CMG AdvisorCentral

Tactical investing news, views and resources for financial advisors

Archives for March 2016

High Corporate Debt Threatens Profits

|

As you see in the next chart, increased corporate debt loads place profits at risk.

3.25.1

It’s profits we need to worry about especially when valuations are high.  This is a headwind to further market upside.

If you want to get a good sense for why high valuations lead to poor future returns, I wrote a piece this week for Forbes titled, Plump P/E Ratio Suggests Subdued Stock Market Returns Ahead.

The point is that debt is a drag on profits.  It is concerning now but will be even more concerning  when interest rates begin to rise. So it is forward we must set our gaze.

Read More >

Bearish Equity And Bullish Bond Signals Persist

|

CMG Capital Management Group Inc.Every Wednesday afternoon Steve Blumenthal, CEO of CMG Capital Management Group, takes a hard look at the markets and posts his Trade Signals.

Trade Signals is Steve’s “risk on – risk off” call on market volatility and adjusting portfolio positioning for the market conditions. Steve illustrates his outlook on a weekly basis through the use of Sentiment Charts.

Read More >

Sustaining the Unsustainable

|

Steve Blumenthal, CEO, CMG Capital Management Group, speaking with Barron's Funds reporter Chris Dieterich about ETF StrategistsBanks can borrow for nothing (0%), expand their loan book by 2.5% (by the end of January 2018) and get an extra 40 bps kicker from the ECB.  Get your “chicks for free.”  OK, maybe not “chicks” but certainly “money for nothing.”  What they are not saying is that the banks are in trouble.  Let’s hope the banks can find some qualified and motivated borrowers.

This next quote pretty much sums it all up for me, “In the last three years plus, central banks have had little choice but to do the unsustainable in order to sustain the unsustainable until others do the sustainable in order to restore sustainability.” – Mohamed A. El-Erian, The Only Game in Town: Central Banks, Instability and Avoiding the Next Collapse (Random House, 2016)

Read More >

Trade Signals For An Aged Tired Bull

|

Then the kind woman washed the lovely bull and massaged his tired muscles with oil. She fed him good food and cared for him, until the end of their happy lives together.The long-term models, CMG Ned Davis Research (NDR) Large Cap Momentum Index and 13/34-Week EMA, inform our long-term market outlook.  The primary trend remains negative.  The long-term signals guide our cautious view on the market.  Hedge equity exposure and raise some cash on rallies.

Mohamed El-Erian is suggesting 25% in cash.  I’m not suggesting that much, but we should take note of his reasoning.  I favor using our CMG NDR Large Cap Momentum Index to have a systematic process in place that does it for us.

Read More >

Helicopter Money Next?

|

Mario Draghi ECBThe big news this week is Mario Draghi and the European Central Bank (ECB).  Let’s look at that, but first let’s see if we can take a 30,000 foot view at the problem and how the markets might behave going forward.

Collectively, the number one global problem is DEBT.  Can we grow our collective incomes in a healthy way that we are able to cover our debts?  For long periods of time, debt helps to fuel growth but at some point it becomes too big.  Think in terms of what you earn and what you have to spend after you pay your bills.  When you have too much debt and more of your income goes to pay off your debt, you have less to spend on other things.  Your economy slows.

Read More >

Time To Buy High Yield ETFs Again?

|

ETF.comCMG Capital Management Group CEO Steve Blumenthal spoke to Cinthia Murphy at ETF.com about the state of high yield bonds. Excerpt from the story:

From a technical—and more tactical—perspective, high-yield bond ETFs could prove to be a great short-term opportunity, but not a long-term one, says Steve Blumenthal of CMG Capital Management Group.

“A simple smoothed moving average can tell us a lot about both the short-term and the longer-term trends in high yield: It’s a short-term buy for now, but trading it with stops in place for the overall longer-term trend picture remains less favorable,” Blumenthal said.

See the full story in ETF.com: Is It Time To Buy High Yield ETFs Again?

Median P/E As Valuation Indicator

|

CMG Capital Management Group CEO Steve Blumenthal on theStreet about high yield bondsMy favorite valuation indicator has long been the Median price to earnings ratio or P/E.  The P/E Ratio is the measure of the share price relative to the annual net income earned per share outstanding.  It can be measured by looking at a specific company such as Apple (“AAPL”) or by looking at a particular index like the S&P 500® Index.

The Median P/E is the one for which exactly half of all the stocks have higher ratios and half have lower.  The P/E is the most commonly used stock valuation ratio.  It allows investors to quickly gauge the valuation of a company based on its current reported earnings.

Read More >

Stock and Bond Trade Signals From CMG

|

Steve Blumenthal, CEO, CMG Capital Management Group, speaking with Barron's Funds reporter Chris Dieterich about ETF Strategists

Steve Blumenthal, CEO, CMG Capital Management Group

Every Wednesday afternoon Steve Blumenthal, CEO of CMG Capital Management Group, takes a hard look at the markets and posts his Trade Signals.

Trade Signals is Steve’s “risk on – risk off” call on market volatility and adjusting portfolio positioning for the market conditions. Steve illustrates his outlook on a weekly basis through the use of Sentiment Charts.

Excerpt below from this week’s Trade Signals S&P 500 Index 1980 – Aggressive Rally, Now What?  Read More >