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Economic Commentary: Q4 2019

Autumn breezes: Change in seasons — and markets
The return of fall offers cooler temperatures—but a shifting market environment. Dovish central bank policies may extend the long economic expansion, but against a backdrop of rising geopolitical tensions and trade disputes contributing to slower growth. Investors are responding by seeking to boost portfolio resilience to withstand volatility. Our take on the major investor themes for the weeks ahead:

U.S. equities: Technology: The cyclical versus the secular
With the economy in the late stages of the business cycle, we continue to favor a moderately pro-risk posture in U.S. equities. Technology remains one of our preferred sectors, but it is important to recognize that some sectors are more tied to the business cycle (like semiconductors), while others may benefit from long-term tailwinds (like software).

Developed markets: Upgrading Europe
We are upgrading the region from underweight to neutral. The European Central Bank’s fresh monetary stimulus could provide a tailwind for equities. We believe the negative sentiment toward the region may be overdone (while recognizing obvious risks) when comparing Europe’s risk to emerging markets and its valuations to U.S. equities.

Emerging markets: Latin America in focus
We have downgraded emerging markets to neutral, but we see opportunities in Latin America. Valuations are attractive for many of the region’s economies compared to other emerging markets, particularly with respect to earnings expectations. We are not sanguine about the risk of trade tensions but note that easing financial conditions and progress on political reform have already helped drive asset prices this year.

Fixed income: Navigating the fall in rates
The Federal Reserve’s 180-degree pivot from rate hikes to rate cuts has had a significant impact on fixed income markets. Still, we believe this is an important time to strengthen the ballast in one’s portfolio through quality fixed income investments, namely investment grade bonds and agency mortgage-backed securities.

Factors: Min vol goes viral
After a challenging start to the year, both minimum volatility and momentum stocks outperformed the broader market in the second quarter. This reinforces how investors are looking to build resilience in their portfolios, while not missing out on market rallies. Min vol valuations appear stretched at this point, while momentum valuations are supportive.
 

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The Markets Don't Pick Sides

By Lineweaver Financial Group
October 19, 2020 Category: Markets Don\'t Pick Sides, Newsletter

While Covid-19 has largely stolen the headlines this year, we expect an increasing focus on the presidential election as we enter the end of the year. In dealing with extreme uncertainty, we find looking to history can often be the best starting point to understand what comes next. Since 1926, the average annual return of the S P has been about 10%, whereas in presidential election years, the market has historically performed slightly better at just over 11%. During election years where the current President has been re-elected, or a different President from the same party has been elected, the S P 500 averaged growth of 16%. However, when the parties switch, the return averaged just 5%. One of the reasons for this is very simple the fact that markets dislike change or the unknown. But generally, it seems more likely to us that the Presidency switched parties because the economy wasnt particularly strong, rather than the Presidential campaign driving the market. Its good to recall

Economic Commentary 2020Q4

By Lineweaver Financial Group
October 19, 2020 Category: Economic Commentary, 2020Q4, Newsletter

Many positive signals appeared in the quarter. Millions of Americans went to work again; monthly net job growth topped 1.7 million in July and 1.3 million a month later. Unemployment, which had hit 14.7% in April, fell from 10.2% in July to 8.4% in August, and the U-6 rate counting both underemployed and unemployed Americans declined from 16.5% to 14.2%.1,2 Consumer confidence, as measured by the Conference Boards monthly index, leaped to 101.8 in August from 86.3 in July. Households kept up their buyingretail sales were up year-over-year through August even though supplemental unemployment benefits expired at the end of July.1 Industries also grew, according to research from the Institute for Supply Management. When ISMs Monthly Purchasing Manager Index for the manufacturing and services sector surpasses 50, those sectors are judged by ISM to be expanding. ISMs services PMI was at 58.1 in July and 56.9 in August; its manufacturing index reached 54.2 in July (a month that saw a 6.4% rise

HealthWatch 2020Q4

By Lineweaver Financial Group
October 19, 2020 Category: HealthWatch, Newsletter

In light of the coronavirus, many are taking steps to ensure everything they touch is clean and sanitized. This is even more true when it comes to our kitchen, a place where we are constantly handling foods. Its hard to know what products or methods are effective and which ones arent. 1. Gas Stove Its important to make sure you are cleaning your gas stove after every meal with either soap and water or detergent and water. A gas stove is an area in your home that can become a breeding ground for infections over time, if not regularly cleaned. 2. Kitchen Counters and Slabs Many keep their fruits, vegetables, and other ingredients on their counters or slabs before being washed. Its recommended that you keep this area particularly clean with a mixture of salt and lemon water. 3. Fruits and Vegetables When it comes to items we are consuming, we want to be especially sure it has been cleaned properly to lower the risk of contamination. Trying to find a cleaning product for our fruits and vegetables

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