This Week from Jesse Hurst
Jesse W. Hurst, II
CFP® CERTIFIED FINANCIAL PLANNER™
AIF ® ACCREDITED INVESTMENT FIDUCIARY


Horizon/Impel Wealth Management 
Investment Committee Perspectives
August 2019


Executive Summary 
 

* Heightened trade tensions between the United States and China has added significant volatility to global stock markets.


 

* The recent cut in interest rates by the federal reserve bank did not leave people on either side of the decision very happy and added to recent volatility.

* A number of economic data points as well as anecdotal evidence shows that economic growth in the United States and across the globe is slowing.

* Rebalancing portfolios so that they are near your long-term risk profiles and using opportunities in the market to create cash needed in the next 12 to 24 months may be something to consider.
 
The joint investment committee of Horizon and Impel Wealth Management met on the afternoon of Monday, August 5. On that day, China allowed its currency to drift below key support levels. This set off a dramatic selloff in the markets, and at one point, the Dow Jones industrial average was off by more than 800 points. The currency move appears to be the latest salvo in the trade/tariff war between the United States and China. This is the second time in the last four months when it appeared that the two countries were working towards a long-term agreement and the negotiations subsequently fell apart, sending markets lower and volatility higher.
 
Unfortunately, as we continue to navigate the latter stages of an economic growth cycle, volatility generally picks up as there is uncertainty around the pace of economic growth and corporate profits. This has only been exacerbated by the trade and tariffs issues going on globally.
 
In addition to this, the Federal Reserve Bank lowered interest rates last week by 25 basis points, it's first interest rate cut since December 2008, when we were in the midst of a global financial crisis. In their post meeting press release and news conference, they stated that this was largely done to provide insurance against the growing uncertainty of the geopolitical backdrop. With this move and the accompanying statement, the Fed is moving further into experimental monetary policy. The market dropped on the fact that the Fed did not give stronger forward guidance as to their intentions to cut interest rates further. The yield curve also inverted further, which is typically a harbinger of future recession, as long-term rates, measured by the 10 Year Treasury Bond, dropped more than short term interest rates that are controlled by the central bank.
 
We have also seen a noted slowdown in US and global manufacturing activity. There have been anecdotal reports that supply chains are being disrupted by the uncertainty. While job growth remains reasonably strong and the unemployment rate low, the index of leading economic indicators has weakened. All of these data points bear watching. 
 
The committee believes that until there is more clarity about the direction of the US economy, trade issues, central bank monetary policy, and the upcoming congressional and presidential elections, volatility will continue to be a present and unwelcome friend. It is important to remember that over the last five years there have been many bouts of political and economic uncertainty. Yet from August 2014, when the S&P 500 first crossed the 2,000-point level, to July 2019, the markets rose over 50% to reach a new high of 3,027.
 
While the committee did not make any adjustments to our portfolios or allocations at today's meeting, we stand ready to take action as the economic and market situations evolve. Most of our clients' portfolios are still up double digits for the year, and this means that it may be time to rebalance your portfolio or harvest gains that may be needed for any liquidity needs that you have over the next 12 to 24 months. This could also serve as dry powder that could allow us to take advantage of market downturns, and the opportunities that will eventually arise as a result of the uncertainty. The committee continues to watch and monitor the situation carefully. If you have any questions regarding this report or your portfolio, please do not hesitate to contact your advisor to discuss. Thanks, and we hope that you enjoy the waning days of summer with your family, friends and loved ones.
 
*Investments in securities do not offer a fix rate of return. Principal, yield, and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. No system, or financial planning strategy can guarantee future results.
 
Sources:
Research comes from the below Investment Strategists and Economists:
Cetera Investment Management, Gene Goldman
First Trust, Brian Wesbury
Blackrock, Richard Turnhill
Charles Schwab, Liz Saunders
JP Morgan Chase, Dr. David Kelly
Nuveen, Bob Doll
Raymond James, Larry Adam & Scott Brown
 
*Disclosures
The views stated in this letter are not necessarily the opinion of Cetera Advisors LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change with notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

Sincerely,

Jesse W. Hurst, CFP®, AIF®
Investment Advisor Representative

Your Team at Impel Wealth Management
      
2006 4th St.
Cuyahoga Falls, Oh. 44221
Phone: (330)800-0182
Fax: (234)312-0460
Website:  www.impelwealth.com 

Emails:
Nathan.Ollish@impelwealth.com  
Leslie.Campanini@impelwealth.com  
  
  
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Is there something we can help you with?  Please call me at 330.800.0182 or email me directly at jesse.hurst@impelwealth.com.

Impel Wealth Management 
2006 4th Street, Cuyahoga Falls, OH 44221    
P: 330.800.0182    TF: 844.422.5550    F: 234.312.0460