Archives for June 2014

Week in Review

Posted on 06.28.14 |

We’re a week away from the 4th of July and investor sentiment remains in the extreme optimism zone. The World Cup rolls on and the U.S. is still in contention. We’re a couple of weeks from the MLB All-Star Game. Days are actually getting shorter! Summer is definitely here.

Sentiment Remains in Extreme Optimism Zone

Despite relatively high valuations, the primary cyclical trend as we go into summer remains favorable, as measured by Big Mo and the Fed. Caution is advised; the cyclical bull is aged and investor sentiment is once again in the Extreme Optimism zone. I continue to expect a sizable summer sell-off and favor hedging equity exposure and actively managing your bond exposure in a disciplined way (i.e.: Zweig Bond Model).

The Zweig Tactical Bond Model remains a bullish buy signal for bonds, as discussed in the 6/25/2014 Trade Signals. See How to Track the Zweig Bond Model.

It’s as Simple as That

Posted on 06.24.14 |

Michael F. Sciortino, Sr.
Executive Vice President, Managing Director, Head of Distribution
CMG

“Life is really simple, but we insist on making it complicated.” – Confucius

With all the noise in their lives, clients are begging us to make their lives simple. Being busy is most often used as an excuse for avoiding the few critically important but uncomfortable actions like planning for retirement or saving for a child’s college tuition.

This is where you add tremendous value. As Steve Jobs said, “That’s been one of my mantras – focus and simplicity. Simple can be harder than complex: you have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.” Once you simplify your story, your practice will flourish.

Week in Review: First Day of Summer

Posted on 06.20.14 |

As we head into summer this weekend we are ready to relax but we always have a keen eye on the markets. We have a tradition at CMG of consistently producing intelligence for clients, advisors and the investing public no matter what the season.

You can find CMG intelligence here at Advisor Central twice a week. Steve Blumenthal produces a weekly outlook called On My Radar every Friday, and Trade Signals on Wednesday. Sign up for Advisor Central updates here and on the main CMG Capital Management Group site for On My Radar and Trade Signals.

What Our Clients Care About

Posted on 06.17.14 |

Michael F. Sciortino, Sr.
Executive Vice President, Managing Director, Head of Distribution
CMG

“I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived. I wanted to live deep and suck out all the marrow of life…” – Henry David Thoreau

In the end, like Henry, our clients want favorable outcomes. What are these and why are they important? In our business a favorable outcome may be a comfortable retirement, college education for our grad children and grandchildren, protection for our loved ones in case of disability or death, a well funded emergency fund or a number of other specific goals. These are all long term outcomes. Today, there is too much focus on the moment and on disruptive events than on these long term needs of families. As advisors we need to help our clients not be victimized by short term circumstances but rather use these events as springboards for long term wealth accumulation.

Near Zero Interest Rates Not The Answer

Posted on 06.13.14 |

Steve Blumenthal
Founder & CEO
CMG

Every security is priced off of Fed-set interest rates. The ultimate question is, are rates going higher or lower? The answer to that trickles through every other asset class, affects borrowing rates, corporate liquidity, profit margins and credit risks, stock valuations etc.

Bank rates have come down but, according to Martin Armstrong, the spread that banks are charging vs what they pay in deposits and what they charge in loans is near a record high. Individuals and corporations have been largely deleveraging. Less spending = slow economy. The same thing happens when you take more money in the form of higher taxes. Expected higher tax and higher regulation changes ones view on future expected return and shapes decisions on business expansion and risk taking.

The current Keynesian central planning approach is not the answer. The answer is in letting millions of individuals seek solutions, create new things, seeing opportunities, taking chances, filling needs, driven by their own self interest and the interest of their individual teams that when aggregated up creates a larger and healthier collective whole.

Armstrong says he has the largest economic database in the world. He believes that it has helped him better identify major trends and turning points. That has come in handy in combination with his Adam Smith approach of staying unbiased and letting the data speak instead of the Marx-Keynesian approach of trying to force the free markets to do as a few central planners think best.

Is the European Economy Turning Japanese?

Posted on 06.11.14 |

PJ Grzywacz President, Chief Compliance Officer, CMG Capital Management Group

PJ Grzywacz
President & CCO
CMG

“I’m turning Japanese, I think I’m turning Japanese, I really think so.”

The English band, the Vapors, was an 80s one hit wonder with the song “Turning Japanese.” I was never a fan but the tune seems to be getting renewed airplay with a very narrow audience these days: central bankers and economic policy makers. The song has little to do with Japan, or Asia for that matter, aside from a clever oriental riff (it’s actually about love). That hasn’t stopped policy makers from taking the chorus line at face value: namely the risk of their economy “turning Japanese”.

Turning Japanese in today’s macroeconomic environment means that your country (or block of countries) is at risk of deflation and if action is not taken quickly and decisively, that risk can turn into a 20 year battle, just like in Japan.

Piketty Has Legs

Posted on 06.06.14 |

Steve Blumenthal
Founder & CEO
CMG

The world’s fascination with Thomas Piketty and his book Capital in the Twenty-First Century is not abating. In the Bloomberg TV video today, Piketty Says FT Made a Fool of Itself Over His Book (video embedded below), we see that the “analysis” by the FT and Piketty’s aggressive response keeps this story cycle spinning and book sales moving along briskly. This is probably the most popular economics book in generations and perhaps the most popular book of any genre now, according to the Bloomberg Anchor. As they say in Hollywood, this story has legs.

Where do I stand on the Piketty debate? I agree with this assessment by Peter Schiff: “There can be little doubt that Thomas Piketty’s new book, Capital in the 21st Century, has struck a nerve globally. What is surprising, however, is that the absurd ideas contained in the book could captivate so many supposedly intelligent people.” If you want a thorough analysis, read Peter’s excellent article in Advisor Perspectives: Piketty’s Envy Problem.

Choose to Be Extraordinary

Posted on 06.03.14 |

Michael F. Sciortino, Sr.
Executive Vice President, Managing Director, Head of Distribution
CMG

As Robert Louis Stevenson once said, “To become what we are capable of becoming is the only end in life.”

Once you begin to understand and realize what you are capable of, the whole world changes. Sure, we all want our life to matter but how can we seize this amazing opportunity, this one-of-a-kind lifetime, this once-in-history opportunity to be extraordinary? Let’s begin with the following question.

When was the last time you sat down and really thought about how you can design an extraordinary life for you and your family? It might be quite different than what you envisioned years ago. With life’s normal cycles, it probably is.

When I look at the lives of extraordinary people, I find that most had a way of saying no to the unimportant so they could say yes to the important, whatever that was in their lives. They passionately believe that wherever they are now, they can get better. I also found that the earlier in life that they began playing to their strengths, the more opportunity they had to develop and enjoy their unique abilities.