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Economic Commentary: Q2 2019

Investment Directions - Spring Forward

Once again, spring is near, a time of growth, renewal and restoration. But with concerns over slowing growth, uncertainty around economic and earnings outlooks, and ever-present U.S.-China and European political risks, investors should be prepared for potential spring volatility. Our take on the major themes for this quarter: 

U.S. Equities: The Healthy Healthcare Sector 

In an environment of slowing growth and less certain earnings outlooks, the traditional defensive qualities and resilient earnings growth of healthcare stocks are appealing. Plus, valuations broadly look reasonable compared to historical levels. Tactical investors may consider getting more granular with the medical devices industry.

Developed markets: What Next for Brexit?

With Theresa May’s Brexit plan resoundingly defeated, she must now renegotiate a deal. We believe the United Kingdom is likely to avoid a hard exit with an extension of the March 29 deadline to exit and gain time to draft a passable proposal. But lingering uncertainty is likely to keep U.K. assets under pressure while a deeper slowdown in European and global growth only accentuates the challenges. We remain underweight in U.K. and European equities.

Emerging Markets: China Looking Ahead

Although Chinese equities tumbled in 2018, we continue to favor China as well as emerging markets overall. Although trade tensions are likely to persist, we believe frictions will subside in the short run. And we find trade tensions are reasonably priced into Chinese equities. Meanwhile, accommodative policy measures and sustained earnings growth in China could lift investor sentiment.

Fixed income: Ballast Matters

In 2018, investors were rightly concerned about duration risk as interest rates rose due to Fed tightening, inflation fears and rising deficits. But during December’s equity sell-off, yields fell—long-duration U.S. Treasuries (as measured by the ICE U.S. Treasury 20+ Year Index) returned +5.6%—a stark reminder of the key role bonds can play as a diversifier in a portfolio. We favor holding long-duration Treasuries and highly rated investment grade bonds for this purpose.
 

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Is Your Tax Plan Working for You?

By Lineweaver Financial Group
February 12, 2020 Category: General, Tax, Tax Planning, Tax Strategies

Its that time of year again - tax season is upon us, and we want to remind everyone of some strategies you may be able to take advantage of on your 2019 tax return. A strategy that many find helpful is bunching deductions, which is essentially accelerating your write offs into one year to try to get above the standard deduction. Last year was the first time for all of us filing under the Tax Cuts and Jobs Act of 2017, which doubled the standard the previous standard deduction from tax year 2016. But this year the only change is a slightly increased standard deduction over last year - $24,400 for Married Filing Jointly, and 12,200 if youre single. By bunching charitable gifts, medical expenses, or even your state and local taxes into one year, you may be able to realize significant savings. However, just keep in mind real estate and state and local taxes are still capped at $10,000. Many people also take advantage of gifting appreciated securities. For example, even if you only paid

Market Outlook 2020

By Lineweaver Financial Group
January 07, 2020 Category: General

What a difference a year makes! A year ago, at this time the market was coming off a 20% correction in the fourth quarter reflecting prevailing headwinds of rising interest rate, escalating global trade tensions between the US and China, uncertainty on Brexit, and growing concerns of slowing global growth. Today conditions have calmed. Central banks around the world are dovish, including in the US, where the Fed moved to make mid-cycle adjustments in the midst of uncertainty and raised chances of extending the cycle. Likewise, around the world central banks seem accommodative with negative interest rates prevailing in several key countries around the globe. The US and China have apparently reached a Phase I trade deal and while the situation is tenuous and large structural hurdles remain in the areas of intellectual property, leaders of both countries seem to be more motivated to move toward more substantial agreements into 2020. With this backdrop, conditions appear favorable for economic

Economic Commentary: Q1

By Lineweaver Financial Group
January 07, 2020 Category: General, Economic Commentary

Our reference to the classic Toots and the Maytals song comes as we see a de-escalation in trade tensions with China, diminishing risks of a no-deal Brexit and few signs that the record U.S. economic expansion is ending or reversing. Still, persistent trade uncertainty is denting business confidence and spending, particularly the longer-term risk of an unravelling of the global supply chain. Our take on the major investor themes for the weeks ahead: U.S. Equites: Sector Steering Defensive sectors have outperformed cyclicals this year against a backdrop of slowing growth and falling interest rates. However, we expect central bank easing could provide a floor for growth in the coming months. Among cyclicals, we remain constructive on technology, while we prefer less rate-sensitive sectors. Developed Markets: Winter of our discontent? Trade uncertainties and slowing growth have taken a toll on developed world stocks outside the United States. But not all DMs are created equal, and

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