Perspectives

While the market has paused over recent days, the equally-weighted S&P has continued to outperform and reflects an improvement for the “average stock.”  The equity markets started last week on a positive note before retreating as trade concerns and Brexit dampened investor enthusiasm.  The major indices rose fractionally: the Nasdaq gained 0.55%, followed by the Russell 2000® Index (0.29%), the Dow Jones Industrial Average (0.17%) and the S&P 500® Index (0.05%.)  Trade concerns took center stage as the European Commission lowered its 2019 growth forecast for the euro zone from 1.9% to 1.3%; the announcement noted a drop in exports to China along with a lack of progress in trade negotiations since the region agreed last summer to a trade truce with the U.S.  Uncertainties include the potential for the U.S. to impose additional tariffs next month, and the upcoming Brexit date in late March.  U.S. trade negotiators are scheduled to resume discussions this week in China.  Comments suggest that a trade deal is a “pretty sizable distance” away; as a result, President Trump has delayed his meeting with President Xi until after the self-imposed early March deadline.  Investors reacted negatively as fears that additional tariffs scheduled to take effect on March 1 might not be delayed pending an agreement.

Companies are deferring investments and becoming ever more cautious as the March 29 Brexit deadline nears.  Each of the four scenarios we previously mentioned remains possible: the UK parliament could vote to cancel its “leave” decision and remain a member of the EU; the UK could extend the deadline and/or issue another referendum; or the EU members could vote to delay to process.  A luxury auto dealer with a major presence in the UK recently indicated that consumer demand remains strong even in the absence of a clear path forward.  Each of these global trade issues may well come down to eleventh hour resolutions as negotiators seek the most favorable outcomes for their side.

So far, with earnings results from 66% of companies in the S&P 500®, the earnings growth rate of 13.3% suggests a fifth consecutive quarter of double-digit growth.  Notably, companies with less than 50% of their sales originating outside the U.S. are reporting twice the earnings growth compared to multi-national firms.  Transportation stocks (including trucking, rail and marine), have reported solid results with trends for 2019 remaining favorable; the sector is recognized as a leading indicator of economic growth. In earnings conference calls, many executives convey a positive-yet-cautious message due to the uncertainties related to trade and Brexit; they are increasingly outspoken in urging the U.S., Europe and China to finalize trade agreements sooner rather than later.

Market focus will soon shift from earnings reports to economic data and geopolitical events, especially Congressional action to avoid another government shutdown which could take effect on February 15th.  These uncertainties may cause continued market volatility and may disrupt the recovery from December lows; and yet, the level of investor concern over these issues may pressure international leaders to find resolutions.

Source:  Pacific Global Investment Management Company

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. 

 

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Latest News

Last Week's Headlines: 2/11/2019

1. Economic activity in the non-manufacturing sector grew in January for the 108th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business. The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the I...

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American manufacturing companies have a spring in their step

A DRIVE ALONG the narrow county roads of Mount Pleaseant, Wisconsin, used to be a sleepy affair. You would spot a pumpkin farm, the odd homestead and red barn. But a recent visit revealed...

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Surprise drop in trade deficit might lead to annual GDP a...

The U.S. economy just might reach 3% growth in 2018, officially speaking, for the first time since 2005. Buf if it does, some of the credit will go

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Better-Than-Expected Earnings Continue Driving Market Higher

There's a sense of cautious optimism now, with earnings-related momentum driving the rally even as investors continue to show concern about geopolitical issues.

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Brian Amidei is Coachella Valley's only Barron's Magazine Top 1,000 Advisor in 2013 and 2014!

Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017 Five Star Wealth Managers!

Disclosures:

Awards and recognitions by unaffiliated rating services, companies, and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Fortem is engaged, or continues to be engaged, to provide investment advisory services; nor should they be construed as a current or past endorsement of Fortem or its representatives by any of its clients. Rankings published by magazines and others are generally based on information prepared and/or submitted by the recognized advisor. Awards may not be indicative of one client?s experience or of the Firm?s future performance.  Neither Fortem nor the recognized advisor has paid a fee for inclusion on a list, nor purchased any additional material from the award provider. The criteria for each award is listed below:

Barron's Disclosure:

The Barron's award is is based on the recognized adviser's assets under management, contribution to the firm's revenues and profits, and quality of practice.  Investment performance is not an explicit criteria.  Additional information about this award is available at http://online.barrons.com/report/top-financial-advisors. 

Five Star Professional Disclosure:

The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided.  Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf

Fortem Financial 2016. All rights reserved. 

Data Sources:  News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations.  Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates).  All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. 

Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice.  The opinions expressed are solely those of the author, and do not represent those of Fortem Financial, LLC or any of its affiliates.  Past performance is no guarantee of future results.  All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.  Forward looking statements are based on current expectations and assumptions, the economy, and future conditions.  As such, forward-looking statements are subject to inherent uncertainty, risks, and changes in circumstance that are difficult to predict.  Actual results may differ materially from the anticipated outcomes.  Carefully consider investment objectives, risk factors and charges and expenses before investing.  Fortem Financial is a registered investment adviser with the SEC.  Advisory services are offered through Fortem Financial.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks.  The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy.  The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange.  The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks.  The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide.  Market indices listed are unmanaged and are not available for direct investment. 

Equities posted the best January results in thirty years; the abrupt reversal of fortune, while perhaps bittersweet, signaled renewed confidence in the economy.  For the week the S&P 500® Index rose 1.57%, followed by the Nasdaq (1.38%), Dow Jones Industrial Average (1.32%) and Russell 2000® Index (1.29%).  On Wednesday, the Federal Reserve left interest rates unchanged and removed longstanding commentary that further rate increases may be necessary.  The Fed also stated that its primary means of adjusting monetary policy will be changes to the Fed Funds rate; the revised guidance lessens the role of balance sheet adjustments.  Many banks incorporated assumptions for no interest rate increases in their 2019 financial projections.  Friday’s jobs report surprised the market with the addition of 304,000 jobs, analysts expected only 172,000.  The unemployment rate edged up 0.1% to 4.0% as the government shutdown added to the ranks of the unemployed.

President Trump cited ‘substantial progress’ in trade negotiations and commented that he will soon meet with Chinese President Xi Jinping in an attempt to reach a comprehensive trade deal; absent new direction from the President, though his Administration still views March 1st as a ‘hard’ deadline on tariffs.  The recovery of crude oil prices continues; OPEC nations achieved 75% of their targeted production cuts in January as they implement aggressive actions to rebalance inventories.  Production levels in the U.S. are also benefitting from more fiscal discipline as drilling programs emphasize profitability.  The U.S. announced additional sanctions on Venezuela this week which will likely lower the country’s production levels.  Earnings results are generally favorable; more than 45% of companies in the S&P 500® have reported earnings; 68.1% exceeded analyst expectations.  Some, but not all, companies report the impact of trade issues.  For example, Caterpillar reported weakness in China while Graco reported strong demand and growth from all international markets.  The recovery of Technology companies continued with positive earnings reports from Facebook and Symantec.  Some company-specific developments, though, have reduced revenues and profitability for the quarter. 

February has a reputation for choppy returns and the move off the December lows likely needs to be consolidated, but we’re more inclined to view the persistency of recent strength as a legitimate sign of momentum that has been largely absent for the better part of the last 12 months.  

The dramatic change in sentiment is forcing investors who fled the equity markets in December to decide when to reenter.  Small cap stocks, many of which outperformed in January, will report earnings in February.  Investors are rewarding those companies with strong results; and yet, company executives may well temper expectations and outlooks pending clarity on trade negotiations, Brexit, oil prices and other geopolitical events.  Many companies are poised for growth in 2019; these results, along with positive developments on trade and monetary policy, may provide continued market momentum.

Source:  Pacific Global Investment Management Company

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. 

 

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Latest News

Last Week's Headlines: 2/4/2019

1. The monthly Consumer Confidence Survey, based on a probaility-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was January 17. "Consum...

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Federal Reserve holds interest rates, pivots to 'patient'...

The Fed signalled flexability on the path for reducing its balance sheet, a substantial pivot away from its bias just last month toward higher borrowing costs

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Facebook shares shoot up after strong Q4 earnings despite...

Facebook managed to beat Wall Street's estimates in its Q4 earnings amidst a constant beat down in the press. Facebook hit 2.32 billion monthly users, up 2.2 percent from 2.27 bill la...

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Employers add booming 304,000 jobs in January, marking 10

Employers added 304,000 jobs in January, the 100th straight month of gains. Economists expected 165,000. Governement shutdown was set to have modest impact

Read Story

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Brian Amidei is Coachella Valley's only Barron's Magazine Top 1,000 Advisor in 2013 and 2014!

Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017 Five Star Wealth Managers!

Disclosures:

Awards and recognitions by unaffiliated rating services, companies, and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Fortem is engaged, or continues to be engaged, to provide investment advisory services; nor should they be construed as a current or past endorsement of Fortem or its representatives by any of its clients. Rankings published by magazines and others are generally based on information prepared and/or submitted by the recognized advisor. Awards may not be indicative of one client?s experience or of the Firm?s future performance.  Neither Fortem nor the recognized advisor has paid a fee for inclusion on a list, nor purchased any additional material from the award provider. The criteria for each award is listed below:

Barron's Disclosure:

The Barron's award is is based on the recognized adviser's assets under management, contribution to the firm's revenues and profits, and quality of practice.  Investment performance is not an explicit criteria.  Additional information about this award is available at http://online.barrons.com/report/top-financial-advisors. 

Five Star Professional Disclosure:

The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided.  Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf

Fortem Financial 2016. All rights reserved. 

Data Sources:  News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations.  Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates).  All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. 

Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice.  The opinions expressed are solely those of the author, and do not represent those of Fortem Financial, LLC or any of its affiliates.  Past performance is no guarantee of future results.  All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.  Forward looking statements are based on current expectations and assumptions, the economy, and future conditions.  As such, forward-looking statements are subject to inherent uncertainty, risks, and changes in circumstance that are difficult to predict.  Actual results may differ materially from the anticipated outcomes.  Carefully consider investment objectives, risk factors and charges and expenses before investing.  Fortem Financial is a registered investment adviser with the SEC.  Advisory services are offered through Fortem Financial.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks.  The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy.  The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange.  The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks.  The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide.  Market indices listed are unmanaged and are not available for direct investment. 

Today the Federal Reserve Board decided to leave the Federal Funds Rate unchanged.  More importantly, they also said that "In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes."  

After the December meeting (when the Fed raised rates by 0.25%), we shared that we thought Powell's (and the Federal Reserve Board's) position on future rate increases was beginning to change.  We referenced Powell's statement in November that rates were nearing "neutral" territory.  We also highlighted that in the December meeting the Fed reduced the expected number of rate hikes in 2019 from three to two because it would take any pressure of needing to raise rates in early 2019 away.  We believe the Fed's actions today are consistent with their position over the last few months.  Powell did not come out and directly state that there will be less than two rate hikes this year, however, his statement suggests that there MAY NOT be two rate hikes this year, and towards the middle of the year, if the Fed's comments continue in the direction they are on, it will be no surprise when they do make that announcement.  

We also wanted to reiterate that while the Fed is seeing less need to continue increasing interest rates, the data they have gathered indicates that the U.S. economy continues to be strong, saying "Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier last year."  

We believe much (if not most) of the moderation in the growth of business fixed investment stems from the trade dispute with China.  Businesses like to have stable, long-term projections in place before engaging in long-term investments, like building factories or warehouses.  This is important, because the outcome of the current trade dispute leaves so much uncertainty, that we would expect most corporations to slow down their rate of capital expenditures pending a resolution.  Essentially, corporations are keeping their cash on hand should an "opportunity" arise.

If China and the U.S. are able to come to a resolution this year, we believe the rate of capital expenditures could increase very quickly.  After a trade agreement, new analysis would be done showing that costs remain in check.  Additionally, we would expect consumer sentiment to increase, which should ultimately lead to increasing revenues (and profitability), which would provide the stable, long-term backdrop most corporations would want to see before making large capital investments.  The result of a strong increase in capital expenditures would be renewed global economic growth. 

 

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Brian Amidei is Coachella Valley's only Barron's Magazine Top 1,000 Advisor in 2013 and 2014!

Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017 Five Star Wealth Managers!

Disclosures:

Awards and recognitions by unaffiliated rating services, companies, and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Fortem is engaged, or continues to be engaged, to provide investment advisory services; nor should they be construed as a current or past endorsement of Fortem or its representatives by any of its clients. Rankings published by magazines and others are generally based on information prepared and/or submitted by the recognized advisor. Awards may not be indicative of one client?s experience or of the Firm?s future performance.  Neither Fortem nor the recognized advisor has paid a fee for inclusion on a list, nor purchased any additional material from the award provider. The criteria for each award is listed below:

Barron's Disclosure:

The Barron's award is is based on the recognized adviser's assets under management, contribution to the firm's revenues and profits, and quality of practice.  Investment performance is not an explicit criteria.  Additional information about this award is available at http://online.barrons.com/report/top-financial-advisors. 

Five Star Professional Disclosure:

The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided.  Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf

Fortem Financial 2016. All rights reserved. 

Data Sources:  News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations.  Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates).  All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. 

Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice.  The opinions expressed are solely those of the author, and do not represent those of Fortem Financial, LLC or any of its affiliates.  Past performance is no guarantee of future results.  All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.  Forward looking statements are based on current expectations and assumptions, the economy, and future conditions.  As such, forward-looking statements are subject to inherent uncertainty, risks, and changes in circumstance that are difficult to predict.  Actual results may differ materially from the anticipated outcomes.  Carefully consider investment objectives, risk factors and charges and expenses before investing.  Fortem Financial is a registered investment adviser with the SEC.  Advisory services are offered through Fortem Financial.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks.  The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy.  The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange.  The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks.  The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide.  Market indices listed are unmanaged and are not available for direct investment.