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On My Radar: The Big Picture – Long-term Secular View – Near-term Outlook – Target 2028 – Ideas  

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March 15, 2024
By Steve Blumenthal

“Easy money, wrote Hazlitt, creates economic distortions… it tends to encourage highly speculative ventures that cannot continue except under the artificial conditions that have given birth to them. On the supply side, the artificial reduction of interest rates discourages normal thrift, saving, and investment. It reduces the accumulation of capital. It slows down that increase in productivity, that ‘economic growth’ that ‘progressives’ profess to be so eager to promote.”

– Edward Chancellor, The Price of Time: The Real Story of Interest

Thursday’s hot inflation print sent Treasury yields higher and the S&P 500 lower. The Producer Price Index (PPI) report, which measures wholesale, or producer, inflation, rose from 1% to 1.6% in the last month—much hotter than the forecasted rise to 1.1%. While the 1.6% figure is still low, the rate of change was significant. 

Energy prices were up 4.4%, and food prices were up 1% from a month ago. Barry Habib wrote this morning, “Overall, this was a hotter-than-expected inflation report, although the year-over-year figures are still low and at good levels.” He added, “Some of the PPI components also go into the Personal Consumption Expenditures (PCE) report and could lead to a hotter PCE inflation report later this month.” 

Sounds a lot like “sticky” inflation. 

In further economic news, February retail sales were weak. Savings rates are low, and people are charging more on credit cards and using buy-now-pay-later promotions for everyday expenses. The less affluent are struggling, while those who are better off, while still spending on travel and leisure, are limiting their discretionary items.  

I had the pleasure of skiing with one of our private credit fund managers in Park City two Sundays ago. His fund takes short-term risk exposure, generally focusing on financing a company’s trade receivables. My friend is particularly concerned about the consumer discretionary space and is no longer lending to that space because, in his view, the next six months look troublesome. In fact, he believes a large retail brand will file for Chapter 11 bankruptcy protection within that period. 

Inflation and higher interest rates are impacting the system.  

Before we dive deeper into this week’s OMR, I want to apologize for the typos in last week’s letter. I was working from a hotel room while rushing to get out to the mountain to ski… Well, ugh. I cringed when I later read the published letter. I’m sure you did, too.  

Ever forward! Let’s go. 

All things start with the cost of money. The Fed controls the short end of the curve, mainly setting the price of money (the Fed Funds rate), which currently sits at 5.25%. But it’s bond investors who control the long end of the curve. So, what’s happening there? 

At the start of the year, market experts predicted six Fed rate cuts; they now predict just three, expecting to see the first cut in June. This week’s notable move is the 10-year Treasury yield inching higher toward the important technical resistance level of 4.33%. It is at 4.31% at the time of this writing. The graph below shows the 10-year Treasury Yield Weekly MACD. Focus on the top orange dotted line, which marks 4.33%. You can see where the Treasury yield hit that mark in both 2008 and 2022. Technically, a break above that level brings a 5% yield back into play. The key for the Fed is unemployment, and current unemployment numbers do not yet support a rate cut.  

The predicted three rate cuts could turn into zero if unemployment stays low and there is no significant stock market downside event. 

 

Source: Stockcharts.com, Blumenthal

Let’s zoom in on the 4.33% dotted orange resistance line again. The light orange circle on the upper right of the chart shows you how close we are to an important higher breakout in interest rates.  

Further, the MACD indicator (orange circle at the bottom right of the chart) is nearing a change, signaling higher interest rates. 

 

Source: Stockcharts.com, Blumenthal

Now, let’s look at the Zweig Bond Model. The Zweig Bond Model was developed by the late, great Marty Zweig in the 1980s, who was motivated to create the model after experiencing the challenging period of high interest rates in the late 1970s and early to mid-1980s. He further advanced the model in partnership with Ned Davis, co-founder of Ned Davis Research. 

Over the years, I have found the Zweig Bond Model to be a useful tool. It’s not perfect, of course, but neither are Wall Street analysts. I remember 24 out of 24 analysts predicting higher rates in 2018. Rates ended lower. Not one economic expert was correct—nor was I. However, despite my being fundamentally incorrect, the Zweig Bond Model kept me bullish on bonds. If the technicals don’t support the fundamental view, listen to the technicals. 

Trade Signals subscribers are familiar with the Zweig chart. Here’s how to read it: 

  • Model indicators are in the upper left corner of the chart. Five signals. Each gets a +1 if the score is bullish or -1 if the score is bearish. 
  • It’s rules-based, with a max score of +5 and a max negative score of –5. 
  • The bottom right-hand section (yellow highlight) shows the current signal.  
  • Reflected is the % Gain per Annum of the Barclays Aggregate Total Return Index when On Buy and when On Sell, as well as the % of Time On Buy and On Sell. 
  • The middle section plots the model scores from 1967.   
  • While the model has been in place for more than 30 years, the returns are hypothetical and do not reflect actual trading, execution risk, and related costs.  
  • This is not a recommendation to buy or sell any security. The idea behind consulting it is to get a feel for the technical trend in bond yields and bond prices.

 

Source: NDR

Grab your coffee and find your favorite chair. Last week, I highlighted several takeaways from JPMorgan’s WallachBeth conference presentation. This week, I begin with a “Big Picture” summary of what I see as our current state. Regardless of whether or not I’m right or wrong, I believe there’s a way to position. In today’s newsletter, I make my base case and share a few ideas.  

Also, with permission, I’ve included several slides from the JPMorgan presentation deck—a hat tip to Jordan Jackson, JPM’s chief global strategist, Max Cann and their team for providing them. If JPMorgan can forecast as well as their Max Cann can ski, we’ll all be in good shape. I conclude the personal section with some highlights from Investco’s Gary DeMoss’s conference presentation about how to present well. I think his insights may be valuable to all businesses. 

On My Radar: 

  • The Big Picture: Long-term Secular View – Near-term Outlook – Target 2028 – Ideas  
  • JPMorgan – Select Slides
  • Random Tweets
  • Personal Note: Smooth Start
  • Trade Signals: Weekly Update, March 13, 2024

See Important Disclosures at the bottom of this page. Reminder: This is not a recommendation to buy or sell any security. My views may change at any time. The information is for discussion purposes only.

The Big Picture: Long-term Secular View – Near-term Outlook – Target 2028 – Ideas

In this section, I lay out my base “fundamental” case covering the macro picture and my current thesis on how things will play out over the coming four to five years. I then share a few ideas and conclude by saying I hope I’m wrong, but regardless, I believe we can position wealth in a way that may meaningfully outperform cap-weighted index fund investing. Here is my big-picture take:  

Geopolitics, Demographics and Technology 

  • Geopolitical power conflict – We’re moving from a U.S.-centric world order to a world where a few states wield much of the cultural, economic, and political influence. A divided world that pits the U.S., Europe, and much of the democratic, free world against China, Russia, Iran, and several of the BRIC countries. 
  • This is a world in which a rising power, China, is challenging the existing power, the U.S. At best, the two systems co-exist peacefully. At worst, there’s war. 
  • Tensions are increasing: We’re seeing proxy wars, trade sanctions, and the reshoring/friend-shoring of manufacturing to secure supply chains. Achieving the lowest cost in manufacturing is less important than protecting/securing supply lines. 
  • China vs. U.S. – The 40-year cyclical period of expanding globalization is over; de-globalization is happening. The economic implications are inflationary.  
  • The developed world’s population is aging. The economic implications are inflationary. 
  • Technology and robotics are rapidly advancing. The economic implications are deflationary.  
  • War between the major powers is the greatest risk. The economic implications are inflationary.  

Developed-World Debt and Entitlements 

  • It’s highly probable that governments will continue to both run fiscal deficits and backstop weakened economies with newly issued debt, all of which is supported by aggressive money creation by central banks. 
  • Printing money is inflationary and destructive to non-asset-backed currencies. That is the state of developed market currencies with the U.S. dollar the global reserve currency. The implications are inflationary—bullish for gold, commodities, and other hard assets. 
  • I keep pointing to Edward Chancellor’s book, The Price of Time: The Real Story of Interest, which discusses the negative economic effects produced by decades-long zero-interest-rate policies and “easy money” following the financial crisis of 2007-2008. In the book, Chancellor explores “the history of interest and its essential function in determining how capital is allocated and priced.” Highly recommended reading. 
  • Over the last 500 years, when leading nations have faced similar debt situations, most often, they decided to print and issue more debt to solve the problem. The resulting challenges are well documented.  
  • Do we think the majority will vote for the person telling us to buckle up, spend less, pay more in taxes, and reduce our Social Security and Medicare benefits? Or will we vote for more stimulus? My guess says more stimulus—a practice and policy that is inflationary at its core. Unfortunately, there are 500-years of documented history that supports an inflationary outcome. 
  • Higher inflation means even higher interest rates. If we continue down this path, we’re in for a level of financial destruction. 
  • Market participants are cheering the possibility of lower interest rates. Lower rates are bullish for risk assets. So, what if rates go even higher? 
  • The U.S. has $213 trillion in total unfunded liabilities and $34 trillion in outstanding government debt. With annual deficits in the $2 trillion range, the debt will likely increase to $50 trillion within ten years. Source: thedebtclock.org 
  • We may look back a few years from now and wish that we’d been able to keep the price of money at 5.25% (the current Fed Funds rate), and the 10-year Treasury at 4.30%. Imagine that. 

The Near-term Outlook (Shorter-term Cyclical View – 2024 to 2028) 

  • The Fed and Fiscal authorities continue to stimulate the economy and bail out distressed situations. 
  • Any sharp decline in the stock market (perhaps -20%) will likely be met with support from the Fed and legislators. That means more rescue money and likely similar responses from the UK and the EU to which, I suspect, markets may respond favorably and move to higher highs. 
  • This could be a 2024 scenario.   

Target 2028 

Both Neil Howes’s book, The Fourth Turning Is Here, and John Mauldin’s The Great Reset seem to be pointing to the second half of the decade. If we think this political year is contentious, just wait for the 2028 election campaign, which may end up being all about restructuring our debt and entitlement systems. Inflation and higher interest rates light the fuse. How we solve the problem depends on things we can’t yet know: government leadership, fiscal response, Fed leadership, Fed response. Will we see higher taxes? Wealth confiscation? I think it is probable. 

But we can expect to see more of this: Biden’s Billionaire Tax proposal. NBCDFW reports, “Under Biden’s proposals, a 25% tax on those with over $100 million would raise $500 billion over 10 years to help fund benefits such as childcare and paid parental leave. That would lift the average tax rate for America’s 1,000 billionaires from 8.2% and bring it in line with the 25% paid by average American workers, according to Biden.” 

I didn’t check the math, but who writes this stuff? The government is running a roughly $2 trillion annual deficit and issuing new government debt to fund it. If they tax more, I very much doubt the additional tax revenue is going to fund childcare and paid parental leave. See how manipulative the narrative is?  

The annual interest expense on the total debt alone is nearing $1 trillion annually. Of the $34 trillion in government debt, $17 trillion is set to roll over in the next three to six months at 4.3% interest or higher. The government is currently paying just 0.50%. What’s 4% on $17 trillion. More money printing is coming. Someone must step up and buy newly issued bonds. Bond vigilantes unite.  

I expect the propaganda narratives to expand. We are in a debt trap, and the hole we are digging is getting deeper. This is why people will likely elect the candidate they believe will give us more handouts. The sad reality is we have $214 trillion in total unfunded liabilities and $188 trillion in assets. Tax all the money, and we can’t zero out our liabilities. Grab a cold beer and click the source – usdebtclock.org. It’s painfully mesmerizing.  

Bottom Line 

  • I believe most investors are anchored in a 40-year period that had the tailwind of declining interest rates. 
  • That period bottomed out with the end of the zero-interest-rate policy. The price of money hit 0%. 
  • Today’s fiscal conditions are different. The current price of money is 5.25%. 
  • Today’s geopolitical backdrop is different. 
  • The deflationary forces of higher taxes, reduced benefits, and the economic impact of higher inflation will be challenged by inflationary policy responses from governments and central banks.  

As we’ve seen in millenniums past, I believe elected officials will choose what they believe is the easiest path: to print more money and monetize debt. Historically, that path has resulted in a high inflationary outcome. I believe we’ll see much higher taxes, reduced Social Security and Medicare benefits, and an aggressive plan to print and spend and print-and-monetize the debt. I don’t believe they will let the economy decline like it did in the 1930s. Systematic companies will be rescued, helicopter money will be given to the people, and some form of debt and entitlement restructuring will occur.  

This is a completely different backdrop than most people expect. Again, investors’ experience is anchored in 40 years of declining interest rate. We are facing challenges very few investors living today have ever faced. That wind is no longer at our backs. 

I just finished listening to Felix Zulauf’s quarterly client call. He believes the market is peaking here, and his base case is for a 20% correction, followed by more juice from the Fed and a rally to potentially higher highs. He still predicts that we’ll see what he calls a “Grandaddy Bear” market sometime in the latter half of the decade. Grandaddy, in Felix’s speak, means -80%. My view isn’t that extreme, but who knows? It’s tough to bet against Felix. 

With all that said, I really hope I am wrong. I want to be positioned in case I’m right. 

Some Ideas 

Note: These are not recommendations for you. These ideas are for discussion purposes only. Please talk with your advisor. All investing involves risk.  

  • Short-term senior secure, floating interest rate private credit. Low leverage. If rates rise as I anticipate, the base lending rate on private credit rises, and your yield rises. If rates decline, you will still earn a spread of 5% to 7% over SOFR (a base lending rate). Currently, SOFR is ~ 5.3%, so many private credit funds are yielding 10% to 12%. 
  • This is a more attractive yield than a 4.30% 10-year Treasury Note. If rates rise, as I suspect they may, from 4% to 8%, your fixed-rate bond investments get destroyed. If rates rise 4%, your floating rate private credit investment rises 4%. You earn more. Be sure to understand the quality and size of collateral and degree of leverage.  
  • Gold, Uranium (growth in nuclear power—small modular reactor technology), agriculture, oil, natural gas, multi-family and single-family housing, nuts and bolts businesses, AI, data centers, and gene editing. 
  • Cap-weighted indices underperform, and active stock selection comes back in vogue, as do long-short investment strategies. 
  • High-growth dividend-paying stocks and value-oriented stocks will come back in form. I’d wait for a 20% market correction before buying.  
  • Use equity hedging strategies to protect your downside. 

Conclusion  

  • If I’m wrong, cap-weighted indices will do well, and I’ll remain satisfied being positioned in the low to mid-teens yielding short-term senior secured select private credit.  
  • If I’m wrong, bonds will match or slightly beat inflation. However, unless I’m trading for a big, short-term, downward interest-rate move, I don’t see how 4.30% would lift your boat.  
  • Whether I’m right or wrong, my portfolio has the potential to match cap-weighted index returns.  
  • If I’m right, traditional stocks and bond investing will underperform (a roller coaster ride to flat returns for the next ten years).  
  • If I’m right, you will have positioned yourself in a way that can deliver an attractive return outcome.   

Most investor capital is positioned in buy-and-hold stock-bond index fund models. Valuations are extremely high by historical standards, and investors are highly concentrated in just a few names, whether they are aware of this or not.  

Due to our debt and entitlement pickle, inflation is the most probable outcome.  

We can handle it; we’ll get through it, some in better shape than others. I really hope I’m wrong, but I want to be forward-thinking in case I am right.  

(Reminder: This is not a recommendation to buy or sell any security. My views may change at any time. The information is for discussion purposes only.)

JPMorgan – Select Slides

Charts follow – Follow the storyline via text at the top of each chart. The summary below charts.

 

That should be enough slides for one day. Although, when I was reviewing the chart deck, I found a 2022 version of the chart 13 shared above. They got the inflation call right but understated the Fed fund target.  

 

 

The following was from my post last week: JPMorgan’s global market strategist, Jordan Jackson, said, “Consumers are bending but not yet breaking.”   The following are a few highlights from his talk (Source: Opinions/views are JPMorgan’s):  

  • Foreign investors own 40% of U.S. Debt. We will reach a point where the bond vigilantes will call the government to task. Think aggressive selling and little buying. That will send interest rates higher. We are not yet at that point, and it could be a few years away.  
  • JPMorgan believes we’ll see earnings growth at 7% to 8% this year, with 50% of it coming from the magnificent 6 (not a typo) stocks and 50% coming from the rest of the market. (Wow!) 
  • They see the high Cap-weighted index stock concentration continuing, noting that the top 10 stocks make up 30% of the market and approximately 25% of all earnings. 
  • Growth companies are in good shape and are investing in R&D. The future earnings outlook is good.  
  • AI will be transformative. JPMorgan sees a 1.5% to 3% boost to GDP from AI alone. I’m not sure when that starts. 
  • Value vs. Growth? They see growth stocks continuing to lead the charge. 
  • Small-cap stocks? Not yet. Forty percent of the Russell 2000 companies are not profitable, and 40% percent have debt tied to floating interest rates. 
  • Interest rates? Yields coming down to between 3.5% andto 3.75% by year-end. 
  • Inflation? The base case is that it moves down to 2%. 
  • Risks? Geopolitical risk is high; supply chain risk is high. JPMorgan sees input costs increasing.  
  • Fed cuts? The base case is that we’ll see three interest rate cuts (June, September, and December). 
  • They do not see the 10-year above 5%. 
  • Investor demand for investment-grade bonds at 5.25% yields and HY bonds at 7.60% remains strong. They note that people are not selling their HY bonds. 
  • Bottom line in 2024: 2% inflation, 0 chance of recession, 2% GDP growth and 4% unemployment. 

JPMorgan addressed what I believe is the big elephant in the room—the massive debt and entitlements crisis we’re speeding toward and likely to reach by the 2028 election.  

 

(Reminder: This is not a recommendation to buy or sell any security. My views may change at any time. The information is for discussion purposes only.)
Random Tweets

Due to the large number of charts, no random tweets this week.

You can follow me on X (formerly Twitter) @SBlumenthalCMG.

Not a recommendation to buy or sell any security. For discussion purposes only. Current viewpoints are subject to change.

Personal Note: Smooth Start

“The road to success is always under construction.”

– Arnold Palmer

I went to the 14th Annual WallachBeth Winter Symposium a week ago, where Gary DeMoss from Invesco Global Consulting gave a presentation titled, “Boardroom Presenting.” It was designed for financial professionals, but the presenting tips and tools they shared can be used by professionals in all fields. It was a great presentation, so I thought I’d share a few takeaways.  

Delivering presentations in high-stakes settings, like boardrooms, is unique. A presentation is part monologue, part dialogue, and part improvisation. Invesco Global Consulting teamed up with word specialist and political consulting firm Maslansky + Partners to apply their unique instant-dial-response technology to the language of the presenter. Picture a bunch of individuals in a room with dial devices in their hands. When they like what was said, they turn the dial to the right; when they don’t like something that was said, they turn the dial to the left. At the end, the devices pool the audiences responses and deliver the presenter with a collective score.  

Maslansky + Partners is well-known for testing boardroom language and strategies with diverse audiences—including investors, institutions, and employees—with the goal of finding the words and strategies that resonate most. They shared their findings on how to refine your delivery skills for small-group, high-stakes presentations so that your message is clear, concise, compelling, and most importantly, coordinated. 

According to Gary, you need to have a smooth opening for two reasons:  

  • You need to captivate your audience, leaving them eager for more.  
  • Delivering a smooth opening helps you as the presenter gain the confidence necessary to deliver your presentation with enthusiasm, passion, and conviction. 

Invesco Global Consulting developed and tested what they call the “client-centered opener” (CCO) across various audiences and topics. The CCO helps to ensure that participants understand that the meeting is centered around their needs and will aim to address the topics they are most interested in. Crafting an effective client-centered opener involves the following three key steps:  

  1. Demonstrate your preparedness. Instead of asking the audience for their immediate concerns, which can imply a lack of preparation, communicate with your audience that their concerns will be addressed after you share the agenda. Acknowledge that you’ve familiarized yourself with your audience’s concerns through prior conversations. This shows both that you’ve prepared for the session and that you’re adaptable to their needs. 
  2. Highlight the potential benefits of the agenda topics. Start by going over your agenda to set the meeting’s direction, but take it a step further by explaining the potential advantages and benefits of each agenda item. By clearly illustrating how the proposed agenda aligns with your audience’s best interests, you are more likely to capture their attention and interest. 
  3. Offer an opportunity to modify the agenda. Engage your audience even more by seeking their agreement on the agenda and giving them the chance to suggest any additional topics. By involving them in the decision-making process, you demonstrate that their input is valued and that the meeting is a collaborative effort, which increases their sense of ownership and investment in the discussion and issues at hand. 

Gary also talked about Zoom (Teams) and advised that we should all leverage our settings. Here are a few tips: 

  • Make sure you’re not too far away from your camera. You don’t want to appear so small that you get what Gary calls “ant cam.”  
  • Make sure you have good lighting, that viewers can see your face clearly, and that your camera is not zooming up into your nostril.  
  • Avoid fake backgrounds and filters. 
  • Your background tells a story about you. Be purposeful with your background. Books, pictures… For example, I saw a Philadelphia Eagles logo in Gary’s Zoom background. It piqued my interest. Some may not like it, but I know I do, and I’m interested in some fun banter with Gary. (By the way, a big thank you to my NY Giants fans for sending Saquon Barkley to the EAGLES. My family is going nuts!) 
  • Small talk matters, big time. It can help prepare the team for working together, rather than working apart, in your meeting.  
  • Join the meeting early, if possible. 
  • Encourage attendees to turn their cameras on—you can share that data shows that turning cameras on makes for better, more productive meetings. But respect that they may need to keep video off for private reasons. 

Finally, Gary talked about the importance of closing your meeting or presentation well. With the original agenda visible somewhere for your attendees to see, them for their time, review the potential benefits of your agenda, and propose the next steps.  

Here’s a script Gary shared:  

“I want to thank you for the time we have spent here today. As we close, I hope you will leave with a few things. First, I hope you’re leaving confident that we can handle the complexities that come with your situation. Second, I hope you now have a clear understanding of how we may help you. Finally, I hope you understand how we can add simplicity and convenience to your life through the variety of services that we offer. Based on what we have discussed today, what do you feel our next steps should be?”  

I hope there are a few takeaways that help you in your business setting. I know I need to get better, and I loved what I heard from Gary at the conference.  

Spring is in the air. I came home yesterday and walked around the house. The dogwood trees in our backyard are blooming, and the forsythia bushes are bright yellow. I also saw way too many weeds that sprung up overnight. I’m going to have to get on that. 

It’s been in the 70s the last few days and will be 60 over the weekend. That’s golf weather! I’ll be joining friends for a few holes at Stonewall this weekend. While Susan is away at a soccer tournament in Virginia, I’ll be working on my swing and picking some weeds. 

I love the Arnold Palmer quote: The road to success is always under construction—time to work on my golf game. And true for everything in life. 

Thanks for reading.

Wishing you a great week, 

Steve

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Trade Signals: Weekly Update – March 13, 2024

“Extreme patience combined with extreme decisiveness. You may call that our investment process. Yes, it’s that simple.” 

– Charlie Munger

Each week, we update our dashboard of indicators covering stock, bond, developed, and emerging markets, along with the dollar and gold charts. We monitor inflation and recession as well.   

If you are not a subscriber and would like a sample, reply to this email, and we’ll send you a sample.

The letter is free for CMG clients. It is designed for traders and investors seeking a better understanding of the current macro trends. You can SUBSCRIBE or LOGIN by clicking on the link below.

TRADE SIGNALS SUBSCRIPTION ACKNOWLEDGEMENT / IMPORTANT DISCLOSURES 

The views expressed herein are solely those of Steve Blumenthal as of the date of this report and are subject to change without notice. Not a recommendation to buy or sell any security.

 

With kind regards,

Steve

Stephen B. Blumenthal
Executive Chairman & CIO
CMG Capital Management Group, Inc.
Private Wealth Client Website – www.cmgprivatewealth.com
TAMP Advisor Client Webiste – www.cmgwealth.com

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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 transaction 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. The views expressed herein are solely those of Steve Blumenthal as of the date of this report and are subject to change without notice. 

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This letter may contain forward-looking statements relating to the objectives, opportunities, and future performance of the various investment markets, indices, and investments. Forward-looking statements may be identified by the use of such words as; “believe,” anticipate,” “planned,” “potential,” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular market, index, investment, or investment strategy. All are subject to various factors, including, but not limited to, general and local economic conditions, changing levels of competition within certain industries and markets, changes in legislation or regulation, Federal Reserve policy, and other economic, competitive, governmental, regulatory, and technological factors affecting markets, indices, investments, investment strategy and portfolio positioning that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties, and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Investors are cautioned not to place undue reliance on any forward-looking statements or examples. All statements made herein speak only as of the date that they were made. Investing is inherently risky and all investing involves the potential risk of loss.

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, has not been independently verified, and does 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 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 purposes.

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.