Current Recommendations

Model / Changes / Holdings As of 9/09/19
Tactical Fixed Income
Most recent allocation changes as of 9/3/2019
Holdings: BAB, BIV, BND, IEF, VCIT
-0.4% wk +7.6% ytd
Global Multi-Asset Income
Most recent allocation changes as of 8/12/2019
Holdings: BAB, EMB, GLDI, USMV, VNQ
+0.7% wk +4.6% ytd
Factor Rotation
Most recent allocation changes as of 7/29/2019
Holdings: FPX, PDP, USMV
+1.0% wk +7.1% ytd
Sector Rotation
Most recent allocation changes as of 8/26/2019
Holdings: ICF, IHI, ITB, XSD
+1.9% wk +0.1% ytd
International Rotation
Most recent allocation changes as of 9/3/2019
Holdings: EWL, CASH (80%)
+1.0% wk -5.7% ytd

 

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
Fed Expected to Cut Rates in September

The Fed will likely cut rates once again at its meeting next week, reports The Wall Street Journal. Last week, the Journal said CME Group had investors placing a 90% probability for a 25-basis-point cut at the coming meeting and a 10% probability for a 50-basis-point cut. When the Fed lowered rates in July, two of the Federal Reserve Bank presidents who participated in the discussion that led to that decision formally dissented against the move. The Journal also notes that “the idea of an aggressive half-point cut to battle the slowdown hasn’t gained much support inside the central bank, according to interviews with officials and their public speeches.”

It appears that sentiment within the Fed for a more aggressive push for stimulating the economy using monetary policy may not be uniform across the institution’s leadership. If the Fed does lower rates again this month, it is unclear how much more stimulus will be provided before U.S. economic data deteriorates further from the current level. The Journal writes, “While market-determined interest rates have tumbled, signaling a dimmer outlook for growth and inflation, many Fed officials believe that the 10-year U.S. expansion can continue at a modest pace and inflation will gradually rise to their 2% target.” Fed officials may need to see further evidence the U.S. economy is in need of stronger monetary policy stimulus before offering it.

Meanwhile, jobs data released last Friday (Sept. 6) showed nonfarm payrolls increasing by 130,000 for the month of August, below estimates for 150,000, reports CNBC. The federal government added 28,000 jobs, 25,000 of which were temporary hires for the upcoming 2020 census. Meanwhile, the private sector added 96,000 jobs, the weakest showing since February. Professional and business services added 37,000 jobs, health care added 24,000, and financial services added 15,000. Retail lost 11,100 jobs. Unemployment held steady at 3.7% while average hourly earnings were up by 0.4% for the month.

Tactical Fixed Income fell 0.4% last week. The worst-performing holding was the Invesco Taxable Municipal Bond ETF (BAB), which fell 0.61%. The best-performing holding was the Vanguard Intermediate-Term Corporate Bond ETF (VCIT), which rose 0.01%. There were no changes to the strategy this week.

Global Multi-Asset Income rose 0.7% last week. The worst-performing holding was the Invesco Taxable Municipal Bond ETF (BAB), which fell 0.61% last week. The best-performing holding was the iShares Edge MSCI Minimum Volatility USA ETF (USMV), which rose 1.47%. There were no changes to the strategy this week.

Factor Rotation rose 1.0% last week. The worst-performing holding was the First Trust US Equity Opportunities ETF (FPX), which rose 0.48%. The best-performing holding was the iShares Edge MSCI Minimum Volatility USA ETF (USMV), which rose 1.47%. There were no changes to the strategy this week.

Sector Rotation rose 1.9% last week. The worst-performing holding was the iShares U.S. Medical Devices ETF (IHI), which rose 0.99%. The best-performing holding was the SPDR S&P Semiconductor ETF (XSD), which rose 4.08%. There were no changes to the strategy this week.

International Rotation rose 1.0% last week. The only holding was the iShares MSCI Switzerland ETF (EWL), which rose 1.6%. There were no changes to the strategy this week.

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