CMG AdvisorCentral

Tactical investing news, views and resources for financial advisors

TwitterGoogle+Linkedin
  • Blog
    • Contributors
  • Advisor Resources
  • About CMG
    • Sitemap
  • Events

NASDAQ’s Jill Malandrino Interviews Steve Blumenthal

Posted on 06.19.18 |

Last week, NASDAQ’s Global Market Reporter, Jill Malandrino, interviewed Steve Blumenthal at the Philadelphia Stock Exchange.

Steve discussed the Fed’s recent interest rate hike and its plans for additional increases this year. Steve urged caution, noting that 10 of the last 13 interest rate increase cycles have landed the US in recession. Click below for the full interview and potential moves investors can make to protect and preserve.

Source: NASDAQ

Categories: Equities, Fixed Income, Market Snapshot, Monetary Policy, Tactical Investment Strategies Tags: Federal Reserve, Interest Rates, recession, The Fed

Equity Market Valuations and Probable Forward Returns

Posted on 02.20.18 |

At which point do rising interest rates spark the fire?  Rates are key to the equation of risk.  In Friday’s On My Radar, Steve surveys what the current equity market valuations tell us about risk… and likely forward returns.  Should you be playing more offense than defense or more defense than offense?  Valuations can help.

READ MORE

Categories: Equities, Fixed Income, Market Snapshot, Monetary Policy, Tactical Investment Strategies Tags: Equities, On My Radar, Steve Blumenthal, valuations

“Three Steps and a Stumble”

Posted on 10.30.17 |

You may have heard the phrase, “three steps and a stumble.”  It means that when the Fed raises rates three times in a row, a market stumble is likely to follow.

Following is a visual look at that rule:

  • The S’s in the chart mark the third consecutive rate hike
  • Note how the hikes almost always precede a new recession
  • Note the current signal is a sell or “S” and
  • Note the DJIA has declined a median of 17.9% from sell signals to bear market bottoms

Source: Ned Davis Research

Minus 17.9% is not too tough to deal with.  We would need a return of approximately 20% to get back to even.  That may not take too long a period of time.  It’s the -40% and -50% that kills the compounding.  While I like the three steps and stumble rule, it’s not my go to.

READ MORE

Categories: Monetary Policy

What does the latest Fed rate increase mean for stocks?

Posted on 06.19.17 |

The Fed raised rates last week and bond yields sank lower.  Many expected the opposite reaction.  If you missed last summer’s mortgage refi opportunity, I believe you are going to get another chance.  Interest rates appear to be heading back down towards their July 2016 lows.

And what are the implications of Fed policy on the U.S. stock market?  Ned Davis Research’s Ed Clissold pointed out in a tweet late yesterday, “Today’s #FOMC decision is a reminder that even slow tightening cycles eventually impact the stock market. #fed @NDR_Research.”

The chart Ed shared in his tweet follows.  Here is how to read it:

  • NDR compares market gains during slow tightening cycles (black line in chart) vs. fast tightening cycles (red line in chart) vs. non tightening cycles (green line in chart), and more.
  • It looks at what happened historically to the stock market in periods when the Fed was quickly raising rates vs. slowly raising rates – like the current cycle.
  • The purple line is the current Fed tightening cycle that began in December 2015.
  • Note how NDR breaks out % Gain During 1st Year and % Gain During 2nd Year. We now find ourselves in year 2.  Purple line (right-hand side of chart).
    • Year 1 gains averaged 10.8%
    • Year 2 gains averaged -1.8%
  • The green line shows non-cycles… markets do better when the Fed is lowering (easing), not raising (tightening), interest rates. “Don’t fight the Fed” as they say.

Categories: Monetary Policy, Tactical Investment Strategies Tags: Equities, ETF, Stephen Blumenthal, Steve Blumenthal, Tactical Investing, The Fed

Animal Spirits and the “Fear Gauge”

Posted on 05.16.17 |

In Friday’s On My Radar, Steve Blumenthal wrote, “Last Monday, the VIX broke below 10 to close at 9.77, the lowest level in more than a decade.  There are only three other days the index has closed at lower levels, all of them in December 1993.  Investors are complacent to risk.  They shouldn’t be.”

Investment consulting firm 720Global also recently wrote about market volatility in The Unseen, “Volatility: A Misleading Measure of Risk.”

As investors, we are negligent if we follow the Fed’s lead into this complacent stupor. By prodding economic growth with unproductive debt and reigniting asset bubbles, the central banks have simply done more of what created the spasms of 2008 in the first place. Despite the markets calm façade and historically low perception of risk, the vast chasm that lies between perceived risk and reality is troublesome.

READ MORE

Categories: Global Economy, Market Snapshot, Monetary Policy, Portfolio Construction, Tactical Investment Strategies Tags: Equities, ETF, On My Radar, Risk, Stephen Blumenthal, Steve Blumenthal, Stocks, Tactical Investing, The Fed, VIX, volatility

Fed Leaves Interest Rates Unchanged; Expresses Confidence in Economy

Posted on 05.04.17 |

Following a two-day meeting of the policy-making Federal Open Market Committee (FOMC), the Federal Reserve held current interest rates steady, but the central bank is likely to raise rates in the coming months (possibly in mid-June).  Fed officials are not worried about the slow pace of growth during the first quarter of 2017.  (U.S. GDP grew at an annualized rate of 0.7 percent.)  The Fed said the slowdown was “likely to be transitory.”

“Inflation measured on a 12-month basis recently has been running close to the committee’s 2 percent longer-run objective,” the Fed said.  Household spending rose “only modestly” but the fundamentals underpinning consumption growth “remained solid.”

Declines in the unemployment rate has been the primary driver behind the Fed’s recent rate increases.  The unemployment rate fell to 4.5 percent in March, the lowest level since 2007.  (The Labor Department will release the April jobs report on Friday.)

Categories: Global Economy, Monetary Policy, Tactical Investment Strategies Tags: Debt, Interest Rates, Rates, Tactical Investing, The Fed

Dalio: Are We at the End of a Long-Term Debt Cycle?

Posted on 10.24.16 |

10-21-00Ray Dalio established Bridgewater Associates in 1975.  With $150 billion under management, Bridgewater is the largest hedge fund in the world.  The firm has approximately 350 institutional clients, including public and corporate pension funds, university endowments, charitable foundations, supranational agencies, sovereign wealth funds and central banks.

In 2015, Bridgewater published Economic Principles, a research paper discussing the driving forces behind the economy, and explains why economic cycles occur by breaking down concepts such as credit, interest rates, leveraging and deleveraging.  Here at CMG, our interns are required to read Economic Principles, among other books.  Though lengthy, it is the best working model on global economic cycles, debt, education, inflation and more I have read.

Dalio was interviewed by CNBC’s Andrew Ross Sorkin at last month’s CNBC Institutional Investors Delivering Alpha Conference.  In this week’s On My Radar, we summarize the interview and address Dalio’s question, “Are we at the end of a long-term debt cycle?”

READ MORE

 

Categories: Monetary Policy, Portfolio Construction, Tactical Investment Strategies Tags: Debt, On My Radar, Stephen Blumenthal, Steve Blumenthal, Tactical Investing

The Quest for Yield

Posted on 10.10.16 |

Yields are at 5,000-year lows.

71% of the world’s government bonds are yielding less than 1%.  33% yield less than 0%.  In a picture it looks like this:

10-07-12

Source: Bloomberg; JPMorgan Asset Management, BofA Merrill Lynch

Risk is being overlooked in HY bonds.  Yields on high yield debt are close to the same yields on less risky loans.  The chase for yield has driven investors to riskier asset classes.

I am anticipating a once-in-a-generation buying opportunity in HY bonds.  While the trend this week is up, continue to invest with the trend.  Move to the safety of cash or Treasury Bills when the trend crosses down.

Click below for a great chart showing what a 1% increase in interest rates does to bond prices.  Show it to your clients!

READ MORE

Categories: Fixed Income, Monetary Policy, Tactical Investment Strategies Tags: Bonds, Debt, fixed income, high yield, On My Radar, Stephen Blumenthal, Steve Blumenthal, Tactical Investing, The Fed, Trade Signals, valuations, Zweig Bond Model

Mauldin’s “Monetary Mountain Madness”

Posted on 09.12.16 |

If you read just one piece this week, read John Mauldin’s “Monetary Mountain Madness.”

John’s promise: “I trust that by the end of this letter you will better understand just how bankrupt – and disastrous – what passes for sound economic thinking among the world’s central bankers actually is.”

Terrific article!

Categories: Monetary Policy Tags: fixed income, high yield, The Fed, Zweig Bond Model

Catch CMG on Twitter

Posted on 04.15.15 |

TwitterCMG Capital Management Group is active on social media.

Follow CMG CEO Steve Blumenthal on Twitter @SBlumenthalCMG

Follow CMG Capital Management Group on Twitter @askcmg

The $9 Trillion Short That May Send the Dollar Even Higher http://t.co/TaQVhLjuRM @business @askcmg Strong Dollar unintended consequences SB

— Stephen Blumenthal (@SBlumenthalCMG) April 13, 2015

Categories: Monetary Policy Tags: dollar

Next Page »

Top Posts

  • Building A Hunker Down ETF Portfolio - Blumenthal at Barron's
  • Blumenthal in WSJ on Valuations And Forward Returns
  • CMG's Total Portfolio Solution Whitepaper Free Download
  • CMG Adopts GIPS Standards Verified By Ashland Partners
  • Charting The New Bull Market in Gold - Blumenthal in Forbes

Categories

  • CMG News
  • Conferences
  • Equities
  • Fixed Income
  • Global Economy
  • Market Snapshot
  • Marketing
  • Monetary Policy
  • Portfolio Construction
  • Practice Management
  • Tactical Investment Strategies
  • top posts

Archives

Browse the blog A-Z

CMG CAPITAL MANAGEMENT GROUP, INC. • 1000 Continental Drive, Suite 570 • King of Prussia, PA 19406 • P:610.989.9090 • E:advisors@cmgwealth.com

©2018 Capital Management Group, Inc, All Rights Reserved

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by CMG Capital Management Group, Inc (or any of its related entities-together "CMG") will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. No portion of the content should be construed as an offer or solicitation for the purchase or sale of any security. References to specific securities, investment programs or funds are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations to purchase or sell such securities.
Certain portions of the content may contain a discussion of, and/or provide access to, opinions and/or recommendations of CMG (and those of other investment and non-investment professionals) as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current recommendations or opinions. Derivatives and options strategies are not suitable for every investor, may involve a high degree of risk, and may be appropriate investments only for sophisticated investors who are capable of understanding and assuming the risks involved. Moreover, you should not assume that any discussion or information contained herein serves as the receipt of, or as a substitute for, personalized investment advice from CMG or the professional advisors of your choosing. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. CMG is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice.
This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any CMG client from any specific funds or securities. Please note: In the event that CMG references performance results for an actual CMG portfolio, the results are reported net of advisory fees and inclusive of dividends. The performance referenced is that as determined and/or provided directly by the referenced funds and/or publishers, have not been independently verified, and do not reflect the performance of any specific CMG client. CMG clients may have experienced materially different performance based upon various factors during the corresponding time periods.
Hypothetical Presentations: To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including: (1) the model results do not reflect the results of actual trading using client assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight; (2) back-tested performance may not reflect the impact that any material market or economic factors might have had on the adviser’s use of the model if the model had been used during the period to actually mange client assets; and, (3) CMG’s clients may have experienced investment results during the corresponding time periods that were materially different from those portrayed in the model. Please Also Note: Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that future performance will be profitable, or equal to any corresponding historical index. (i.e. S&P 500 Total Return or Dow Jones Wilshire U.S. 5000 Total Market Index) is also disclosed. For example, the S&P 500 Composite Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor’s chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The historical performance results of the S&P (and those of or all indices) and the model results do not reflect the deduction of transaction and custodial charges, nor the deduction of an investment management fee, the incurrence of which would have the effect of decreasing indicated historical performance results. For example, the deduction combined annual advisory and transaction fees of 1.00% over a 10 year period would decrease a 10% gross return to an 8.9% net return. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet, his/her investment objective(s). A corresponding description of the other comparative indices, are available from CMG upon request. It should not be assumed that any CMG holdings will correspond directly to any such comparative index. The model and indices performance results do not reflect the impact of taxes. CMG portfolios may be more or less volatile than the reflective indices and/or models.
In the event that there has been a change in an individual's investment objective or financial situation, he/she is encouraged to consult with his/her investment professionals.
Written Disclosure Statement. CMG is an SEC registered investment adviser principally located in King of Prussia, PA. Stephen B. Blumenthal is CMG's founder and CEO. Please note: The above views are those of CMG and its CEO, Stephen Blumenthal, and do not reflect those of any sub-advisor that CMG may engage to manage any CMG strategy. A copy of CMG's current written disclosure statement discussing advisory services and fees is available upon request or via CMG's internet web site at (http://www.cmgwealth.com/disclosures/advs).