Market Thoughts for October 2020
Brad McMillan, Commonwealth’s CIO, recaps the market and economic news for September. It was a tough month for the markets. They began September with a drop and ended the month with everything down, but by much less than feared. The economic news was better, with improved data from the labor market and consumer confidence bouncing back. Business confidence and investment were also healthy. Overall, the recovery looks to be on a solid foundation. But could the upcoming election pose a real risk? Stay tuned to find out. Follow Brad at blog.commonwealth.com/independent-market-observer.
Chief Economist Shares Post-Election, Post-Pandemic Outlook
Many factors feed into the relative strength or weakness of the U.S. economy, but the president traditionally receives the credit or blame. Fiscal policy – taxes and government spending – have an important role in economic activity, and confidence can drive consumer spending and business investment decisions.
Low-Carbon Investing Doesn’t Have to Mean Low Return
Investing in businesses that strive for a better climate through decarbonization doesn’t necessarily assume a lower bar for performance. Just the opposite. Besides contributing to a healthier environment, low-carbon equity investing can also offer attractive return potential.
For DC Plans, Pandemic Reinforces Value of Consultants and Advisors
Guiding Defined Contribution (DC) plans through economic cycles is challenging enough without harsh headwinds from a global health crisis. But more plan sponsors are getting invaluable expert help to navigate through current challenges while keeping a long-term perspective.
A Strong Recovery, Challenges Ahead
While the US economy has been staging a strong recovery from the COVID-19 pandemic, the challenge is far from over, says Franklin Templeton Fixed Income CIO Sonal Desai. She says the tug of war between the virus and the economy seems likely to continue until an effective vaccine is made available at scale.
Why a Next-Gen Advisor Can Be Good for Your Business
Hiring a next-gen advisor can benefit every aspect of your business and set you up for long-term success and growth. Download our free white paper to learn insights and actionable steps you can take to help you find the perfect candidate and retain top talent to position your firm for the future.
Wealthy Covid Refugees Lure Top Art Galleries to Palm Beach
The migration south is similar to one earlier this year, when galleries, auction houses and restaurants set up outposts in the small villages on Long Island’s South Fork after many of the city’s millionaires and billionaires moved there to sit out the pandemic.
Q2 Real GDP Per Capita: -31.69% Versus the -31.4% Headline Real GDP
The Third Estimate for Q2 GDP came in at -31.4% (-31.39% to two decimals), down from -5.0% (-4.99% to two decimals) in Q1. With a per-capita adjustment, the headline number is lower at -31.69% to two decimal points.
An Inside Look at the GDP Q2 Third Estimate
The accompanying chart is a way to visualize real GDP change since 2007 and uses stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics.
CPI and PCE: Two Measures of Inflation and Fed Policy
The BEA's Core Personal Consumption Expenditures Chain-type Price Index for August, released this morning, shows that core inflation is below the Federal Reserve's 2% long-term target at 1.25%. The August Core Consumer Price Index release is higher at 1.57%. The Fed is on record as using Core PCE data as its primary inflation gauge.
ISM Manufacturing Index: Down 0.6 in September
This morning the Institute for Supply Management published its monthly Manufacturing Report for September. The latest headline Purchasing Managers Index (PMI) was 55.4, a decrease of 0.6 from 56.0 the previous month. Today's headline number was below the Investing.com forecast of 56.4 percent.
Markit Manufacturing Inches Up in September
The September US Manufacturing Purchasing Managers' Index conducted by Markit came in at 53.2, up 0.1 from the 53.1 final August figure. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
A Perfect Storm? 4 ugly truths investors need to know before capital gains season arrives
Taxes matter and tax-managed investing can make a meaningful difference over the course of an investor's time horizon. The market volatility in 1Q2020 and other factors may make 2020 an especially challenging year for capital gain distributions. This paper discusses tactical and structural reasons why investors may want to consider taking advantage of market events and transitioning to tax-managed investing now and examines the potential benefits of opportunistic tax-loss harvesting. Act now to get ahead of this looming tax surprise.
Real Disposable Income Per Capita in August
With the release of this morning's report on August Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal -3.24% month-over-month change in disposable income was at -3.55% when we adjust for inflation. This is a decrease from last month's 0.30% nominal increase and 0.09% real decrease last month. The year-over-year metrics are 4.85% nominal and 3.44% real.
PCE Price Index: August Headline & Core
The BEA's Personal Income and Outlays report for August was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index was up 0.32% month-over-month (MoM) and is up 1.38% year-over-year (YoY). Core PCE is below the Fed's 2% target rate.
The Big Four Economic Indicators: Real Personal Income in August
Personal Income (excluding Transfer Receipts) in August rose 1.20% and is down 1.0% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was up 0.88%. The real number is down 2.3% year-over-year.
Modern Monetary Theory Explored
Modern Monetary Theory (MMT) is a rather unconventional economic concept – at least if you are a classically trained economist as I am. That said, over the years, I have learned that, every now and then, it pays to think out of the box, so I am willing to take a closer look.
Moving Averages Update: September
Valid until the market close on October 30, 2020.
The S&P 500 closed September with a monthly loss of 3.85% after a gain of 7.01% in August. At this point, after close on the last day of the month, all three S&P 500 strategies are signaling "invested" — unchanged from last month's triple "invested" signal. Four of five Ivy Portfolio ETFs — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), and iShares Barclays 7-10 Year Treasury (IEF), and Invesco DB Commodity Index Tracking (DBC) — are signaling "invested", a decrease from last month's quintuple "invested" signal.
Introduction to Delaware Statutory Trusts
Delaware statutory trusts (DSTs) offer accredited investors a wide range of attractive benefits, including passive income potential and capital gains tax deferral under section 1031 of the Internal Revenue Code. Learn why DSTs make an ideal investment for a broad range of accredited investors.
Capital Square is a national investment sponsor specializing in tax-advantaged real estate offerings, including Delaware statutory trusts and qualified opportunity zone funds. Founded in 2012, the investor-centric company has completed more than $2 billion in transaction volume.
Value Investing, Evolved
CIO Austin Hawley discusses the dramatic underperformance of value stocks relative to growth stocks over the past decade—and why a strategy focused on intrinsic value is still relevant. A shift toward a service- and knowledge-based economy focused on intangible assets, and the emergence of internet-based businesses means traditional definitions of value have become less useful. However, price remains an important factor in determining future returns.
ESG Investing: From Tipping Point to Turning Point
We believe it's time for ESG investing to become a must-have ingredient in portfolios. Put ESG investing into action by exploring 3 trends we expect will drive ESG growth and opportunity:
- The Great Reset in a Turbulent 2020
- Investors Reshaping the Investment Industry
- Boomers Preparing to Transfer Wealth
2020 Election: 10 truths no matter who wins
The momentous events of the past few months have upended the traditional cadence of an American presidential election year however the 2020 campaigns and elections will still go on. While the election will have a significant impact on the country, we want to provide some caution from drawing too many links between who’s occupying the white house and the performance of the stock market. In this webinar, Brian Levitt, Invesco’s Global Market Strategist, will share historical perspectives and data on the impact of politics on investing.
This presentation will cover:
- Common misperceptions about presidential politics and the economy
- Market performance and approval ratings
- How the impact of signature legislative accomplishments isn’t always as expected.
Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges, and expenses. For this and more complete information about the fund(s), investors should ask their advisors for a prospectus/summary prospectus or visit invesco.com/fundprospectus.
Invesco Distributors, Inc. is not affiliated with Advisor Perspectives.
Pending Home Sales At Record High in August
Today the National Association of Realtors released the August data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales in August continued to move upward, marking four uninterrupted months of positive contract activity."
Long Forgotten Economic & Market Threat - Inflation
The US inflation rate has hovered around 1.5% over the last decade, well below the Fed’s target rate of 2% most of the time. Such low inflation for such an extended stretch is quite unusual given historical economic relationships, especially with the economy strong and the unemployment rate near historic lows late last year and earlier this year before the pandemic hit.
Why Biden Is Better Than Trump for the Economy
The presumption that Republicans are better than Democrats at economic stewardship is a longstanding myth that must be debunked. For all Americans who care about their and their children’s future, the right choice this November could not be clearer.