Peace of Mind
Doug Walters
How well do you sleep when you are out of touch with your portfolio? Appropriate risk, diversification, and a robust process help, as do markets reaching all-time highs…
Contributed by Doug Walters , Max Berkovich ,
I spent much of the week out of the office and out of touch with the daily financial news flow. I know many in our industry who are on edge in such situations, but I was at ease. If you have set your risk tolerance right and built a well-diversified portfolio designed to benefit across the economic cycle, then you should not care about the day-to-day, week-to-week, or even month-to-month fluctuations. Of course, it did not hurt that markets breached new highs this week…
Headlines This Week
Equities were higher across the Globe, with U.S. markets touching all-time highs. Bonds too moved higher as yields fell. The U.S. 10-year flirted with the 2% level. Gold did not sit this party out either, reaching a multi-year high.
Federal Reserve Chairman Jerome Powell indicated that the case for a rate cut has strengthened. While the inflation rate remains below their 2% target, Fed members want to see persistence in the data before they pull the trigger on a rate cut. One member was reported to be clamoring for a 0.5% cut at that meeting.
- The Bank of England (BOE) left its rates unchanged, signaling more uncertainty ahead.
- The Bank of Japan (BOJ) kept its monetary policy unchanged but signaled they would ease if needed.
President Trump met with Canada’s Prime Minister Trudeau in Washington to discuss the United States-Mexica-Canada Agreement (USMCA).
- Mexico became the first nation to ratify the (USMCA) as a replacement for the North American Free Trade Agreement (NAFTA).
Geopolitics reared its ugly head this week but did not derail the risk-on party. Iran shot down a U.S. military surveillance drone. In a last-minute decision, President Trump called off a retaliatory missile strike, which could have had up to 150 casualties. While a bigger disruption to markets was avoided, crude prices were not spared as oil prices jumped 10% during the week.
The Week Ahead
Numbers Game
An economic data dump will characterize the last week of the quarter. Notable releases include the final Q1 U.S. Gross Domestic Product (GDP), Person Consumption Expenditures Index (PCE), Durable Goods Orders, Personal Spending, Consumer Confidence, and several housing-related reports.
Black Gold
With oil prices rising in response to Iran related tension, the Organization of the Petroleum Exporting Countries (OPEC) meeting should receive more attention than initially expected. Experts do not see OPEC’s output rising.
Twenty
The G20 summit in Osaka, Japan kicks-off on Thursday. A highly anticipated meeting between China’s President Xi Jinping and President Trump is the centerpiece, but a meeting with Russia’s Putin and Turkey’s Erdogan are also newsworthy.
20 for 20
Twenty Democratic party hopefuls for the Presidential nomination will square off in a two-night debate on NBC. Wednesday night, Senator Warren, Senator Booker, and Congressman O’Rourke headline the event. The Thursday line up will pit Senator Bernie Sanders and former Vice President Biden against each other.
Stock Highlights from Max
More Matches
Markets at a new all-time high helped pull all sectors up, but it wasn’t equal. Utilities and Financials were the laggards, putting in only a slightly positive week. Our REIT sector was technically the top sector thanks to a well-received growth plan from our lone holding, the health care REIT Ventas Inc. (VTR), but Technology was the star thanks to microchip stocks bouncing back from recent woes and a positive earnings report from…
- Oracle Corp. (ORCL) not only beat earnings expectations but also showed revenue growth. While the $11.14 Billion quarterly revenue figure was only 1.2% more than a year ago, expectations were for a decline in revenue.
- The parade of M&A continued this week with UnitedHealth Group Inc. (UNH) shelling out $3.2 billion for a privately held payments firm Equian, in hopes of branching out beyond health care. Cognizant Technologies Corp. (CTSH) spent an undisclosed amount to acquire Zenith Technologies. The biggest matchmaking coup this week came from Pfizer Inc. (PFE), who inked a deal to acquire Array Biopharma Inc. (ARRY). The total enterprise value of the transaction is $11.4 Billion. The acquisition will add a pipeline of cancer therapies to Pfizer’s shelf and is expected to be dilutive to earnings by $0.04 – $0.05 this year and next. While Merck & Co. Inc. (MRK) did not strike any deals this week, it did find itself mentioned as a shopper of small to medium size targets in the cancer therapy and animal health spaces.
- Also, this week, Facebook Inc. (FB) announced its cryptocurrency Libra. A nonprofit association will run the cryptocurrency. The open-source digital currency is set to launch in the first half of next year and should empower consumers to spend money around the globe. Facebook will launch Calibra, the digital wallet for the currency, which should generate income for Facebook. Not surprisingly, it did not take long for politicians to call for hearings on the issue.
About Strategic
Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on client assets of over $2 billion.
OverviewDisclosures
Strategic Financial Services, Inc. is a SEC-registered investment advisor. The term “registered” does not imply a certain level of skill or training. “Registered” means the company has filed the necessary documentation to maintain registration as an investment advisor with the Securities and Exchange Commission.
The information contained on this site is for informational purposes and should not be considered investment advice or a recommendation of any particular security, strategy or investment product. Every client situation is different. Strategic manages customized portfolios that seek to properly reflect the particular risk and return objectives of each individual client. The discussion of any investments is for illustrative purposes only and there is no assurance that the adviser will make any investments with the same or similar characteristics as any investments presented. The investments identified and described do not represent all of the investments purchased or sold for client accounts. Any representative investments discussed were selected based on a number of factors including recent company news or earnings release. The reader should not assume that an investment identified was or will be profitable. All investments contain risk and may lose value. There is no assurance that any investments identified will remain in client accounts at the time you receive this document.
Some of the material presented is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Strategic Financial Services believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
No content on this website is intended to provide tax or legal advice. You are advised to seek advice on these matters from separately retained professionals.
All index returns, unless otherwise noted, are presented as price returns and have been obtained from Bloomberg. Indices are unmanaged and cannot be purchased directly by investors.