By Mitchell Anthony
The volatility in the markets continues to remain high as traders and investors digest the impact of the significant policy changes in play by the Trump administration. This administration has plans for change unlike any other administration in decades. The administration hopes to level the playing field on trade and relieve the burden on America from illegal immigration. Further the administration is not afraid to take bold steps to keep the Federal Reserve tuned in to the fragility of our economy. On the other side of the aisle we have the liberal Democrats who seem willing to sacrifice the strength of America for equality in the world and use whatever tool is at their reach to carry out their obstructive agenda. The FAANG's thus far has been insulated from most of the policy changes at play by Trump. However the Dems have taken aim at the FAANG's despite the liberal agendas of most FAANG companies, and plan to try to obstruct the business plans of these industries once the Dems take control of Congress. These are the problems that investors and traders alike are weighing into their investment posture. As a result our markets are 10% lower today than they were at their highs in September. Traders have left the markets and have taken speculative positions in bonds or safe positions in cash as they await better visibility on these issues. Investors have not yet changed their asset allocation as a result of these problems. Our objective is to create alpha for our clients and we seek to stay ahead of what investors do. We are carefully weighing whether investors next step will be to leave stocks for another asset class. Likewise we are carefully weighing whether traders will return to equities soon and push stock indexes to new highs.
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Markets Fall as Investor’s Hedge the Risks On the Horizon for the Economy.
The equity markets in America have turned downward as result of some storm clouds that have appeared on the horizon that threaten to stall or slow the growth of our economy. Over the last few weeks the S&P 500 has fallen 10% from its September 30 peak and is now up just 1% for the year. All of MACM's growth strategies have fallen from their September 30th peaks. MACM's dynamic growth portfolio has declined 13% but is still up 8% year to date. AAI has given back 10% and is now up 5% year to date. Diversified equity has given up 12% but is still up 11% year to date. While we are unhappy that we have given back almost everything gained in the third quarter we believe that higher prices remain on the horizon for equities and the cycle is not going to end here!Read more
By Mitchel Anthony
The US economy continued on its path of acceleration in the third quarter at the expense of rest of the globe. Virtually all sectors of the US economy reported robust growth and improving demand for their goods and services throughout the third quarter. While the naysayers worried about the impact of tariffs and the trouble in social media, the equity markets notched a terrific quarter with returns exceeding 7% or more across most domestic large-cap indices. MACM’s dynamic growth portfolio advanced 9% in the quarter and its diversified equity portfolio advanced 10.1% in the quarter far exceeding the bogey of the S&P 500 which was up 7.4%. Read more
US Stocks have regained their footing as predicted in our first quarter newsletter. We believed equities would get back on track after first-quarter earnings reports and economic data that we expected to be quite positive. This is exactly what happened in the second quarter. The leadership centered on domestic equities with NASDAQ and small cap stocks at the top of the list. Foreign markets tumbled as expectations for growth in the globe receded given the current environment for trade and impending tariffs. Emerging markets and China suffered the most with Europe closely behind in the freefall. This downturn came and pushed money into the US markets as the US economy stands strong in the trade war. In anticipation of this MACM exited all of its investments in emerging markets in Europe toward the end of Q1 and repositioned the portfolio in domestic equities leveraged to consumption themes present in America.Read more
Equity Markets Delink From Economic Data And Get Distracted With Washington Policy.
Equity markets in America suffered their worst quarter in over two years as 2018 began on a soft note. The softness in equities in Q1 followed an outstanding year for equities in 2017 and was not surprising for many investors but was unwelcome for traders. The S&P 500 fell .76% in the first quarter of 2018. Mitchell Anthony Capital Management (MACM)’s clients enjoyed much better performance in Q1 with almost all strategies posting positive returns. MACM’s diversified equity portfolio advanced 4.8% , DYNAMIC GROWTH advanced 3.5% HIGHLY FOCUSED EQUITIES advanced 5.4%, ASSET ALLOCATION INCOME advanced 3%, and GROWTH advanced 4% in the quarter. MACM’s clients enjoyed 372 - 620 basis points of positive alpha in Q1 of 2018. This outperformance was attributed to the superior group of equity holdings in the portfolios managed by M ACM. Positive alpha was gained from holdings in healthcare, Internet retailing, technology, and financials. Conversely MACM had only modest holdings in areas like telecom, energy, utilities, and consumer staples (which led the equity market lower).Read more
2017 began with optimism from investors, consumers and businesses. The market’s great year began with a great first quarter followed steadily by similar gains in Q2 - Q4. Washington policy took a turn for the better despite unrest amongst the liberal socialists in our country. Trump’s first year was difficult for him and the nation as the country failed to unite; however, progress was made as Trump proved himself worthy of the job and did get one of his initiatives done! The tax cut was a great victory for business and had some modest benefits for most Americans as well. The obstruction to Trump's plans was unfortunate. It continues but shows signs of waning as liberal democrats are losing face, and possibly their will to continue, as meritless attacks failed to distract the White House agenda, but did wear on the American public’s tolerance for dishonesty from their leaders and the media.
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The American Economy continues to show signs of improvement and the growth picture has improved. As a result the equity markets have moved significantly in the first half of the fourth quarter. Economic results showing the health of the consumer, industrial sector, and globe have trended higher throughout Q4. This along with strong corporate earnings announcements since the end of Q3, have provided fuel for higher equity market prices. While many thought the leadership in the market was due for a change toward value, this has not occurred, and better earnings continue to drive the growth markets higher.Read more
Despite a flattening in consumer confidence in the US, growth in the American economy improved in the third quarter of 2017. GDP for the second quarter was revised upward from 2.2% to 3.1%. Corporate earnings accelerated in the third quarter for the S&P 500 to over 17%. Consumer confidence which hit a 17 year high in March 2017, has since eased back modestly. The change in trend for consumer confidence is difficult to quantify but it is likely due to politics in Washington and the country’s inability to come together since the election.Read more
The growth in the equity markets has been far greater than the growth in our economy since President Trump was elected. The S&P 500 logged another quarter of growth with the index advancing 3.1% in the quarter and advancing 9.3% year to date. MACM's dynamic growth portfolio also logged another good quarter of growth advancing 4.4% in the quarter and 13.5% year-to-date. This is not unusual as markets seem to perform the best during periods of slow growth with low inflation and friendly monetary policy. While this is true, we must note that the equity market rally paused in 2014 and 2015 when corporate America fell into an earnings recession and slow growth was replaced by no growth.Read more
Whether you look at financial market performance, consumer confidence, the purchasing manager survey, or unemployment data, it is clear that Trump has been great medicine for the globe’s economies and financial markets. The election of Donald Trump has brought higher confidence to consumers, investors, and unemployed Americans. The Trump effect has also played out in international economies. The globe is now in full expansion mode according to the latest purchasing manager index readings.Read more
