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Economic Commentary: Q3 2019

Investment Directions - Staycation or Vacation?
“Sell in May and go away” is an old maxim for investors. Evidence is mixed on its validity, but given this year’s rally, the temptation now is understandable. Our take: consider taking some profits and rotating into exposures that offer more resilience if volatility returns. Think of it as the investor version of a “staycation” and catch up on chores. With that in mind, our take on the major investor themes for the weeks ahead:

U.S. Equities: Reverting to Technology
We remain overweight U.S. equities, and one of our favored sectors is technology. Even with strong performance this year, we believe the sector remains appealing. Technology firms tend to have strong balance sheets and enjoy support from longer-term trends, attractive qualities in a late economic cycle. Furthermore, tech stocks have historically fared well through various yield
curve regimes.

Developed Markets: Europe Poised for Revival?
Investors in Europe have had little reason for optimism for some time. But we expect European growth to accelerate this year given solid domestic demand. Valuations look attractive relative
to history, although political and trade risks linger. China’s efforts to stimulate its own growth could help export-heavy economies, such as Germany.

Emerging Markets: Brazil Waiting on Reform
Brazilian assets have underperformed the broad emerging market index this year, despite signs that economic growth is accelerating and earnings prospects remain intact. Instead, investors are focused on the negotiations around pension reform. We expect volatility around the negotiations to continue until reform is enacted.

Fixed Income: Return of the Benign Regime
The Federal Reserve’s rate hike pause has benefited fixed income sectors and assets across the board. Given the market expects rates to remain contained this year, these seemingly benign conditions could last for some time. In this environment, we favor quality, intermediate-term fixed income spread assets, such as agency MBS and high-grade corporates.

Factors: Insight into Relative Strength
Our factor-tilting model examines multiple metrics including relative strength, which uses a simple measure of 12-month price momentum to determine the trending behavior of each factor and compare market sentiment in one factor versus the others Changes in multiple factors’ relative strength have particularly driven our updated outlook this quarter: We’ve upgraded quality from neutral to overweight while downgrading minimum volatility and momentum.

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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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