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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.

Weekly Market Commentary

August 24th, 2020

Chadd Mason, CEO The Cabana Group

Tech Companies Lead the S&P 500 to Record Highs

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

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

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

August 18th, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

August 10th, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

August 3rd, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

August 3rd, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

July 29th, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

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

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

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

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

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

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

 

Weekly Market Commentary

July 20th, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

July 13th, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

July 7th, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

June 22nd, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

June 22nd, 2020

Chadd Mason, CEO The Cabana Group

Which Way Will the Market Break?

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

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

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

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

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

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

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

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

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

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

 

Weekly Market Commentary

June 15th, 2020

Chadd Mason, CEO The Cabana Group

Markets Show Important Reversal at Even More Important Level

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

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

June 8th, 2020

Chadd Mason, CEO The Cabana Group

Perception is Not Reality

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

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

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

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

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

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

IMPORTANT DISCLAIMERS

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

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

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

 

Weekly Market Commentary

June 1st, 2020

Chadd Mason, CEO The Cabana Group

The Stock Market Continues to Climb as Protests Spread Nationwide

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Weekly Market Commentary

May 26th, 2020

Chadd Mason, CEO The Cabana Group

What Investors Can learn from Today’s Market

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

May 18th, 2020

Chadd Mason, CEO The Cabana Group

Markets Closed Up Big Today Amid Positive Coronavirus Vaccine Results

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

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

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

April 27th, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

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

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

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

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

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

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

Oil Market Update

– David Young, CFA

Oil Prices: A Primer

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

April 14th, 2020

Chadd Mason, CEO The Cabana Group

The Investment Process Magnified to the Tenth Degree

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

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

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

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

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

 

Weekly Market Commentary

April 7th, 2020

Chadd Mason, CEO The Cabana Group

Market Swings Continue Among Coronavirus Optimism

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

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

March 30th, 2020

Chadd Mason, CEO The Cabana Group

Americans Come Together as Markets Close Out Worst Quarter Since 1987

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

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

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

IMPORTANT DISCLAIMERS

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

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

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

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

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

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

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

Weekly Market Commentary

March 23rd, 2020

Chadd Mason, CEO The Cabana Group

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

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

More perspective from those who came before us:

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

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

Market Update:

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

Target Drawdown 7, 10, 13 and 16:

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

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

Target Drawdown Income 5 and Efficient 10:

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

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

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

In Closing:

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

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

IMPORTANT DISCLAIMERS

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

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

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

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

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

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

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

Weekly Market Commentary

March 16th, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

March 9th, 2020

Chadd Mason, CEO The Cabana Group

All True Investing Takes Process and Perspective

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

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

Our Process:  

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

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

Some Perspective:

S&P 500

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

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

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

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

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

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

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

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

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

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

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

Weekly Market Commentary

February 19th, 2020

Chadd Mason, CEO The Cabana Group

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

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

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

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

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

IMPORTANT DISCLAIMERS

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

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

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

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

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

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

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

Weekly Market Commentary

February 19th, 2020

Chadd Mason, CEO The Cabana Group

Apple Reports Coronavirus Threat to Tech

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

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

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

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

At Cabana we remain Moderately Bullish.

IMPORTANT DISCLAIMERS

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

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

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

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

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

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

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

Weekly Market Commentary

February 10th, 2020

Chadd Mason, CEO The Cabana Group

Q4 Earnings Continue to Beat Expectations and Provide Investors with Hope

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

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

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

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

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

IMPORTANT DISCLAIMERS

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

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

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

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

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

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

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

Weekly Market Commentary

February 4th, 2020

Chadd Mason, CEO The Cabana Group

The Emotional Stock Market vs. the Wise Old Bond Market

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

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

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

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

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

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

We remain moderately bullish for the time being at Cabana.

IMPORTANT DISCLAIMERS

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

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

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

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

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

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

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

Weekly Market Commentary

January 27, 2020

Chadd Mason, CEO The Cabana Group

Markets React to the Coronavirus Fears

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

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

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

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

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

IMPORTANT DISCLAIMERS

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

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

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

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

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

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

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

Weekly Market Commentary

January 21, 2020

Chadd Mason, CEO The Cabana Group

The Temperature is “Just Right”

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

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

Key Terms:  

Goldilocks Economy:

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

IMPORTANT DISCLAIMERS

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

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

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

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

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

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

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

Weekly Market Commentary

January 13, 2020

Chadd Mason, CEO The Cabana Group

News-Driven Market Predictions Can Be a Recipe for Disaster

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

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

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

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

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

IMPORTANT DISCLAIMERS

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

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

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

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

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

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

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

Weekly Market Commentary

January 06, 2020

Chadd Mason, CEO The Cabana Group

Trusting the Markets Among Rising Middle East Tension

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

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

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

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

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

IMPORTANT DISCLAIMERS

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

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

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

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

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

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

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

Weekly Market Commentary

December 23rd, 2019

Chadd Mason, CEO The Cabana Group

2019: A Great Year for Investors of all Types

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

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

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

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

At Cabana we remain moderately bullish.

IMPORTANT DISCLAIMERS

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

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

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

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

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

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

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