Current Recommendations

Model / Changes / Holdings As of 6/3/19
Tactical Fixed Income
Sell Invesco Preferred ETF (PGX) (20%)
Buy iShares 7-10 Year Treasury Bond ETF (IEF) (20%)
Holdings: BAB, HYD, IEF, TFI, VCIT
+0.6% wk +4.1% ytd

Global Multi-Asset Income
Sell SPDR Bloomberg Barclays Convertible Securities ETF (CWB) (20%)
Sell YieldShares High Income ETF (YYY) (20%)
Buy Invesco Taxable Municipal Bond ETF (BAB) (20%)
Buy iShares 7-10 Year Treasury Bond ETF (IEF) (20%)
Holdings: BAB, IEF, PGX, USMV, VNQ

-1.2% wk +2.6% ytd
Factor Rotation
Sell AlphaClone Alternative Alpha ETF (ALFA) (33%)
Holdings: SPLV, USMV, Cash (34%)
-1.6% wk +1.2% ytd
Sector Rotation
Sell First Trust Dow Jones Internet ETF (FDN) (25%)
Sell Vanguard Communication Services ETF (VOX) (25%)
Buy iShares Cohen & Steers REIT ETF (ICF) (25%)
Holdings: ICF, ITB, IYG, Cash (25%)
-2.8% wk -3.5% ytd
International Rotation
Buy iShares MSCI India ETF (INDA) (20%)
Holdings: INDA, Cash (80%)
+0.0% wk -2.6% ytd

Note: Performance reflects new recommendations executed at the closing price on the day of the recommendation. You may place trades as soon as you receive this update. 

Commentary
U.S. Targets Mexico for Tariffs

According to The Wall Street Journal, President Trump announced last week that “the U.S. would impose escalating tariffs on all Mexican imports beginning June 10, in an effort to push the country to deter the flow of asylum-seeking Central American families to the southern border.” The tariffs will start at 5% and increase to as high as 25% over time if Mexico does not comply with U.S. demands.

Active White House chief of staff Mick Mulvaney stated that these tariffs are not related to trade negotiations with Mexico, implying that they are not being used to influence the content or implementation of the U.S.-Mexico-Canada Agreement.

These tariffs could have a significant impact on trade between the U.S. and its third-largest trading partner. The Journal reports that the U.S. imported $346.5 billion of goods from Mexico in 2018. The auto industry would be especially affected by these tariffs. According to CNN, $59.4 billion in auto parts were imported from the country last year along with about $52 billion worth of finished autos.

There may still be time for the U.S. to work out its differences with China and Mexico. The Wall Street Journal reports that both countries have signaled that they are willing to work with the U.S. Last weekend, the Chinese government published a government policy paper that was critical of the U.S. when it came to trade matters but suggested that China and the U.S. can find some common ground. Vice Commerce Secretary Wang Shouwen espoused the same sentiment. Meanwhile, Mexican President Andrés Manuel López Obrador has expressed his desire to talk with the U.S. about immigration. In accordance with his statements, Mexico has sent a delegation to the U.S. to work on a plan for better controlling immigration at the border.

Tactical Fixed Income rose 0.6% last week. The worst-performing holding was the Invesco Preferred ETF (PGX), which was flat. The best-performing holding was the Invesco Taxable Municipal Bond ETF (BAB), which rose 1.49%. This week, the strategy sold the Invesco Preferred ETF (PGX) and bought the iShares 7-10 Year Treasury Bond ETF (IEF).

Global Multi-Asset Income fell 1.2% last week. The worst-performing holding was the YieldShares High Income ETF (YYY), which fell 2.15%. The best-performing holding was the Invesco Preferred ETF (PGX), which was flat. This week, the strategy sold the SPDR Bloomberg Barclays Convertible Securities ETF (CWB) and the YieldShares High Income ETF (YYY) and bought the Invesco Taxable Municipal Bond ETF (BAB) and the iShares 7-10 Year Treasury Bond ETF (IEF).

Factor Rotation fell 1.6% last week. The worst-performing holding was the AlphaClone Alternative Alpha ETF (ALFA), which fell 2.24%. The best-performing holding was the iShares Edge MSCI Minimum Volatility USA ETF (USMV), which fell 1.45%. This week, the strategy sold the AlphaClone Alternative Alpha ETF (ALFA). The strategy is now 34% cash.

Sector Rotation fell 2.8% last week. The worst-performing holding was the iShares U.S. Home Construction ETF (ITB), which fell 4.08%. The best-performing holding was the First Trust Dow Jones Internet ETF (FDN), which fell 1.39%. This week, the strategy sold the First Trust Dow Jones Internet ETF (FDN) and the Vanguard Communication Services ETF (VOX) and bought the iShares Cohen & Steers REIT ETF (ICF). The strategy is now 25% cash.

International Rotation was flat last week. This week, the strategy bought the iShares MSCI India ETF (INDA). The strategy is now 80% cash.

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