Current Recommendations

Model / Changes / Holdings As of 2/11/19

Tactical Fixed Income
Most recent allocation changes as of 2/4/2019
Holdings: BAB, CWB, IEF, PGX, VCIT

+0.2% wk +0.9% ytd

Global Multi-Asset Income
Most recent allocation changes as of 2/4/2019
Holdings: DEM, EMB, GLDI, VNQ, YYY

-0.4% wk +1.7% ytd

Factor Rotation
Most recent allocation changes as of 1/28/2019
Holdings: EEMV, FPX, FV, Cash (1%)

+0.1% wk +3.7% ytd

Sector Rotation
Most recent allocation changes as of 1/22/2019
Holdings: BBH, FDN, ITB, VNQI

-1.0% wk +3.4% ytd

International Rotation
Sell iShares MSCI Singapore Capped ETF (EWS) (20%)
Buy iShares MSCI Pacific ex Japan ETF (EPP) (20%)
Holdings: EIDO, EPHE, EPP, IFV, ILF

-1.9% wk +2.7% wk
Note: New recommendations recorded at the closing price on the day recommendation is made. You may place trades as soon as you receive this update. 

Commentary
European Growth Faltering

In 2018, the U.K. experienced its lowest rate of annual growth since 2009. GDP increased by only 1.4% from the previous year. Lower growth rates appear to be a trend across Europe. Germany and France, for example, both grew at the sluggish pace of 1.5% last year.

The Wall Street Journal cited declining investment as a major contributor to the U.K.’s slowing growth rate. In fact, investment declined 0.9% in 2018, the biggest decline since 2009. Uncertainty around the terms of the U.K.’s departure from the EU has prevented businesses from being able to fully plan ahead and make investments in the economy. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, estimated that overseas investment in the British automobile industry was down by almost 50% in 2018.

Last week the European Commission lowered the growth estimates for Germany, France, and Italy, according to Investing.com. The commission sees Germany growing at a rate of 1.1% in 2019, down from its previous estimate of 1.8%. France and Italy had their growth rates cut from 1.6% and 1.2% to 1.3% and 0.2%, respectively.

The recent reduction in European growth rates appears to be the product of continuing trade negotiations worldwide and slowing growth in countries outside of Europe, such as China. With the global economy as intertwined as it is, any economic change outside of Europe, such as an alteration of the trading agreements between the U.S. and China, could profoundly impact economic activity within the continent. Further, what happens in Europe will likely affect economic activity in the U.S. over the coming year.

Tactical Fixed Income was the top performer last week with a gain of 0.2%. The only holding that declined was the Invesco Preferred ETF (PGX), which lost 0.14%. The best-performing holding was the Invesco Taxable Municipal Bond ETF (BAB), which gained 0.54%. There were no changes to the strategy this week.

Global Multi-Asset Income fell 0.4% last week. The sole positive performer was the Vanguard Real Estate ETF (VNQ), which gained 1.5%. The WisdomTree Emerging Markets High Dividend ETF (DEM) was the worst performer, losing 1.34%. There were no changes to the strategy this week.

Factor Rotation increased by 0.1% last week. The holding with the worst performance for the week was the iShares Edge MSCI Min Vol Emerging Markets ETF (EEMV), which lost 0.7%. The best performer was the First Trust US Equity Opportunities ETF (FPX), which gained 0.79%. There were no changes to the strategy this week.

Sector Rotation was down 1.0% last week. The worst-performing holding was the VanEck Vectors Biotech ETF (BBH), which lost 3.29%. The sole positive performer was the First Trust Dow Jones Internet ETF (FDN), which gained 1.17%. There were no changes to the strategy this week.

International Rotation was the worst performer for the week, falling 1.9%. The worst performer within the strategy was the iShares Latin America 40 ETF (ILF), which lost 3.82%. The only positive holding was the iShares MSCI Philippines ETF (EPHE), which gained 0.23%. This week, the strategy sold out of the iShares MSCI Singapore Capped ETF (EWS) and bought the iShares MSCI Pacific ex Japan ETF (EPP).

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