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2017 Predictions

Posted on 01.17.17 |

I hate making predictions.

I got the tech wreck and sub-prime right, but was far too early on those predictions.  Importantly, the predictions below could most certainly be wrong.  We live in a highly complex world.  We can measure instability, we can score up risk but we can’t precisely know timing.The clear risk to me today is in the bond market.

  • U.S. stocks will remain in an uptrend fueled by a strong dollar.
  • Tax cuts, infrastructure spending and $2 trillion in tax repatriation will drive capital flows to the U.S.
  • The European sovereign debt crisis will be the first major crack to crack. Unmanageable debt in Portugal, Italy, Greece and Spain.  Include France and Germany in their dysfunctional union.  Confidence in government/political leadership is lost.
  • The European banks sit on the fault line. Watch the banks.  Hope so… Not so sure.
  • The smart money races out of EU banks to U.S. dollars and U.S. assets.
  • In China, debt too is the major concern. Ghost cities lacking rental income will prove unable to support the structured debt that financed the construction.  Defaults mount.
  • Drastic measures are put in place to prevent the flow out capital to the U.S.
  • Gates, tariffs, currency wars escalate – trade wars escalate.
  • Loss of confidence in government here, there and most everywhere.
  • Global and U.S. inflation become a major concern as global growth remains well below the average of the last six post-recession expansions.  Click here for a great chart.
  • Stagflation returns. Low growth/high inflation.  Interest rates move higher with the 10-year touching 3% this year and 6% within a few short years.
  • The great bond bull market is over. Bond investors lose money.
READ MORE

Categories: Global Economy, Tactical Investment Strategies Tags: Bonds, Equities, fixed income, Gold, recession, Risk, Stephen Blumenthal, Steve Blumenthal, Tactical Investing, The Fed

Bloomberg Markets Most Influential Summit Recap

Posted on 10.03.16 |

ho92rmshLast week, Steve Blumenthal attended the Bloomberg Markets Most Influential Summit.  In this week’s On My Radar, Steve shares his notes from the conference, as well as links to select video interviews.

Hedge fund legend Julian Robertson kicked things off on Tuesday evening. Julian sees opportunities in technology and biotech stocks and he believes there’s pain ahead for investors not properly positioned due to the bubble created by Fed Chair Janet Yellen and the global central banks.

Steve also highlights interviews with Howard Marks of Oaktree Capital Management and Marc Lasry of Avenue Capital Group.

READ MORE

Categories: Conferences Tags: Equities, fixed income, Gold, high yield, On My Radar, Stephen Blumenthal, Steve Blumenthal, The Fed

Trade Signals – Sentiment Better, Risk On Remains

Posted on 09.07.16 |

With a nod towards broad portfolio diversification, following is a quick summary of what I am seeing this week — organized by investment category (equity markets, fixed income and liquid alternatives):

Equity Markets: Investor Sentiment moved from excessive optimism to neutral.  The trend remains positive.  Supply and demand continues to evidence more buyers than sellers (a bullish signal).  Don’t Fight the Tape or the Fed moved from 0 to -1.  This next chart shows us why we want to watch out for -2 (an unfavorable trend and unfriendly Fed environment):

09.07.01

The 13/34-Week EMA trend indicator remains bullish.  The CMG NDR Large Cap Momentum Index is nearing a buy signal; its model trend line is bullish.

A quick note on the chart above:  NDR shows price appreciation and not total return.  So, the Buy/Hold + 8.55% Gain/Annum would be higher with dividends added in.  That would be more informative; however, since we are comparing the price appreciation in each zone (+2, +1, Neutral (0) as reflected), I believe the data is telling and useful in giving us a sense for which environments suggest more or less risk.  Actual returns in each category are higher.  A thank you to an astute reader.

Fixed Income: The 10-year Treasury Yield is back down to 1.52%.  Money is voting with its pocket… saying the Fed won’t raise rates.  The Zweig Bond Model remains bullish on bonds and our HY remains in a buy signal.  The underlying HY fundamentals are terrible; however, this is another good example where trend following can be a good friend.  We will ride the uptrend until it reverses.  Further, we see “JNK” and “PCY” exhibiting the strongest relative strength in fixed income (this from a universe of nine ETFs ranging from short-term and long-term Treasury bonds, corporate bonds, munis, high yield, emerging market, inflation and developed market bonds).

Liquid Alternatives: The CMG Opportunistic All Asset ETF Strategy is currently allocated approximately 81% to equities and 19% to fixed income.  We are seeing strong relative price leadership in “EEM” (Emerging Markets), “VT” (Vanguard Total World Stock ETF), “QQQ” and “IYW” (Technology ETFs) and “IYF” (U.S. Financials).  Our two fixed income ETFs, “EDV” (Vanguard Extended Duration Treasury) and “TLT” (iShares 20+ Year Treasury Bond), have rallied nicely.  Biotech looks to be recovering from the Hillary Clinton statements.  For weightings by asset class, please see the CMG Opportunistic All Asset Strategy pie chart below.  Gold (“GLD”) looks to have held support at 125.  The cyclical trend for gold remains higher as evidenced by the Gold chart you’ll find in the full post (link below).

For charts, analysis, and commentary see the rest of the story in Trade Signals — Sentiment Better, Risk On Remains.

The current opinions and forecasts expressed herein are solely those of Steve Blumenthal and are subject to change.  They do not represent the opinions of CMG.  CMG’s trading strategies are quantitative and may hold a position that at any given time does not reflect Steve’s forecasts.  Steve’s opinions and forecasts may not actually come to pass.  Information on this site should not be used as a recommendation to buy or sell any investment product or strategy.

Categories: Tactical Investment Strategies Tags: CMG NDR Large Cap Momentum Index, CMG opportunistic All Asset Strategy, Equities, ETF, fixed income, Gold, high yield, Tactical Investing, Trade Signals, Zweig Bond Model

The Quest For Yield

Posted on 07.31.16 |

CMG Capital Management Group Market AnalysisAt a recent investment conference, one of the panelists was an investment officer for the China Investment Corporation (CIC) – the Chinese sovereign wealth fund.  She was particularly critical of the performance of their hedge fund managers.  The CIC and others have been exiting their hedge fund investments.  A common theme of late.

“The secret to my success is I buy when everyone else is selling and I sell when everyone else is buying,” said the great Sir John Templeton to me in 1985.  He added, “If you can do that, you’ll be amongst the best in the business.”  The contrarian in me just couldn’t help but to think back to that sage advice.  It seems to me like we may be arriving at one of those points in time, Sir John.  Just saying.

Read More >

Categories: Tactical Investment Strategies Tags: Gold, On My Radar, Steve Blumenthal

Trade Signals: All-Time Record High

Posted on 07.15.16 |

CMG Capital Management Group Inc.There are no major changes this week; though, daily investor sentiment is nearing Extreme Optimism.  The cyclical trend for U.S. equities remains bullish.  With valuations high (and they could go higher), risk remains high.  Hedge any equity exposure.

The Zweig Bond Model remains in a buy signal, suggesting longer-term high-quality bond ETF exposure.  High yield remains in a buy signal.  Gold remains in a cyclical bull market uptrend.

Following are the most recent Trade Signals:

Read More >

Categories: Tactical Investment Strategies Tags: CMG NDR Large Cap Momentum Index, Gold, Steve Blumenthal, Trade Signals

Gold Remains Bullish, Equity Valuations High

Posted on 07.11.16 |

CMG Capital Management Group Market AnalysisWe are living in an unprecedented interest rate and monetary policy period in time.  Gold moved into a cyclical bull market environment in January and the trend remains bullish. (Please visit my Trade Signals post and scroll down to the gold chart).  I like gold for up to 10% of a total portfolio structure.

Today let’s take a look at what the most recent equity market valuation data is telling us.  We’ll look at one-to-three year, seven-year and 10-year forward time horizons.

You’ll find that U.S. equities are significantly overvalued.  This continues to suggest caution and setting realistic expectations on stock market returns.

Read More >

Categories: Tactical Investment Strategies Tags: Gold, On My Radar, Steve Blumenthal

Trade Signals: Gold Shines, HY Sells, S & P Lags

Posted on 06.18.16 |

CMG Capital Management Group Inc.S&P 500 Index 2071 (6/15/2016)

You’ll see in the indicators below that gold continues to perform well and remains in a defined cyclical uptrend.  High yield moved to a sell signal early in the week.  This was after a strong short-term performance gain.  The fundamental outlook for high yield bonds remains challenged.  We are currently positioned in Treasury bills.  We expect defaults to increase sharply in the next recession.  We favor tactical trend-following and setting stops to protect principal.

Read More >

Categories: Tactical Investment Strategies Tags: CMG NDR Large Cap Momentum Index, Gold, Steve Blumenthal, Trade Signals

Bonds And Gold In Bullish Trend

Posted on 04.17.16 |

CMG Capital Management Group Inc.The CMG Managed HY Bond Program moved back to a buy signal early this week.  Bonds (the Zweig Bond Model remains in a buy signal), emerging markets, even gold (gold remains in a buy signal below) are all moving higher.

Also notable last week: the 13-week Exponential Moving Average (EMA) line crossed above the longer-term 34-week EMA line.  Trend followers smooth the historical price performance and, when a shorter-term trend line crossed above or below, it identifies a change in trend.

CMG NDR Large Cap Momentum Index

Read More >

Categories: Tactical Investment Strategies Tags: Bonds, CMG NDR Large Cap Momentum Index, Gold, Steve Blumenthal, Trade Signals

Bearish Equity And Bullish Bond Signals Persist

Posted on 03.25.16 |

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 >

Categories: Tactical Investment Strategies Tags: CMG NDR Large Cap Momentum Index, Gold, Steve Blumenthal, Trade Signals

Charting The New Bull Market in Gold – Blumenthal in Forbes

Posted on 02.28.16 |

ForbesIn Steve Blumenthal’s latest Forbes article he discusses a way to block out the noise of gold fever and adhere to a time-tested method of modulating exposure to gold. According to this trend-following method, says Steve, a new cyclical bull market period for gold has just begun. Excerpt from the Forbes story:

Consider the use of a simple trend-following process to trade gold. One of my favorite methods is to compare two smoothed moving-average price lines: a 13-week moving average and a slower 34-week moving average. Think of a moving average as a smoothing of the price of a security (or index) over the past number of weeks.

See the full story in Forbes: Charting The New Bull Market In Gold.

Categories: Portfolio Construction, top posts Tags: Forbes, Gold, Steve Blumenthal

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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.
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