April 29, 2022
By Steve Blumenthal
“This is not the only time in history that they’ve been behind, but they are strikingly behind.
They need to catch up and do it in a systematic and understandable way.”
– John Taylor, Mary and Robert Raymond Professor of Economics, Stanford University, George P. Shultz Senior Fellow in Economics, Hoover Institution (bio here)
Today’s epigraph comes from the creator of the Taylor Rule, Professor John Taylor. “The rule is an econometric model that describes the relationship between Federal Reserve operating targets and the rates of inflation and gross domestic product growth. The Taylor Rule has been interpreted both as a way to forecast Fed monetary policy and as a fixed rule policy to guide monetary policy in response to changes in economic conditions. The Taylor Rule was invented and published from 1992 to 1993 in his study ‘Discretion vs. Policy Rules in Practice.’” Source: Investopedia
Cutting through the economic noise, the Fed has a dual mandate of achieving maximum employment and stable prices. The Taylor Rule attempts to approximate where the Fed should set the Fed Funds rate in order to reach its objectives. The formula says the Fed Funds rate should be more than 5%, not 0.5%. Inflation has the tiger by the tail. The Fed is way behind. The next two charts are for geeks only.
Taylor Rule – Unemployment Gap (fred.stlouisfed.org)
Taylor Rule – GDP Gap (fred.stlouisfed.org)
What’s the state of play? Barron’s put it this way, “Fears that the Federal Reserve Open Market Committee may raise rates by a half percentage point at each of its coming meetings resulted in sharp jumps in bond yields and renewed nervousness in global equity markets. Unexpected earnings disappointments among some of Wall Street’s most reliable technology stocks added to investor woes. Fed Chair Jay Powell effectively endorsed a half-point hike at the Fed’s coming May meeting. Bond markets now discount up to four such moves over the next six months.”
The party was great. The hangover is setting in.
I thought Mauldin’s Thoughts From the Frontline letter last week was excellent. He breaks down his recession call and does it in a very understandable way. Further below, in Trade Signals, I zero in on two of my favorite recession-watch charts. Grab your coffee and find your favorite chart. I hope you enjoy Mauldin’s latest missive.
If you are not signed up to receive the free weekly On My Radar letter,
you can sign up here.
Mauldin – Into the Fire
Above Zero COVID
More Inflation Pressure
New Dilemmas
Meanwhile, Back at the Fed
Palm Beach, Polo, and Baby Formula
If you haven’t noticed—perhaps because you live on Mars—inflation is here. Not just in the US but almost everywhere. Prices for everyday goods and services, including necessities like food, are climbing rapidly. The US Consumer Price Index rose 8.5% in the 12 months through March… and we know it understates categories like housing.
These year-over-year comparisons may improve a bit as the “base effect” makes the lookback period start at a higher level. That won’t necessarily mean prices are falling; inflation will remain a problem even if prices stabilize. Higher living costs have a cumulative effect the longer they last.
This is from the latest hot-off-the-press Hoisington quarterly letter (which Over My Shoulder members will get next week):
“Most Americans have suffered a substantial fall in their standard of living over the past 12 months. In the latest available 12-month change, 116.2 million American wage and salary workers suffered a 3.7% decline in their inflation-adjusted paychecks, the largest drop since 1980 (Chart 1). This alone more than offsets the gain in income going to the 6.5 million newly employed in the latest 12 months. In addition, salary workers suffered a larger loss in standard of living than hourly employees (Chart 2). Inflationary damage to the 70 million retired Americans cannot be calculated in precise terms, but qualitatively the situation is not good. Those covered by Social Security received a 5.9% cost of living adjustment (COLA), however, most private pensioners do not have COLAs.
Source: Hoisington
“A rough estimate is that approximately 50 million or more retirees’ real income has been seriously eroded by the 40-year decade high inflation rate. Summing those whose income trailed price increases (116.2 + 50) yields a figure of approximately 170 million Americans. The sizeable adverse impact of inflation is consistent with a decline in real disposable personal income in 11 of the 13 latest months. Eighty five percent of U.S. households make under $150,000 a year, with many living from paycheck to paycheck or on steady salaries. The imbalance between those who benefitted and those who were harmed from the monetary and fiscal policies pursued over the last two years is abundantly clear. The 8.5% inflation rate has dramatically lowered the standard of living of over 170 million individuals.”
This was the result of a massive monetary policy error which was pointed out over a year ago by numerous Nobel laureates and mainstream economists, and well, lots of less-well-known analysts like me. The Fed even did not include a section on policy rules in its February report to Congress which it has used since 2017 as it clearly showed they were behind the curve. Like they could hide it.
As bad as conditions are, they have the real potential to get even worse. Today we will explore how China’s latest COVID lockdowns will affect the global economy. Hint: It won’t be good. We may be out of the frying pan and into the fire.
First, let me remind you the SIC 2022 is just a little over a week away. I can’t tell you how grateful I am to see all these amazing speakers coming to the aid of my readers… because frankly, we need all the help we can get at this point. (Click here to see the full faculty list—it’s quite impressive. Henry Kissinger, David Rubenstein, Felix Zulauf, Ron Baron, Tom Hoenig, Niall Ferguson, Joe Lonsdale, Frank Luntz, Charles and Louis Gave and Anatole Kaletsky, Howard Marks, Cathie Wood, William White, and 40+ more! The energy and crypto panels are powerhouses!)
As you know, I’m convinced we’re heading into a recession, possibly a severe one. The Fed messed up by raising rates and reducing their balance sheet too late, and the time that passes until they finally get their ducks in a row will not be pretty. Inflation numbers could potentially rival the late 1970s and ‘80s… and do yourself a favor and get your Virtual Pass to this vital online conference. You’ll be glad you did.
Above Zero COVID
In some ways, we are replaying early 2020. Back then a mysterious virus was ravaging China, causing the government to restrict movement and shut down much of the economy. Our initial worries were about how it would affect our supply chains.
As it turned out, the virus spread, and most of the world went into varying degrees of closure, sparking a global slowdown which reduced the demand China would have fulfilled. As a result, we never really saw the full impact of losing China’s exports. Demand then returned with a vengeance, thanks to fiscal and monetary stimulus. Now we have vaccines and treatments for the virus. It’s not gone but is more manageable now… except in China.
China’s “Zero COVID” strategy sought to stop the virus via brute force. It worked well, too. Since mid-2020, cases would pop up here and there, often brought by travelers. The government would respond swiftly with quarantines and mass testing, then it would be over. The more transmissible Omicron variant appears to have derailed this plan.
Worse, the virus can feast on a Chinese population with almost no infection-acquired immunity and very low vaccination rates. The vaccinated minority mostly received Chinese-made vaccines that are far less effective than the mRNA vaccines used in most developed countries, which China could have licensed but the government chose not to. This hubris will tragically cause tens of thousands of unnecessary deaths. It makes me weep for the Chinese people. Now, they’re locking down because they have little choice. Uncontrolled spread would be devastating.
Gavekal has been tracking local restrictions in China and recently produced this chart. It weights the cities by contribution to GDP.
Source: Gavekal
In early March, cities representing over half of Chinese GDP were at Level 0 with no restrictions. By mid-April less than 5% were in that category, while almost 40% of GDP was at the harsher levels 2‒4.
Gavekal’s Dan Wang (one of my favorite writers) lives in Shanghai and shared what it was like.
“This wasn’t supposed to happen here in China’s largest and most cosmopolitan city, with some 26 million people. Shanghai had been, after all, the best-managed city in China throughout the two years of the pandemic, a model where local authorities imposed minimal restrictions while making sure outbreaks stayed controlled. But as cases rose through March, residents and officials grew anxious. An official who heads Shanghai’s mental-health department went on television to tell residents they must ‘repress the soul’s yearning for freedom,’ prompting amused citizens to create memes that satirized a spiritual turn in party-state officialese.
“Ten days later, Shanghai declared a temporary, staggered lockdown that swiftly became indefinite and all-encompassing. Our shutdown rivaled two of the country’s toughest: Wuhan at the beginning of 2020 and Xi’an at the end of 2021.
“Residents were allowed out of their apartments only to take PCR tests. Few businesses could operate. People struggled to obtain basic necessities like medical supplies, elderly support, and food. Most restaurants and supermarkets were no longer able to make deliveries. Local authorities then took charge of food distribution, making residents dependent on government-organized food packages. People quickly chafed. When they started to sing and chant on their balconies, the government sent up a drone with a megaphone that repeated, ‘Please repress the soul’s yearning for freedom.’ It wasn’t as funny the second time around.”
This isn’t the orderly, efficient China the government likes to portray. People forcibly kept in their homes without food or access to medical care, serenaded by propaganda drones, pets being killed, and inhumane camps for those who test positive sounds more like a dystopian nightmare. Many other stories and videos, some from Westerners living in China, confirm that impression, though. The images on Twitter are depressing.
Exactly how bad is the COVID outbreak, in terms of illness and death? We have no way of knowing. The Chinese data on COVID is clearly fake. I think we can assume it was serious or threatening to become so. There’s no other reason to impose such conditions.
As I write this there are reports the lockdowns are easing in parts of Shanghai. But other reports say that’s not true, and that the lockdowns will continue until mid-May. In any case, the economic effects may only be starting.
Sidebar: There may be more than just a simple Zero COVID policy in play here. There has always been a serious rivalry between Shanghai and Beijing. If there is a serious anti-Xi faction, it is centered in Shanghai. Serious China watchers I follow think part of the Shanghai lockdown is a clear warning to Shanghai leaders to toe the line.
More Inflation Pressure
Here’s a tweet from Dr. Scott Gottlieb, former FDA director.
Source: Scott Gottlieb
This can be seen graphically in another way. Almost twice as many ships are waiting near Shanghai ports as opposed to last year, which was already well above average:
Source: VesselsValue
This is what three weeks of downtime does. Ships arrive and can’t unload or be loaded because the workers who would do it are in lockdown, so they pile up. Remembers the stories last year about Los Angeles and Long Beach? Shanghai is that same situation on steroids. It has a cascading effect, too. Supply chains need predictability. The right stuff must show up in the right place at the right time.
Chinese authorities know this, of course, and will work to unsnarl the ports. But at this point a lot of delay and damage is locked in. We will probably see echoes of the Shanghai snarl around the world as delayed shipments arrive all at once, causing clogs at the receiving end.
Unlike 2020, this time the rest of the world is opening instead of closing. The impending recession will hit demand eventually. For now, though, consumer and business spending remain strong. People are waiting for stuff from China that isn’t going to arrive as expected—some of it already paid for. This will add to inflation pressure as prices rise for goods that are suddenly in short supply.
Now, combine this with food and energy prices that were already rising even before the Russia-Ukraine war, plus a Federal Reserve that is seriously behind the curve and looks likely to clamp down hard. This would be a perfect inflationary storm even if China were running smoothly, which it clearly isn’t.
The developed world is about to take a whale of a hit. But China may take a bigger one.
New Dilemmas
I wrote a letter back in January called Beijing’s Dilemmas. That was barely three months ago but now seems like years. The dilemmas I described, including the early stages of today’s COVID wave, are still there and more have developed.
For one, the domestic economy is still in precarious shape following last year’s Evergrande real estate collapse. The Xi government’s “common prosperity” plan is a giant change in direction from “capitalism with Chinese characteristics.” Managing it requires a deft touch, which COVID doesn’t help. The joke in China is that common prosperity now means common poverty and no food.
Nor is that all. As growth weakens in the rest of the world, China’s export sector will weaken, too. That’s not entirely bad; the government has long sought to rebalance and build domestic demand. But they need it to happen gradually.
Then there’s energy. China was having an energy crisis even before the war, with electricity blackouts increasingly common. China isn’t participating in the Russia sanctions but remains exposed to global energy prices, which have surged. It may replace some of this by increasing imports from Russia—maybe at bargain prices—but there are practical limits. Pipeline and shipping capacity isn’t infinite.
It’s an open question how long Russia can maintain current production levels without the Western companies who have now left. Schlumberger and Halliburton have left Russia. How do you keep your wells operating, let alone drill without them? I can guarantee you that US production would fall dramatically if those two companies decided to not operate in the US. They are vital to world oil production. Russia doesn’t have that expertise, let alone the equipment. This will be a slow-moving development, and sadly, it means energy prices will keep rising.
Beijing has also been walking a fine line between its “Great Power” ambitions and its US and European customer relationships. The foreign companies who once saw abundant opportunities in China face new conditions that are often less attractive. Ditto for Chinese companies seeking to sell high-tech goods overseas.
US Treasury Secretary Janet Yellen this week talked about “friend-shoring,” clearly implying that US companies should secure friendlier sources for their supply chains. Many companies are trying to figure out how to bring production back to the US. China’s original attraction was price. Different supply chains mean input costs will rise. More price increases and inflation.
Now, on top of that we can add the Russia-driven changes. As recently as January, Xi and Putin were proclaiming a “no limits” alliance. Neither seems to have expected the furious reaction to Russia’s Ukraine invasion, and certainly not the economic part of it. Beijing is caught in the middle. Having seen Russia amputated from the world economy in a matter of weeks, China needs to avoid getting the same treatment. This limits its ability to take advantage of the situation.
And just to make matters even more interesting, the Chinese Communist Party will hold its National Congress later this year, which will determine whether Xi Jinping stays in power. You might think there is no serious doubt about it. His re-election is certainly likely. But it’s not guaranteed, and he needs to keep the party elites on his side.
These are a bunch of giant risks and question marks the world doesn’t need right now. Markets certainly don’t need them. We have them nonetheless.
Meanwhile, Back at the Fed
A few random quotes that hit my inbox Friday morning:
From David Rosenberg:
“Powell is going to crush inflation in the cyclical parts of the economy that he can control and, in the process, generate a 1982-style recession—brace yourself for it.”
From Peter Boockvar:
“As a reminder, since the early 1980s each rate hiking cycle ended below the peak of the prior one. In Q4 2018 the Fed stopped when the fed funds rate got to 2.25–2.5%. So, the rather quick pace and much higher level of rate hikes currently priced in, 50bps at each of the next three meeting, an ultimate near 3.5% fed funds rate by next summer and an annualized pace of QT of $1.14 Trillion, would be by far the most aggressive tightening stance seen in a post-Volcker world if the Fed actually follows through. And it won’t just happen in a vacuum in order to tame inflation.
“Decades of easy money have medicated an entire economy on a low cost of capital and given markets reason to achieve ever higher multiples and ever tighter credit spreads. It is why the investing world has changed this year and why the coming few years will be quite different than the previous. While investing has seemed ‘easy,’ it never is and now is ever more difficult and challenging. With the S&P 500 still trading at 19X earnings, the NASDAQ by 27X, the Bloomberg high yield index spread to Treasuries of 344 bps vs. the 10 yr average of 435 bps and 20 yr average of 510 bps, there is just no room for error here.”
From Gavekal:
“In the eurozone, the recent acceleration in inflation and the accompanying rise in bond yields as the market has priced in future policy rate increases from the European Central Bank have helped to drive a steep fall in real M1 growth. As eurozone HICP inflation [European CPI] has risen from 1.3% YoY in March 2021 to 7.5% in March 2022, and as the yield on 10-year bonds has climbed from -0.5% last August to 0.9% today (the fastest increase in more than 20 years), real M1 growth has sunk to 3% YoY, its slowest since 2013.”
The ECB is preparing to abandon its insane negative yield policy. Ten-year German bonds now yield almost 1%. This is affecting bond prices all over the world, including in the US. European finance ministers are beginning to pressure Christine Lagarde to fight inflation just like Jerome Powell is being forced to. This will bring about recession in Europe, if it hasn’t already begun. I regularly get a long chart-filled private briefing on the economies in Europe. This morning it was simply ugly.
Palm Beach, Polo, and Baby Formula
This weekend I’m taking my first airline trip in what seems like forever to Palm Beach for a polo match, of all things. Some friends of mine are looking at starting a new business and are interested in having me participate. Evidently potential investors will be there. I’m not actually certain what to wear. Is it a faux pas to wear a polo shirt to a polo match? I am told it will be fun though. And I will be with friends, which I also miss.
Your generous help for our recent Ukraine fundraising efforts resulted in seven large buses moving 500 women and children from Lviv to Krakow every day, now more than 6,000 since we started. Thank you! It is dangerous just to get to Lviv, but to reach safety in Poland women must avoid human traffickers posing as friends trying to “help” with transportation. It is a serious problem.
It is time to hit the send button. Remember, we always get through recessions and the world is going to be much better in the future. I am still long humanity. And remember to sign up for the SIC. And don’t forget to follow me on Twitter, where I am getting a little bit more feisty. It is actually quite fun. Have a great week!
Your excited about the SIC analyst,
John Mauldin, Mauldin Economics
Trade Signals: High Yield Leads Stocks, Stocks Lead The Economy, Recession Follows Last
April 27, 2022
Market Commentary
Notable this week:
A reader asked me about the “Recession Watch” indicators I post each week in Trade Signals. Keeping an eye on the indicators is vital because the most significant market declines come in recession. There have been 26 bear markets since 1928. The “Mean Decline” has been 35.6%. The two recessions in the 2000s gave us more than -50% each. Specifically, the readers asked, “why aren’t they signaling recession while at the same time several economists are calling for a recession?” One of those major economists is my partner John Mauldin. Let’s see if I can answer that question today.
First, some data on the history of market declines from our friends at NDR.
The reason for getting the recession call right is apparent. The challenge is recessions are only known in hindsight. Required are two consecutive quarters of negative GDP growth, and there is a lag in the reporting. This week GDP for Q1 came in at -1.4%. By the time it’s official, the recession may already be over.
I post five recession watch indicators each week (if you are reading this in OMR, click through, and you’ll find them near the end of the post. If you are reading this in Trade Signals online, scroll down). The five are:
- The Global Recession Probability Model (currently signaling “High Recession Risk”)
- The Economy Based on the Stock Market (a monthly indicator that looks at the month-end close of the S&P 500 Index relative to its 5-month smoothed moving average trend line).
- Recession Probability Based on Employment Trends (currently strong signaling low probability of recession)
- Credit Conditions (currently, lending conditions are favorable, signaling a low risk of recession)
- The U.S. Economy and the Yield Curve – Comparing the 10-year Treasury yield vs. the 6-Month Treasury Bill yield (currently, a positive yield curve is signaling low recession risk). You may note that the 2-year to 10-year yields did briefly invert. An early warning signal to be watched.
From my experience, the following are the three indicators I personally feel are the most important to watch. And thus, the title of this week’s Trade Signals: High Yield Leads Stocks, Stocks Lead Economy, Recession Follows Last.
Recession Watch Progression:
- The High Yield Junk Bond Market is an early leading indicator for the stock market and the economy (though very early)
- The Stock Market tends to follow the High Yield Junk Bond market. Stocks are an excellent leading indicator of the economy (expansion and contraction)
- A recession is only known in hindsight.
Over the years, I’ve learned that the price direction of lesser quality bonds (High Yield aka Junk Bond) is an excellent leading economic indicator for the direction of stock prices, and stocks are an excellent predictor of the economy. Think of HY as the canary in the coal mine. Perhaps it is because bond investors keep a closer eye on the higher risk stuff in their portfolios, and when things turn down, they cut losses on their riskiest assets first. Let’s take a closer look.
Keep your recession watch goggles on and get ready for the opportunities that healthy stock market declines create. Risk is rising. Like Mauldin, I think a recession is highly probable in the second half of this year.
The Dashboard of Indicators follows next. More red than green.
Not a recommendation for you to buy or sell any security. For information purposes only. Please talk with your advisor about needs, goals, time horizon, and risk tolerances.
Click HERE to see the Dashboard of Indicators and all the updated charts in Wednesday’s Trade Signals post.
Not a recommendation for you to buy or sell any security. For information purposes only. Please talk with your advisor about needs, goals, time horizon, and risk tolerances.
If you are not signed up to receive the free weekly On My Radar letter,
you can sign up here.
Personal Note – Sage Advice from a Great Coach
“We have a saying that everyone’s role is different, but everyone’s status is the same. It’s a reminder that no matter how bright the spotlight gets, we are all part of something much larger than ourselves.”
– Jay Wright, Retiring Head Coach, Villanova Basketball
Villanova is just a few miles down the road from my office in Malvern, PA. I’ve long admired Coach Wright and quietly wondered why my Penn State Nittany Lions can’t get to the top level in college basketball. My father was best friends with former Penn State Head Coach Bruce Parkhill and Bruce had the Lions on the right path. He would share with my dad his passion and how much he loved working with the team. The program has not been the same since Bruce retired. Great coaches are hard to come by.
With Villanova in my backyard and Coach Wright being such an exceptional person, it’s been easy to root for the team. This week, Coach Wright announced his retirement. With a hat tip to my friends at Admired Leadership, I thought I’d share what they wrote about Coach Wright. His tools for navigating and succeeding in life are particularly motivating, as is his positive influence on players, students, faculty, and fans. Imagine the ripple effect the life of one great individual has on the world. Congratulations, Coach!
As the ball left Jenkins’ hand, (Jay) Wright offered little reaction, only saying the word “Bang” to himself. When the ball hit nothing but the bottom of the net, Wright pivoted like a soldier on the parade field and walked toward the Carolina bench to shake hands.
No one could’ve acted cooler or calmer than he did after reaching the highest point of an illustrious coaching career.
Last week, Wright walked away from the game after 21 seasons as the head man at Villanova. He led the Wildcats to 16 NCAA tournament appearances, four Final Fours and two National Championships. Wright accumulated 642 wins over his 26-year career as a head coach and was inducted into the Naismith Basketball Hall-of-Fame last year.
What made Wright so successful? What made him such a great leader, able to elevate Villanova’s basketball program to an elite level where it was always competing for titles?
Wright understood his strengths and weaknesses as a leader, and thus developed a culture centered on his skillset. He defined the type of character acceptable to recruit.
Wright knew he could teach the game, knew he could improve every player in his program. So he did what all great culture builders do: he built his program inside out, not outside in. He only recruited players who fit the mold he created, never deviating or becoming sidetracked by the star-rating system or, perhaps more importantly, what his competition was doing. He stayed in his cultural comfort lane, never wavering or succumbing to the temptation to alter his beliefs.
Here are four quotes from Wright that shed insight into his leadership beliefs.
“We have a saying that everyone’s role is different, but everyone’s status is the same. It’s a reminder that no matter how bright the spotlight gets, we are all part of something much larger than ourselves.”
Wright wanted players who would understand the difference between coaching and criticism, which then would allow his talents as a teacher to improve the skill set of the individual and the team as a whole. Everyone must accept coaching, regardless of the role. And like all great cultures, the name on the front of the jersey is more important than the name on the back.
“The most important characteristic any of us have is our attitude. It’s a concept that permeates everything you do. We all bring our attitude to every situation.”
Wright looked for good players with great attitudes who would then develop into great players. He wasn’t interested in de-recruiting a player, he wanted to teach the game of basketball. If a player didn’t have a great attitude, Wright would be worthless as a teacher.
“We’re not complex in what we do X-and-O-wise, but we do spend a lot of time on how we react mentally to every situation.”
What Wright was saying was that the Villanova basketball team wouldn’t beat itself. They would play smart, play hard, and be prepared for every situation on the court. Simple allows teams to play smart, which then allows more complexities from game to game.
“If you think about how good you are as opposed to what the next challenge is going to be, then you’ve already lost. We have to stay humble.”
Wright wanted players to focus on the moment, not become distracted by outside influences. He wanted players like himself, who always wanted to improve and never feel contentment.
Wright was authentic in the culture he created because the culture was based on his life beliefs. And those beliefs are relevant far beyond the basketball court. Source: The Daily Coach
‘We have to stay humble.’ I love that!
I’ll be totally geeking out the next two weeks. The SIC2022 virtual conference begins this Monday, May 2. I’ll be taking notes and over the next month or so will share my high-level takeaways with you. You can find the conference agenda here. I present on Friday, May 13, and will share my thoughts about what I learned from the conference and will also share a few ideas on how we as a family office are addressing today’s low yield, high inflation environment.
Wishing you an abundance of joy! And send some of it to your favorite old coach! That will be a very good day!
Steve
Stephen B. Blumenthal
Executive Chairman & CIO
CMG Capital Management Group, Inc.
If you are not signed up to receive the free weekly On My Radar letter,
you can sign up here.
Forbes Book – On My Radar, Navigating Stock Market Cycles. Stephen Blumenthal gives investors a game plan and the advice they need to develop a risk-minded and opportunity-based investment approach. It is about how to grow and defend your wealth. You can learn more here.
Stephen Blumenthal founded CMG Capital Management Group in 1992 and serves today as its Executive Chairman and CIO. Steve authors a free weekly e-letter entitled, “On My Radar.” Steve shares his views on macroeconomic research, valuations, portfolio construction, asset allocation and risk management.
Follow Steve on Twitter @SBlumenthalCMG and LinkedIn.
IMPORTANT DISCLOSURE INFORMATION
This document is prepared by CMG Capital Management Group, Inc. (“CMG”) and is circulated for informational and educational purposes only. There is no consideration given to the specific investment needs, objectives or tolerances of any of the recipients. Additionally, CMG’s actual investment positions may, and often will, vary from its conclusions discussed herein based on any number of factors, such as client investment restrictions, portfolio rebalancing and transactions costs, among others. Recipients should consult their own advisors, including tax advisors, before making any investment decision. This material is for informational and educational purposes only and is not an offer to sell or the solicitation of an offer to buy the securities or other instruments mentioned. This material does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors which are necessary considerations before making any investment decision. Investors should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, where appropriate, seek professional advice, including legal, tax, accounting, investment or other advice.
Investing involves risk. Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CMG), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CMG. Please remember to contact CMG, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. CMG is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice.
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.
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. See in links provided citing limitations of hypothetical back-tested information. Past performance cannot predict or guarantee future performance. Not a recommendation to buy or sell. Please talk to your advisor.
Information herein has been obtained from sources believed to be reliable, but we do not warrant its accuracy. This document is a general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose.
In a rising interest rate environment, the value of fixed income securities generally declines and conversely, in a falling interest rate environment, the value of fixed income securities generally increases. High-yield securities may be subject to heightened market, interest rate or credit risk and should not be purchased solely because of the stated yield. Ratings are measured on a scale that ranges from AAA or Aaa (highest) to D or C (lowest). Investment-grade investments are those rated from highest down to BBB- or Baa3.
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
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 professional.
Written Disclosure Statement. CMG is an SEC-registered investment adviser located in Malvern, Pennsylvania. 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, or exclusively determines any internal strategy employed by CMG. 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 www.cmgwealth.com/disclosures. CMG is committed to protecting your personal information. Click here to review CMG’s privacy policies.