k.  Continuing claims came in at 2.049 million.  For October, Personal Income and Spending were better than expected, coming in at 0.5% and 1.3%, repetitively. The final University of Michigan Consumer Sentiment for November came in at 67.4 versus the consensus estimate of 66.8.  Finally, PCE Prices came in line with expectations on both the headline and Core measure.  However, the overall measure showed a 5% year-over-year increase higher than September’s year-over-year increase of 4.4%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 11/19/2021

-Darren Leavitt, CFA

US financial markets ended the week mixed.  Mega-cap Growth stocks pushed the S&P 500 and Nasdaq to another set of all-time highs while cyclical issues and small caps lagged, hindering the Dow and Russell 2000’s performance.  In Washington, the 1.2 trillion dollar infrastructure bill was signed into law. The 1.75 trillion dollar “Build Back Better” plan passed the lower House despite the CBO’s finding that the program would render an increased deficit over the next decade.  The bill now goes to the Senate, which is likely to amend it and send it back to the House.  Also, in Washington, news that a decision on who will be nominated to be Chairman of the Federal Reserve is imminent came from several sources. It appeared to be either current Fed Chair Jerome Powell or Fed Governor Lael Brainard.  The decision comes with multiple vacancies within the Federal Reserve Board of Governors and will undoubtedly impact markets.

In Europe, Austria announced that it would institute a nationwide lockdown due to a surge in Covid infections.  The announcement dampened investor sentiment and helped to curb the reflation trade.  Germany and the UK are also experiencing increased infection rates.  That said, Pfizer and Moderna both received FDA approval for the use of booster shots for adults 18 and older after six months of being fully vaccinated.  Other corporate highlights included NVidia’s stellar earnings report and forecasts that topped analysts’ expectations. The stock price increased nearly 10% on the week.  Walmart and Target both had better than expected earnings but showed margin compression, which sent shares lower.  Both retailers acknowledged that they did not pass on increased prices to the consumer, which cut into their margins.  On the economic front, data for the week was solid and headlined by a better-than-expected retail sales print.

The S&P 500 gained 0.3% for the week, the Dow fell 1.4%, the NASDAQ added 1.2%, and the Russell 2000 lost 2.8%.  The US Treasury curve flattened over the week, with the 2-year note yield decreasing by one basis point of 0.51%.  The 10-year bond yield fell four basis points to 1.54%.  Oil prices fell sharply on a weakened demand outlook and on news that China will tap its Strategic Petroleum Reserve (SPR) and had encouraged other countries to do the same.  WTI fell 6% or $4.72 to close at $76.11 a barrel.  Gold prices fell $16.9 to $1851.80 an Oz.

Retail Sales for October came in at 1.7% versus expectations of 1.5% and were better than the prior months reading of 0.8%.  Industrial production for October increased to 1.6% from a negative 1.3% in September and beat the expectation of 1%.  Housing Starts missed the mark by a tad coming in at 1520k versus the consensus estimate of 1576k, while Building Permits were a bit better at 1650k versus 1620k.  Initial Claims and Continuing Claims continued to trend in the right direction coming in at 268k and 2.080M, respectively.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 11/12/2021

-Darren Leavitt, CFA

US financial markets fell from record-high levels as increases in inflation continued to weigh on investor sentiment.  The tape was full of corporate news highlighted by the break-ups of General Electric and Johnson & Johnson, the record IPO of EV manufacturer Rivian, and the slide in Tesla’s share price induced by CEO Elon Musk’s sale of five billion dollars of stock.  Geopolitical news was also prevalent throughout the week.  In China, General Secretary Xi Jinping’s Historical Resolution was passed by the communist party, ensuring him a historic third term as General Secretary.  In Washington, President Biden touted the Bi-partisan passing of the Infrastructure Bill, which will be signed into law on Monday.  However, support for the Reconciliation Bill paused as the CBO announced that it would not have a score on the bill until after Thanksgiving.  In Eastern Europe, Russia continued to amass troops along the Ukrainian border while US warships sailed into the Black Sea.  Economic data for the week painted a more permanent picture of inflation which has continued to affect sentiment indicators.

The S&P 500 lost 0.3% for the week, the Dow fell by 0.6%, the NASDAQ gave back 0.7%, and the Russell 2000 shed 1%.  US Treasuries gave up all of their gains and more from the prior week.  Bond prices fall as yields rise. The 2-year note yield gained twelve basis points, closing at 0.52%. The 10-year yield increased by thirteen basis points to close at 1.58%. Interestingly, the 3-year and 5-year notes had even more profound moves and came as the Federal Reserve started to taper its asset purchase program.  Notably, the results of the US Treasury’s debt auctions for the week were awful.   A hot CPI print changed rate hike expectations, increasing the Fed’s probability of an initial move in June of 2022 from 50% to over 70%.  Additionally, the market has now priced in three rate hikes between now and the first half of 2023.  Gold prices increased by 2.8% or $51.8, closing at $1868.70 an Oz.  Oil prices fell on the week, losing $0.42 to $80.83 a barrel. Data showed a second consecutive build in crude inventories as OPEC + announced it expects oil demand to fall in 2022.  Copper prices increased 3% or $0.13 to $4.45 an Lb.  Bitcoin lost $4k on the week to close at $63,505.

Economic data for the week was a bit disappointing.  Investors were focused on inflation data.  The PPI or Producers Price Index was slightly better than expected, with the headline number coming in at 0.6% versus expectations of 0.7%. Core PPI, which excludes food and energy, was better, coming in at 0.4% versus 0.5%.  At the consumer level, CPI or Consumer Price Index missed the mark in a big way.  The range in expectations was very wide, but the results were higher than the largest estimate. Headline CPI came in at 0.9% on a month-over-month basis relative to the consensus estimate of 0.6%.  On a year-over-year basis, consumer prices increased 6.2%, the highest level since 1990.  Core CPI was also hotter than expected, coming in at 0.6% versus the consensus estimate of 0.4% and on a year-over-year basis grew 4.6%.  Rent increases were notable in the report and are a component that will likely continue to increase over the next couple of quarters.  Small Business Optimism fell short of expectation, as did the preliminary reading of the University of Michigan’s Consumer Sentiment, both of which pointed to inflation as the primary reason for the declines.  On the employment front, JOLTS job openings were slightly lower than the prior reading but still encouraging at 10.438 million.  Initial Jobless claims came in at 267k while Continuing Claims ticked up a bit to 2.16 million.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 11/5/2021

-Darren Leavitt, CFA

Wow-what a week on Wall Street!  US equity indices hit another set of all-time closing highs. Market sentiment was bolstered on several different fronts.  3rd quarter corporate earnings continued to impress, especially in the travel and leisure sector (Uber, Airbnb, Expedia, Bookiing.com), which fostered the “reopening” trade.  News that Pfizer’s antiviral pill reduced Covid hospitalizations and mortality by 95% was extremely encouraging.  In Washington, there was talk that the much-anticipated infrastructure bill had a real chance to pass in the house, and it did late Friday night and is now off to President Biden’s desk.  Global Central banks sent an accommodative tone to the street and tempered inflation expectations, which helped to send yields lower for the week.  Economic data for the week was highlighted by a robust Employment Situation report and expansionary manufacturing and services reports.

The S&P 500 gained 2% for the week while the Dow tacked on 1.4%, the NASDAQ increased by 3.1%, and the Russell 2000 crushed it with a 6.1% advance.  US Treasury yields fell on reassurances from Fed Chairman Powell that the Fed is in no hurry to raise rates and his expectation that inflationary forces will subside by the 2nd and 3rd quarter of 2022.  The 2-year note yield fell ten basis points to 0.39%, while the 10-year bond yield sank eleven basis points to close at 1.45%.  Oil prices fell $2.27 or 2.7% to $81.25 a barrel.  A build in crude inventories sent crude below $80 early in the week, but OPEC’s announcement that they would maintain its current production levels through December prompted a rebound in prices.  Gold prices increased by $33 or 1.8%, closing at $1816.9 an Oz. Copper prices were little changed on the week at $4.342 an Lb.

The economic data calendar was stacked and headlined by the October Employment Situation Report.  Non-Farm Payrolls came in better than expected at 531k, and the prior month’s reading was revised higher.  Private Payrolls were also better than expected, coming in at 604k.  The Unemployment rate fell to 4.6%, which was in line with the consensus estimate but lower than the prior reading of 4.8%.  Average hourly earnings increased 0.4% and were in line with expectations and down from September’s increase of 0.6%.  On a year-over-year basis, wages are up 4.9%.  Initial Jobless Claims fell to another post-pandemic low at 269k, while Continuing Claims fell to 2.105M.  ISM Manufacturing for October came in at 60.08, which was down from the prior reading of 61.1, while ISM Services came in at 66.7, which was better than the September reading of 61.9.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 10/29/2021

-Darren Leavitt, CFA

Wall Street faced a deluge of corporate earnings in the final week of October.  Generally, reports were better than expected but tempered by management concerns related to the current state of the global supply chain.  Tech earnings were mixed with positive market action from Microsoft and Google; Apple and Amazon shares fell in the wake of their announcements.  That said, the Mega cap growth issues led the market higher with new all-time highs forged by the NASDAQ and S&P 500.  In other corporate news, Tesla topped one trillion in market cap on news that rental car company Hertz has ordered 100,000 cars from the company.  Pfizer and BioNTech were granted emergency use authorization of their Covid-19 vaccine for children ages 5 through 11.  Facebook announced the company would change its name to Meta effective December 1st.  In Washington, President Biden announced the framework for a 1.75 trillion dollar reconciliation bill, but it appears progressives are still not entirely on board.  Economic data for the week continued to be mixed.

For the week, the S&P 500 gained 1.3%, the Dow rose 0.4%, the NASDAQ led with an advance of 2.7%, and the Russell 2000 inched higher by 0.3%.  The US Treasury yield curve continued to flatten as investors expect the Federal Reserve to increase rates sooner than expected.  The 2-year note yield rose two basis points to 0.49%, while the 10-year yield fell ten basis points to 1.56%.  Oil prices were little changed on the week, with WTI closing down $0.25 to 83.52 a barrel.  Gold prices fell by $12.9, closing at $1783.90 an Oz.

There was plenty of economic data to digest over the week.  Q3 GDP estimates fell short of the mark, coming in at 2% versus expectations of 2.4%.  Consumer Confidence came in better than expected at 113.8 versus the consensus estimate of 108.  In contrast, the final October reading of the University of Michigan’s Consumer Sentiment Index came in below the prior reading.  The two data sets showed people encouraged by the pullback in Covid 19 infections, higher wages, and increases in employment opportunities while being worried about inflation.  Initial Claims hit another post-pandemic low at 281k as continuing claims trended lower to 2.243 million.  Investors will hear from the Federal Reserve in the coming week and await a significant Employment Situation Report scheduled for release on Friday.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 10/22/2021

-Darren Leavitt, CFA

US financial markets rallied throughout most of the week, with the S&P 500 touching a new intraday high and the Dow closing at a new all-time high.  Corporate earnings dominated the headlines and were, for the most part, better than expected.  So far, 84% of the companies that have reported have produced better than expected results.  However, this week, several companies took down forward guidance related to supply chain constraints.  Proctor and Gamble highlighted the price increases of raw materials, which reduced their margins.  Intel had problems sourcing materials to build its Semiconductors.  Beyond Meat missed the mark and noted that the restaurant business has not fully recovered to pre-pandemic levels.  Snap Chat’s earnings were also a big disappointment.  The company took down guidance for the coming quarters based upon changes to Apple’s privacy policies that will likely impact their advertising efforts. The announcement took Facebook, and Google shares lower and affected the overall communications services sector.   On the other hand, American Express had a great quarter and highlighted some encouraging spending trends that took hold over the 3rd quarter.  Economic data for the week was mixed but remained encouraging on the labor front.

The S&P 500 gained 1.6% for the week, the Dow added 1.1%, the NASDAQ increased by 1.3%, and the Russell 2000 rose by 1.1%. Fears that the Federal Reserve would raise its policy rate sooner than expected hit the US Treasury market.  The 2-year note yield increased seven basis points for the week to close at 0.47%.  The 10-year yield increased eight basis points to 1.66%.  Fed Chairman Powell spoke on Friday and again acknowledged that the Fed would begin tapering its asset purchase program in the coming month and would likely eliminate the program by the middle of 2022.  The Fed Chair did say the Fed would be cautious with its policy rate and still expects that inflation will subside over the next several months as supply chains normalize.  Oil prices continued their ascent.  WTI prices increased by $1.51 or 1.8% on the week to close at $83.77 a barrel.  Gold prices increased by $28.2, closing at $1796.30 an Oz.

High-frequency labor data continued to trend in the right direction.  Initial Claims for the week came in at 290k better than the 303k that had been expected, and continuing claims fell to 2.481million from the prior week’s reading of 2.603 million.  Housing data was a bit of a disappointment and may reflect the higher input costs associated with building.  Housing starts came in at 1555K versus expectations of 1635k, and Building Permits came in at 1589k compared to the consensus estimate of 1690k.  Preliminary IHS Markit Manufacturing and Services showed that both sides of the economy continue to be expansionary. The Manufacturing data came in at 59.2 compared to the prior reading of 60.7, while Services came in at 58.2 better than the previous reading of 54.9.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 10/15/2021

-Darren Leavitt, CFA

US Financial markets rallied across the board on a solid start to the 3rd quarter corporate earnings season.  The Consumer Discretionary sector led gains with a 3.6% advance off of much better than expected Retail Sales data.  The Materials sector also had an excellent showing as supply chain logistic concerns remained and helped push commodity prices higher. Technically, the S&P 500 regained its 50-day moving average on Thursday and built upon that threshold on Friday.  Over the next few days, investors will continue to look at this level to see if it can be reestablished as an area of support.  Economic data for the week was, for the most part, better than expected, showing continued progress on the labor front.

For the week, the S&P 500 gained 1.8%, the Dow increased by 1.6%, the NASDAQ led gainers with an advance of 2.2%, and the Russell 2000 added 1.5%.  It was an interesting week in the US Treasury market that saw the yield curve flatten a bit.  The release of the most recent FOMC meeting notes suggested that the Federal Reserve will curtail their asset purchase program by 15 billion in the next couple of months with plans to eliminate the program by the middle of 2022.   The news hit the front end of the curve, where the 2-year note yield increased by nine basis points to close at 0.4%.  Interestingly, the back end of the curve was bid up.  The 10-year bond yield decreased by three basis points to 1.58%, and the 30-year bond yield fell eleven basis points to close at 2.05%.  Oil prices continued to rally, with WTI gaining $2.86 or 3.67% to close at $82.26 a barrel.  Gold prices increased by $10.7 to $1768.10 an Oz.  Notably, Copper prices increased by 10% or $0.455 to $4.731 a Lb.

Financials kicked off 3rd quarter earnings this week with impressive reports.  Most banks beat on the top and bottom lines and found investment banking and Sales and Trading sources of strength in the quarter.  Commentary out of the executive suite seemed to be cautiously optimistic.  On the one hand, a rich pipeline in IPO’s coupled with more M&A should continue to be a tailwind for investment banking.  On the other hand, CEOs acknowledged that we could be in for a more persistent inflationary environment.  Investors also saw solid results out of United Healthcare, Walgreens, and Taiwan Semiconductor.  Delta Airlines announced a nice quarter but warned of the impact of higher fuel prices on their coming quarters. Apple also made headlines when it announced it would reduce the production of the iPhone 13 because of supply chain constraints.

Economic news for the week was generally positive.  Retail Sales blew away estimates on both the headline and core numbers.  The headline number came in at 0.7 versus expectations of -0.3, while the core number that excludes autos and energy came in at 0.8 versus the estimate of 0.4.  On the labor front, Initial claims came in at 293k, the lowest level since the pandemic started, and Continuing Claims also trended lower to 2.593M.  Inflation data was better than expected at both the consumer and producer levels, but year-over-year increases still cause concern.  CPI came in at 0.4 versus expectations of 0.3 whole the core number came in at 0.2 versus 0.3.  A year-over-year increase of 5.4% and 4%, respectively.  PPI came in at 0.5 versus expectations of 0.6, while the core number came in at 0.2 versus 0.5.  Finally, The University of Michigan’s preliminary reading of Consumer Sentiment for October came in at 71.4, down from the final September reading of 72.8.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 10/15/2021

-Darren Leavitt, CFA

US Financial markets rallied across the board on a solid start to the 3rd quarter corporate earnings season.  The Consumer Discretionary sector led gains with a 3.6% advance off of much better than expected Retail Sales data.  The Materials sector also had an excellent showing as supply chain logistic concerns remained and helped push commodity prices higher. Technically, the S&P 500 regained its 50-day moving average on Thursday and built upon that threshold on Friday.  Over the next few days, investors will continue to look at this level to see if it can be reestablished as an area of support.  Economic data for the week was, for the most part, better than expected, showing continued progress on the labor front.

For the week, the S&P 500 gained 1.8%, the Dow increased by 1.6%, the NASDAQ led gainers with an advance of 2.2%, and the Russell 2000 added 1.5%.  It was an interesting week in the US Treasury market that saw the yield curve flatten a bit.  The release of the most recent FOMC meeting notes suggested that the Federal Reserve will curtail their asset purchase program by 15 billion in the next couple of months with plans to eliminate the program by the middle of 2022.   The news hit the front end of the curve, where the 2-year note yield increased by nine basis points to close at 0.4%.  Interestingly, the back end of the curve was bid up.  The 10-year bond yield decreased by three basis points to 1.58%, and the 30-year bond yield fell eleven basis points to close at 2.05%.  Oil prices continued to rally, with WTI gaining $2.86 or 3.67% to close at $82.26 a barrel.  Gold prices increased by $10.7 to $1768.10 an Oz.  Notably, Copper prices increased by 10% or $0.455 to $4.731 a Lb.

Financials kicked off 3rd quarter earnings this week with impressive reports.  Most banks beat on the top and bottom lines and found investment banking and Sales and Trading sources of strength in the quarter.  Commentary out of the executive suite seemed to be cautiously optimistic.  On the one hand, a rich pipeline in IPO’s coupled with more M&A should continue to be a tailwind for investment banking.  On the other hand, CEOs acknowledged that we could be in for a more persistent inflationary environment.  Investors also saw solid results out of United Healthcare, Walgreens, and Taiwan Semiconductor.  Delta Airlines announced a nice quarter but warned of the impact of higher fuel prices on their coming quarters. Apple also made headlines when it announced it would reduce the production of the iPhone 13 because of supply chain constraints.

Economic news for the week was generally positive.  Retail Sales blew away estimates on both the headline and core numbers.  The headline number came in at 0.7 versus expectations of -0.3, while the core number that excludes autos and energy came in at 0.8 versus the estimate of 0.4.  On the labor front, Initial claims came in at 293k, the lowest level since the pandemic started, and Continuing Claims also trended lower to 2.593M.  Inflation data was better than expected at both the consumer and producer levels, but year-over-year increases still cause concern.  CPI came in at 0.4 versus expectations of 0.3 whole the core number came in at 0.2 versus 0.3.  A year-over-year increase of 5.4% and 4%, respectively.  PPI came in at 0.5 versus expectations of 0.6, while the core number came in at 0.2 versus 0.5.  Finally, The University of Michigan’s preliminary reading of Consumer Sentiment for October came in at 71.4, down from the final September reading of 72.8.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 10/8/2021

-Darren Leavitt, CFA

Markets started the week lower but were able to recover losses and make slight gains by the end of the week.  Concerns regarding the debt ceiling, the static state of the infrastructure bill, raw materials shortages, inflation, and kinks in the global supply chain remained with investors.  In the middle of the week, investors were encouraged by the Senate’s ability to extend the debt ceiling by $480 billion until December 3rd, which opened the door for “buy the dip investors” to return to the market. However, a disappointing September Employment Situation Report on Friday once again dampened investor sentiment. Technically, the 50-day moving average of the S&P 500 now acts as resistance; this level will continued to be watched to see if the market can regain It, if not, the market will continue to vulnerable.

The S&P 500 gained 0.8% for the week, the Dow rose 1.2%, the Nasdaq inched higher by 0.1%, and the Russell 2000 gave back 0.4%.  Increased raw materials prices and supply play chain issues increased inflation expectations and steepened the US yield curve.  The 2-year note yield increased by five basis points to close at 0.31%.  The 10-year bond yield rose 15 basis points to 1.61%.  One of the main culprits of increased inflation expectations is the price of oil, which traded north of $80 a barrel during the week.  WTI prices increased by $3.55 or 4.6%, closing at $79.40 a barrel.  Gold prices were little changed, closing at $1757.40 an Oz.

The move in oil and the increase in yields promoted the energy sector and financials, which were up 5% and 2.3%, respectively.  On the other hand, increased rates caused real estate to sell off 0.8% and caused some headwinds for large-cap growth names as lofty valuations were questioned.

The September Employment situation report headlined economic data for the week.  The Non-Farm Payrolls number was disappointing, coming in at 194k versus expectations of 420K.  The miss allowed some to question the timeline of the Federal Reserve’s asset purchase programs taper.  Private payrolls also missed the mark coming in at 317k versus the consensus estimate of 400k.  The Unemployment rate came in at 4.8%, lower than August’s rate of 5.2%.  Finally, Average hourly earnings came in a bit hot at up 0.6% the street was looking for 0.4%.  The increase in wages also caused concern on the inflation front.  ISM Non-Manufacturing came in better than expected with a 61.9% print.  Initial claims and Continuing Claims also showed improvement coming in at 326k and 2,714 million, respectively.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 10/1/2021

-Darren Leavitt, CFA

Financial markets took a step back in the final week of the third quarter.  Increased inflation expectations pushed US Treasury yields higher, which induced valuation concerns on large-cap growth stocks. Rising energy costs were evident throughout the week and supported by supply concerns in the UK and China. Questions surrounding the infrastructure bill persisted while politicians found a resolution to fund the government through December 3rd.   Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen were in front of the Senate Banking Committee. Yellen reiterated that the debt ceiling would be exhausted by October 18th, and politicians needed to find a solution.  J Powell testified that inflation would likely be elevated for a while but was comfortable having it run above the Fed’s soft mandate of 2%.  Of note, Dallas Federal Reserve President Kaplan and Boston Federal Reserve President Rosengren tendered their resignation.

On the corporate news front, pharmaceutical company Merck announced that their oral antiviral Covid pill reduced hospitalizations and death by 50% and will seek emergency use authorization from the FDA.  Economic data for the week was mixed.

The S&P 500 lost 2.2% for the week, the Dow gave back 1.4%, the NASDAQ led declines with a 3.2% loss, and the Russell 2000 shed 0.3%.  The US Treasury curve steepened in what was another week of very volatile trade.  The 2-year note yield fell one basis point to 0.26%, while the 10-year bond yield increased one basis point to 1.47%.  However, intra-week, the 10-year yield touched 1.58%.  Oil prices gained another 2.5% or $1.87 to close at $75.87 a barrel.  Gold prices were up slightly, gaining $7 to close at $1758.80 an Oz.

High-frequency employment data was a bit weaker than expected.  Initial Claims came in at 362k versus expectations of 340K, and Continuing Claims came in at 2.802 million.  Interestingly, this weakness comes as job openings surged.  Also, a bit of a downer was the final reading of the Conference Board’s Consumer Confidence which ticked down to 109.3; the consensus estimate was 114.4, and the reading in August came in at 115.2.  Headline PCE prices were in line, as were the Core figures, but both data sets showed significant gains on a year-over-year basis, 4.3% and 3.6%, respectively, which are 30-year records! ISM manufacturing data continued to show signs of expansion, but data underneath the hood showed persistent problems in sourcing raw materials, transportation, and labor.  In China, ISM Manufacturing data signaled contraction coming in at 49.6.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 9/24/2021

-Darren Leavitt, CFA

Financial markets had a rollercoaster ride over the week that started on fears that one of China’s largest land developers would default on their debt which stoked rhetoric of a systematic breakdown in the global markets.  The week started with the S&P 500 down nearly 3%, but a subsequent late-day rally cut the early-day losses in half.  Additionally, the market looked vulnerable after closing below its 50-day moving average last Friday.  But a constructive tone out of the Federal Reserve’s September FOMC meeting coupled with the realization that Evergrande’s default had minimal exposure to global banks led “buy” the dip investors back into the markets.  However, concerns regarding Washington’s inability to get an increase in the debt ceiling remain.  Economic data for the week continued to come in a bit better than expected, which also helped the markets recover.

For the week, the S&P 500 managed a 0.5% increase, the Dow led gainers with a 0.6% advance, the NASDAQ lagged its peers with a gain of 0.2%, and the Russell 2000 added 0.5%.  The US yield curve steepened on Fed rhetoric and better than expected economic data.  The 2-year note yield increased four basis points to close at 0.27%, while the 10-year yield increased nine basis points to 1.46%.   30-year paper closed with a yield of 1.99%.  Gold was unchanged on the week.  Oil prices continued to climb.  WTI prices increased 2.8% or $2.08 to close at $74.00 a barrel.  The price increase helped push the Energy sector up 4.7% for the week.  Notably, Cryptocurrencies took a hit on the week on news that there had been another hack to the system and more so on news that the Chinese government would ban Bitcoin and crack down further on illegal mining.

Economic data reported during the week was constructive.  The housing market still appears to be doing quite well.  New Home Sales, Existing Home Sales, Housing Starts, and Permits all beat expectations.  Preliminary September Markit PMI data for Manufacturing and Services showed continued expansion coming in at 60.5 and 54.4, respectively.  August Leading Indicators came in at 0.9 versus the consensus estimate of 0.6.  Finally, high-frequency data on unemployment continue to show trending improvement.  However, Initial Claims missed the mark coming in at 351K versus the estimate of 315k.  Continuing Claims came in at 2.845 million.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 9/17/2021

-Darren Leavitt, CFA

US financial markets endured another week of losses that ended with the S&P 500 closing below its 50-day moving average on a quadruple witch expiration.  Although investors were treated to better than expected economic data, the peak growth narrative still made the rounds.  No real progress was made on the infrastructure bill as politicians addressed the Federal government’s debt ceiling.  Corporate news was negatively skewed, and no real positive catalyst came out of Apple’s new product introduction.  In China, regulators continued their recent crackdowns this week, focusing on the gaming sector.  Additionally, China’s largest property development company defaulted on debt payments.  The default is concerning, and markets will be keeping an eye on how Beijing responds, especially if the default becomes more of a systematic problem.

For the week, the S&P 500 lost 0.6%, the Dow gave back 0.1%, the NASDAQ fell 0.5%, and the small-cap-focused Russell 2000 was able to buck the trend with a gain of 0.4%.  Trading in US Treasuries was again all over the place. The 2-year note yield increased two basis points to close at 0.23%, while the 10-year yield increased three basis points to 1.37%.  Oil prices gained 3% or $2.17 to close at 71.92 a barrel.  The metals complex had a tough week.  Gold prices fell 2.2% or $40.8 to $1751.20 an Oz.  Copper prices sank 5% to 4.241 an Lb.

Economic data for the week was better than expected.  The headline CPI print came in at 0.3% less than the expected 0.4%.  Retail sales surprised to the upside in a big way.  The headline number came in at 0.7%, while the consensus estimate was – 0.7%.  Ex Autos’ was also better than expected, coming in at 1.8% versus -0.2%.  Initial claims and Continuing Claims continued to trend in the right direction.  Initial claims came in at 332k, and Continuing Claims came in at 2.665 million, down from the prior reading of 2.852M.  The Philly Fed reading was also much more robust than expected, coming in at 30.7 versus the consensus estimate of 19.6. Finally, the preliminary September reading of the University of Michigan’s Consumer sentiment came in at 71, which was slightly better than expected.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 9/10/2021

-Darren Leavitt, CFA

The holiday-shortened week produced negative returns across the board for US equity indices.  The month of September has historically been a tough month for equities, and given the outsized moves we have seen so far this year, it is not a surprise to see a bit of a pullback.  An early week sell-off in Cryptocurrencies set the stage for other risk assets.  Bitcoin started the week at $52,791, then tumbled 13% to close on Friday at $45,605.  Goldman Sachs was the third investment bank in a couple of weeks to reduce their growth outlook for the US, which further dampened market sentiment.  In Europe, the European Central Bank announced that it would curtail its asset purchase program at a very measured pace and on a vague timeline.  In Washington, the Infrastructure spending bill continued to be up for debate even as the Democrat Senator from West Virginia, Manchin, partially pulled his support for the proposed human infrastructure component of the bill.  Economic data was light on the week but showed another strong print in the Producers Price Index and continued progress on the labor market.

For the week, the S&P 500 lost 1.7%, the Dow gave up 2.2%, the NASDAQ shed 1.6%, and the Russell 2000 lagged with a loss of 2.8%.  US Treasuries sold off slightly for the week.  The 2-year yield increased one basis point to 0.21%, while the 10-year Note yield increased two basis points to close at 1.34%.  Gold prices fell just over 2% or $41.70 to close at $1792 an Oz.  Oil prices increased fractionally, gaining $0.60 to close at $69.75 a barrel.

On a year-over-year basis, the Price index for final demand was up 8.3% as the headline PPI for August came in at 0.7%, a bit higher than the expected 0.6%.  Initial Jobless Claims fell to the lowest level since the pandemic’s start, coming in at 310K versus an expected 337k.  Continuing claims fell to 2.783 million on a week where supplemental federal unemployment benefits expired.  Next week we will get a look into consumer prices with the CPI. We will also get August Retail Sales and the first September reading of the University of Michigan’s Consumer Sentiment survey.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 9/3/2021

-Darren Leavitt, CFA

Mega-cap technology issues pushed markets to another set of all-time highs in front of the Labor Day weekend holiday as traders rotated out of issues tied to the reflation trade.  Ironically, growth issues outpaced value issues over concerns that economic growth is slowing and perhaps the realization that global economies will most likely face future growth inhibitors from other variants of Covid-19.  Market news and action were tepid as traders took off early in front of the holiday.  However, the economic calendar was heavy and focused on the August Employment Situation Report.

For the week, the S&P 500 added 0.6%, the Dow gave back 0.2%, the NASDAQ outperformed, gaining 1.5%, and the Russell 2000 inched higher by 0.7%.  US Treasuries were also somewhat subdued.  The 2-year note yield lost one basis point to close at 0.2%, while the 10-year yield fell gained two basis points to close at 1.32%.  Oil prices increased by $0.48 to close at $69.05 a barrel on the back of what was a relatively muted OPEC meeting.  Gold prices advanced $13.90 to close at 1833.70 an Oz.

Economic news took the spotlight this week, with investors focused on jobs.  The August Employment situation report came in mixed, but the headline Non-farm payroll number missed the mark in a big way and added to the peak growth narrative in the market.  Non-farm payrolls came in at 235K versus expectations of 800k.  Private payrolls also missed the mark coming in at 243k versus 700k.  The Unemployment rate fell to 5.2% from the prior reading of 5.4% but was in line with expectations.  There was a nice tick-up in Average Hourly earnings that came in up 0.6%- the street had been looking for an increase of 0.3%.  Consumer Confidence was also disappointing, coming in at 113.8 versus the street consensus of 123 and down from the July reading of 128.9.  PMI data from China showed both Manufacturing and Services sector activity falling from prior readings and in Services contracting.  ISM data in the US also showed activity falling, but both sectors remain in expansion mode.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 8/27/2021

-Darren Leavitt, CFA

It was a hectic news week. The S&P 500 and NASDAQ hit a set of new all-time highs as Wall Street and global central banks focused on Federal Reserve rhetoric from the virtual economic symposium at Jackson Hole. Geopolitical uncertainly in Afghanistan increased as ISIS attacked the Kabul airport killing 13 American Marines and several civilians.  In Washington, politicians continued to debate the Infrastructure spending bill.  News that the FDA had given Pfizer’s Covid 19 vaccine full approval coincided with data suggesting that delta variant infection rates had peaked.  Economic data on the week was, for the most part, better than expected, and corporate earnings and news seem positively skewed.

The S&P 500 gained 1.5% for the week, the Dow added 1%, the NASDAQ increased 2.8%, and the Russell 2000 led with a 5.1% advance.  The US Treasury curve steepened on hawkish Fed governor rhetoric that suggested that the Fed’s QE programs should end sooner rather than later.  The 2-year note yield increased one basis point to 0.22%, while the 10-year bond yield increased five basis points to close at 1.31%.  Oil prices had a huge week increasing over 10% or $6.62, to close at $68.77 a barrel.  Gold prices rose $35.40 or 1.8% to close at $1819.80 an Oz.

Wall Street was focused on the Federal Reserve throughout the week as the Kansas City Fed held its Jackson Hole Economic Symposium virtually.  Over the week, investors heard from quite a few Fed Governors and what they heard was it was time to start tapering the Fed’s $120 billion a month asset purchase program sooner rather than later.  J Powell spoke on Friday and offered a more balanced tone.  Concerning inflation, the Chairman acknowledged that we have made “substantial further progress.”    The Chairman suggested we had made “clear progress” on the employment front, but more progress was needed.  Powell also reiterated that even if the Fed began tapering its QE program, financial conditions would remain accommodative.  His speech calmed markets and helped push equities and Treasuries higher on Friday.

Economic data for the week was better than expected.  Preliminary PMI data for the US and Eurozone suggested that the Manufacturing and Service sectors remained in expansionary mode.  Existing Home Sales and New Home Sales beat expectations coming in at 5.99M and 708k, respectively.  Initial Claims came in at 353k, and Continuing Claims fell to 2.862 million.  University Consumer Sentiment for August came in light at 70.3 versus expectations or 70.5.  August Personal Spending and Income came in better at 0.3% and 1.1%, respectively. Finally, Producer Prices were in line with the street forecast of 0.4%.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 8/20/2021

-Darren Leavitt, CFA

US Financial markets fell from their recent all-time highs on fears that economic growth could falter.  Traders rotated out of the reflation trade as Covid infection rates increased and the efficacy of our current vaccination regime was brought into question.  The Energy sector lost over 7% for the week, while the Materials, Industrial, and Financial sectors lost over 2%.  Defensive sectors such as Healthcare, Real Estate, Utilities, and Consumer Staples fared much better.

News that the Afghanistan government had fallen to the Taliban gave investors another set of geopolitical variables to contemplate.  The Hang Seng index fell into bear market territory as Chinese regulators continued their crackdown on publicly traded companies.   Economic data was headlined by the FOMC minutes from the July meeting that reiterated the Fed was poised to begin tapering its asset purchase program.

For the week, the S&P 500 lost 0.6%, the Dow gave back 1.1%, the NASDAQ fell 0.7%, and the Russell 2000 shed 2.2%.  Safe-haven demand flattened the US Treasury curve.  The 2-year note lost one basis point to close at 0.21%, while the 10-year yield fell four basis points to 1.36%.  Gold prices were little changed, increasing $5.5 to close at $1784.40.  Oil prices tumbled over 9% weekly, with WTI prices closing off $6.12 to $62.25 a barrel.

Economic data was mixed for the week.  Empire State Manufacturing missed the mark coming in at 18.3 versus the consensus estimate of 29.  Retail sales for July were also disappointing, coming in at 1.1% versus expectations of 0.1%.  The Ex-auto number also missed consensus.  Housing Starts were lower than expected, while Building Permits for July exceeded estimates.  Initial Claims and Continuing claims both showed continued progress coming in at 340k and 2.82 million, respectively.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 8/13/2021

-Darren Leavitt, CFA

The S&P 500 and the Dow inked new all-time highs as the Financials, Materials, and Consumer Staples did well over the week.  Energy and Small Caps lagged.  The Senate passed the 1.2 trillion dollar infrastructure plan and approved $3.5 trillion in additional spending.  The Bill now goes to the house where nine democrats have pushed back on the $3.5 trillion in additional spending.

For the week, the S&P 500 was higher by0.7%, the Dow added 0.9%, the NASDAQ declined by 0.1%, and the Russell 2000 shed 1.1%.  The 2-year note yield tacked on two basis points to 0.22%, while the 10-year bond yield increased by one basis point to close at 1.30%. Oil prices continued to fall on growth concerns.  WTI lost $0.47, closing at $67.81 a barrel.  Gold prices increased $16.40 to $1779.90 an Oz.

Economic data was generally in line with the consensus estimates.  The Consumer Price index came in at 0.5% versus the forecast of 0.6%.  Core CPI came in at 0.3% versus the estimate of 0.5%.  The Producers Price index increased 1% versus the estimate of 0.6% while the Core CPI increased by 1%.  Initial Jobless claims came in line at 375k while Continuing Claims fell to 2.866 million.  The big surprise in data this week was in the preliminary University of Michigan’s Consumer Sentiment, which fell to 70.2 from 81.2.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 8/6/2021

-Darren Leavitt, CFA

US equity indices forged new all-time highs on the back of an impressive Employment Situation Report and an upward S&P 500 price target revision by investment bank Goldman Sachs.  However, the US Treasury market was extremely volatile throughout the week due to conflicting signs of economic growth.  The Senate finalized the $1 trillion infrastructure bill details and sent them to the floor for a vote this weekend.

The S&P 500, Dow, and NASDAQ hit new all-time highs, increasing 0.9%, 0.8, and 1.1%, respectively.  The Russell 2000 gained 1% for the week.  The US Treasury curve was all over the place throughout the week but ended with higher yields.  The 2-year note yield increased two basis points to close at 0.20%.  The 10-year note yield at one point during the week traded to 1.1258 but ended the week up five basis points at 1.29%.  The commodity complex had a tough week.  Gold prices fell $53.9 to close at $1763.30 an Oz.  Oil prices fell on demand concerns, and prices looked vulnerable to a technical pullback.  WTI prices fell $5.59 or 7.5% to close at $68.28 a barrel.  Copper prices dropped 3% on the week to close at 4.347 a Lb.

The week was full of economic data and headlined by the July Employment Situation Report.  Job growth expectations were all over the map, with non-Farm Payroll estimates ranging from 320K to 1.3 million. Expectations were dampened on Wednesday when the ADP Employment Change Report came in well under expectations.  The report showed 330k payrolls versus the consensus estimate of 650k.  However, the high-frequency data of Initial Claims and Continuing Claims were better than expected.  Continuing Claims came in under 3 million at 2.932 million, the lowest level seen since March 2020.  ISM Manufacturing and Services inked the 14th consecutive month of expansion.  The manufacturing print was less than expected at 59.6- the consensus was at 60.7.  The report detailed issues in the supply chain, including kinks in raw material procurement, labor, and transportation. On the other hand, Services came in at the highest level ever at 64.1, showing clears signs of growth in the economy.  The Employment Situation report did not disappoint and showed substantial gains across the board for the labor market.  Non-farm Payrolls came in at 943K versus a consensus of 885K.  May and June’s figures were also revised upward.  The Unemployment rate fell a half a percentage point to 5.4%; the street had been looking for 5.6%.  Average hours worked ticked higher, as did Average Hourly Earnings.  Wages were up 0.4% month over month and 4% year over year.  More hours worked at higher wage levels means more money in consumers’ pockets and should be a tailwind for the economy.  All that said, the strong report most likely gives the Fed the ability to send a clear message on its desire to taper its asset purchase program and provide a timeline to start that could be as soon as November.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 7/30/2021

-Darren Leavitt, CFA

It was a hectic week on Wall Street as second-quarter earnings continued to roll in with mixed results.  Apple, Microsoft, Amazon, Facebook, and Google, which are very influential on the indices, generally sold off in the wake of their announcements.  Amazon not only missed Q2 estimates it also lowered guidance for the coming quarter and year. The sell-offs were a drag on the consumer discretionary, information technology, and communication services sectors.

The July Federal Open Market Committee meeting concluded on Wednesday afternoon with assurances from the Chairman that the Fed would remain accommodative for quite some time. There was no change to the policy rate, and the Fed backed away from any timeline related to curtailing its asset purchase program.  J Powell said we have a substantial amount of time before the Fed reaches its mandate of full employment. The Fed Chairman’s Q&A session seemed to calm the markets.

Delta variant infection rates continued to spike during the week, especially in areas where vaccination rates have lagged.  The spike in infections has caused speculation about the reintroduction of national lockdown mandates that some fear will dampen economic growth.

Economic data for the week was mixed.  The Q2 Advanced Estimate of GDP came in lower than expected at 6.5%- the street was looking for 8.2%.  New Home Sales missed the mark coming in at 676K versus expectations for 790K.  June Durable Goods orders came in 0.8%, while the consensus estimate was 1.8%.  Personal Income and Spending were better than expected while PCE prices rose a little less than expected.  The Employment cost index rose 0.7% but came in less than the expected 1%.  Initial claims regressed again, coming in at 400k.  Continuing claims were also higher from a week ago, coming in at 3.269 million.  The final University of Michigan’s consumer sentiment for July came in at 81.2 higher than the prior estimate and just better than June’s result.

The S&P 500 lost 0.37% for the week while the Dow shed 0.36%, the NASDAQ lagged with a decline of 1.11%, and the Russell 2000 eked out a 0.75% gain.  The US yield curve continued to flatten as the 2-year note yield fell one basis point to 0.18%, and the 10-year bond yield fell five basis points to close at 1.24%.  Gold prices were essentially unchanged from the prior week closing at 1817.20 an Oz.  Oil prices increased as EIA Crude Oil inventories showed a 4.09 million drawdown.  WTI closed higher by nearly 3% or $2.11 to $73.87.  Copper closed 4% higher to $4.484 per Lb.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 7/23/2021

-Darren Leavitt, CFA

US Financial markets started the week off much as it had ended the prior week, in the red.  A continuation of the peak growth narrative catalyzed further by increased Covid infection rates stemming from the delta variant sent the S&P 500 below its 50-day moving average, the 10-year bond yield to 1.14%, the Russell 2000 into correction mode, and the CBOE volatility index up 36%.  However, by Tuesday, investors came in and bought the dip, encouraged by solid second-quarter earnings results and by S&P 500’s ability to close above its 50-day moving average.  Analyst upgrades in Apple and Microsoft, coupled with positive commentary from executives at United Airlines, Coca Cola, and Chipotle suggesting that the Delta variant had not affected their businesses, sent a bid into the mega-cap stocks. Upbeat earnings results from Snap and Twitter further bolstered sentiment for the mega-cap tech issues.

The S&P 500 increased 2% for the week while the Dow added 1.1%, the NASDAQ gained 2.8%, and the Russell 2000 rose 2.1%.  The US yield curve steepened a bit over the week in a bewildering fashion.  The 2-year note yield fell four basis points to close at 0.19%, while the 10-year yield shed one basis point to close at 1.29%.  Again, at one point on Monday morning, the 10-year yield was as low as 1.14%, sixty basis points off its most recent highs.  Gold prices fell by $13.2 to close at $1801.90.  Oil prices increased fractionally, with WTI closing up $0.33 to $72.09 a barrel.

Economic data results announced over the week generally missed consensus estimates.  Initial Claims, which have been trending in the right direction over the last several weeks, came in at 419k, the highest level seen since May.  Continuing claims fell 27k to 3.26 million.  Preliminary IHS Markit Manufacturing hit a record high of 64.6 in July while the Services reading fell to 59.8 from June’s level of 64.6.  Building Permits, a leading indicator, fell 5.1% month over month and at an annualized rate of 1.598 millon which was shy of the 1.7 million expected.  Lastly, the Conference Board’s Leading Economic Index increased at the slowest pace since February, coming in at 0.7% versus the expected 0.9%.

Second Quarter earnings results will continue to be announced in the upcoming week.  The Treasury will auction off 2, 5 & 7 year notes which will be interesting to watch given the recent bond market action.  Additionally, expect the FOMC it’s policy rate decision on Wednesday afternoon- no change is expected. Still, there may be some language in the decision related to the timing of the Fed’s asset purchase program taper.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 7/16/2021

-Darren Leavitt, CFA

Despite hitting another set of all-time highs, US financial markets ended the week lower.  2nd quarter earnings kicked off with better than expected results from the financials; however, banks shares generally sold off in the wake of the announcements.  Fed Chairman Jerome Powell was on the Hill for his semiannual testimony on monetary policy.  The Fed Chair reiterated that the Fed would continue to be accommodative for quite some time while acknowledging the recent increases in inflation.  Economic data was mixed for the week but headlined by the Consumer Price Index (CPI) and the Producer Price Index (PPI), which both came in hotter than expected.

The S&P 500 lost 1% for the week, the Dow gave back 0.5%, the NASDAQ declined 1.9%, and the Russell plunged 5.1%. The most recent rotational trade between Growth and Cyclicals changed to selling Growth and Cyclicals and buying defensive sectors.  Utilities, Real Estate, and Consumer Staples held up well while Energy, Financials, Materials, and Semiconductors sold off.  The Semiconductor sector had a tough week on the back of disappointing earnings from Taiwan Semiconductor (TSM).   The yield curve flattened as the 2-year note yield increased two basis points to 0.23%, and the 10-year yield fell six basis points to close at 1.30%.  The 2-10 spread declined by eight basis points to 107.  Oil prices fell on news that OPEC had reached a supply agreement.  WTI prices fell 3.75% or $2.80 to close at $71.76 a barrel.  Gold prices increased by $4.40, closing at 1815.10 an Oz.

The much anticipated CPI print was stronger than expected, coming in at 0.9% versus expectations of 0.7%.  The reading showed price increases across each category.  Similarly, the Producers Price Index was also hotter than expected.  The headline number came in at 1%, while the consensus estimate was 0.6%- annualized PPI is running at 7.3%.  June Retail sales were much better than expected, coming in at 0.6 versus the forecast of -0.6%.  Initial Jobless claims came in at 360K, and Continuing Claims showed progress at 3.241 million.  Preliminary July U of M consumer sentiment was noticeably weaker at 80.6 from June’s final reading of 85.5.  Interestingly, the weakness was attributed to fears about increased inflation.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

 

Weekly Market Commentary

Weekly Market Commentary – 7/9/2021

-Darren Leavitt, CFA

The holiday-shortened week produced significant swings in the equity and fixed income markets as investors continued to contemplate where we are in the economic cycle.  The peak growth narrative appeared early in the week on the back of a weaker than expected ISM non-manufacturing print. Later in the week, China’s central bank signaled that it would be relaxing reserve requirements on banks to induce more lending activity.  Concerns over the new Delta variant of COVID and the possibility for further lockdown measures instilled additional economic growth concerns.

On that front, Japan extended lockdown protocols and announced that there would not be any spectators at Olympic venues.  Emerging markets issues lag other markets as Chinese regulators tightened their grip on Chinese companies listed in the US.  DIDI, a ride share service in China, came public late last week only to see regulators curtail their offering on App sites- the news sent shares significantly lower.  OPEC, which had extended last week’s meeting, was unable to agree on supply which helped propel Oil above $76 a barrel.

Despite the volatile week, the S&P 500 was able to forge a new all-time high.  The S&P 500 gained 0.4%, the Dow added 0.2%, the NASDAQ rose 0.4%, and the Russell 2000 shed 1.1%.  The yield curve continued to flatten as the 2-year note yield fell three basis points to 0.21%, and the 10-year fell seven basis points to close at 1.36%.  Of note, the 10-year yield traded as low as 1.24% as short covering came into the market.  Gold prices increased 1.3% or $24 to close at $1810.70 an Oz.  Oil trade was also quite volatile on the back of a failed OPEC meeting and growth concerns.  WTI closed fractionally lower, losing $0.36 to $74.56a barrel.

The weak ISM non-manufacturing print highlighted economic data for the weak. July’s number came in at 60.1 below the consensus estimate of 62.5 and below the June reading of 64.  Initial claims for the week regressed a bit to 373K versus expectations of 343K, while Continuing Claims continued to move in the right direction at 3.329 million.  Finally, the FOMC minutes came in with no surprises.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 7/2/2021

-Darren Leavitt, CFA

Economic data for the week was headlined by the Employment Situation Report that resulted in mixed results. The S&P 500, the Dow, and the NASDAQ forged another set of all-time highs while the Russell 2000 lagged on a quarter-end rebalance.  Bank stocks rose on announcements that they would increase dividends and increase share repurchase program.  The Delta variant of Covid-19 hindered the international market’s performance on fears that some geographies would impose new lockdown measures.  Japan is currently contemplating a one-month lockdown in front of the summer Olympics.

For the week, the S&P 500 gained 1.7% and closed above 4300.  The Dow was up 1%, the NASDAQ increased 1.9%, and the Russell 2000 gave back 1.2%.  The US Treasury curve flattened as the 2-year note yield fell one basis point to 0.24%, and the 10-year yield fell eleven basis points to close at 1.43%.  Oil prices increased by $0.86 or 1%, to close at $74.92 on news that OPEC will provide less supply than initially expected; the group did extend discussions into the upcoming week.  Gold prices increased by $8.40 to close at $1786.70.

On Friday, the Employment Situation Report showed that 850k non-farm payrolls had been created, beating the consensus estimate of 680k.  However, the Unemployment rate ticked higher to 5.9%; the consensus estimate was 5.7%.  Average hourly earnings were also weaker than expected, coming in up 0.3% month over month.  The Labor participation rate stayed at 61.6.  Initial claims for the week came in at 364k versus the estimate of 400k, and continuing claims came in at 3.46 million, which was a bit higher than the prior reading.  ISM manufacturing showed the 13th consecutive expansionary reading coming in at 61.6.  Consumer Confidence for the month came in better than expected, coming in at 127.3, which was much better than the anticipated 120.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

Weekly Market Commentary – 6/25/2021

-Darren Leavitt, CFA

US Financials markets bounced back from last week’s sell-off as buy the dip buyers stepped in and pushed the S&P 500 above its 50-day moving average.  Comments for Fed Chairman J. Powell, who was testifying in front of Congress, helped sustain the rally when he reassured investors that the Fed would not raise rates prematurely.  The Fed Chairman also provided a positive outlook for the labor market in the second half of the year.  A widely successful stress test on US banks further fueled the rally.  The positive results from the test will likely lead to more share buy-backs and an increase in dividends.  In Washington, a bipartisan agreement on an infrastructure spending bill was announced.  The proposed plan of 1.2 trillion dollars would include 579 billion in new spending.  The deal will likely come under more scrutiny as it is tied to additional social spending initiatives.

The S&P 500 closed at another record high, gaining 2.74% on the week.  The Dow rose 3.44% while the NASDAQ added 2.35%, and the Russell 2000 led with an increase of 4.32%.  The yield curve steepened over the week, with the 2-year note yield increasing by one basis point to close at 0.27%.  The 10-year yield increased by nine basis points to close at 1.54%.  Gold prices rose by $10.40 to close at 1778.30 an Oz.  Oil prices increased by 3% or $2.39 to close at $74.06 a barrel.  Cryptocurrencies were again quite volatile as Bitcoin traded below the critical technical level of 30k.

Economic data for the week had mixed results.  The high cost of housing curbed New Home sales which came in under the consensus estimate.  In May, 769k new homes were sold; economists had expected 860k.  However, Existing home sales came in at 5.8 million versus the consensus of 5.65 million.  Headline PCE prices came in up 0.4% month over month, while the core number, which excludes food and energy, came in at 0.5% month over month.  The final reading for June’s University of Michigan’s Consumer Sentiment Index came in at 85.5, slightly lower than May’s final reading of 86.4. Finally, initial claims came in at 411k more than expected, while Continuing Claims showed improvement at 3.39 million.

Investment advisory services offered through Foundations Investment Advisors, LLC (“FIA”), an SEC registered investment adviser. FIA’s Darren Leavitt authors this commentary which may include information and statistical data obtained from and/or prepared by third party sources that FIA deems reliable but in no way does FIA guarantee the accuracy or completeness.  All such third party information and statistical data contained herein is subject to change without notice.  Nothing herein constitutes legal, tax or investment advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person.  Personal investment advice can only be rendered after the engagement of FIA for services, execution of required documentation, including receipt of required disclosures.  All investments involvement risk and past performance is no guarantee of future results. For registration information on FIA, please go to https://adviserinfo.sec.gov/ and search by our firm name or by our CRD #175083. Advisory services are only offered to clients or prospective clients where FIA and its representatives are properly licensed or exempted.

Weekly Market Commentary

-Darren Leavitt, CFA

US equity indices fell across the board for the week on a more hawkish than expected statement from the Federal Reserve’s Open Market committee meeting.  In the Q&A after the release of the FOMC statement, Fed Chairman Jerome Powell provided a more dovish tone.  The Fed announced no change to the current Fed Funds rate and said they would continue their asset purchasing program of 120 billion a month.  The Chairman did say that the committee would telegraph to investors their intention to end the program before the actual taper would begin.  The Fed increased the interest on excess reserves by five basis points to 0.15% and raised the reverse purchase rate by five basis points to 0.05%.  A change in the Fed’s Dot Plot, which lays out each member’s expectations for monetary policy, showed a rate hike by the end of 2023 rather than the prior expectation of 2024.  Additionally, seven members thought it might be appropriate to raise the Fed Funds rate in 2022.

The change to the expected path of interest rates was reiterated on Friday by St. Louis Fed President Bullard.  In an interview with CNBC, the usually dovish Bullard said he was one of the members who thought the Fed Funds rate should increase in 2022.  He also said the Fed should not be buying mortgage back securities.

The rhetoric out of the Fed strengthened the argument that we have seen peak growth and peak inflation expectations.  That narrative took a chunk out of the reflation trade that has favored valued-oriented cyclicals and the commodity complex.  At the end of the week, it was easy to see the divergence in value versus growth issues.

The S&P 500 lost 1.9% for the week, the Dow fell 3.4%, the NASDAQ gave up 0.3%, and the Russell 2000 led declines with a loss of 4.2%.  The US Treasury curve flattened on the week, with the 2-year note yield increasing by eleven basis points to 0.26%.  The 10-year yield fell by one basis point to close at 1.45%, perhaps validating the Fed’s notion that much of the anticipated inflation will be transitory.

Interestingly, Oil was able to hold up relatively well while other parts of the commodity complex sold off.  WTI fell $0.67 on the week to close at $71.00 a barrel.  On the other hand, gold prices fell nearly 6% or $110.7 to close at 1768.70 an Oz.  Copper prices fell over 8% to close at $4.158/lb.

Economic data for the week came in mixed.  May Retail Sales fell -1.3% on a month-over-month basis and was less than the street consensus estimate of -0.6%.  Initial claims regressed on the week, increasing 37k to 412k versus the expectation of 350K.  Continuing claims were essentially unchanged at 3.518 million.  The Producers Price Index or PPI came in hotter than expected, but investors seemed unfazed by the announcement.  The reading increased 0.8% month over month versus the expectation of 0.5% and came in 6.6% on a year-over-year basis.

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 – 6/11/2021

-Darren Leavitt, CFA

The S&P 500 hit all-time highs on the week in very tight market action.  Cyclicals and US Treasury yields fell throughout the week on the notion that the economy has seen peak growth and peak inflation expectations.  A strong CPI print and continued strong data on the labor market seemed to be dismissed by investors.  Of note, a poll by Reuters that surveyed several economists found that most expect the Federal Reserve to announce its intention to begin tapering its bond purchasing program at the August or September meeting.  Interestingly the week’s muted trade coincided with the VIX, a volatility measure, falling to 15.65, the lowest level since February of 2020.

The S&P 500 gained 0.4% for the week, the Dow lost 0.8%, the NASDAQ finished 1.8% higher, and the Russell 2000 rose by 2.2%.  The US Treasury curve flattened. The 2-year note yield was unchanged at 0.15%, while the 10-year yield fell ten basis points to close at 1.46%.  The 10-year touched 1.43 in the week, which is the lowest level seen in three months.   Gold prices fell by $12.2 to close at $1879.40.  Oil prices gained 2% or $1.52 to close at $71 a barrel.

A peak growth narrative was noticeable in how equity sectors traded for the week.  Real Estate and Healthcare, along with Information Technology and Consumer Discretionary sectors, outperformed.  On the other hand, Financials, Industrials, and Materials underperformed.  It is worth mentioning that the Biotech sector was up 5.9% for the week partly on a controversial FDA decision to approve Biogen’s treatment for Alzheimer’s.

Economic news was headlined by the Consumer Price Index (CPI), which came in up 0.6% on a month over month basis, up 5% on a year over year basis, and an annualized rate of 5.8%.  The core number, which excludes food and energy, was up 0.7% at an annualized rate of 4%.  The preliminary June University of Michigan Index of Consumer Sentiment came in at 86.4 versus the estimate of 83.5 and better than the final may reading of 82.8.  Inflation still appears to be a concern for the consumer.  On the unemployment front, Initial Claims came in at 375k versus the estimate of 365k but were again trending in the right direction and the lowest level seen since before the pandemic hit.  Continuing claims were down by 258k to 3.499 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

Weekly Market Commentary – 5/28/2021

-Darren Leavitt, CFA

Financial markets moved higher throughout the week as the inflation debate continued on Wall Street. A full economic calendar was headlined by the PCE Price Index, the Federal Reserve’s preferred measure of inflation.  In Washington, Senate Republicans countered the Biden administration’s 1.7 trillion-dollar American Jobs Plan with a 928-billion-dollar infrastructure plan, and President Biden announced his fiscal year 2022 budget of 6-trillion dollars.

The S&P 500 gained 1.2% for the week, the Dow added 0.9%, the Nasdaq advanced by 2.1%, and the Russell 2000 increased 2.4%.  The US Treasury curve flattened with the 2-year note yield decreasing one basis point to 0.14% and the 10-year bond yield falling five basis points to close at 1.58%.  Gold prices rose $25.40 or 1.35% to close just above $1900 an Oz.  Oil prices increased over the week too.  WTI prices increased 4.1% or $2.67 to close at $66.32 a barrel.  Interestingly, the increase in oil prices did not translate into a good week for the energy sector, which lagged the broader market.  Also of note was the volatility seen in cryptocurrencies during the week.  Sharp sell-offs in the past have hindered the equity market’s performance, while this week, investors dismissed the move lower.

Will inflation be transitory is the question di jour for investors.  If you believe the Federal Reserve, it will be, and if you look at the most recent action in the bond market, it suggests the same.  However, a narrative in the market suggests we will continue to see spikes of inflation on certain goods and services. It will, in turn, create inflation in other areas of the market, namely labor, which will eventually lead to higher interest rates.  If rates do move materially higher due to increased inflation expectations, then highly valued equities and, for that matter, other high valuation asset classes may suffer. Tangible assets tend to do well in inflationary environments, think real estate and commodities.  Small and mid-cap stocks also seem to do better, as do value-oriented stocks and sectors.  The jury is still out on inflation, so investors will be closely monitoring the Fed and economic data.

The PCE Price Index announced this week increased 3.6% on a year-over-year basis in April- a pretty solid dose of inflation!  At the same time, expected year-ahead inflation monitored by the University of Michigan’s Consumer Sentiment came in at a record 4.6%.  Initial jobless claims for the week continued to decline, coming in at 406k, down from the prior week’s 444k.  Continuing claims also continued to show improvement coming in at 3.642 million, down from the preceding week’s 3.738 million.  New Home Sales fell 5.9% on a month-over-month basis to a seasonally adjusted rate of 863k versus expectations of 980k.  The Conference Board’s Consumer Confidence figure declined .3 to 117.2, while the consensus estimate was 118.  Durable Goods orders also were a bit disappointing, coming in down 1.3% month over month versus expectations for a gain of .8%.

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 – 5/21/2021

-Darren Leavitt, CFA

The financial markets were in consolidation mode as a volatile risk-off trade in cryptocurrencies exacerbated concerns about inflation and valuations.  A sell-off in commodities curbed investors’ appetite for cyclicals while growth sectors found some reprieve.  First-quarter earnings announcements continued to surprise, but price action was mixed.  The Federal Open Market Committee minutes were released but were a non-event.  The minutes did suggest that some members were open to tapering the current asset purchase program later in the year.  Economic data was mixed for the week.

The S&P 500 lost 0.43%, the Dow gave up 0.51%, the NASDAQ gained 0.31%, and the Russell 2000 fell 0.42%.  The US Treasury curve ended up pretty much where it started the week.  The 2-year note yield was unchanged at 0.15%, and the 10-year yield fell one basis point to 1.63%.  Gold prices rose 2% or $38.90 to close at $1876.80 an Oz.  WTI fell with the broader commodity complex losing 2.5% or $1.69 to close at $63.64 a barrel.

 

At first glance, it appears that the market action was somewhat muted last week. However, the activity underlying the major indices saw selling in the most recently favored cyclicals.  Financials, Energy, Industrials, and Materials sold off while Real Estate, Utilities, and Consumer Staples outperformed.  Lowes, Home Depot, and Macy’s all had solid Q1 earnings reports but sold off after their announcements.  Walmart, Target, and Palo Alto Networks also announced solid results but were awarded higher prices.  Cybersecurity issues were well bid on the week after the administration announced new initiatives to address ransomware attacks.

Bitcoin and other cryptocurrencies sold off hard over the week in very volatile trade.  The Chinese government announced that they would increase regulations on crypto and curb crypto mining initiatives.  Bitcoin fell as low as 30k before a rebound to 38k on Friday.  Some pundits fear the move portends further risk-off action in the broader market.

Economic data was mixed.  Housing Starts decelerated in April, falling 9.5% on a month over month basis or an annualized rate of 1.569 million.  Building permits rose 0.3% to total permits of 1.76 million.  The slight increase may be due to the higher costs facing builders, namely, land, materials, and labor.  Initial Jobless Claims fell 34k to 444k, another low post-pandemic.  Continuing claims regressed about coming in up 111k to 3.751 million.  The Conference Board’s Economic Index came in better than expected and showed solid results in the leading indicators.  IHS Markit Manufacturing and Services were both better than expected at 61.5 and 70.1, respectively.

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 – 5/14/2021

-Darren Leavitt, CFA

It was a volatile week on Wall Street that saw the major US equity indices fall across the board.  Inflation fears were stoked by a hot Consumer Price Index reading and surging gas prices caused by a ransomware hack that shut down one of the largest oil pipelines in the country.  A continuation of the rotational trade out of high growth technology into cyclicals coincided with an uptick in interest rates.

For the week, the S&P 500 fell 1.4%, the Dow lost 1.1%, the NASDAQ led declines- shedding 2.3%, and the Russell 2000 gave up 2.1%.  Consumer Discretionary, Information Technology, and Communication Services sectors took the brunt of the sell-off while the Financials and Industrials fared a little better.  Inflation fears pushed Treasury yields higher and steepened the yield curve.  The 2-10 spread widen to 149 basis points.  The 2-year note yield ticked one basis point higher to 0.15%, and the 10-year yield increased by six basis points to close at 1.64. The 10-year traded as high as 1.70% during the week but was able to back off a bit from that level on a pull-back in commodity prices.  Gold prices increased by $7.10 for the week to close at $1837.90 Oz, while WTI prices inched higher by $0.39 to close at $65.33 a barrel.

Economic data for the week centered investor’s focus on inflation.  The headline CPI number increased 0.8% on a month over month basis, and the Core CPI, which excludes food and energy, rose 0.9% month over month.  Both exceeded consensus estimates by a wide margin and, when annualized, show some of the highest levels of price increase seen in a decade at 3.1% and 4.6%, respectively.  The three most significant price increases came from used cars, airline tickets, and hotel and leisure.   Inflation expectations also dampened the preliminary May reading of the University of Michigan’s Consumer Sentiment reading.  Respondents cited concerns about housing prices, gas prices, and the increase in new and used car prices.  The reading came in at 82.8 versus the consensus estimate of 90.2.  Retail sales for April were flat but came off a substantial March number that was revised from 9.8% to 10.7%, but investors seemed to dismiss the flat reading after coming off such a solid prior month.

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 – 5/7/2021

-Darren Leavitt, CFA

US equity indices finished the week mixed as a strong rotational trade into cyclicals and out of high growth technology issues reappeared.  The S&P 500 and Dow forged new all-time highs as the tech-heavy NASDAQ and Russell 2000 lagged.  Energy, Financials, Materials, and Industrial sectors outperformed over the week while the Information Technology and Consumer Discretionary sectors underperformed.  Q1 earnings results continued to roll in better than expected, but in most cases, the results were overshadowed by the prominent rotational trade.  Economic news for the week was much weaker than expected, which caught many by surprise.

For the week, the S&P 500 gained 1.2%, the Dow added 2.7%, the NASDAQ declined 1.5%, and the Russell 2000 eked out a 0.2% increase.  The US Treasury curve continued to flatten, with the 2-year yield falling two basis points to close at 0.14% and the 10-year bond yield shedding five basis points to 1.58%.  Interestingly, the lower move in yields did not act as a buoy for growth stocks.  Gold prices rose 3.5% or $62.90 to close at 1830.80.  Oil prices ticked higher by 2.2%, with WTI closing at $64.94 a barrel.

The much anticipated April Employment situation report was a big disappointment.  The headline non-farm payrolls number came in at 266k versus a consensus estimate of 1 million.  Lower revisions for the March report accompanied the big miss.   The unemployment rate ticked higher coming in at 6.1% versus the Street estimate of 5.8%.  The news generated questions regarding the effects that extended and supplemental unemployment benefits have on the labor market.  The Biden administration dismissed the correlation and suggested that the miss prompt Congress install his 1.8 trillion dollar American Family Plan quickly.  ISM Manufacturing and Services data also regressed but still showed both parts of the economy in expansion.  April ISM Manufacturing came in at 60.7 less than the consensus of 65.3 and down from the prior month’s reading of 64.7.  ISM Non-Manufacturing came in at 62.7 versus the street estimate of 65 and down from the March reading of 63.7.

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 – 4/30/2021

-Darren Leavitt, CFA

It was a hectic week on Wall Street highlighted by large-cap technology Q1 earnings, the April Federal Reserve Open Market Committee, and a busy economic data calendar.  Trading was mixed throughout the week and in the end yielded flat to down results for the major averages.  The S&P 500 finished the week flat while the Dow fell 0.5%, the Nasdaq gave up 0.4%, and the Russell 2000 lost 0.2%.  The yield curve steepened with the 2-year note yield increasing one basis point to close at 0.16% and the 10-year bond yield increasing by six basis points closing at 1.63%.  Gold prices fell $10.20 to $1767.90 an Oz.  The energy complex was strong over the week with WTI trading up $1.36 to close at 63.51 a barrel.

Earnings continued to roll in hot.  Technology garnered most of last week’s earnings action, and the numbers did not disappoint.  Tech heavyweights frankly blew away estimates.  As has been the case for most of this earnings season, companies have been outpacing earnings estimates only to see their stock prices fall after the announced results.  Market expectations coming into earnings were high, and as a result, we have seen tepid and rotational trade over the last few weeks.  The markets may be at an inflection point here, and it appears that continued consolidation may be warranted before the markets can move higher.

The April Federal Reserve meeting was as expected.  There was no change to the policy rate that sits between 0 and 0.25%.  J Powell also reiterated that the current pace of asset purchases would continue for the foreseeable future at 120 billion dollars a month.  While employment numbers have been improving, the Chair reminded investors that we are still far off from the employment figures that we saw pre-pandemic. While we have seen some prices increase, portending some inflation, he still believes many of these price increases are transitory.

Q1 GDP increased to a 6.4% annualized rate just below the consensus of 6.5% but still is a strong result.  Personal income soared, up 21.1% in the month on the back of the stimulus checks that hit individual’s bank accounts recently.  April Consumer Confidence came in at 121.7 versus the consensus estimate of 115 and reflected the optimism of the global economy opening back up again.  Initial Jobless Claims came in at 553, slightly higher than had been expected.  Continuing Claims continued to fall, coming in at 3.60 million, down from the prior week’s reading of 3.65 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

-Darren Leavitt, CFA

US equity markets finished mixed on the week as Q1 earnings continued to surprise to the upside.  Markets pulled back sharply on Thursday on reports that the Biden administration will propose increasing the capital gains tax, and economic data continued to come in better than expected.

For the week, the S&P 500 lost 0.1%, the Dow shed 0.5%, the NASDAQ gave back 0.3%, and the Russell 2000 managed a gain of 0.4%.  US Treasury markets traded in a tight range throughout the week.  The 2-year note yield increased one basis point to 0.15%, while the 10-year yield closed unchanged at 1.57%.  Gold prices fell $2.10 to close at $1778.10 an oz.  Oil prices traded off, fractionally losing $1.01 to close at $62.15 a barrel.

Q1 earnings continue to come in better than expected.  25% of the companies within the S&P 500 have reported earnings.  According to FactSet, 84% of the reported companies have had better than expected earnings, and 77% have beaten expectations on revenues.  In the coming week, another 181 S&P 500 companies are set to report, and 10 of 30 Dow components will report.

On Thursday, the New York Times and Bloomberg ran reports that the Biden Administration will increase the capital gains tax rate to 39.6%, up from 20% on those earning more than one million dollars.  The proposed increase comes on top of the current 3.8% tax on investment income to help fund the Affordable Cares Act.  In addition to the increase, these individuals would be subject to state and local taxes as well.  Interestingly the market did not respond to the NY Times article early in the day but did sell-off on the Bloomberg story that came across the tape with a couple of hours left in the trading session.  Some pundits suggested the sell-off was just an excuse to sell a hot market-  this may have some weight given the buy the dip investors that moved markets materially higher on Friday.

Initial Jobless Claims fell to the lowest level since the pandemic started.  Data showed that 547k had filled out claims versus the consensus estimate of 600k.  Continuing Claims also trended lower, coming in at 3.674 million from last week’s reading of 3.708 million.  New Home sales soared, showing an increase of 20.7% on a month over month basis and coming in at a 1.021 million annualized rate.  Preliminary data on manufacturing and services also topped estimates.

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

-Darren Leavitt, CFA

US equity indices hit another set of all-time highs in what was a very busy week on Wall Street.  First-quarter earnings season kicked off, with US Banks showing impressive results.  Markets were well bid throughout the week and moved higher despite news that J&J’s Covid vaccine usage was halted due to some adverse effects and that the US will impose more sanctions on Russia.  Investors also got a full plate of economic news that showed robust retail sales and in-line consumer prices.

For the week, the S&P 500 was up 1.4%, the Dow added 1.2%, the NASDAQ increased 1.1%, and the Russell 2000 tacked on 0.9%.  Perhaps the story of the week was in the bond market that was able to dismiss strong economic data and rally.  The 2-year note yield increased one basis point to 0.16%, while the 10-year yield decreased by ten basis points to close at 1.57%.  Gold prices rose 2% or $35.70 to close at $1780.20 an Oz.  Oil prices gained 6% on the week, with WTI prices up $3.95 to close at 63.16 a barrel.

US banks showed an impressive first-quarter.  Goldman Sachs, JP Morgan, Bank of America, Wells Fargo, and Citi all produced better than expected results.  Trading departments had solid results, and lighter than expected loan loss provision use were highlights.  Interestingly most of the banks sold off after their announcements suggesting that much of the good news was already baked into their stock prices.  Weak consumer loan demand tempered the results, but most think this demand will pick up in the second half and that the banks are in the best financial shape in decades.

Blood clot issues caused the CDC and FDA to halt the use of J&J’s Covid vaccine.  The halt will allow doctors and scientists to study the adverse effects and assess if further usage is safe.  The news undoubtedly hurt vaccine sentiment and may curtail the use of J&J’s vaccine. Still, shots continued to go into arms, and Pfizer announced that it would be able to provide more doses than had previously been expected.

An increased Russian military presence along the Ukrainian border has concerned US officials and their European allies.  In response, the Biden administration announced a new set of sanctions against Russia to keep US institutions from buying Ruble-denominated Russian sovereign debt.   The move will likely be met with a countermeasure from the Russians, and any escalation could certainly weigh on financial markets.

Economic news was much better than expected.  The much anticipated CPI print was in line with expectations.  Headline CPI came in at 0.6% or 1.6% on a year over year basis.  Core CPI, which strips out food and energy, also came in line with consensus estimates at 0.3%.  March Retail sales came in at a whopping 9.8%, much better than estimates of 6%.  Initial claims were also much better than expected, coming in at 576k versus 705k.  Continuing claims came in at 3.731 million from 3.727 million in the prior 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

-Darren Leavitt, CFA

Markets continued to rally, but the advance came on quiet trading volume. Robust economic data coupled with a solid economic outlook from JP Morgan’s CEO Jamie Diamond catalyzed buying.  First-quarter earnings start in earnest in the coming week, with the financials kicking us off.  It will be an exciting couple of months as strong corporate earnings expectations have fueled the market rally.   For the week, the S&P 500 gained 2.7%, the Dow added 2%, the NASDAQ outperformed with a 3.1% advance, and the Russell 2000 lagged with a loss of 0.5%.

Large-cap technology issues led the advance as US Treasury yields declined.  The 2-year note yield fell three basis points to 0.15%, while the 10-year bond yield fell four basis points to close at 1.67%.  The March FOMC meeting minutes confirmed that the Federal Reserve’s policy stance remains accommodative. Oil prices fell $2.12 to close at $59.21 a barrel.  Investors took profits in the energy sector throughout the week, making it the worst-performing sector.  Gold prices increased $14 to close at $1744.50 an Oz.

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 – 3/26/2021

-Darren Leavitt, CFA

It was a mixed week on Wall Street that saw continued quarter-end rebalancing that supported pro-cyclical issues and hindered mega-cap growth issues.  For the week, the S&P 500 gained 1.6%, the Dow added 1.4%, the NASDAQ declined 0.6%, and the Russell 2000 gave back 2.9%.  The S&P 500 and the Russell 2000 breached their 50-day moving averages during the week.  The S&P 500 was able to find support and trade above the 3873 level while the Russell struggled to regain the 2290 level.  The 2-year note yield fell one basis point to 0.14%, while the 10-year yield in whipsaw trade fell seven basis points to 1.66%.  Gold prices fell $9 to $1732.50 an Oz.  Oil trade for the week was again quite volatile as investors ascertained the ramifications of the Suez Canal blockage on the commodity.  WTI closed down $1.44 to $60.99 a barrel.

There was plenty of corporate news on the tape this week, which started with the announcement that railroad Canadian Pacific will acquire Kansas City Southern in a cash and stock deal worth $29 billion.  Other corporate news included Intel’s report of a $20 billion investment in a new fabrication facility in Arizona and news that AstraZeneca’s vaccine was not as effective as initially thought.

News of extending lockdown measures in Germany and the Netherlands dampened market sentiment even as vaccination protocols in the US were broadened to include more age groups.

In Washington, President Biden held his first press conference to introduce a $4 Trillion infrastructure spending plan in the coming week.  Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell testified in front of Congress on the CARES act, which provided very little incremental news for investors.

Economic data for the week was better than expected.  The final reading of the University of Michigan’s consumer sentiment index was the best in a year coming in at 84.9 versus expectations of 83.6. Initial jobless claims were lower by 97k to 684k, the lowest level since last March.  Continuing Claims fell 264K to 3.87 million.  February Personal income fell 7.1%, slightly worse than the expected decline of 7%.  Personal spending came in at -1% versus the consensus estimate of -0.7%.  However, interestingly the February savings rate fell to 13.6% from January’s 19.8%.

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 – 3/19/2021

-Darren Leavitt, CFA

It was a hectic week on Wall Street that saw the major US equity indices fall as interest rates continued to rise.  All eyes were on the Federal Reserve’s two-day FOMC meeting that concluded on Wednesday with a dovish statement from Fed Chairman Jerome Powell. Surprisingly, the BOJ and a few emerging market central banks announced hawkish moves in policy.  The energy sector, which has been on a tear, fell hard on the week, as did oil prices, perhaps on profit-taking and some sector rotation in front of quarter-end.  Economic data was skewed to the downside for the week, but the Philadelphia Fed Index data had a huge upside surprise.

For the week, the S&P 500 lost 0.8%, the Dow shed 0.5%, the NASDAQ fell 0.8% and the Russell 2000 lagged with a loss of 2.8%.  The US Treasury curve continued to steepen with the 2-10 spread widening eight basis points to 158.  The 2-year note yield increased one basis point to close at 0.15%, while the 10-year bond increased nine basis points to close at 1.73%.  Gold prices rose $21.90 or 1.2% to close at $1741.50 an Oz.  Oil prices tumbled on the week, with WTI closing down 6.3% at $61.45 a barrel.

Over the last several weeks, the dramatic rise in interest rates had Wall Street focused on the Federal Reserve’s two-day policy meeting.  In the end, there was no change to the Fed’s policy rate, and the Fed’s dot plot, which depicts when there will be a change in the policy rate, showed no rate change until 2023.  The Fed Chairman’s statement also indicated that the Fed would continue their asset purchase program to the tune of $120 billion a month. It noted that a taper to this action would not occur until the Fed’s mandate of full employment and inflation targets had been achieved.  Interestingly, on Friday, the Fed announced that it would allow changes made to the Supplementary Leverage Ratio calculation to expire at the end of the month.

The SLR calculates leverage at banks, and the policy change last year was made to help liquidity in the market.  The reversion in policy may require banks to raise capital and perhaps curb their stock repurchase programs. Financials sold off on the news.  Some expect the change could also induce banks to sell their US Treasury holdings and hinder their appetite for holding them, which could ultimately help push US yields higher. Elsewhere we saw the Bank of Japan widen its band around the 10-year JGB to 50 basis points from 40 basis points which is a form of tightening.  Russia and Turkey also surprised investors with increases in their respective policy rates.  The pandemic pushed all central banks into an accommodative mode, and interestingly the beginning of divergent central bank policy could expedite changes to asset allocations and increase volatility.

There was quite a bit of economic data announced last week that came in worse than expected.  Initial Claims came in at 770k versus expectations of 700k.  Continuing Claims fell slightly to 4.12 million from last week’s 4.142 million.  Housing starts and permits surprised to the downside.  February Retail Sales fell 3% but were expected to rise 0.2%.  Similarly, February Industrial Production fell 2.2% versus the consensus estimate of 0.7%.  March’s Philadelphia Fed Index results were much better than expected, coming in at 51.8 versus expectations of 23.5 and a February reading of 23.1.

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

Weekly Market Commentary – 3/12/2021

-Darren Leavitt, CFA

The S&P 500, Dow, and Russell 2000 equity indices made fresh all-time highs for the week while the NASDAQ rebounded from its sell-off over the last couple of weeks.  President Biden signed the 1.9 trillion dollar stimulus bill and announced that vaccinations would be available to all adults by May 1st.  Lockdown measures continued to be relaxed across the country as infection rates decline.

Optimism surrounding the re-opening of the global economy coupled with more fiscal stimulus pushed the 10-year bond yield to levels not seen since February of 2021. Additionally, the European Central Bank announced that it would increase their asset purchase program’s pace to help further stimulate their economies. US economic data for the week showed an increase in consumer sentiment, better than expected initial claims, and hints of some inflation at the producer level.

For the week, the S&P 500 gained 2.6%, the Dow increased 4.1%, the NASDAQ rose 3.1%, and the Russell 2000 outperformed with a 7.3% return.  Cyclical sectors continued their outperformance while mega-cap growth stocks lagged, especially on Friday as interest rates spiked higher.  The 2-year note yield fell one basis point to 0.14%, and the 10-year bond yield increased by nine basis points to close at 1.64%.  The US Treasury auctioned 3, 10, and 30 year paper on the week, but the supply was met with decent demand.  Gold prices inched higher by $21.10 to close at $1719.60 an Oz. Price action in oil was muted, with WTI prices falling $0.50 to close at $65.59 a barrel.

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 – 3/5/2021

-Darren Leavitt, CFA

US financial markets finished the week with mixed results as another spike in interest rates induced a sharp sell-off in growth stocks.  Inflation concerns were heightened on commentary from Federal Reserve Chairman Jerome Powell and perpetuated the latest rotational trade we have seen in the last few weeks.  A robust February Employment situation report further stoked inflation fears and pushed the 10-year bond yield to 1.61% at one point.  Oversold conditions that saw the S&P 500 down as much as 5% on the week and the Nasdaq down as much as 11% brought in ” buy the dip” buyers mid-day Friday.  The S&P 500 closed 2% higher on Friday to close above its key 50-day moving average of 3822.

For the week, the S&P 500 gained 0.8%, the Dow led with an increase of 1.8%.  The NASDAQ tumbled 2.1%, and the Russell 2000 gave back 0.4%.  The yield curve steepened again, with the two-year note yield increasing one basis point to 0.14% and the 10-year bond yield increasing by nine basis points to close at 1.55%.  Gold continued to struggle despite the increased fears of inflation.  Gold prices fell $29.90 or 1.7% to close at $1698.50.  OPEC’s decision to keep production cuts in place fueled oil prices and the energy sector.  WTI prices closed 7.6% higher than a week ago, closing at $66.09 a barrel.  The energy sector gained another 10% on the week and has been the best performing sector over the last several weeks.

Comments from Federal Reserve Chairman on Thursday on inflation sent the Ten-year bond eight basis points higher and helped catalyze a sharp sell-off in stocks.  The Chairman continued to express that the current accommodative monetary stance was appropriate and conveyed that yield curve management on the long end of the curve was not a tool they would use right now. The Chairman did acknowledge his concerns on the further tightening financial conditions and its effect on the Fed’s employment mandate.

The February Employment Situation Report was much stronger than expected, with non-farm payrolls coming in at 379K versus the estimate of 200K.  Private Payrolls were even more potent, coming in at 465K versus the consensus estimate of 195K.  The Unemployment rate fell to 6.2% from January’s 6.3%.  The Labor Participation rate continued to underwhelm with a reading of 61.4% relative to last January’s reading of 63.3%.  The better-than-expected report comes as more geographies curb lockdown mandates and more individuals are being vaccinated.

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 2/26/2021

-Darren Leavitt, CFA

A continued steepening of the yield curve induced selling of all asset classes throughout the week.  Economic growth expectations have stoked inflation fears, sending the 10-year note yield fifty-two basis points higher over the month.  Federal Reserve Chairman Jerome Powell tried to damper inflation fears in his bi-annual testimony in front of Congress by reiterating his opinion that the Fed’s inflation mandate of 2% will likely take 3-years to attain.  The Chairman also made clear that the Fed’s monetary policies would remain accommodative for the next few years and that their $120 billion per month of asset purchases would continue as well.  The testimony helped lift markets off their lows on both Tuesday and Wednesday but failed in curbing losses for the week.

The S&P 500 sank 2.4% for the week while the Dow shed 1.8%.  The NASDAQ led declines with a loss of 4.9%, and the Russell gave up 2.9%.  The 2-year note yield gained three basis points to close at 0.14%, and the 10-year yield, which traded as high as 1.61%, ended the week up eleven basis points at 1.46%.  Safe-haven gold lost nearly 3% or $48.80 to close at $1728.40 an Oz, which is somewhat surprising given the precious metals’ psychological hedge on inflation.  Similarly, Bitcoin’s perceived hedge against inflation was questioned as the cryptocurrency price fell from 58k to 42K over the week.  Oil continued to trade higher, with WTI gaining 4% on the week or $2.30 to close at $61.45 a barrel.

The week’s initial jobless claims ticked down to 730k from the prior week’s 841k while continuing claims fell to 4.419 million.  Consumer Confidence came in at 91.3, just shy of the 91.5 that was expected but up from the prior reading of 88.9. The University of Michigan’s Consumer Sentiment came in at 76.8 versus expectations of 77.  January personal income came soared to 10% on a month over month basis on government social benefits.  January personal spending increased 2.4%, while the savings rate increased to 20.5%.  The PCE price index and Core PCE that excludes energy and food both increased by .3% or 1.5% year over year, showing tame inflation.

Technically the S&P 500 breached its 50-day moving average on Friday but was able to trade back and close above the level.  The hold was encouraging, but traders will be watching this level for the next several sessions to see if it can hold or if another breach will bring on more selling.

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 2/19/2021

-Darren Leavitt, CFA

Markets sold off a bit last week in a rotational trade into pro-cyclical sectors and out of growth stocks.  Fourth-quarter earnings continued to come in better than expected while economic data for the week was mixed.  Strong retail sales and an upside surprise in the Producer Price Index induced more steepening in the US yield curve.  Stimulus talks continued with indications that lawmakers might get a package done in the coming week.

For the week, the S&P 500 lost 0.7%, the Dow gained 0.1%, the NASDAQ gave up 1.7%, and the Russell 2000 fell 1%.  The 2-year note yield increased one basis point to close at 0.11%, while the 10-year bond yield rose fifteen basis points to close at 1.35%.  Oil prices continued their ascent, gaining $2.26 or 4% to close at $59.15 a barrel.  OPEC is expected to meet in the coming week to discuss reducing some of the production cuts; however, initially, it appears the Russians and Saudis have differing opinions on how the reductions should be implemented.  Gold prices lost 2.5% for the week or $46 to close at $1777.10 an Oz.  Interestingly, Bitcoin traded north of 57K on the week.

Industrials, Materials, Energy, and Financial issues were bid higher over the week as investors rotated out of large-cap growth stocks.  The consolidation trade comes as the yield curve has steepened, and with it comes concerns regarding valuations of the high-flying growth stocks.  Conversely, financials stand to benefit from the increased spread within the curve.  This rotational trade is nothing new, and we have seen this trend over the last several months as expectations for the reopening of the global economy became more likely.

Retail sales in January rebounded on the hopes for more stimulus.  The data set increased 5.3% on a month over month basis, much more than the 0.8% consensus estimate.  The Producer Price Index surprised to the upside as well, increasing 1.3% versus the expectation of 0.5%.  The uptick in prices at the producer level may suggest price increases at the consumer level.  In fact, this week, Kraft Heinz indicated their increased input costs would eventually have to be translated into higher prices of their products.  Initial claims regressed in the prior week, raising 17k to 861K, more than the 775K consensus estimate.  Continuing claims decreased 64K to 4.494 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

Weekly Market Commentary 2/12/2021

-Darren Leavitt, CFA

Markets rallied to all-time highs on continued positive sentiment surrounding the reopening of global economies and on the fear of missing out on further gains.  Markets opened the week on a strong note with Treasury Secretary Janet Yellen suggesting the US economy could meet full employment if an additional tranche of stimulus is in place. Cyclical sectors such as energy, financials, and semiconductors led the way.

Later in the week, the broader market traded sideways, perhaps consolidating the large move seen in the prior week. Infection and hospitalization rates continued to decline over the week as governments jockeyed to secure more vaccine doses.  Fourth-quarter earnings continued to impress, but the results were met with mixed price action.  Bitcoin soared to over 47k on news that Tesla has purchased 1.5 billion worth of the cryptocurrency and announced that the company would now accept Bitcoin as payment for their products.  Additionally, MasterCard and Bank of New York announced cryptocurrency initiatives.

For the week, the S&P 500 added 1.2%, the Dow gained 1%, the NASDAQ tacked on 1.7%, and the Russell 2000 rose 2.5%.  The US yield curve continued to steepen as the 10-year bond yield inked an 11 month high.  The 10-year yield increased three basis points to close at 1.20%, while the 2-year note yield inched up one basis point higher to 0.10%.  Gold prices increased by $10.20 on the week to close at $1823.10 an Oz.  The price of oil continued to move higher, almost touching $60 a barrel, which buoyed the energy sector.  WTI prices gained 4.5% or $2.58 to close at $56.89 a barrel.

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 2/5/2021

-Darren Leavitt, CFA

Markets rebounded strongly in the first week of February.  Fourth-quarter earnings continued to beat expectations, vaccines continued to go into arms, and economic data continued to be mixed, which fostered more fiscal stimulus arguments.

The S&P 500 gained 4.6%, the Dow rose 3.9%, the Nasdaq added 6%, and the Russell 2000 increased by 7.7%. All market sectors posted gains for the week, with the energy sector outperforming.  The US Treasury curve steepened over the week.  The 2-10 spread closed at 108 basis points, the widest spread since early 2017.  The 2-year note yield fell three basis points to close at 0.09%, while the 10-year bond yield increased by eight basis points to close at 1.17%.  Gold prices fell ~$38 to close at $1812.90 an Oz. WTI crude prices gained over 9% on the week or $4.71 to close at $56.89 a barrel.

Fourth-quarter earnings were highlighted this week by exceptional results out of Google and Amazon.  Google traded 7% higher after their announcement, while Amazon shares sold off 2% due to the CEO’s unexpected departure.  Mr. Bezos will transition into an Executive Chair position in the third quarter.

Covid Infection rates continued to subside from the levels seen in December and January.   The pace of vaccinations in the US seems to be improving and aids investor sentiment that the economy will be much better in the second half.

The January Employment Situation Report headlined economic data for the week.  Non-farm payrolls increased 49k, which was slightly worse than the 50k expected but certainly better than the negative 227k in December.  The Unemployment rate fell to 6.3% versus the expected 6.7% and the prior reading of 6.7%.  The employment data helps the argument that more fiscal stimulus is needed.  ISM manufacturing and services data continued to show expansion; in fact, it’s the 8th consecutive month where both indicators have been in expansionary mode.

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 1/29/2021

-Darren Leavitt, CFA

Markets sold off in volatile trade as retail investors wreaked havoc in heavily shorted companies.  The fourth-quarter earnings season continued to produce better than expected results, although it appears stock prices may already reflect the results.  The January FOMC meeting was expected with monetary policy staying in place while politicians continue to debate Biden’s 1.9 trillion dollar stimulus plan.  There was also plenty of mixed headlines on the coronavirus vaccine front for investors to interpret.  Economic data announced over the week was on the margin better than expected but did little to aid market action.

For the week, the S&P 500 lost 3.3% and fell just below its 50-day moving average of 3716. The Dow shed 3.3%, the NASDAQ fell 3.5%, and the Russell 2000 gave back 4.4%.  Safe-haven assets offered minimal cover.   The 2-year note yield fell one basis point to 0.11%.  The 10-year bond yield was unchanged, closing at 1.09%.  Gold prices fell $5.30 on the week to close at $1850.50, which produced the 5th monthly decline in the last six months.  Oil prices were little changed, with WTI closing down $0.21 to $52.18 a barrel.

A massive short squeeze continued to develop in GameStop, which saw its stock price increase from $65 to $483. At the highs, GameStop became the largest market cap stock in the Russell 2000. Other names like AMC Entertainment, Blackberry, and Nokia showed similar market action. The action was so volatile that trade restrictions were imposed while custodians were required to raise additional capital to ensure trades would settle properly.  A movement by retail investors prompted by some social media influencers has sought highly shorted stocks to buy, forcing the shorts to cover and reconsider their positions.  Trading curbs and perhaps increased regulation are likely outcomes of these developments, which are likely to continue.

The mega-cap tech stocks were in focus last week with their fourth-quarter earnings announcements.  Apple announced its first-ever 100 billion dollars in revenues quarter, which topped analyst expectations.  Similarly, Facebook posted the largest quarterly revenues since Q2 of 2018.  Tesla and Microsoft also announced better than expected results.  However, stock prices fell for all these issues post earning except for Microsoft in what seems to be a situation where the better than expected results had already been priced into the stocks.  Dow, Honeywell, Caterpillar, and Chevron demonstrated similar price action after their earnings.

The January FOMC post-meeting commentary reiterated the Fed’s accommodative policy stance.  As expected, the Fed Funds rate range was unchanged at 0-.0.25%.  Fed Chairman Powell did suggest that Fiscal policy initiatives and the development of effective vaccines had been driving the recent market action.  However, fiscal policy initiatives continue to be mired in a closely divided Congress.  President Biden signaled that he remained hopeful that congress could get together and pass his 1.9 trillion dollar stimulus proposal and suggested that he may alter the budget to get the stimulus out if congress remains in a stalemate.

News on the Coronavirus vaccine front was mixed.  Moderna announced that its vaccine was effective against the UK and South African virus strains. At the same time, Pfizer’s CEO suggested that other variants of the virus could elude our current stable of vaccines.  Elsewhere, J&J announced that it’s one shot vaccine was 66% effective and that Novavax announced its Phase 3 trial candidate was 89.3% effective.

Economic data announced for the week was highlighted by fourth-quarter GDP increasing at a 4% annualized rate.  The figure came in just shy of the consensus estimate of 4.3% but showed resiliency given the increased lock-down measure taken late in the quarter.  Similarly, the final reading of the University of Michigan’s consumer sentiment index came in at 79 versus an estimate of 79.2 and the December reading of 80.7.  The slight miss also showed the consumer hanging in there.  Weekly initial unemployment claims came in down 67k to 847k, which was slightly better than the 875k that was expected.  Continuing claims fell 203k to 4.771 million.  Finally, new home sales were up 1.6% month over month or a seasonally adjusted rate of 847k.

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 1/22/2021

-Darren Leavitt, CFA

The mega-cap technology issues led markets to another set of all-times as cyclicals took a step back after being red hot for the last several weeks.  Fourth-quarter earnings continued to roll out with mixed results. President Biden’s inauguration was followed by several executive orders that the market seemed to take in stride.  After she called for Congress to “act big” on fiscal stimulus, Janet Yellen’s nomination cleared the Senate Finance committee.  Economic data on the job front continued to be sluggish, although housing data showed record strength.  Coronavirus infections continued to increase around the globe while injections of the vaccine continued to have logistical issues.  Dr. Fauci suggested that infection rates may be close to a plateau in the US, while in Europe, more stringent lockdown measures are being considered.

For the week, the S&P 500 gained 1.9%, the down added 0.6%, the tech-heavy NASDAQ led averages with an increase of 4.2%, and the Russell 2000 inked at 2.1% gain.  US Treasury trade was muted during the holiday-shortened week.  The 2-year note yield declined by one basis point to close at 0.12%, while the 10-year bond yield was unchanged at 1.09%.  Oil prices were also unchanged, closing at 52.39 a barrel.  Gold prices increased $27.80 to close at $1855.80 an Oz.  Bitcoin prices continued its wild ride, trading off to just over 31k.

Netflix’s fourth-quarter earnings, along with some upgrades in Apple and Microsoft, jump-started a mega-cap rally for the week.  Netflix subscriber adds were much better than expected and ignited trading to the upside after the announcement.  Disney and Roku shares rose on the news as well.  On the other hand, Intel and IBM disappointed investors with their earnings results and outlook.  Despite Intel’s results, investors continued to pour into the Semiconductor sector, which had another stellar week.  IBM beat on the bottom line but came in light on revenues and induced a steep sell-off.  Financials reported decent earnings, but investors sold the news.  Goldman Sachs, Bank of America, Morgan Stanley, and US Banc-Corp all lost ground after their earnings and muted the financial sector’s weekly performance.

Initial Jobless Claims were down 26k from the prior week to 900k but still above the estimate of 845K and stoked more stimulus rhetoric.  Continuing Claims fell 127k to 5.054 million.  Existing Home sales were up 0.7% month over month or an annual rate of 6.76 million.  Housing inventory continues to be at all-time lows, and perhaps is why we saw Housing Starts increase by 5.8%, the strongest reading since September of 2006.  IHS Flash Manufacturing and Services data was mixed worldwide, but here in the US, both data sets expressed expansion with readings of 59.1 and 57.5, respectively.

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 1/15/2021

-Darren Leavitt, CFA

Markets gave up a bit of ground last week as fourth-quarter earnings season kicked off and President-Elect Biden laid out his 1.9 trillion dollars economic stimulus plan.  Economic data was mixed but painted a picture for the need for more stimulus while the Fed pushed back on the notion that the Fed Funds would be raised anytime soon.

For the week, the S&P and NASDAQ lost 1.5%, the Dow shed 0.9%, and the Russell inked a 1.5% gain.  The yield curve was unchanged on the week.  The 2-year note and 10-year bond yields fell one basis point each to close at 0.13% and 1.09%, respectively.  Gold prices fell $8.70 to close at $1828 an oz.  Oil prices gained $0.13 or 0.3% to close at 52.38 a barrel.

Fourth-quarter earnings kicked off with the Financials.  Citibank, Wells Fargo, and JP Morgan all posted better than expected bottom-line results, but Wells Fargo missed revenue estimates.  Interestingly, the stocks sold off and perhaps indicated that the markets had already priced in these better than expected results.

President-Elect Biden showcased his 1.9 trillion dollars economic stimulus plan the week before his inauguration.  The plan includes another $1400 direct payment to individuals, $400 in supplemental unemployment benefits, $350 billion in state and local funding, and would increase the Federal minimum wage to $15/hr.  Markets also expect that Biden will take executive action on several Trump-era policies within his presidency’s first couple of days.

Retail Sales for December missed the mark coming in at -0.7 versus the estimate of -0.2.  Initial claims were up 185K to 965k versus the forecast of 780k and mark the highest level of initial claims since August 2020.  Continuing claims also regressed and were up 199k over the prior week to 5.271 million.  Industrial production increased 1.6% month over month and shows manufacturing continues to recover.

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 1/8/2021

-Darren Leavitt, CFA

Wow-what a way to start 2021.  US equity averages hit another set of all-time highs despite Washington’s political turmoil and a Democratic sweep in the Georgia Senate runoff elections.  Economic data continued to be mixed, but investors looked past a disappointing December Employment Situation Report to the possibilities of even more economic stimulus.

For the week, the S&P 500 gained 1.8%, the Dow tacked on 1.6%, the NASDAQ advanced 2.4%, and the Russell 2000 soared 5.9%!  The US yield curve saw significant steepening.  The 2-year note yield increased one basis point to close at 0.13%, while the 10-year bond yield ticked higher by nineteen basis points to close at 1.11%. The widening spread in yields helped propel the financial sector 4.7% higher for the week.  Gold lost $57 or 3% to close at $1836.70 at the same time Bitcoin rallied above $41,000.  Oil prices increased significantly, gaining $3.98 or 8.3% to close at $52.25 a barrel.  The move above $50 came as Saudi Arabia and Russia agreed to continue production cuts and added a cut of 1 million barrels a day for February and March.  The agreement sent the energy sector 9.3% higher for the week.

A Democratic sweep in the Georgia Senate elections gives the Democrats a slim majority in the Senate and opens the door to perhaps a more robust Biden agenda.  Investors were unfazed by the results and perhaps recognize that such a small majority will curtail radical policies.  Additionally, the win seemed to bolster the probability for even more economic stimulus.  Late in the week, President-elect Biden proposed a 3 trillion dollar spending plan with 2 trillion earmarked for infrastructure and green jobs.  The notion of more stimulus coupled with an enormous spending plan hammered longer-dated US Treasuries.  Political turmoil at the US Capital was nothing short of astonishing.  Congress had convened to certify the Electoral College results, but the process was disrupted by protestors that laid siege on the Capital.  Eventually, order was restored, and Congress was able to certify the election.  In the aftermath, several of the President’s cabinet members have resigned due to the President’s rhetoric that seemed to have provoked the siege. Some have called for Article 25 to be invoked, which would remove the President from office, while the Democrats have threatened impeachment of the President.

The Employment situation report for December showed that non-farm payrolls decreased by 140k and that the three month average of payrolls had declined to 283k from 522k.  The unemployment rate stayed steady at 6.7%.  Average hourly earnings showed a nice tick up of 0.8%, which brings the 12-month increase in earnings to 5.1%.  The labor participation rate stayed the same at 61.5%.  Initial claims were down slightly for the week at 787k, while continuing claims fell by 126k to 5.072 million.  ISM Manufacturing and Non-Manufacturing showed continued expansion with readings of 60.7 and 57.2, respectively.   Notably, PMI manufacturing figures were also better than expected in Europe.

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 1/1/2021

-Darren Leavitt, CFA

The S&P 500 and Dow Jones Industrial average’s set new all-time highs in the holiday-shortened week.  Another tranche of stimulus passed by Congress and signed by the President catalyzed markets higher early in the week.  The House passed another version of the bill that would pay households $2000 rather than $600, but Senate majority leader Mitch McConnell squashed its hopes by saying there was no realistic path for approval through the Senate.  Direct stimulus checks should be hitting an individual’s accounts within the next few days.

The relief could not come soon enough as hospitalizations and deaths from the coronavirus hit new highs in the US. A faster-spreading variant of the virus was found in California, but scientists believe the new strain does not increase an individual’s mortality rate or sickness.  Inoculations continued to be administered but at a slower pace than had been expected.  Additionally, the UK approved Astra Zeneca/Oxford’s vaccine for emergency use.

For the week, the S&P 500 gained 1.79%, the Dow increased by 1.58%, the NASDAQ tacked on 0.92%, and the Russell 2000 shed 1.45%.  Investors gravitated towards this year’s biggest winners and haven FANG stocks, namely Facebook, Amazon, Netflix, and Google.  The other side of the trade saw weakness in the most recent hot IPO issues, which fell sharply during the week.  US Treasury trade remained subdued, with the 2-year and 10- year yield falling one basis point to 0.12% and 0.92%, respectively.  Gold gained $11.20 to close at $1893.70.  Oil was little changed, with WTI closing at $48.27 a barrel.

It was a light week for economic data.  Initial Jobless claims came in better than expected at 787k.  The figure was down 19k from the prior reading and better than the consensus estimate of 800k.  Continuing claims continued to fall, coming in at 5.219 million- the lowest level since March.

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 12/25/2020

-Darren Leavitt, CFA

US equity markets were mixed in a holiday-shortened week. Corporate news was limited but influenced individual issues while trade was relatively subdued.    Investors continued to focus on Washington negotiations for a resolution on another tranche of coronavirus stimulus.  The EU and the UK came to a post-Brexit trade agreement even as the UK increased lockdown measures to combat a new strain of Covid19 that appears to be spreading at a much higher rate.

For the week, the S&P 500 lost 0.52%, the Dow shed 0.34%, the NASDAQ increased by 0.31%, and the Russell tacked on 1.72%.  The US yield curve was little changed, with the 2-year note yield rising one basis point to close at 0.12% and the 10-year bond yield falling two basis points to close at 0.93%.  Gold lost just over $7 to close at $1882.60 an Oz.  Oil prices fell $0.74 to close at $48.30 a barrel.

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 12/18/2020

-Darren Leavitt, CFA

Choppy trade action throughout the week led US stock indices to another set of all-time highs. Coronavirus stimulus package negotiations dominated headlines while the December Federal Reserve meeting affirmed the Fed’s continued accommodative stance.  Economic data announced for the week was disappointing, but news regarding Moderna’s Covid vaccine was positive.

The S&P 500 gained 1.3% on a quadruple witching week that saw four sets of market options expire on Friday.  The Dow added 0.4%, the NASDAQ rose 3.1%, and the Russell 2000 increased by 3.1%.  The US Treasury yield curve steepened as longer-dated maturities sold off on the possibility of more stimulus needing to be financed and the Fed’s accommodative tone.  The 2-year note yield was unchanged at 0.11%, and the 10-year yield increased six basis points to close at 0.95%.  Gold prices rose 2.5% or $46.58 to close at $1889.20 an Oz.  Oil prices increased 6% or $2.82 to close at $49.04 a barrel.

Interestingly, despite the move higher in oil prices, the energy sector was the worst-performing sector last week but was probably due to consolidation after two months of extreme performance.  Bitcoin eclipsed 20k during the week, trading over 10% higher in one day.  The cryptocurrency now trades at $23,579 while the dollar trades at its lowest level since April of 2018.

Stimulus package negotiations continued throughout the week and into the weekend.  The two-sides continued to make progress but were stuck on eliminating the Federal Reserve’s pandemic lending the facilities.  Republicans want the 429 billion in unused Cares Act funds to be rescinded, want Cares Act funding to halt at the end of the year, and want congressional approval to restart these lending facilities.  The bill looks like it will be tied to the broader government spending package and will include $600 direct payments to American households, $300 in additional unemployment benefits.  It is likely the vote on the two packages could come as soon as Monday morning.

The December Federal Reserve meeting was as expected.  The Fed’s stance will continue to be accommodative until full employment and inflation targets have been met.  The Fed announced it would continue its monthly purchase of $120 billion in US Treasuries and Munis.

Retail sales data was disappointing on the economic front, coming in at -1.1% versus expectations of down 0.2%.  Initial claims ticked higher for a second week in a row, coming in at 885K versus the consensus estimate of 795K.  Continuing Claims fell to 5.508 million from the prior reading of 5.781 million.  Housing starts and Building permits continued to show strength in the real estate market.

There was more positive news regarding a coronavirus vaccine.  On Friday, an FDA panel recommended the FDA approve Moderna’s vaccine for emergency use.  The vaccine subsequently has been approved and sets up another front to fight the virus.

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 12/11/2020

-Darren Leavitt, CFA

Market action was mixed for the week.  Hope for another tranche of stimulus and positive news on a coronavirus vaccine’s progress aided market sentiment early in the week.  However, COVID-19 infection rates continued to spike, and with it, more state and local government lockdowns were announced.  Economic data reported in the week was also mixed but showed signs of regression on the employment front.  Highlighted by the Airbnb IPO, another set of unicorn IPO’s debuted during the week and cued concerns over frothy valuations.

For the week, the S&P 500 lost 1%, the Dow shed 0.6%, the Nasdaq fell 0.7%, and the Russell 2000 bucked the trend with a gain of 1%.  US Treasuries were bid higher, moving yields lower across the curve.  The 2-year note yield fell three basis points to close at 0.11%, while the 10-year bond yield decreased by eight basis points to close at 0.89%.  Gold and Oil prices were little changed for the week closing at $1843.30 an Oz and $46.58 a barrel.  There were no changes to our models.

Investors were hopeful that Washington could agree on another round of stimulus, but by Friday, it appeared both sides were again at a stalemate.  A bipartisan 908-billion-dollar proposal fell short for Republicans on business liability and state and local government funding issues.  Treasury Secretary, Mnuchin proposed a 916-billion-dollar package, but it fell short in the democrat’s eyes because it excluded unemployment benefits.  The two sides were able to extend the time-line to keep the government funded for another week.  There is a real chance that negotiations on the funding bill could incorporate an agreement for more stimulus, and it is something we will be watching this week.

Inoculations started in the UK this week using the Pfizer-BioNtech vaccine.  In the US, the FDA also gave emergency use approval for the Pfizer-BioNtech vaccine, and it is expected that vaccinations will begin in the next couple of days.  An FDA panel also found that the Astra Zeneca /Oxford vaccine was effective and safe, setting the vaccine up to be formally reviewed by the FDA for EUA.  It is also widely expected that the Moderna vaccine will be approved soon.  Sanofi announced that their vaccine trials would continue, but it will most likely seek approval in late 2021.  The approval of these vaccines could not come soon enough.  Numerous states and local governments are taking lockdown measures to stem the increase in infection rates.  Shelter and place orders are in effect for many of California’s major cities.  In some Arizona counties, ICU bed capacity is exhausted.  New York and Pennsylvania announced more extensive lockdown measures.

Interestingly, preliminary University of Michigan consumer sentiment data came in better than expected despite the lockdown measures.  On the flip side, initial claims were up 137k for the week to 853k versus expectations of 720k.  Continuing claims also regressed and were up 230k to 5.757 million.

One area of the market that continues to be red hot is the initial public offering (IPO) market.  This week we saw Airbnb go public.  The stock priced at $68 a share, and the first public trade was at $146- the stock closed its first day of trading up 112%.  Similarly, Door Dash came to market pricing at $102 a share and closing its first day up 85%.  These two names were the headliners for the week, but other IPO’s priced during the week also did quite well.  This is a trend that has been in place for the 3rd and 4th quarters.  Some think that this type of market action demonstrates the current market’s speculative nature and one that requires caution.  Many of the recent IPOs have been Tech-related. Interestingly, there appears to be a broadening movement in Washington to clip many of our largest Technology firms’ wings.  This week the FTC and many states filed suits against Facebook claiming their anti-competitive, but the news was a bit overshadowed by the hot Ipo headlines.  The move to curb Technology companies’ influence has been gaining traction on both sides of the aisle in Washington and is a theme to watch in 2021.

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 12/4/2020

-Darren Leavitt, CFA

US equity markets hit another set of all-time highs last week.  Positive price momentum carried over from a strong November into the start of December, and more positive news on Covid-19 vaccines coupled with the rhetoric around a bipartisan stimulus package aided the weekly gains.

For the week, the S&P 500 added 1.7%, the Dow rose 1%, the NASDAQ led with a gain of 2.1%, and the Russell 2000 increased 2%.  The US Treasury curve steepened as longer-tenured issues sold off.  The 2-year yield increased by one basis point to close at 0.14%, while the 10-year bond yield rose by thirteen basis points closing at 0.97%.  Gold snapped its losing streak gaining just over 3% or $56.60 to close at $1840.20 an Oz.  Oil continued its move higher, increasing $0.76 a barrel to close at $46.25.  There were no changes to our models last week.

Wall Street had an impressive rally last week, with most sectors of the market participating.  Value and growth equities both did well.  Standout sectors included Software and Semiconductors.  In Software, Salesforce.com formally announced that it would take-out Slack, and Docusign and Snowflake’s earnings were better than expected. Semi’s continued to be red hot, posting 50.5% gains since the end of 2019.  Sixteen components of the Philly Semiconductor index were at all-time highs on Friday.  The performance comes as the Semiconductor industry association saw 6% year over year growth in October sales.

The positive news continued to roll-out on Covid-19 vaccines.  Early in the week, Moderna announced an efficacy rate of just over 94%.  Additionally, Pfizer and BioNTech received emergency use approval in the UK.  Later in the week, Pfizer announced that there had been some troubles in their supply chain and tempered their expected manufacturing expectations for their vaccine by 50%.

Stimulus related headlines reappeared during the week.  A watered-down version that would slate $908 billion found some bipartisan support but received a cold shoulder from the administration. Bernie Sanders also said he wanted more from the proposed bill and would want an additional set of $1200 checks to go out to US households.  The news headlines gave the market some footing and induced some anxiety in longer-dated treasuries that sold off on the prospects of a better economy and more fiscal spending.  The push for more stimulus might have a chance after Washington saw a big miss in the Employment situation report.  Non-farm payrolls increased by 245k, much less than the 650k that was expected.  The report clearly showed a slowdown in hiring in November and also showed increased permeant jobless statistics.  On the bright side, the unemployment rate fell to 6.7% in November from 6.9% in October.

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 11/27/2020

-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.