August 29, 2014
By Steve Blumenthal
As we enter the last weekend of the summer, a bummer of a thought though I do favor the fall, I thought I’d keep this piece short and share with you what I found to be a very balanced and well thought-out view on the current state of the economy. With granted permission, I share with you today Ned Davis’s insights in a piece titled, Half-Full Growth Rates.
Not so sexy, I know, but a coherent view and a quick read. Let’s keep the weekend reading short and the free time abundant. Have a relaxing weekend.
I share the following in this week’s On My Radar:
- Half-Full Growth Rates, by Ned Davis
- Trade Signals – Cyclical Bullish Trend for Stocks Remains – 08-27-2014
Half-Full Growth Rates, by Ned Davis
Quoting Ned:
“The data continues to lean toward fairly solid growth, but there are some definite offsets, which really limit the ability to see “escape velocity”. There has been good news around hiring but real disposable income growth is still too low. Recent drop in gas prices and continued job growth should help. Excessive debt is one of the main reasons for our growth problems over the past 14 years and that excess debt and low investment in particular have hurt productivity. Adding, the lack of investment also probably means a halt to improvement in the federal deficit.”
Ned concludes that monetary growth and low interest rates have worked to the extent that we are seeing half-full economic growth, which should continue and adds that longer-term problems with debt, low savings and low investment weigh on growth potential.
Here is the link to Half-Full Growth Rates
Trade Signals – Cyclical Bullish Trend for Stocks Remains – 08-27-2014
I posted the following chart on Wednesday, August 13. Short-term sentiment was extremely negative suggesting an oversold rally for the market. The S&P 500 Index was at 1933 and it is now over 2000 for the first time in history.
The above chart is updated through 8-26-14 in Trade Signals. Sentiment has moved back to the neutral zone. This sentiment indicator remains bullish. Note the red arrows pointing to positive market performance when sentiment, as measured above, is at Extreme Pessimism.
General thoughts on the market:
- the cyclical bull market is aged,
- profit margins have likely peaked (and will likely mean revert),
- the market is meaningfully overvalued and over-owned, and
- margin debt is high and cash low
However, price momentum (as measured by Big Mo and the 13/34-Week EMA trend chart) remains bullish and don’t fight the Fed or the Tape remains the important theme.
Included in this week’s Trade Signals:
- Cyclical Equity Market Trend: Cyclical Bullish Trend for Stocks Remains (as measured by Big Mo and 13/34-Week EMA S&P 500 Index chart)
- Weekly Investor Sentiment Indicator – NDR Crowd Sentiment Poll: Extreme Optimism Again
- Daily Investor Sentiment Composite: Neutral Reading (Bullish for the Market)
- The Zweig Bond Model: Cyclical Bullish Trend for Bonds (supporting bond investment exposure)
Click here for the link to the full piece
Conclusion
I’m really looking forward to the long weekend though I have to admit I’ve had a pretty relaxing August. My good friend and strategist partner, Mark Eicker, is coming into town this weekend. Some brain storming ahead as well as a few good IPAs. A fun Labor Day picnic at our house is planned. My job is to get the badminton net untangled and repositioned and then, of course, run to the store to load up on burgers, hot dogs, chicken and beer. Some of the CMG team will be joining us as well and there is much to celebrate and be grateful for.
Recharged and ready to go, September is shaping up to be a busy month. It’s Chicago mid month for the Invesco Powershares ETF Asset Manager Summit September 15-16 and then a short cab ride up the road to the Morningstar ETF Conference September 17-19. I speak at the conference on Friday. Some meetings in New York follow at month end.
Wishing you some grill time, a good beer and a fantastic time with those you love most.
Have a great weekend!
With warm regards,
Steve
Stephen B. Blumenthal
Founder & CEO
CMG Capital Management Group, Inc.
Philadelphia – King of Prussia, PA
steve@cmgwealth.com
610-989-9090 Phone
610-989-9092 Fax
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by CMG Capital Management Group, Inc. (or any of its related entities-together “CMG”) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. No portion of the content should be construed as an offer or solicitation for the purchase or sale of any security. References to specific securities, investment programs or funds are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations to purchase or sell such securities.
Certain portions of the content may contain a discussion of, and/or provide access to, opinions and/or recommendations of CMG (and those of other investment and non-investment professionals) as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current recommendations or opinions. Derivatives and options strategies are not suitable for every investor, may involve a high degree of risk, and may be appropriate investments only for sophisticated investors who are capable of understanding and assuming the risks involved. Moreover, you should not assume that any discussion or information contained herein serves as the receipt of, or as a substitute for, personalized investment advice from CMG or the professional advisors of your choosing. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. CMG is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice.
This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any CMG client from any specific funds or securities. Please note: In the event that CMG references performance results for an actual CMG portfolio, the results are reported net of advisory fees and inclusive of dividends. The performance referenced is that as determined and/or provided directly by the referenced funds and/or publishers, have not been independently verified, and do not reflect the performance of any specific CMG client. CMG clients may have experienced materially different performance based upon various factors during the corresponding time periods.
CMG Global Equity FundTM and CMG Tactical Futures Strategy FundTM: Mutual Funds involve risk including possible loss of principal. An investor should consider the Fund’s investment objective, risks, charges, and expenses carefully before investing. This and other information about the CMG Global Equity FundTM and CMG Tactical Futures Strategy FundTM is contained in each Fund’s prospectus, which can be obtained by calling 1-866-CMG-9456. Please read the prospectus carefully before investing. The CMG Global Equity FundTM and CMG Tactical Futures Strategy FundTM are distributed by Northern Lights Distributors, LLC, Member FINRA. NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
Hypothetical Presentations: To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including: (1) the model results do not reflect the results of actual trading using client assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight; (2) back-tested performance may not reflect the impact that any material market or economic factors might have had on the adviser’s use of the model if the model had been used during the period to actually mange client assets; and, (3) CMG’s clients may have experienced investment results during the corresponding time periods that were materially different from those portrayed in the model. Please Also Note: Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that future performance will be profitable, or equal to any corresponding historical index. (i.e. S&P 500 Total Return or Dow Jones Wilshire U.S. 5000 Total Market Index) is also disclosed. For example, the S&P 500 Composite Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor’s chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The historical performance results of the S&P (and those of or all indices) and the model results do not reflect the deduction of transaction and custodial charges, or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing indicated historical performance results. For example, the deduction combined annual advisory and transaction fees of 1.00% over a 10 year period would decrease a 10% gross return to an 8.9% net return. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet, his/her investment objective(s). A corresponding description of the other comparative indices, are available from CMG upon request. It should not be assumed that any CMG holdings will correspond directly to any such comparative index. The model and indices performance results do not reflect the impact of taxes. CMG portfolios may be more or less volatile than the reflective indices and/or models.
In the event that there has been a change in an individual’s investment objective or financial situation, he/she is encouraged to consult with his/her investment professionals.
Written Disclosure Statement. CMG is an SEC registered investment adviser principally located in King of Prussia, PA. Stephen B. Blumenthal is CMG’s founder and CEO. Please note: The above views are those of CMG and its CEO, Stephen Blumenthal, and do not reflect those of any sub-advisor that CMG may engage to manage any CMG strategy. A copy of CMG’s current written disclosure statement discussing advisory services and fees is available upon request or via CMG’s internet web site at (http://www.cmgwealth.com/disclosures/advs).