Economic Data, The Federal Reserve and Progress on Medical efforts to combat the Coronavirus

Stocks continued to rise to record levels last week after a clearer path was laid out by the Federal Reserve. In a shift from previous statements, chairman Jerome Powell said the Fed would be more accommodative and let inflation and employment run at higher rates that will likely accompany lower interest rates. The statement came as unemployment benefits dropped, signaling the labor market is recovering. President Trump officially accepted the GOP nomination on Thursday. His speech at the White House made history, as the site was used for a political event after the President had canceled plans to deliver his speech first in North Carolina and then in Florida. Abbott Laboratories announced on Wednesday that the FDA had given it’s $5 rapid result COVID-19 test the go-ahead to manufacture. The White House later announced it would be buying 150 million tests after Abbott said its production would run at about a 50 million a month rate. Moderna Inc. also announced positive phase 1 trial results for its COVID vaccine. The vaccine produces consistently high levels of neutralizing antibodies in older adults. Moving to the corporate economy, MGM Resorts announced it will lay off 18,000 employees while Coca-Cola is offering buyouts to 4,000 of its employees. Looking ahead, investors will be looking at the market through both the Biden and Trump policy lenses. With the debates scheduled for September 29, October 15, and October 22, the two candidates have one month to streamline their messages to their respective bases.

The three major topics last week were 1) the churn under the surface of the economic data; 2) the Fed’s long-run strategy review; and 3) progress on medical efforts to combat COVID-19 (vaccines/drugs but also quick/cheap testing). The globe appears to be learning to live with the virus, and if the economy is able to run hot, the Fed appears willing to let it do so. The macroeconomy is firing unevenly, but a durable bottom inactivity (still supported by Federal income-replacement) is likely intact. It helped that there was some moderately positive news on trade between the U.S. & China last week as well.

The Infectious Disease Equity Market Volatility Tracker is a measure showing the impact of the virus on equity market volatility. After a spike early in 2020, it has continued to trend lower in recent months. Concerns about second-waves of infection have climbed in numerous countries. Yet, risk assets look to be factoring in this news less & less.

U.S. durable goods orders rose +11.2% m/m in July, with core cap goods orders ex aircraft up 1.9% and shipments up 2.4%. Mfg continues to support the recovery, and the boost from autos is an important swing factor.

U.S. personal income rose 0.4% m/m in July, and the story remained one of government transfer payments making up the difference for many consumers. Nominal consumer spending rose 1.9% m/m. The U.S. saving rate was 17.8% (ie, still very elevated). Restrained consumer sentiment readings in August (e.g., the U of Mich survey at 74.1, Conf Bd at 84.8) indicate the fragility remaining in the U.S. economy, though the trajectory is one of improvement.

Expanded U.S. unemployment benefits ended in July, though the economy appears to have had enough momentum to make it through August based on the weekly/daily data (jobless claims, travel stats, mobility numbers, etc). While business production has been impaired, the production of consumer goods is helping create a durable bottom in economic activity. Key issues remain in services, small businesses, and then commercial real estate that serves firms with stranded assets (leisure & hospitality, travel, retail).

Bottom line: A new lockdown as in March/April is not the base case. Recent academic research indicates this tool was too blunt. Still, we are moving past the “easy” part of the economic bounce. Human beings generally find nonlinear series less intuitive (e.g., explaining compound interest, the rice-and-chessboard fable, etc). COVID-19 involves non-linear spread, which is why it’s so important to have sustainable policies to keep the medical “R number” (the number of people an infected person infects) less than 1. Yet we are making progress: fewer concerts, large gatherings, carnivals, bars + behavioral changes like social distancing, masks in public & cleaning protocols. The prospect of frequent/fast/cheap testing is especially relevant in the U.S., where case isolation & contract tracing have been tough to execute.

Now confidence needs to improve. If large-ticket purchases are improving (e.g., homes, cars), that argues a subset of the population is willing to take some risk. True, the strength remains in purchases of things vs. services (where person-to-person contact is risky). It is also an unequal recovery. New U.S. stimulus will have to be a September story (at best). We continue to believe that the biggest risk is that we end economic policies that are working too early, as we wait for the medical solution (vaccine/drug/test) to the medical problem (virus). But through August the economy has proved resilient. We are staying tuned.
Source: Strategas


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

Sincerely,

Fortem Financial
(760) 206-8500
team@fortemfin.com

 


 

Latest News

 

A Flexible Fed Means Higher Inflation

The central bank's new inflation policy means almost any action is justified-and what that means for markets.

Read Story

 

The stock market is on a tear, but now comes September, t...

However, something curious happens in presidential-election years.

Read Story

 

Are Apple & Salesforce Blowing A Tech Bubble?

A lot of the companies in the tech sector have gone from being fundamental growth stories that persisted through the Covid-19 slump, to being stocks with more than a bit of euphoria and p...

Read Story

 


Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 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:

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.

Fortem Financial

PRIVACY NOTICE REGARDING CLIENT PRIVACY

Fortem Financial Group, LLC, has adopted this policy with recognition that protecting the privacy and security of the non-public personal information we obtain about our customers is an important responsibility.

All financial companies choose how they share your non-public personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your non-public personal information. Even when you are no longer our customer, we will only share your non-public personal information as described in this notice. So, please read this notice carefully to understand what we do.

The types of non-public personal information we collect and share depend on the product or service you have with us. This information can include items such as your Social Security number and income, your account balances and transaction history, and your investment experience and account transactions.

We collect your non-public personal information in a variety of ways. For example, we obtain your non-public personal information when you open an account or give us your income information, tell us about your portfolio or deposit money, or enter into an investment advisory contract. We also collect your non-public personal information from other companies. For example, from the custodians who hold your account assets.

All financial companies need to share customer’s non-public personal information to run their everyday business. Below, we describe the reasons we can share your non-public personal information and whether you can limit this sharing.

We share your non-public personal information for our everyday business purposes such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, report to credit bureaus, to protect the confidentiality or security of your records, or as permitted by law. We may also share your non-public personal information for our own firm’s marketing purposes; so that we can offer our products and services to you.

Federal law gives you the right to limit only sharing non-public personal information about your credit worthiness for our affiliates’ everyday business purposes; sharing non-public personal information about you with our affiliates to market to you; and sharing non-public personal information with non-affiliates to market to you.

We don’t share non-public personal information about your creditworthiness with our affiliates for their everyday business purposes. We don’t share your non-public personal information with our affiliates to market to you. We don’t share your non-public personal information with non-affiliates to market to you. We also don’t share your non-public personal information for joint marketing with other financial companies. State laws and individual companies may give you additional rights to limit sharing.

We share non-public personal information with our parent company affiliate, Focus Financial Partners, Inc, for its internal and external auditing purposes. We also share your non-public personal information with a non-affiliate for the purpose of aggregating it and providing summary information based on this data to our parent company, Focus Financial Partners, Inc.

To protect your non-public personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

Our policy about obtaining and disclosing non-public personal information may change from time to time. We will provide you notice of any material change to this policy before we implement the change.

If you have questions please call us at 760-206-8500 or go to our website at www.fortemfin.com.

IMPORTANT CONSUMER DISCLOSURE

Fortem Financial Group, LLC ("Fortem Financial" or the "Firm") is a federally registered investment adviser with offices in California. Fortem Financial and its representatives are in compliance with the current registration and notice filing requirements imposed upon federally registered investment advisers by those states in which Fortem Financial maintains clients. Fortem Financial may only transact business in those states in which it is notice filed, or qualifies for an exemption or exclusion from notice filing requirements.

This website is limited to the dissemination of general information regarding the Firm's investment advisory services offered to U.S. residents residing in states where providing such information is not prohibited by applicable law. Accordingly, the publication of Fortem Financial' website on the Internet should not be construed by any consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment, tax or legal advice. Furthermore, the information resulting from the use of any tools or other information on this website should not be construed, in any manner whatsoever, as the receipt of, or a substitute for, personalized individual advice from Fortem Financial. Any subsequent direct communication from Fortem Financial with a prospective client will be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. Fortem Financial does not make any representations as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to this website or incorporated herein, and takes no responsibility therefore. All such information is provided for convenience purposes only and all users thereof should be guided accordingly.

All statements and opinions included on this website are subject to change as economic and market conditions dictate, and do not necessarily represent the views of Fortem Financial or any of their respective affiliates. Past performance may not be indicative of future results and there can be no assurance that any views, outlooks, projections or forward-looking statements will come to pass. Investing involves risk, including the potential loss of principal, and the profitability of any particular investment strategy or product cannot be guaranteed.

Any rating referenced herein may not be representative of any one client's experience. Further, the Firm's receipt of any rating is not indicative of the Firm's future performance. The Charles E. Merrill Circle of Excellence award is granted by Merrill Lynch for outstanding client service and satisfaction. The award is granted based on annual criteria established by Merrill Lynch for its top decile advisors. The Barron's Top 1,200 Financial Advisors rating of the top financial advisors in the United States is based on data provided by participating firms. The following factors are included in the rankings: assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. Investment performance is not an explicit component. The Five Star Professional award is granted by Five Star Professional and recognizes service professionals who provide quality services to their clients based on data provided by participating firms. The award is granted based on the following ten objective eligibility and evaluation criteria: credentialed as an investment advisory representative (IAR) or a registered investment advisor; actively employed as a credentialed professional in the financial services industry for a minimum of five years; favorable regulatory and complaint history review; fulfilled their firm review based on internal firm standards; accepting new clients; one-year client retention rate; five-year client retention rate; non-institutionalized discretionary and/or non-discretionary client assets administered; number of client households served; and educational and professional designations. Feedback from consumer surveys will augment a regulatory history review. Firms have the option to provide input on award candidates from their firm, regardless of the nomination source. The Palm Springs Life's "40 Under 40" Rising Young Professionals to Watch in the Coachella Valley is based upon nominations from the local business community and selected by the staff of Palm Springs Life.

For information pertaining to the registration status of Fortem Financial, please refer to the Investment Adviser Public Disclosure website, operated by the U.S. Securities and Exchange Commission, at www.adviserinfo.sec.gov., which contains the most recent versions of the Firm's Form ADV disclosure documents.

ACCESS TO THIS WEBSITE IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND WITHOUT ANY WARRANTIES, EXPRESSED OR IMPLIED, REGARDING THE ACCURACY, COMPLETENESS, TIMELINESS, OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS WEBSITE OR ANY THIRD PARTY WEBSITE REFERENCED HEREIN.