This Week from Jesse Hurst
Jesse W. Hurst, II

Horizon/Impel Wealth Management 
Investment Committee Perspectives
August 2020

Executive Summary
● Financial markets continue moving onward and upward, seemingly at odds with economic data, which, while improving from their April lows, seems to have leveled off more recently. The August jobs report surprisingly showed an additional 1.8 million new jobs created. The unemployment rate fell to 10.2%. Both of these numbers were better than expected.
● The dollar has fallen recently. Southeast Asia and Europe are both reopening their economies and seem to have a better handle on the viral outbreak at the moment. This could lead to faster economic growth in other parts of the world over the near term.

 ● In addition to viral and economic concerns, the election season is upon us. This has many people concerned about what the impact of the Presidential and Congressional elections could be on the economy and financial market returns going forward.

The joint Investment Committee of Horizon and Impel Wealth Management met on the afternoon of Monday, August 10th. The timing of this was fortunate as the most recent unemployment report came out on Friday, August 7th. This gave us a better read on where the economy may be headed, and what the outlook for future Federal Reserve Bank policy may be.

The committee is happy to report that the portfolios managed by the committee continue to outperform their risk adjusted benchmarks over the most recent one, three, and five year periods of time. We are happy that the proactive adjustments that have been made to the models have helped our clients weather this very unusual, uncertain, and volatile year in a reasonable manner.
Financial markets continue to move towards their previous all-time highs that were reached on February 19th of this year, before the viral outbreak and economic shutdowns occurred. Subsequently, we saw great volatility and downturn in the stock, bond, and commodity markets. This downturn reversed itself quickly in late March as Congress passed the CARES Act and the Federal Reserve Bank opened the floodgates of liquidity to support the bond markets and the banking system. While slowing significantly from the previous two months, the August jobs report showed that an additional 1.8M new jobs had been created, exceeding expectations for 1.4M new jobs. The unemployment rate fell to 10.2%. While both of these numbers were better than more modest expectations, it is important to note that the unemployment rate is still higher than the worst unemployment rate that we saw during the Great Financial Crisis of 2008-09. It appears that we have recreated half of the jobs that were lost in the March and April time periods during the initial economic shutdown.
There is great debate among economists and market strategists about the shape of the US economic recovery. The initial bounce off the bottom in April/May looked V-shaped. However, the momentum of this upturn has slowed recently and has caused many people to wonder whether the economy will morph toward a U-shaped recovery, a square root recovery, or some other shape. What seems more plausible, is a series of rolling W's, in which we get upward momentum followed by short pullbacks based on the course of the virus and the economic reopening. This could last until we get a vaccine and/or proven therapeutic.
Many of the market strategists and economic teams followed by the committee have noted that the dollar has fallen recently. It appears that both the Southeast Asian and European economies are opening at a faster pace and have contained the viral outbreak better than the United State has at this point in time. There are three factors that could lead to foreign stocks having a period of out-performance after many years of lagging their US counterparts. The first would be that foreign valuations are significantly lower than those in the United States. The second would be the faster growth in these economies as they reopen, and the third would be a falling dollar. A falling dollar allows the value of foreign assets to rise in real dollar terms even more so than their asset price movements alone. This is something we will continue to track.

In addition to the issues discussed above, we are also heading full steam into election season. There are many people who believe this is one of the most important and contentious election cycles we have ever seen, and that the outcome of this election cycle could have significant ramifications for the economy and markets over time. We would like to remind our clients that over long periods of time, the US economy and stock market have done very well and trended higher regardless of which party controlled the government. As you can see in the chart below, we believe that a free market economy, entrepreneurialism, ingenuity, and innovation are far more important to the economy and markets than any political agenda. It has been this way for over 100 years, and we expect that trend to continue going forward.

We strongly believe that regardless of the outcome of the election, people will continue to consume electricity coming from utility companies. They will continue to eat out and buy food at the grocery stores. They will continue to buy their necessary medications for blood pressure and cholesterol, and that technology companies will continue to innovate and offer newer, better, and faster products. We want you to keep this in mind as you endure the media news cycles and the endless political commercials over the next couple of months. Do not worry, it will all be over after November 3rd. Unfortunately, we will not have Big 10 college football to assuage our pain.
Finally, we want to remind people that have liquidity and income needs over the next 6-12 months or longer, that with markets rebounding to post-viral highs, now is a good time for you to re-fill those money market and short-term bond liquidity buckets. That way, in the event of any future volatility or uncertainty, the money you need in the near term is in less risky places, available for your needs.

The Investment Committee continues to appreciate your support of our investment process. We take this responsibility very seriously. We diligently research and debate our thought process with each other before coming to decisions and implementing those across our various model portfolios. We do this for the benefit of you, our trusted friends and clients. Should you have any questions about these notes or our process, please feel free to reach out to your advisor. Thanks, and have a great day.

*Investors cannot directly invest in indices. Past performance does not guarantee future results.
*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.


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

*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 without 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. *
Securities and advisory services offered through Cetera Advisors LLC, member FINRA/SIPC, a broker/dealer and a Registered Investment Adviser.
Cetera is under separate ownership from any other named entity.

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