MENU

Perspectives

Although there remains plenty of worrisome news, businesses appear to be pushing through with their overall plans

by Fortem Financial September 28, 2020

COVID-19 cases in the United Kingdom, France, and Spain have been picking up, prompting London Mayor Sadiq Khan to have talks for new restrictions aimed to slow the spread of the virus. Treasury yields dropped over the course of the week on the increased COVID concerns in Europe and comments from the Federal Reserve. On Tuesday, Fed Chairman Jerome Powell testified before Congress and said another fiscal stimulus would be important to aid the economy. These calls for additional stimulus were echoed by other senior U.S central bank officials on Wednesday. This all led investors to seek the perceived safety of Treasuries and yields to fall. Investors also worried about a slower economic recovery as initial jobless claims on Thursday were 870k, compared to estimates of 850k, and continuing claims were 12.58m compared to estimates of 12.3m. Gold prices also dropped 5% over the week.

With less than a week to close out the third quarter, stocks closed slightly lower than last week with the S&P 500 contracting by -0.61%. Hopes of a stimulus package dwindled last week after representatives expressed doubts of a deal between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin being struck by election day. However, most headlines were overshadowed by the passing of Supreme Court Justice Ruth Bader-Ginsburg. The partisan divide was expressed on whether a confirmation hearing would be appropriate in the last weeks of President Trump’s first term.

Business confidence is trying to recover, with the Business Roundtable CEO index rising to 64 in 3Q. Housing has also been a source of strength in the U.S. (new home sales existing home sales, mtg apps for purchase, homebuilders sentiment, etc). There are still uniquely-impaired areas in this pandemic (eg, aircraft). But CEO’s appear to be planning for a durable economic bottom, even if it will take time to recover the prior level of economic activity. A sense of hope was felt in the restaurant industry as Darden Inc., the parent company of Olive Garden and Red Lobster, reported better than expected earnings and margins. Reduced capacity dining was offset by carryout orders, boosting the company’s first-quarter earnings. Investors will gauge the economy next week when 2Q GDP is released on Wednesday, closing out the quarter and preceding earning season.

True, there remains plenty of worrisome news, with second-virus-wave concerns in Europe & other locations. U.S. initial jobless claims rising slightly w/w to 870,000 in the Sep 19th week also indicate some loss of momentum. But businesses appear to be pushing through with their overall plans, even if there are local lockdowns in activity. Manufacturing (especially global companies that can tap into growth from Asia) is still performing better than services. The problem is not really with goods now. Goods production & global trade matter for the S&P 500.

Academic research has also indicated that the full lockdown is too blunt a tool, and medical knowledge & treatment for COVID-19 have improved significantly in the past 6 months. NBER working paper #27719 notes that: “First: across all countries and U.S. states that we study, the growth rates of daily deaths from COVID-19 fell from a wide range of initially high levels to levels close to zero within 20-30 days after each region experienced 25 cumulative deaths. Second: after this initial period, growth rates of daily deaths have hovered around zero or below everywhere in the world. Third: the cross-section standard deviation of growth rates of daily deaths across locations fell very rapidly in the first 10 days of the epidemic and has remained at a relatively low level since then. Fourth: when interpreted through a range of epidemiological models, these first three facts about the growth rate of COVID deaths imply that both the effective reproduction numbers and transmission rates of COVID-19 fell from widely dispersed initial levels and the effective reproduction number has hovered around one after the first 30 days of the epidemic virtually everywhere in the world … failing to account for these four stylized facts may result in overstating the importance of policy mandated NPIs [non-pharmaceutical interventions] for shaping the progression of this deadly pandemic.” (Atkeson, Kopecky, Zha, 8/2020)

Bottom line: for the average person, there’s little new information coming from health officials on COVID-19, simply a repetition of previous concerns. That doesn’t mean there won’t be additional local virus worries, indeed there already are in numerous places (Europe, Canada, etc). The non-pharma health response just doesn’t seem to matter one way or the other statistically. We’re more interested in the plans of business leaders, who seem intent on fading a global lockdown now.

In Florida, “Gov. Ron DeSantis says he is lifting all restrictions on businesses statewide that were imposed to control the spread of the virus … Most significantly, that means restaurants and bars in the state can now operate at full capacity.” (NPR)

Businesses may fail, but they appear to be giving it a go first. For those affected by local lockdowns, there are economic policies that have proven effective (eg, the U.S. CARES act). The biggest risk remains that we end policies that are effective too early, in our view. Of course, we could be wrong, there could be virus mutations, compounding conditions (flu), or other medical considerations. But if we are trying to distinguish what is the base case and what is the risk case, it looks like the economy is still biased toward growth at the moment.
Source: Strategas, First Trust


Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark the performance of specific investments

Sincerely,

Fortem Financial
(760) 206-8500
team@fortemfin.com

 

 

Latest News

 

Market Snapshot: Dow surges nearly 500 points to set upbe...

U.S. stock indexes traded higher at midday Monday, as investors brace for a period in which the race for the White House and the state of the economy may come into greater clarity.

Read Story

 

Economic Preview: U.S. September job report is going to s...

The September job report will signal that the U.S. economic recovery has entered a more tenuous phase.

Read Story

 

Durable-Goods Orders Rise for Fourth Straight Month

Orders for long-lasting factory goods increased for the fourth consecutive month in August, a sign of the manufacturing industry's continued recovery from coronavirus pandemic-related dis...

Read Story

 

Trump-Biden delayed election outcome worries overblown: G...

Markets are overestimating the possibility the 2020 election result will be delayed, according to Goldman Sachs Group.

Read Story

 

Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

Disclosures:
Awards and recognitions by unaffiliated rating services, companies, and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Fortem is engaged, or continues to be engaged, to provide investment advisory services; nor should they be construed as a current or past endorsement of Fortem or its representatives by any of its clients. Rankings published by magazines and others are generally based on information prepared and/or submitted by the recognized advisor. Awards may not be indicative of one client’s experience or of the Firm’s future performance. Neither Fortem nor the recognized advisor has paid a fee for inclusion on a list, nor purchased any additional material from the award provider. The criteria for each award is listed below:

Five Star Professional Disclosure:
The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
Fortem Financial 2016. All rights reserved.

Data Sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.

Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. The opinions expressed are solely those of the author, and do not represent those of Fortem Financial, LLC or any of its affiliates. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful. Forward looking statements are based on current expectations and assumptions, the economy, and future conditions. As such, forward-looking statements are subject to inherent uncertainty, risks, and changes in circumstance that are difficult to predict. Actual results may differ materially from the anticipated outcomes. Carefully consider investment objectives, risk factors and charges and expenses before investing. Fortem Financial is a registered investment adviser with the SEC. Advisory services are offered through Fortem Financial.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

Fortem Financial

Fortem Financial Author

Recent Posts

PRIVACY NOTICE REGARDING CLIENT PRIVACY

Fortem Financial Group, LLC, has adopted this policy with recognition that protecting the privacy and security of the non-public personal information we obtain about our customers is an important responsibility.

All financial companies choose how they share your non-public personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your non-public personal information. Even when you are no longer our customer, we will only share your non-public personal information as described in this notice. So, please read this notice carefully to understand what we do.

The types of non-public personal information we collect and share depend on the product or service you have with us. This information can include items such as your Social Security number and income, your account balances and transaction history, and your investment experience and account transactions.

We collect your non-public personal information in a variety of ways. For example, we obtain your non-public personal information when you open an account or give us your income information, tell us about your portfolio or deposit money, or enter into an investment advisory contract. We also collect your non-public personal information from other companies. For example, from the custodians who hold your account assets.

All financial companies need to share customer’s non-public personal information to run their everyday business. Below, we describe the reasons we can share your non-public personal information and whether you can limit this sharing.

We share your non-public personal information for our everyday business purposes such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, report to credit bureaus, to protect the confidentiality or security of your records, or as permitted by law. We may also share your non-public personal information for our own firm’s marketing purposes; so that we can offer our products and services to you.

Federal law gives you the right to limit only sharing non-public personal information about your credit worthiness for our affiliates’ everyday business purposes; sharing non-public personal information about you with our affiliates to market to you; and sharing non-public personal information with non-affiliates to market to you.

We don’t share non-public personal information about your creditworthiness with our affiliates for their everyday business purposes. We don’t share your non-public personal information with our affiliates to market to you. We don’t share your non-public personal information with non-affiliates to market to you. We also don’t share your non-public personal information for joint marketing with other financial companies. State laws and individual companies may give you additional rights to limit sharing.

We share non-public personal information with our parent company affiliate, Focus Financial Partners, Inc, for its internal and external auditing purposes. We also share your non-public personal information with a non-affiliate for the purpose of aggregating it and providing summary information based on this data to our parent company, Focus Financial Partners, Inc.

To protect your non-public personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

Our policy about obtaining and disclosing non-public personal information may change from time to time. We will provide you notice of any material change to this policy before we implement the change.

If you have questions please call us at 760-206-8500 or go to our website at www.fortemfin.com.

IMPORTANT CONSUMER DISCLOSURE

Fortem Financial Group, LLC ("Fortem Financial" or the "Firm") is a federally registered investment adviser with offices in California and Arizona. Fortem Financial and its representatives are in compliance with the current registration and notice filing requirements imposed upon federally registered investment advisers by those states in which Fortem Financial maintains clients. Fortem Financial may only transact business in those states in which it is notice filed, or qualifies for an exemption or exclusion from notice filing requirements.

This website is limited to the dissemination of general information regarding the Firm's investment advisory services offered to U.S. residents residing in states where providing such information is not prohibited by applicable law. Accordingly, the publication of Fortem Financial' website on the Internet should not be construed by any consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment, tax or legal advice. Furthermore, the information resulting from the use of any tools or other information on this website should not be construed, in any manner whatsoever, as the receipt of, or a substitute for, personalized individual advice from Fortem Financial. Any subsequent direct communication from Fortem Financial with a prospective client will be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. Fortem Financial does not make any representations as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to this website or incorporated herein, and takes no responsibility therefore. All such information is provided for convenience purposes only and all users thereof should be guided accordingly.

All statements and opinions included on this website are subject to change as economic and market conditions dictate, and do not necessarily represent the views of Fortem Financial or any of their respective affiliates. Past performance may not be indicative of future results and there can be no assurance that any views, outlooks, projections or forward-looking statements will come to pass. Investing involves risk, including the potential loss of principal, and the profitability of any particular investment strategy or product cannot be guaranteed.

Any rating referenced herein may not be representative of any one client's experience. Further, the Firm's receipt of any rating is not indicative of the Firm's future performance. The Charles E. Merrill Circle of Excellence award is granted by Merrill Lynch for outstanding client service and satisfaction. The award is granted based on annual criteria established by Merrill Lynch for its top decile advisors. The Barron's Top 1,200 Financial Advisors rating of the top financial advisors in the United States is based on data provided by participating firms. The following factors are included in the rankings: assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. Investment performance is not an explicit component. The Palm Springs Life's "40 Under 40" Rising Young Professionals to Watch in the Coachella Valley is based upon nominations from the local business community and selected by the staff of Palm Springs Life.

For information pertaining to the registration status of Fortem Financial, please refer to the Investment Adviser Public Disclosure website, operated by the U.S. Securities and Exchange Commission, at www.adviserinfo.sec.gov., which contains the most recent versions of the Firm's Form ADV disclosure documents.

ACCESS TO THIS WEBSITE IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND WITHOUT ANY WARRANTIES, EXPRESSED OR IMPLIED, REGARDING THE ACCURACY, COMPLETENESS, TIMELINESS, OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS WEBSITE OR ANY THIRD PARTY WEBSITE REFERENCED HEREIN.