As you know, market volatility has been on everyone’s mind. We wanted to update you on our thoughts as to what we believe the source of the volatility is, and when we think it may subside. Strategic market bottoms that give way to durable rallies often begin from a more depressed sentiment backdrop than is currently present. In addition to the timely put/call data (no movement yesterday), we continue to watch the weekly I.I. bull/bear survey for a signal on sentiment. Optimism has retreated from levels seen in late summer, but bulls still outnumber bears about 2 to 1.
Crude is oversold enough to bounce, but the trend is weak and price action is reminiscent enough of 2014/15 to view rallies with skepticism. Crude Oil is down more than 25% in the last 4 weeks. Although this is good for the consumer, it is not so good for profits in the energy sector and that is a weight on the market. Longer term, the lower price will benefit the economy but the short term sell off put energy company earnings into question. Currently, declining oil prices, a moderating Chinese economy, and tightening U.S. monetary policy are factors spooking risk assets (stocks).
An equally-weighted construction of FANG names has flipped to negative in our trend model for the first time in years this week. As a consequence, rallies back to resistance have to be viewed with suspicion – negative trends don’t lock in pronounced or prolonged bear markets, but they are suggestive of environments where return probabilities aren’t skewed favorably. The market has become so used to taking its cue from technology that it is looking for new leadership. Until that leadership is obvious, the market will still try and stabilize based on fundamentals. Price pressures, such as wage inflation, are present yet inflation is not accelerating at a quick enough pace to jeopardize the current economic expansion; it is hard to see price level growth of 2-2.5% hurting the economy much.
NFIB Small Business Optimism remains near historical highs (107.4) despite idiosyncratic and cyclical headwinds. We continue to watch the data for any significant cracks, but thus far there looks to be time to undo the uncertainty created by numerous U.S. trade spats. Still-elevated business confidence argues for a continued capex upswing, suggesting there is still time this business cycle to expand. This is the story that took a pause in 3Q. We’re staying tuned, especially if the Trump administration pursues a short-term deal with China (as we expect).
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!
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:
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.