As a follow up to this morning’s meeting, I have attached the presentation about AQR Market Neutral. This piece is for internal use only.
I will be making minor updates to the single page slide to better reflect recent performance and our general outlook. I will get this approved for use in client decks.
Thank You,
Pete
Peter Malone, CFA
Research Analyst
Direct: 617.226.0030
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109
Good Morning,
Below is a snapshot of the yield/duration profile of our fixed income investment vehicles as well as the overall profile of the fixed income portion of our different models.
Additionally, another “cash sweep” vehicle, FDRXX (Govt. Money Market), has a 7-day yield of 1.63% and weighted average maturity of 22 days.
As a point of reference, the Barclays Agg has a 30-day SEC yield of 3.1% and a duration of 5.89.
Peter Malone, CFA
Research Analyst
Direct: 617.226.0030
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109
Good Afternoon,
Attached is the September Chart Pack from SSGA. Below are graphs that discuss equity market returns and flows, inflation and the Fed, and current bond asset class positioning.
Good Morning,
Attached is the Monthly Market Monitor from Eaton Vance. Below are four graphics that look at yield spreads, U.S. equity returns and earnings, and the broad diversification of GDP contribution globally.
Good Morning,
Attached is this week’s “By the Numbers” piece from MFS. The two statistics below reiterate (again) why it makes sense for clients to remain invested.
“The total return of the S&P 500 stock index over the last 10 calendar years (2008-2017) is +126.0% (total return). The 10 best trading days during the 10 years (i.e., 10 days out of 2,518 trading days) produced an +97.9% gain. Thus, 10 trading days over the last 10 years were responsible for 78% of the index’s total return, i.e., less than ½ of 1% of the trading days drove 78% of the index’s return”
“The 3 best gain days (by percentage) for the S&P 500 in the last 68 years (i.e., dating back to January 1950) all occurred during the month of October”
As always, the idea is not to use technicals to time when or how to be invested but, rather, to maintain a diversified portfolio over the long term that does not miss market upswings at the cost of preventing any temporary selloffs.
Peter Malone, CFA
Research Analyst
Direct: 617.226.0030
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109
PLEASE NOTE!
We moved! Please note our new location above!
This is a very good read from Strategas that broadly discusses the landscape of wealth management. Here is an excerpt that gives an outline of the paper:
“In one way, what was old is new again. The importance of the fiduciary and the provision of holistic, relationship-driven, risk-based advisory services has moved firms to again covet the same affluent clients that bank trust departments worked for 50 years ago – there are just so many more of them. We will explore the re-emergence of the fiduciary and ponder some of the implications on the business.”
Peter Malone, CFA
Research Analyst
Direct: 617.226.0030
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109
PLEASE NOTE!
We moved! Please note our new location above!
Attached is a piece from Strategas that discusses repatriation, fiscal policy, and global tariffs. While many of these numbers are forward projections or estimates, Strategas does make a few major points:
1.) Total Repatriation: they estimate that U.S. companies repatriated $200 billion in Q2 bringing the total amount for the calendar year up to $500 billion; based on these projections, they are trending at $1 trillion of fiscal policy for 2018
2.) Repatriation & Tariffs: tariffs are broadly poor economic policy and can have long term effects on the global economy; however, in the short term, approximately $38 billion in global tariffs will be implemented in 2018 while Cisco alone has repatriated $67 billion so far this year. The potential for shareholder return and/or corporate growth driven by repatriation far exceeds the dollar effects from tariffs to this point
3.) Use of Cash: while some money is being given to shareholders in the form of dividends or buybacks, paying down debt is the most cited use of cash by companies in the S&P 500; this includes increased pension contributions (closing the gap for underfunded pensions) as the tax bill let companies make pension contributions through September at a 35% tax reduction (2017 rate)
Net Dividends from Foreign Subsidiaries – up to 3.4% of GDP if $700 billion gets repatriated
Calendar Year 2018 – Tax cuts vs. tariffs
Use of Repatriation – Announcements from S&P 500 Companies
Peter Malone, CFA
Research Analyst
Direct: 617.226.0030
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109
PLEASE NOTE!
We moved! Please note our new location above!
Attached is the most recent “Uncommon Sense” piece put out by Michael Arone and SSGA. In this article, he suggests that now may be the time to substantially increase an allocation to emerging market equities.
We are currently comfortable with our emerging market weights in our portfolios, but this provides a different perspective on the state of the asset class. Mr. Arone’s optimism is based on the following:
Continue reading “Uncommon Sense – Emerging Market Equities”
Attached is the “By the Numbers” piece from MFS.
Below are two interesting stats about the housing markets in the United States:
“Just 1 out of every 23 home mortgages in America (4.36%) was at least 1 payment past due as of the 2nd quarter 2018. That result is an improvement from the 1 out of every 10 home mortgages (9.85%) that was at least 1 payment past due as of the 2nd quarter 2010 or 8 years earlier.”
“American households headed by individuals under the age of 35 were split 44/56 between homeowners and renters in the 2nd quarter 2004, i.e., 14 years ago. American households headed by individuals under the age of 35 were split 36/64 between homeowners and renters in the 2nd quarter 2018”
While the first numbers indicate that the overall creditworthiness of Americans has improved, the second stat could imply that younger generations are burdened with other debt (student loans), making it difficult to take on the financial responsibility of a mortgage.
Peter Malone, CFA
Research Analyst
Direct: 617.226.0030
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109
PLEASE NOTE!
We moved! Please note our new location above!
Headlines over the past few days have been celebrating the current bull market as the longest in history. However, there are some that would argue that this is not truly the case.
A bull market begins at the bottom of a bear market, which is widely accepted as a 20% drop from the latest peak in the cycle. The argument can be made that in October 2011, during intraday trading the S&P 500 reached a 20% decline relative to the most recent post crisis high.
This is not meant to truly dispute the “record” but rather to point out that this continued rise in the S&P 500 was not a straight line upward. This is another example to our clients that remaining invested over time provides a much greater opportunity for positive returns. It is easy to look back now at the extreme highs reached since 2009 and forget the major drawdowns in 2011, 2015, and even earlier this year.
Below is a link to a WSJ article discussing this point and a chart from Strategas depicting the different highs and lows since 2009:
https://www.wsj.com/articles/calling-bull-on-the-longest-bull-market-1534940689?mod=hp_lead_pos6
Peter Malone, CFA
Research Analyst
Direct: 617.226.0030
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109
PLEASE NOTE!
We moved! Please note our new location above!
