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Fourth Quarter 2021 | Fixed Income Commentary

Published on January 20th, 2022

Fourth Quarter 2021 | Fixed Income Commentary

Market Overview

The Current Income Portfolio declined 0.54% gross during the fourth quarter. Corporate bonds, which make up roughly 73% of the portfolio, declined 0.82%, while preferred securities, which comprised roughly 23% of the portfolio, gained 0.27%. Within the preferred securities allocation, retail securities, which have both fixed and fixed-to-floating rate coupons, accounted for 70% while institutional securities, which only have fixed-to-floating rate coupons, made up the remainder.  The portfolio’s retail preferred securities gained 0.73% during the quarter and the institutional preferred securities declined 0.91%. The Bloomberg Barclays Intermediate US Corporate Bond Index, and Intermediate US Govt/Credit Index, declined 0.55% and 0.57%, respectively. The BofA Fixed Rate Preferred Securities Index, which is made up of 40% institutional and 60% retail preferred securities, was essentially unchanged for the quarter.

Fixed income markets started the quarter on a positive note, with many companies reporting better than expected corporate earnings and many macroeconomic indicators, such as consumer confidence, labor force participation and unemployment claims, showing signs of further economic recovery.  As the quarter progressed, however, consumer prices continued to climb as shortages and bottlenecks showed little sign of easing. According to the Bureau of Labor Statistics, the Consumer Price Index rose by 6.2% in October, and by 6.8% in November, the largest 12 month increase in four decades.

With a wave of new cases of the Omicron variant starting to surge across the country in late November, fears of additional government lockdowns and prolonged inflationary pressures deepened. As a result, the Federal Reserve officials began to signal a more hawkish outlook for monetary policy. In a senate hearing on Nov. 30th, Federal Reserve Chairman Powell acknowledged that inflation has been “broad” and “more persistent” than previously anticipated, and that the committee would consider tapering asset purchases at a faster pace than the current $15B per month.

At December’s FOMC meeting, the Federal Reserve took further tightening action. Chairman Powell revised the committee’s tapering plan higher to $30B per month, and to conclude the bond buying program three months earlier, in March of 2022. A faster end to tapering also meant an earlier “lift-off” by the Federal Reserve in raising interest rates, as median dot plot forecasts were revised upward to reflect three hikes in 2022, three in 2023, and eight interest rate hikes in total by 2024.

During the quarter, the yield curve underwent a bear flattener shift whereby interest rates rose by more in the front-end than in the intermediate and long-term segments of the curve. By the end of the quarter, two-year U.S. Treasury yields had increased by 46 bps, to reflect the perceived earlier interest rate hikes, while ten-year yields increased by just 2 bps. This flattening in the slope of the yield curve caused shorter duration securities to decline to a greater degree than intermediate and longer-term duration securities. As a result, CIP’s corporate bonds, which have a shorter duration than the intermediate-term US investment grade corporate bond market, experienced a greater decline than that of the respective index. In addition, when the yield curve flattens, it can also have a slightly negative effect on fixed-to-floating rate securities. While higher interest rates generally increase the value of the securities’ floating-rate coupon component, the average period before which the Current Income Portfolio’s securities begin to float is approximately three years. Therefore, any increases in the yields for maturities of up to three years can still negatively impact the portfolio’s fixed-to-floating rate securities via the fixed-rate component.

Fourth Quarter Increase in 2Y and 10Y US Treasury Yields

Source: Bloomberg

Given our belief that expectations for earlier timing and a greater number of interest rate hikes have now been priced into the yield curve by investors, it seems likely that much of the expected decline from rising interest rates is already “baked into” current prices of securities in the portfolio. For further portfolio deterioration to continue from changes in the yield curve, interest rates would need to exceed what current hawkish projections imply. Therefore, we believe the Current Income Portfolio is well positioned to withstand the several interest rate hikes that are currently projected for this year.  Should expectations for an even more aggressive hiking cycle materialize, the portfolio’s relatively short duration should limit the severity of any impact from changes in interest rates and the inclusion of fixed to floating rate preferred securities provides offsetting interest rate exposure to fixed-rate coupons, which in turn lowers overall portfolio volatility.

In our view, credit conditions should remain benign in the near to intermediate term. Companies continue to have strong balance sheets, solid corporate earnings, and, because of the many refinancing’s that took place in recent years at historically low interest rates, some of the highest interest coverage ratios since 2015. We continue to monitor the credit and interest rate environments and believe the portfolio is appropriately positioned to earn enhanced income without taking on excessive risk to do so.

As of December 31, 2021

WATCH NOW – 2022 Outlook: The Year of Normalization

Published on Jan. 20, 2022

January 19th, 2021 – 2022 Outlook: The Year of Normalization

 
 
John Roscoe, CFA, Chief Investment Officer, and Jason Benowitz, CFA, CMT, Senior Portfolio Manager, sat down to discuss the latest updates in the financial markets from this past quarter. In this webinar, they also discussed:
  • Shift to Mid-Cycle: slower growth, higher rates, and Washington gridlock
  • Pass the Baton: from government support to self-sustaining expansion
  • Risks to the Outlook: inflation, regulation, and geopolitics
 

December 2021 | Equity Commentary

December 2021 | Equity Commentary

Published on January 10th, 2022

Market Overview

Rapidly rising cases of the Omicron variant did not deter U.S. stocks from pushing higher in December. The S&P 500 rose 4.5% with cyclical value stocks outperforming growth for the month. The “reopening trade” that saw value lead in the first four months of the year reversed in mid-May, giving way to growth stocks’ leadership until December. The 10-year U.S. Treasury bond yield moved slightly higher in December but finished the year at a still historically low level of 1.52%. Globally, U.S. stocks were the place to be in 2021—the MSCI USA index posted a return of +27%, which was 19% higher than an MSCI index tracking 49 developed and emerging markets.

U.S. economic growth is expected to be strong for Q4 2021. As of January 4, the Atlanta Federal Reserve’s GDP Now model estimates real GDP growth in the fourth quarter at 7.4%, while Wall Street consensus estimates peg GDP at closer to 6%. The Omicron variant’s impact is likely to be less in the realm of reduced demand in leisure, hospitality, and travel (as in previous waves), and more in supply disruptions linked to people missing work due to sickness. The same general economic takeaway applies now as in previous phases of the pandemic: less growth now likely means more growth later, as demand is delayed but not destroyed.

The number of people filing for unemployment (initial jobless claims) registered at 207,000 for the week ending January 1, close to a 50-year low. Job openings in the U.S. also continue to reach record highs, with an estimated 12 million available jobs by the end of last year, according to job-search site Indeed. These levels imply 1 million new jobs were added in Q4 2021, underscoring the desperation of companies to bring on new workers to meet demand. In December, employers added 199,000 new jobs and the unemployment rate fell to 3.9%. Labor force participation ticked slightly higher but remains below pre-pandemic levels.

The housing market continues to show few signs of cooling, even as the average rate for a 30-year fixed loan has moved from 2.65% a year ago to 3.22% today, according to Freddie Mac. Median existing-home prices rose 13.9% in November from a year ago, in line with trends from previous months. The median sales price for a newly built homes also reached an all-time high. According to the Mortgage Bankers Association, Americans borrowed a record $1.61 trillion to buy homes last year, up from the previous record set in 2020 ($1.48 trillion).

Services and manufacturing PMIs remain firmly in expansion territory, but the Institute of Supply Management said manufacturing activity fell from 61.1 in November to 58.7 in December. The upshot is that the decline was largely influenced by the ‘supplier delivery times’ component of the index. In normal times, falling supplier delivery times implies that demand is waning. Today, it means that bottlenecks are clearing.

There is a good argument that the U.S. economy is experiencing somewhere near peak inflation. Commodity prices may have peaked in October, and supply chain problems started to move in the right direction particularly as Asian factories reopened following pandemic-related lockdowns. Minutes from the Federal Reserve’s December 14-15 meeting, however, make it clear that the Federal Reserve is no longer comfortable waiting for prices to ease: “participants generally noted that…it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated.” The minutes also noted that some participants see it as “appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate.” Trading in interest rate futures indicates an approximately 70% probability the Federal Reserve would increase the fed funds rate at or before their March meeting, a greatly accelerated timeline from expectations just two months ago.

The Federal Reserve turned more hawkish in Q4. But it is also important to acknowledge their starting point of extraordinary accommodation. In other words, even if the Federal Reserve follows through with ending QE, raising rates three or four times, and shrinking its $8.76 trillion balance sheet over the course of the year, they will still likely finish the year looking quite accommodative by historical standards. The Federal Reserve’s actions in 2022 may be better described as ‘becoming less accommodative’ versus engaging in monetary tightening.

On the political front, the Biden administration’s Build Back Better agenda is stalled. There may be a small near-term impact with the ending of the expanded child tax credit, but it is not likely to significantly alter U.S. households’ overall strong financial position. The bill still has a chance of passing in the coming months in some form but will likely be reduced to a size that would not have meaningful economic impact in 2022. It is also worth noting that the proposed set of tax increases in the original bill have been either removed or considerably scaled down as negotiations continue.

Megacap Tech Stocks Still Have Lots of Fans After Historic Run

Published on Jan. 5, 2021

Jason Benowitz Featured in Bloomberg “Megacap Tech Stocks Still Have Lots of Fans After Historic Run”

“These companies have profits and cash flows and solid balance sheets,” said Jason Benowitz, senior portfolio manager with Roosevelt Investment Group. “High valuation by itself is not a sufficient thesis to be negative on a stock.”

The big risk, according to Benowitz, is if interest rates rise even more than is currently forecast. Indeed, the Nasdaq 100 fell 1.4% Tuesday as yields on the 10-year U.S. Treasuries jumped 16 basis points in just two days, serving a reminder to technology investors of the need to guard against unwelcome surprises. Higher rates reduce the present value of future earnings, weighing especially on shares of highly valued, fast-growing companies.

Read the Full Article Here

CIP Update: The Best Offense is a Good Defense

CIP Update: The Best Offense is a Good Defense

Published on December 21st, 2021

US Treasury yields have been volatile this year, but overall have moved higher, and the rising interest rate environment has had a negative impact on many fixed income assets.  Bond math dictates that the higher the duration (effectively, the longer the maturity) of a fixed-rate coupon security, the greater the decline in value will be from an increase in interest rates. Other factors affecting the value of fixed income portfolios include the relative change in a security’s credit spread, (which can be caused by macroeconomic factors as well as security-specific factors), and the overall allocation to various types of coupons, including those with both fixed and variable-rates.

In general, when a security’s credit spread declines, its value appreciates to reflect the issuer’s lower risk of default.  In addition, when a security’s coupon structure is fixed for a period, and then floats after a certain date is reached, its value can appreciate even as interest rates rise or the yield curve steepens. By carefully selecting high quality, undervalued issuers that offer attractive compensation in terms of “credit spread”, a fixed income portfolio can benefit from credit spread tightening regardless of the ensuing interest rate environment. Furthermore, by including an allocation to fixed-to-floating rate coupon securities within the portfolio, that portfolio’s overall sensitivity to changes in government yields can be significantly reduced as fixed rate and fixed-to-floating rate exposures offset each other.

In the process of portfolio construction for the Current Income Portfolio, we attempt to apply a risk-conscious approach that considers each of the aforementioned factors. We believe the resulting portfolio is a unique blend of high-quality corporate bond and preferred securities, diversified by industry and sector, with a shorter duration than respective intermediate-term fixed income indices and lower overall sensitivity to changes in interest rates.

The success of this risk-adjusted approach is supported by the relative outperformance of the portfolio versus benchmark indices so far this year. The Intermediate-term US Gov/Credit Index, which is comprised of government securities and investment grade corporate bonds, with an overall duration of 4.1, has declined by 1.3% through December 17th, while the Intermediate-term US Corporate Bond Index, which is comprised of intermediate-term investment grade corporate bonds, with an overall duration of 4.5, has declined by 1.00%. The Current Income Portfolio, which is comprised of investment grade corporate bonds and preferred securities, with an overall duration of 3.4, has declined by just 0.65% gross throughout the same period. Therefore, although performance has declined year-to-date, we believe CIP has benefited more from credit spread tightening and lost less from interest rates rising than respective benchmark indices.

While we continue to believe that the “best offense is a good defense”, and that the portfolio is defensively positioned to continue to earn high current income with low overall volatility, it does not imply that we expect the portfolio to continue to decline in the future. With a credit environment that is relatively benign, coupled with solid corporate fundamentals, strong balance sheet positioning and the highest levels of interest coverage that investment grade companies have had since 2015, we expect a relatively muted effect from changes in credit spreads over the next year.

In addition, with recent improvements in the labor market, and macro-economic data seemingly showing signs of elevated inflationary pressures, FOMC forecasts now project an earlier lift-off, and greater number of interest rate hikes over next few years. Median FOMC dot plot forecasts now project three interest rate hikes in 2022, three in 2023, and eight interest rate hikes in total by 2024.

Shift in the U.S. Treasury Yield Curve in 2021

Given that a portfolio with a duration of 3.4 is most affected by the near and intermediate-term segments of the yield curve (highlighted in the white box in the chart above), and expectations for earlier, and a greater number of, interest rate hikes have been priced in (as depicted by the shift from green, to orange, to blue lines throughout 2021 in the chart above), we believe much of the projected decline from higher interest rates is already “baked into” current prices of securities in the portfolio. For further portfolio deterioration to apply, we think interest rate hikes would need to exceed what current hawkish yield curve projections imply. 

The CIP portfolio continues to be defensively positioned, in our view, with respect to both credit and interest rate risk. The inclusion of fixed-to-floating rate coupons in CIP’s preferred securities allocation has helped to lower portfolio volatility from changes in interest rates. Moreover, approximately one-third of the portfolio matures in the next one to three years, which offers the opportunity to re-invest those funds at potentially higher rates.  The intent to enhance yield and reduce overall portfolio risk is unchanged, and the portfolio continues to be positioned to earn high current income, without extending duration or lowering our credit quality standards.

DISCLOSURES
Past performance is not a guarantee of future results. This information is intended solely to report on investment strategies and opportunities  identified by Roosevelt. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of  financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell  any financial instrument. References to specific securities and their issuers are for illustrative purposes only and are not intended to be, and  should not be interpreted as, recommendations to purchase or sell such securities. Our current disclosure statement is set forth on our Form ADV  Part 2, available for your review upon request, and on our website, www.rooseveltinvestments.com. Our Form CRS is also available on our website and available for review upon request.
Indices are unmanaged and cannot accommodate direct investment. Roosevelt Investments is solely responsible for the content of its website.  The sponsor/ broker dealer firm has not reviewed or verified the accuracy or completeness of its content and is not responsible for any  statements included therein.
INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE • MAY LOSE VALUE

WATCH NOW: Kates-Boylston Webinar “How to Navigate the Tax Landscape When Selling your Business and in Retirement”

Published on Dec. 9, 2021

WATCH NOW: Kates-Boylston Publications Presents – How-To Webinar Series 2021 “How to Navigate the Tax Landscape When Selling your Business and in Retirement”

How to Navigate the Tax Landscape When Selling your Business and in Retirement

Funeral home owners often sell their business without realizing how much money from the sale will go to taxes and how much they may have saved in taxes with proper planning. With an uncertain tax environment in the years to come, having a plan in place is crucial.

Join Tim Hermann, vice president and senior wealth advisor at Roosevelt Investments, as he shares insight into different tax savings and retirement planning strategies owners may want to consider as they look to sell their business and transition into retirement.

Yield Generating Considerations for Year-End

Yield Generating Considerations for Year-End

Published on December 10th, 2021

Overview

As we speak to our clients, one of the biggest concerns that they focus on is the low interest rate environment of the past few years. Yields have remained at near historical lows across the board for most traditional income products, and it’s becoming increasingly difficult to construct solid income generating portfolios. Low interest rates have incentivized income-starved investors to take on additional risks to generate the yield they require. Inflation has become a source of angst in the investment community as well.

In November of this year, the U.S. Treasury Department began offering a new series of “I Bonds”, which can be purchased directly through the TreasuryDirect website1 . I Bonds are essentially a savings bond that earns interest based on combining a fixed rate and an inflation rate. The combined rate is called a composite rate; simply the combination of a fixed rate that stays the same for the life of the bond and an inflation rate that is set twice a year. The Composite Rate for I Bonds bought from November 2021 through April 2022 is an annualized 7.12%. This applies for only the first six months after the issue date. This semiannual rate then changes depending on the fixed rate and the inflation rate as measured by the Consumer Price Index.

These bonds are backed by the full faith of the U.S. government and are limited to an annual $10,000 per person. Because of the annual limit, strategically, an individual can purchase the bonds before January 1st and then purchase an additional $10,000 anytime between January 1st and April 30, 2022. A married couple can then receive $40,000 worth of I Bonds and receive the annualized 7.12% Composite Rate for the first six months the bond is held or ~ 3.5% for the first 6 months risk free. The I Bonds can also be purchased for children, grandchildren or using businesses and trusts. An individual purchaser can also elect up to $5,000 from your federal income tax refund to I Bonds, thereby increasing your calendar year limit to $15,000.

We often see opportunities that make sense for some of our clients, but there are few things to keep in mind.

  • A new Composite Rate will be announced on May 1, 2022. There is a likelihood that the rate currently offered will change.
  • The I Bonds are taxed on the federal level but not on the state and local income tax level.
  • I Bonds earn interest for 30 years unless you cash them first. You can cash them after one year. But if you cash them before five years, you lose the previous three months of interest.

If you have any questions or would like our help reviewing your circumstances, please do not hesitate to reach out to us.

1 Source: https://www.treasurydirect.gov/

November 2021 | Equity Commentary

November 2021 | Equity Commentary

Published on December 7th, 2021

Market Overview

U.S. equities continued to rally in early November on stronger economic data and fading risks from the Delta wave. Covid-19 cases moved higher later in the month, however, and the emergence of the Omicron variant spurred volatility around the Thanksgiving holiday. Snarled supply chains and longer-than-expected inflation also continued to weigh on sentiment, particularly as kitchen table issues such as higher gas and food prices send mixed signals to investors about whether the economy is indeed strong. To cap off the month, Federal Reserve Chairman Jerome Powell effectively dropped the “transitory” inflation narrative and signaled the Federal Reserve may need to move more quickly to combat rising prices. The S&P 500 finished the month with a total return of negative 0.7%, while 10- and 30-year U.S. Treasury bond yields declined.

U.S. economic re-acceleration largely surprised to the upside in November. For the week ending November 20, the number of workers filing for unemployment benefits (jobless claims) fell to 199,000, marking the lowest level in 52 years1 and underscoring tightness in the labor market. Jobless claims serve as a proxy for layoffs, so it makes sense to us why they are so low employers that have workers don’t want to lose them. In the last week of November, claims remained very low, in our opinion but rose slightly to 222,000.

We believe consumer and investor sentiment appear somewhat anchored to supply chain and inflation worries, but corporate earnings and other gauges of economic activity continue to point to sustained levels of demand, production, and growth. There is arguably a growing disconnect between expectations for sustained inflation and holiday shopping shortages and the reality of record economic activity and profits. This disconnect appears likely to open the door for positive growth and earnings surprises, which have historically worked in equity markets’ favor.

Entrepreneurs and self-employed workers are also contributing to the tight U.S. labor market. There are now 9.4 million self-employed workers in the U.S., according to the Labor Department, which marks a 500,000 increase since the start of the pandemic. Many workers are eschewing service sector jobs to set out on their own as consultants, freelancers, or small business owners. In 2021, the share of U.S. workers employed by a large company (more than 1,000 employees) fell for the first time since 2004, while the number of self-employed workers is at its highest level in 11 years. The number of self-employed workers may continue to rise from here—in September alone, 4.4 million people resigned from their jobs, a record.1

President Biden signed the infrastructure bill into law on November 15, which paves the way for significant investment in traditional forms of infrastructure, like roads, bridges, the electrical grid, rail, water, and broadband. The $1 trillion price tag actually represents $550 billion in additional spending above projected federal spending for roads, bridges, etc. This level of spending marks the largest investment in infrastructure in over a decade and should provide modest tailwinds for economic activity and growth. In addition, since the spending is spread out over a decade, we believe the inflationary impact should be small.

Early signs suggest the holiday shopping season may prove sturdy in spite of the ongoing pandemic, supply chain issues. and rising prices. RetailNext, a research firm that tracks in-store shoppers, said foot traffic in stores was up 61% this Black Friday compared to 2020, when many consumers were still skittish about the spread of Covid-19. Consumer enthusiasm to get out and shop led to online sales falling slightly year-over-year, from $9 billion in 2020 to $8.9 billion this year. U.S. consumers continue to propel the economy forward, having increased their spending by about 4.4% on average over the last five years.

Activity in factories, mines, and utilities in the U.S. rose at a solid 1.6% month-over-month clip in October, which followed a slowdown in September tied to the rise of the Delta variant.2 The October reading shows companies working to bring production back up to full capacity. Manufacturing, which is the biggest component of industrial production, rose by 1.2%.2 Momentum continued last month, as the Institute for Supply Management said its index of factory activity rose from 60.8 in October to 61.1 in November. Any reading above 50 signals expansion.

The U.S. housing market also remains quite strong. The average price of a home in a major U.S. city, as measured by the S&P CoreLogic Case-Shiller National Home Price Index, rose 19.5% year-over-year in September. This figure is down slightly from the 19.8% annual rate posted in August, but nevertheless points to consistent and above-average growth. Sales of previously owned homes are set to reach their highest level since 2006.

The U.S. economy is fundamentally strong, but there are also a few negatives that warrant some caution in the near term. The Federal Reserve, for one, has shifted their messaging materially over the last couple of weeks. In a Senate hearing on November 30, Chairman Powell allowed that “pricing increases have spread much more broadly” than anticipated in the economy, and that the Federal Reserve “didn’t predict supply-side problems.” Shifting focus to price stability, the Federal Reserve may be setting the stage to accelerate the reduction of its asset-purchase (QE) program, which could in turn open the door to interest rate increases sooner rather than later.

The Omicron variant, and the potential for a ‘winter wave,’ could also potentially create some headwinds to growth. Early indications show the variant being no more deadly than previous strains, and vaccines also appear effective at continuing to provide protection against severe cases. Two new antiviral pills – one from Merck and another from Pfizer – could receive emergency use authorization in the coming weeks, which would add another layer of defense against hospitalizations and deaths and thus help to curb adverse economic impact. There are more unknowns than knowns in this moment, however, and uncertainty may drive volatility in the short term.

Finally, a modest and likely fleeting background negative is government funding and the debt ceiling, which we anticipated would return to headlines in early December. Political posturing and hamstringing funding bills is likely in the coming days and weeks, but early signs point to a more-than-usual amount of negotiation happening between parties. Congress voted on December 2 to extend government funding through February 18, and now must address raising the debt ceiling as well as the fate of the $2 trillion Build Back Better bill.

1 Source: Bureau of Labor Statistics

1 Source: https://www.federalreserve.gov/releases/g17/current/default.htm

Walmart veteran Biggs to step down as CFO next year

Published on Dec. 1, 2021

Jason Benowitz Featured in Reuters “Walmart veteran Biggs to step down as CFO next year”

“Bret Biggs was a candidate to ultimately succeed Doug McMillon as CEO, given his long tenure at the company and broad experience across business units and functions outside of finance,” “However, we expect McMillon to serve many more years at the helm,” said Jason Benowitz, senior portfolio manager at Roosevelt Investment Group.

Read the Full Article Here

The Employment Landscape | Equity Commentary

The Employment Landscape | Equity Commentary

Published on November 22nd, 2021

Overview

The Federal Reserve estimates that 1.5 million more boomers have retired during the pandemic period than would have otherwise.1  In a sense that extra 1.5 million appears meaningful because it was what drove the Federal Reserve to revise its definition of “full employment” – what it needs to see to raise interest rates.2 The old definition contemplated the total number of employed individuals returned to pre-pandemic levels.3 They are not making that a necessary condition to raise rates anymore.

However, the 1.5 million is not so meaningful, in our view, when compared to the total number of employed (154.0 million4 ) the total number of unemployed (7.4 million4 ) or the total job openings (10.4 million5 ).  We also think it is not so meaningful when compared to the 36% of U.S. adults who would not cover a $400 emergency expense using cash or its equivalent.6

Higher unemployment benefits may have kept 0.5 to 0.8 million people from finding jobs and these jobs may come back at 200 to 250 thousand jobs per month over the next several months.7 Similar to accelerated retirements, this is not so meaningful, in our view.

We think the biggest gap is in health and childcare concerns. This is visible in where the jobs have not come back – front-line work in hotels, restaurants, and leisure, and the wide employment gap between women and men, which is opposite of what is typical following a recession.Of course demand impact plays some role here as well. The Delta wave significantly interrupted the labor market recovery, which appears back on track for now, though with risk of a winter wave following holiday gatherings. We think the age 5 to 11 child vaccination may accelerate the labor market recovery. There are 28 million children in that age cohort, which is the largest unvaccinated cohort.However only 27% of parents plan to vaccinate their children quickly.9

The experience of the last economic cycle – in particular the second half of the last cycle, when unemployment was below 5%, as it is now – was that the Federal Reserve could keep policy easy for longer than it expected – and interest rates stayed lower, for longer than expected – because workers kept coming off the sidelines. This was true even as President Obama doubled eligibility for food stamps and made it easier to collect disability. That experience is a reason why we believe the Federal Reserve changed their framework to be more patient this time around. We attribute that experience to the hangover from the financial crisis, which created long-term unemployment, loss of skills for workers, and therefore required a really tight labor market to make employers hunt for sidelined workers who may have lost skills. This time the employers are hunting while the workers need to be cajoled, but we still think we can get back to where we were before, in the base case, assuming something doesn’t interrupt the expansion. We believe we can go even farther than before, because the widespread adoption of collaboration tools for remote work can unlock more labor force participation than in prior cycles, though it will take some time to get there.

 

 

1 Source: Federal Reserve Bank of Dallas. “The Labor Market May Be Tighter Than the Level of Employment Suggests.” May 27, 2021.

2 Source: Federal Open Market Committee. Press Conference. June 16, 2021.

3 Source: Federal Open Market Committee. Press Conference. September 16, 2020.

4 Source: Bureau of Labor Statistics. “Employment Situation Summary.” November 5, 2021.

5 Source: Bureau of Labor Statistics. “Job Openings and Labor Turnover Summary.” November 12, 2021.

6 Source: Federal Reserve. “Survey of Household Economics and Decision-Making.” May 17, 2021.

7 Source: Evercore ISI. “What Happens Now That Enhanced Unemployment Insurance is Over?” September 14, 2021.

8 Source: Centers for Disease Control and Prevention. “CDC Recommends Pediatric COVID-19 Vaccine for Children 5 to 11 Years.” November 2, 2021.

9 Source: Kaiser Family Foundation. “KFF Covid Vaccine Monitor.” October 28, 2021.

 

REGISTER NOW: Tim Hermann joins Kates-Boylston Publications for a Webinar “How to Navigate the Tax Landscape When Selling your Business and in Retirement”

Published on Nov. 18 2021

Kates-Boylston Publications Presents – How-To Webinar Series 2021 “How to Navigate the Tax Landscape When Selling your Business and in Retirement”

How to Navigate the Tax Landscape When Selling your Business and in Retirement

Webinar Date: Tue, Dec 7, 2021 1:00 PM – 2:30 PM EST

Funeral home owners often sell their business without realizing how much money from the sale will go to taxes and how much they may have saved in taxes with proper planning. With an uncertain tax environment in the years to come, having a plan in place is crucial.

Join Tim Hermann, vice president and senior wealth advisor at Roosevelt Investments, as he shares insight into different tax savings and retirement planning strategies owners may want to consider as they look to sell their business and transition into retirement.

Here Are The Winners of Metaverse Buzz

Published on Nov. 15, 2021

Jason Benowitz Featured in Yahoo “Here Are The Winners of Metaverse Buzz”

“Whatever the future looks like, it’s going to require accelerated computing,” “We keep thinking of new and better ways to utilize data and we wind up with tremendous growth in data transmission, which drives that cohort of companies whether or not the metaverse comes to reality.” said Jason Benowitz, senior portfolio manager at the Roosevelt Investment Group LLC in New York.

Read the Full Article Here

Musk sells nearly $7 bln worth of Tesla shares this week

Published on Nov. 15, 2021

Jason Benowitz Featured in Reuters “Musk sells nearly $7 bln worth of Tesla shares this week”

“We expect the share sales will continue, as Musk holds millions of options worth billions of dollars that would otherwise expire worthless, and he has also prearranged share sales under 10b5-1 plans,” said Jason Benowitz, senior portfolio manager at the Roosevelt Investment Group LLC in New York.

Read the Full Article Here

October 2021 | Equity Commentary

October 2021 | Equity Commentary

Published on November 10th, 2021

Market Overview

The U.S. equity market selloff was pronounced in September, with the S&P 500 recording a 5.1% decline from September 2 to October 4. The round trip back to all-time highs did not take long, however. In early October, the S&P 500 took just 12 trading days to reclaim the September 2 peak, and stocks have continued notching all-time highs since. The selloff in September may be attributed in part to seasonality, but also because of lingering concerns over supply chain issues, rising prices, and an economic slowdown in China. Those concerns remain in place today, but equity market and corporate earnings resilience in October may signal these issues are indeed temporary. 

As expected, the Federal Reserve announced on November 3 its plans to gradually ‘taper’ its quantitative easing (QE) program. The equity and bond market response was largely muted, with the S&P 500 moving slightly higher and the 10-year U.S. Treasury bond yield rising 4 basis points on the day of the announcement, from 1.55% to 1.59%. Markets tend to pre-price widely known and expected events, and the Federal Reserve has been clearly telegraphing this move for months. In minutes from the Federal Reserves September meeting, it outlined the plan for “monthly reductions in the pace of asset purchases, by $10 billion in the case of Treasury securities and $5 billion in the case of agency mortgage-backed securities (MBS).” November’s announcement followed this outline exactly, with the taper set to conclude in June 2022.

We believe consumer and investor sentiment appear somewhat anchored to supply chain and inflation worries, but corporate earnings and other gauges of economic activity continue to point to sustained levels of demand, production, and growth. There is arguably a growing disconnect between expectations for sustained inflation and holiday shopping shortages and the reality of record economic activity and profits. This disconnect appears likely to open the door for positive growth and earnings surprises, which have historically worked in equity markets’ favor.

The Institute for Supply Management’s services index rose to 66.7 in October from 61.9 in September, signaling very strong economic activity – readings above 50 indicate expansion. All 18 services industries reported growth, with new orders and business activity posting their highest readings since 1997. We believe this is a clear sign that the economy is accelerating as the Delta wave recedes. To be fair, we believe some of this activity is being driven by companies fast-tracking orders in anticipation of supply chain-induced delays. But strong demand – and the drive to increase production capacity to meet it – is clearly a priority across this significant part of the U.S. economy.

Labor shortages continue to weigh on business efforts to meet demand, but there are signs of continued improvement to the U.S. jobs picture. The Labor Department reported 531,000 new jobs added in October. Jobless claims also dropped to 290,000 at the end of October, which marks a new low in the pandemic recovery. Continuing claims, which measures how many people are still unemployed and receiving benefits, also fell to a post-pandemic low. The end of expanded federal unemployment benefits may continue nudging unemployed workers back into the labor force, and higher wages could make job-seeking more attractive. Wages rose 4.2% year-over-year in Q3, the fastest pace in 30 years.1

Rising labor and input costs have thus far had little noticeable effect on corporate earnings. As of this writing, 82% of the S&P 500’s market cap has reported Q3 results, and earnings are besting expectations by 10.5%, on average. 79% of reporting companies have reported better-than-expected results, with Financials generally posting the biggest beats. Supply chain issues, rising input costs, labor shortages, and wage pressures all pose challenges, but it appears corporations continue to demonstrate the ability to navigate them.

On the government spending front, the Biden administration’s Build Back Better agenda continues to face barriers in Congress, with Senate moderates Joe Manchin and Kyrsten Sinema objecting to key provisions and the overall price tag. What was once a $3.5 trillion bill has been slashed by 50% to $1.75 trillion, and even then, the fate of the bill is largely unknown. Spending at this level over a 10-year timeframe is likely to only have modest implications for the overall U.S. economy in our view, and the reductions in the overall size of the plan have taken many of the major tax increases down with them – reducing risk of a significant tax-related headwind.

Our concerns regarding the Chinese economy did not abate in October. The major property developer, Evergrande, avoided default in October by making a missed bond payment within a 30-day grace period, but its bonds continue to trade at about 25 cents on the dollar. Other property developers are also experiencing distress, and pressure is mounting on Beijing to manage an orderly industry-wide restructuring in this important sector of the economy. Energy shortages are also posing a problem across China, but the country has responded by reopening coal mines and reportedly resuming some imports from Australia, which they had previously banned.

Adding to these challenges, Covid-19 cases in China have flared up over the past month, which typically means lockdowns, quarantines and/or restrictions on travel and public gatherings.  In recent days, more than half of the flights at Beijing’s airports have been canceled. Collectively, these headwinds do not bode well for an economy that has seen slowing manufacturing activity since the spring. We continue to monitor developments in China closely for potential negative impacts elsewhere.

1 Source: https://www.wsj.com/articles/wages-and-prices-are-up-but-it-isnt-a-spiralyet-11635688981

Micron Earnings to Shed Light on Rare Weak Spot in Chip Stocks

Published on Nov. 4, 2021

Jason Benowitz Featured in Bloomberg “Micron Earnings to Shed Light on Rare Weak Spot in Chip Stocks”

While repurchases are likely to rise as economic growth continues, corporations may opt to allocate more cash to capital expenditures like technology and factories, according to Jason Benowitz, a senior portfolio manager at Roosevelt Investment Group. He’s not worried about the prospect of reduced buybacks weighing on the broader market. The Philadelphia semiconductor index has gained 23%, beating the S&P 500 Index and the Nasdaq 100 Stock Index. Makers of equipment used in the production of semiconductors have seen the biggest gains, led by Amkor Technology Inc. and ASML Holding. Micron shares are little changed on the year, while Western Digital has gained about 7%. Micron traded 0.9% lower in morning trading in New York.

“The outlook for global growth remains fairly strong for the second half of this year and 2022 once the delta variant subsides,” said Jason Benowitz, senior portfolio manager at Roosevelt Investment Group. “Chip stock action reflects that.” Micron is projected to post revenue of $8.2 billion in its fiscal fourth quarter, an increase of 36% from the same period a year ago, according to the average of analyst estimates compiled by Bloomberg. Earnings excluding some items are expected to be $2.34 per share, more than twice what it was in the fourth quarter of 2020.

Read the Full Article Here

Should You Change Your Medicare Coverage During Open Enrollment?

Published on Nov. 4th, 2021

The Medicare Open Enrollment Period Begins

Overview

Many of our clients currently rely on Medicare plans for their health care coverage. They may have enrolled in Original Medicare or Medicare Advantage, and likely have prescription drug coverage as well. For those who rely on these plans the fall Medicare Open Enrollment

Period for 2022 Medicare coverage is going on now and lasts until December 7, 2021.

Depending on your circumstances, this may be the only time during the year that you may be able to enroll in or switch to another Medicare Advantage plan or Medicare Part D prescription drug plan or drop your plan and return to Original Medicare.

Below are some of the basics of these plans.  The attached flowchart will help guide you through a number of considerations when evaluating and comparing your Medicare options.  Covered topics include changes in health care needs, cost of premiums and deductibles, Access to specific providers, services and prescription drugs, out-of-state concerns as well as effective dates of any changes.

Original Medicare has 3 Basic Parts

Part A – Inpatient hospital Coverage, skilled nursing care facility care, hospice care, home health care, and some nursing home care (not long-term care)

The is free to all over 65 who have registered.

Part B – Outpatient doctor and other health care provider services, preventative services, ambulance service, durable medical equipment, mental health, very limited outpatient drugs.

Monthly fee for 2021 starts at $148.50 and increases depending on your adjusted gross income.

Part D – Medicare Drug Plan

The cost depends on what prescriptions you are currently taking. The cost includes the premium, yearly deductible, co-payments, and coverage gap payment. There are many companies that offer drug plans, and you need to find the company that will provide your prescriptions at the lowest cost to you.

 

Medicare Supplement or Medigap Policies

A Medigap policy is health insurance sold by private insurance companies to fill the “gaps” in Original Medicare Plan coverage.

 

Medicare Advantage Plan

Medicare Advantage is a type of health insurance plan that provides Medicare benefits through a private sector health insurer.

In a Medicare Advantage plan, a Medicare beneficiary pays a monthly premium to a private insurance company for Part A and Part B. Advantage plans also include prescription drug benefits, Part D. Advantage plans can include additional benefits like eye exams, glasses, hearing aids.

Advantage plans have a limited universe of providers and going outside the program can be costly.

 

There are professionals who can help you choose the right medical coverage for you. They know all the particulars of both original Medicare and Advantage plan. Where you live, who are your current doctors, and what prescriptions you take will determine what advantage plan is right for you.

We at Roosevelt Investments can help you get the help you need to choose the right plan for you!

Third Quarter 2021 | Fixed Income Commentary

Published on October 25th, 2021

Third Quarter 2021 | Fixed Income Commentary

Market Overview

The Current Income Portfolio returned 0.1% gross during the third quarter, with corporate bonds gaining by 0.2% and preferred securities declining by 0.6%. Of the preferred securities, $25 par-value securities, which have both fixed, and fixed-to-floating, rate coupons, declined by 1.1%, and $1,000 par-value securities, which only have fixed-to-floating rate coupons, gained by 0.8%.

We believe the quarter’s relatively flat performance was driven by the modest increase of just two basis points in ten-year US Treasury yields, which opened the quarter at 1.47% and closed it at 1.49%. While the overall change in government yields was minimal, from quarter to quarter, interest rate movements intra-quarter were more significant.

Third Quarter 10Y US Treasury

Source: Bloomberg

At the start of the quarter, concerns over an uptick in cases of the delta variant, coupled with waning consumer confidence, supply chain disruptions that cause shortages and bottlenecks, and various other factors, effectively dampened projections for economic growth during the second half of the year. As a result, ten-year US Treasury yields, and ten-year US Real yields, which are an indication of the market’s long-term expectations for economic growth, fell by roughly 30 bps in July, while long-term economist expectations for inflation stayed roughly the same.

As the quarter progressed, pressures on government yields appeared to ease. Market expectations began to look through the temporary factors considered to be driving economic growth to decline. At the September Federal Reserve meeting, FOMC growth forecasts for U.S. GDP were revised downward to 5.9% from 7% for 2021, while forecasts for 2022 were simultaneously revised upward, from 3.3% to 3.8%. These moves in opposite directions reflect economist expectations for an even stronger economy once global supply-chain constraints, labor shortages and transportation issues subside. Moreover, projections for the personal consumption expenditure (PCE) price index, which is the Federal Reserve’s preferred method for tracking inflation, were revised upward by 0.8%, from 3.4% to 4.2%, in 2021, and by 0.1%, from 2.1% to 2.2%, in 2022, reinforcing our belief that price increases from shortages and bottlenecks are projected to be transitory.

At the September FOMC meeting, Federal Reserve officials also released expectations for monetary policy, with respect to the tapering of asset purchases as well as to “lift-off”, as depicted by the Federal Reserve’s “dot plot” for interest rate hikes. While the conditions necessary for tapering to begin have likely been met, the hurdle for raising interest rates has “all but been met” with respect to the Federal Reserve’s goal for employment. The Federal Reserve plans to keep interest rates at current levels until inflation moderately exceeds 2% for some time, on a sustainable basis, and maximum employment has been achieved. We believe this highlights the disconnect between timeline for asset purchases and the onset of raising interest rates, in that the two do not need to go together. While it is expected that the Federal Reserve could begin the tapering process as soon as November 2021, median expectations for the first interest rate hike are not until 2023.

The CIP portfolio continues to be defensively positioned with respect to both credit and interest rate risk. Credit quality across the portfolio is strong, leverage trends have been favorable and profit margins have been stable. CIP’s corporate bonds have a lower average duration than the intermediate-term corporate bond market, which reduces the portfolio’s relative sensitivity to rising interest rates. Moreover, the inclusion of fixed to floating rate coupons in CIP’s preferred securities allocation has helped to lower portfolio volatility from changes in interest rates.  The intent to enhance yield and reduce overall portfolio risk is unchanged, and the portfolio continues to be positioned to earn high current income, without extending duration or lowering our credit quality standards.

As of September 30, 2021

Short-Term Turbulence but Medium-Term Optimism: Our Thoughts Into Year End

Published on Oct. 15, 2021

October 14, 2021 – Short-Term Turbulence but Medium-Term Optimism: Our Thoughts Into Year End

John Roscoe, CFA, Chief Investment Officer, and Jason Benowitz, CFA, CMT, Senior Portfolio Manager, sat down to discuss the latest updates in the financial markets from this past quarter. In this webinar, they also discussed:
  • Disruptive Impacts: chaos in China, and other concerns for investors
  • Games of Chicken: legislating fiscal policy in the U.S. Congress
  • Prepare for Normalization: higher rates, slower growth, and Washington gridlock

September 2021 | Equity Commentary

September 2021 | Equity Commentary

Published on October 6th, 2021

Market Overview

September was a choppy month for stocks and bonds, as macroeconomic headwinds converged on the U.S. and global economy. Among the issues surfacing in September were consumer sentiment dipping on Delta concerns, the Federal Reserve giving clearer indication of ‘tapering’ plans later in the year, a debt ceiling standoff, and China dealing a range of uncertainties spanning real estate, energy, manufacturing, and state-driven economic reforms. The S&P 500 suffered its worst month since March 2020, sliding -4.7% in September. U.S. Treasuries also sold off during the month, likely in anticipation of upward pressure on interest rates tied to Federal Reserve tapering and longer-than-expected inflation pressures.

The surge of the highly contagious Delta variant seemed to temporarily hit the ‘pause’ button on the post-pandemic growth boom. Consumers trimmed spending on hospitality services and travel in July, and supply constraints—tied to worker and component shortages, reduced factory capacity in Asia, and ballooning shipping costs and delays—led many economists to mark down GDP growth estimates for Q3. Forecasting firm IHS Markit lowered their Q3 GDP forecast from 7.8% in July to 3.6% by late September.1

The Delta-induced blip in economic activity appears to be fleeting, however, and consumers appear to remain in a strong financial position. Households have a record $142 trillion in net worth, wages are on the rise, and there are still roughly as many job openings as there are unemployed Americans.2 Consumers seem to be paring spending on big ticket items, like vehicles and furniture, but they are spending more in areas like retail and services. In a sign that spending, and growth remain in an upward trend, personal outlays on goods and services rose 0.8% in August compared to July, according to the Commerce Department.

Downward revisions to economic growth forecasts in Q3 have given way to rising forecasts for economic growth in Q4 2021 and beyond. The belief is that aggregate demand and future growth were not lost as a result of the Delta surge, but merely delayed by a few months. The Federal Reserve raised its full-year GDP growth forecast for 2022 to 3.8% in September, up from 3.3% in their June forecast.3

At a two-day meeting held in September, the Federal Reserve did not make any changes to policy but did set the stage to begin ‘tapering’ the quantitative easing program, potentially as soon as the November 2-3 meeting. Gradually trimming the $120 billion in monthly purchases is often framed as monetary tightening, which could have a deleterious effect on the stock market. But the reality will likely look much different, in our view. For one, the Federal Reserve clearly telegraphs plans well in advance, which greatly reduces the possibility of a negative surprise. Second, an underappreciated result of reducing bond purchases is that it places upward pressure on longer duration Treasury bond yields, which will arguably steepen the yield curve over the next several months. A steepening yield curve is generally a positive leading indicator for economic activity.

We believe another temporary macro headwind in September was the risk of a government shutdown that featured prominently in the headlines. Congress has since passed a small spending bill to keep the government open until at least early December. The narrow spending bill may have received bipartisan support (254 to 175 in the House, and 65 to 35 in the Senate), because it included funding for resettlement of Afghan refugees and disaster recovery funds for hurricane and wildfire damage here in the U.S.

The more consequential debt ceiling issue remains unresolved. Treasury Secretary Janet Yellen has warned that failing to raise the debt ceiling would mean ‘running out of money’ by October 18. We expect Congress to raise the debt ceiling and thereby avoid a default event. In our view, brinksmanship is likely to bring the issue to the 11th hour, however, with the potential to inject short-term volatility into the capital markets. The Democratic Party can resolve the issue unilaterally through the reconciliation process, which seems the most likely route, given Republican opposition in the closely divided Senate.

Finally, there is China, which has arguably been the biggest driver of September volatility. China’s headwinds appear to stem from multiple sources: a slowing economy, heavy-handed government intervention across a variety of sectors, an energy crunch, and the looming default of property developer Evergrande, the country’s largest high-yield issuer. The Chinese government has been tightening the spigot and reining-in debt and lending practices, which has stunted Evergrande’s cash flow and has the company at the brink of bankruptcy. 42% of Evergrande’s $89 billion in outstanding debt is reportedly due within the next year.4

The risk is sizable for China, but we do not expect the U.S. capital markets to suffer significant contagion from China for two reasons. First, we expect Beijing to act in order to prevent an Evergrande default from cascading into a financial crisis, as the state has the means and the political will to do so. 2022 is a key year for President Xi Jinping, when China hosts its twice-per-decade Communist Party congress and will decide whether to extend his leadership. Second, we are not seeing signs of the contagion in the usual channels: commodity prices remain high, and spreads remain tight in the U.S. high yield market, where the issuance window is wide open. In 2016, when turbulence in China impacted U.S. markets, commodity prices declined, and U.S. high yield spreads materially widened. We are not seeing these indicators today.

Source:

1https://www.wsj.com/articles/u-s-economy-set-to-pick-up-speed-after-delta-driven-downturn 11632907800?mod=markets_lead_pos10

2https://www.wsj.com/articles/u-s-economy-set-to-pick-up-speed-after-delta-driven-downturn-11632907800?mod=markets_lead_pos10

3https://www.atlantafed.org/cqer/research/gdpnow

3https://www.atlantafed.org/cqer/research/gdpnow

4 https://www.wsj.com/articles/evergrande-china-real-estate-debt-debacle-empty-buildings-cities-beijing-11633374710

Short-Term Turbulence but Medium-Term Optimism: Our Thoughts Into Year End

Published on Oct. 4, 2021

October 14, 2021 – Short-Term Turbulence but Medium-Term Optimism: Our Thoughts Into Year End

John Roscoe, CFA, Chief Investment Officer, and Jason Benowitz, CFA, CMT, Senior Portfolio Manager, sit down to discuss the latest updates in the financial markets from this past quarter. In this webinar, they also discuss:
  • Disruptive Impacts: chaos in China, and other concerns for investors
  • Games of Chicken: legislating fiscal policy in the U.S. Congress
  • Prepare for Normalization: higher rates, slower growth, and Washington gridlock

Register Here

September 2021 | Thoughts from our Equity Team

September 2021 | Thoughts from our Equity Team

Published on September 28th, 2021

We believe the risk of a market correction may be elevated in the near term. The economy appears to be slowing due to rise of the Delta variant and various disruptions to global supply chains.  The Federal Reserve is likely to begin tapering its asset purchases in the coming months, and since that event disrupted the capital markets in 2013, it is possible it could do so again. The U.S. government may shut down on October 1, but this is not a significant concern to us, because we believe any shutdown would be brief, and historically investors have looked through brief shutdowns. More concerning to us is the approach of the debt limit, which is possible as soon as mid-October, and for which markets sold off significantly in 2011, even though the ceiling was ultimately raised before an actual event of default. Finally, the risk of a correction is elevated because of negative seasonality, as September and October are the weakest months for stocks, on average.
 
The U.S. market declines last Friday and Monday, September 20th, we believe were sparked at least in part by concerns about China, which has a trifecta of issues: a slowing economy, heavy-handed government intervention across a variety of sectors, and the looming default of Evergrande, the nation’s largest high yield issuer, with over $90 billion in bonds outstanding. We do not expect the U.S. capital markets to suffer significant contagion from China for two reasons. First, we expect Beijing to act in order to prevent an Evergrande default from cascading into a financial crisis, because it has the means and the will to do so. We believe that China can hardly afford a financial crisis on top of its slowing economy and Covid risk. Just a few weeks ago, Beijing bailed out Huarong, a bank with significant holdings of troubled loans, which indicates it may act if called upon. President Xi Jinping wants to reduce risk and sail as smoothly as possible into his appointment to a third term next October. Second, we are not seeing signs of the contagion in the usual channels: commodity prices remain high, and spreads remain tight in the U.S. high yield market, where the issuance window is wide open. In 2016, when turbulence in China impacted U.S. markets, commodity prices declined, and U.S. high yield spreads materially widened, and these are both stable.
 
Having said all of that, we have not assumed an overly defensive posture, because we believe if there is a correction it is likely to be fairly short and shallow, and we think risky stocks may perform well coming out of it and through year end. The U.S. Delta wave appears to have peaked as the 7-day average of cases peaked on August 31 and has since declined by 11% as reported by the CDC. We expect this decline to continue based on Delta waves observed in other nations, before plateauing at a higher level due to winter seasonality. In the coming months, additional vaccinations, boosters for seniors, and authorization in children under 12, the largest pool of unvaccinated Americans, could set us up for normalization in 2022. We believe that Economic growth remains strong even if it has slowed somewhat, with the Wall Street consensus expecting 5% for the third quarter, down from 7% previously. 

We think Monetary policy remains accommodative, and it works with long and variable lags, such that the extremely easy policy of the last 18 months should continue to support economic activity and asset prices through next year. We expect the yield curve to steepen as quantitative easing is reduced. We believe the combination of declining Covid cases and a steepening yield curve should support those stocks that benefit most from reopening the economy. This cohort of stocks is riskier, which makes us reluctant to reduce our overall risk exposure, despite harboring some near-term concerns. In the last 50 years, there were 15 instances where stocks advanced by 15% or more in the first 8 months of the year. Stocks had positive returns in the final 4 months of the year in 13 of these 15 instances, with an average gain of 5%. A strong beginning and middle like we have experienced this year historically has portended a strong finish, which we believe the strategy is positioned to benefit from, should it come to pass.

August 2021 | Equity Commentary

August 2021 | Equity Commentary

Published on September 8th, 2021

Market Overview

The S&P 500 index rose about 3% in August, marking its seventh consecutive monthly increase. Year to date through August, the index made 53 new all-time highs—the most recorded since 1964. Since the March 2020 lows, the S&P 500 has more than doubled1, charting a “v-shaped” recovery often characteristic of event-driven bear markets. Ten- and 30-year U.S. Treasury bond yields remained relatively unchanged in August, which appeared to complement decelerating inflationary pressures and a still-dovish Federal Reserve.

Stocks’ summer rally coincided with a robust earnings season. A Wall Street Journal analysis found that more than 75% of U.S. companies reported higher revenues in Q2 2021 than Q2 20192, which offers insight into corporations’ ability to resume pre-pandemic growth trends. FactSet data from mid-August showed that of the 91% of reporting S&P 500 companies, a staggering 87% of them had delivered positive earnings-per-share and revenue surprises for the quarter.3

The U.S. economy continues expanding, but we believe there are a few signs growth may be cooling slightly. In August, factories and service providers – as measured by the IHS Markit surveys of purchasing managers – saw activity dip. On the service-sector side, the purchasing managers index fell to an 8-month low of 55.2, while the manufacturing index sank to a 4-month low of 61.2.4 These declines are noteworthy, though it’s worth recalling readings above 50.0 signal expansion. The economy appears to be still growing, just at a slower pace.

The Federal Reserve held its annual Jackson Hole symposium virtually for the second consecutive year. As ever, investors parsed Chairman Jerome Powell’s speech for clues regarding when, and how quickly, the Federal Reserve may begin tapering bond purchases and/or raising interest rates. Though opinions vary among FOMC members, Chairman Powell continues to tilt dovish and appears committed to moving slowly. Many market participants continue to link tapering with rate increases, but Chairman Powell has attempted to disassociate the two. His statements suggest tapering need not directly signal an impending rate hike in 2022.

Chairman Powell also seems less concerned about a tight labor market driving inflationary wage pressure than some of his more hawkish counterparts, who cite employers’ ongoing challenges finding workers. Though the Federal Reserve has no parameters defining ‘full employment,’ Chairman Powell seems fixated on employment being ~6 million jobs below its February 2020 level, with stubborn levels of slack in the services sector. He sees a low likelihood of a persistent wage-price spiral.

The Federal Reserve remains similarly dovish on inflation as it believes Covid-related supply chain disruptions are driving relatively narrow price gains—a view supported by longer-term inflation expectations, which remain relatively moderate. Chairman Powell has clearly stated his belief it would be a mistake for the Federal Reserved to respond to what it views as temporary price fluctuations, which makes interest rate increases very unlikely in 2021.

On the political front, the House of Representatives inched closer to passing Democrats’ economic centerpieces before adjourning for its August recess. A 220-212 party-line vote approved a $3.5 trillion budget framework (the American Families Plan) and advanced the $1.0 trillion infrastructure bill. The Senate already passed the budget framework, allowing House and Senate Democrats to craft a budget without Republican involvement (budget reconciliation only requires simple majorities in both chambers).

In exchange for moderate Democrats’ support for the reconciliation bill, Speaker Pelosi has committed to a vote on the infrastructure bill by September 27. As ever, the devil will be in the details, many of which are still missing and will likely prompt sharp debate among the various factions in the Democratic Party. Further complicating the legislative schedule is the impending debt ceiling, which the U.S. government may reach in September or October. All told, increased spending—which seems likely under most legislative scenarios—should provide a modest fiscal tailwind in future quarters.

Surging Covid-19 (Delta variant) cases in the U.S. have shown signs of weighing on consumer sentiment. The Conference Board’s consumer confidence index fell from 125.1 in July to 113.8 in August, pulling the index back to February 2021’s level (before the vaccine was widely available). Consumer spending growth in July was up just 0.3% from June levels—a considerable deceleration from May to June’s 1.1% growth.5 Some states and businesses have responded to rising cases by reintroducing indoor mask mandates and/or requiring proof of vaccination, and event cancellations and delays are becoming more common. Several high-profile corporations have also delayed office reopening plans.

August offers a single data point for consumer sentiment, and it’s worth noting sentiment data tend to be backward-looking. It does not offer much insight into where the economy may be headed, particularly if Delta ebbs as quickly as it has in countries like India and the U.K. Fading pandemic risk could unleash some additional spending as consumers return to more normal economic activity. We believe the odds favor a peak in new cases over the next 3-6 weeks, although students returning to the classroom could also spur a rise in new cases.  Ongoing fiscal stimulus is also bolstering the economy in the near term, as child tax credit starting hitting accounts in July. Fiscal stimulus contributed to a 1.1% July increase in household income (according to the U.S. Commerce Department), marking the biggest jump since March 2021.  

Globally, rising cases—particularly in Southeast Asia—are disrupting production and prolonging supply chain issues. Malaysia, an important if underappreciated link in the semiconductor supply chain, has struggled with a recent surge in cases, prompting staff shortages and introducing yet another hiccup in semiconductor production. China’s economy is also showing signs of ongoing Covid-related strains: that country’s services sector purchasing managers index (PMI) contracted in August for the first time since February 2020, while manufacturing PMI barely eked out a positive reading (50.1), with the new orders sub-index modestly contracting (49.6).6

Finally, the geopolitical situation in Afghanistan reached a climax in late August with the full U.S. troop withdrawal. The market effect appeared negligible, despite the tragic loss of life. The tail risk in the U.S. revolves around domestic policy—e.g., if the Afghanistan unraveling were to disrupt the Biden administration’s pursuit of other economic policy objectives, like the aforementioned spending packages.

Source:

1https://www.nytimes.com/2021/08/31/business/stock-market-record.html?referringSource=articleShare

2https://www.wsj.com/articles/how-the-biggest-companies-have-fared-during-the-covid-19-pandemic-11630229403

3https://www.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_081321A.pdf

4https://www.markiteconomics.com/Public/Release/PressReleases

5https://conference-board.org/data/consumerconfidence.cfm

6https://www.wsj.com/articles/covid-19-delta-variant-pummels-chinas-services-sector 11630386778?reflink=desktopwebshare_permalink

The Three Pillars of an Exit Plan – A Post-Pandemic Tune-Up

The Three Pillars of an Exit Plan – A Post-Pandemic Tune-Up

Published on Aug. 25, 2021

Investors, businesses, and consumers are focused on the future, and that’s great news.

Over the past few months, I have been talking to family, friends, colleagues, and clients in funeral service about lessons they have learned in the past year. I’m curious how folks think the future will look different. Interestingly, just about everyone gives a different answer about the future of work, life, and daily interactions. To me, the variety of responses is the clearest indication that the uncertainties of the past year have given way to uncertainties about the future.

To me, there is no better way to counter uncertainty than by making a thoughtful, detailed, and ultimately written plan. For many funeral service and cemetery professionals, this may mean taking a look at your business, its value, and your personal financial goals to ensure you have a clear vision for what you want the future to look like. In other words, now is the time to give your financial plan and your exit plan a post-pandemic tune up. I’ll focus on what you need to know for your exit plan here.

The Three Pillars of an Exit Plan

The three pillars of an exit plan are really three sets of questions that funeral service and cemetery business owners need to ask themselves.

Question 1: In order to leave or sell your business, how much would you need to receive in equity and/or after-tax proceeds?

Within the context of the pandemic and the past year, a key data point for all business owners is figuring out how much your business valuation changed. Did the pandemic cause it to increase or decrease? Do you think pandemic-driven forces – like changes to real estate prices, the jobs market, technology’s effect on how businesses offer services, and the changing wants and needs of client families  – bode well for the future of your business or work against it?

Answering these questions will not only give business owners a sense of what their business is worth today, it can also begin to address key questions about how the business’s valuation could change in the years ahead.

Another critical issue to think about here is what could happen to the value of your business if tax rates move higher. While we are not tax experts and we urge you to speak to your tax advisor about these issues, here is a hypothetical example to consider:

  • Scenario 1: Business owner sells his business in 2021 for $1,500,000. Using 20% federal capital gains rates, the owner receives $1,200,000 net of taxes.
  • Scenario 2: Business owner sells his business in 2023 for $1,500,000. By then, capital gains rates have increased to match ordinary income rates (39.6%) for those who earn more than $1,000,000. In this scenario, the owner receives $906,000 net of taxes.

The $300,000 difference between the two scenarios is not a small sum, which is precisely why these types of issues should be front-and-center in exit planning today.  

Question #2: When do you want to leave or sell your business?

The decision whether to sell now versus later can be dictated by tax expectations, as demonstrated above. But owners also need to consider the conditions throughout the profession and personal circumstances.

In the funeral service and cemetery profession, an owner may want to strongly consider selling during a period of heightened consolidation, attractively-priced deals, and low cost of capital (for example). The macroeconomic environment also plays a role – if the economy is in growth mode and expanding, there may be more years left in the cycle to accumulate additional value.

On the personal side, many owners need to weigh factors like lifestyle needs, desire to retire versus to work, family life, and/or desire to pursue philanthropic pursuits. At the end of the day, what the business owner wants for themselves personally needs to play a decisive role in how an exit plan is shaped.

Question #3: Who are the possible successors or acquirers of the business?

In all likelihood, the pandemic revealed new information about prospective successors or buyers for the business. Maybe the key employees you had in mind to take over the business struggled to meet the challenges posed by the pandemic. On the flip side, maybe you were surprised by how a family member or a third party stepped up over the past year, shifting your thinking completely about who is best suited to take over the business.

At the end of the day, finding and training a successor is almost certainly a multiyear process, requiring a lot of attention and energy. Owners should consider whether the pandemic made it more – or less – clear who is qualified to lead the business into the future.  

The last point to make is that exit planning is a dynamic, methodical, ongoing process – it is not a single event! Owners should not expect to make an exit plan once and never revisit it. Over time, financial situations change, timelines change, personal needs change, taxes change, and the economics of funeral service changes. The pandemic, of course, was a catalyst for change – which to me means owners and investors need to respond by tuning up your financial and exit plan now.

Read the full article

Source: Published in Memento Mori magazine

July 2021 | Equity Commentary

July 2021 | Equity Commentary

Published on August 10th, 2021

Market Overview

U.S. stocks continued trending higher in July, with the S&P 500 ticking about 2.4% higher. Longer duration U.S. Treasury bond yields fell during the month, which may signal the market’s expectation for moderating growth and inflation in the second half of 2021. The Bureau of Economic Analysis reported the U.S. economy grew at an annualized pace of 6.5% (“advance” estimate) in the second quarter, which while strong, still fell below the  8+% consensus estimate. The Bureau also confirmed the 2020 pandemic-induced recession officially ended in April 2020, meaning the economic downturn lasted only two months. As it were, when the recession was officially declared in June 2020, it was already over. 

The U.S. economy is now back above its pre-pandemic size. Consumer spending persists as the lead driver of the expansion, with spending up 11.8%  in the three months ending June 30—the second-best performance since 1952.1 Business investment also rose 8%, adding 1.1%1 to the total GDP  number.  

Data suggests business spending growth could persist in the second half of the year. Corporate clients of J.P. Morgan and Bank of America have nearly $1 trillion (combined) in unused credit lines, and many have been asking the banks to increase them further. J.P. Morgan recently conducted a  survey of corporate clients and found 46% want to ramp-up capital spending later this year, with 38% indicating a desire to increase credit lines.2 

The drag on U.S. economic growth in the second quarter came from a combination of inventory drawdowns, which subtracted 1.1% from GDP,  rising imports, and a decrease in federal government spending.3 According to the Bureau of Economic Analysis, nondefense spending on intermediate goods and services fell the most, largely due to a drop-off in Paycheck Protection Program (PPP) loans. 

The Covid-19 Delta variant is spreading rapidly in the United States and in many countries abroad. Case studies of India and the United Kingdom suggest the Delta wave could last a few weeks and taper off, but this disease continues to be unpredictable even for the world’s foremost scientists.  With regards to equity markets, the central question is whether governments reinstate lockdowns in an effort to stem the spread. We believe that here in the U.S., the risk of another lockdown remains low. 

Vaccines are universally available to U.S. adults, which makes current risk far different than in previous stages of the pandemic. Mitigation measures, such as masking and social distancing, are also widely understood and can be carried out without shutting down major parts of the economy. Corporations, state and local governments, and the federal government, are also experimenting with mandates as a means to control risk,  while staying open. 

For example, General Motors, Ford Motor, and Stellantis (the maker of Jeep and Dodge), have reinstated mask mandates for all factory and office workers, regardless of vaccination status. Stanley Black & Decker has done the same. Facebook, Google, and even Tyson Foods have said they would require vaccinations for their entire U.S. workforce. Louisiana has introduced indoor mask mandates, while New York City will require people to show proof of vaccination for indoor activities like dining, gyms, and events with large groups. More examples exist across the economy,  but the bottom line is that as long as the vaccines remain highly effective at protecting against serious illness, there can be ways to address the ongoing crisis without shutting down. 

The widely-watched infrastructure bill passed a key hurdle in July. The bill must move through a very difficult amendment process in the Senate before moving over to the House, where it will likely be met with Democratic critics and mild support from Republicans. In other words, final passage is far from assured.  

Even so, it is worth summarizing key features of the proposed legislation, as winners and losers are often minted in big government spending  programs: 

• $110 billion for traditional infrastructure, i.e., repairing and improving roads and bridges 

• $39 billion to modernize public transit, including introduction of a zero-emission bus fleet 

• $66 billion for passenger freight and rail systems 

• $7.5 billion for a national network of electric vehicle charging stations 

• $17 billion for ports and $25 billion for airports 

• $65 billion expansion of broadband Internet access 

• $55 billion for clean drinking water 

• $73 billion in clean energy transmission 

Finally, the Labor Department reported a 5.4% (4.5% core) CPI increase in June from the previous year. The base effect still applies since the U.S.  economy was heavily restricted last summer, but when compared to June 2019 inflation still rose by a stout 3%. In his July testimony to Congress,  Federal Reserve Chairman Jerome Powell seemed less confident than usual: “This is a shock going through the system associated with reopening of the economy, and it has driven inflation well above 2%. And, of course, we’re not comfortable with that.”

1https://www.reuters.com/world/us/us-consumer-spending-rises-strongly-june-inflation-increases-2021-07-30/ 

2https://www.wsj.com/articles/businesses-are-loading-up-on-credit-spending-could-follow-11628069581 

3https://www.bea.gov/news/2021/gross-domestic-product-second-quarter-2021-advance-estimate-and-annual-update

Nicki Price Adams is the Face of Wealth Management in American Funeral Director

Published on Jul. 16 2021

July 2021: Nicki Price Adams is the Face of Wealth Management in American Funeral Director

Read the Full Article Here

Second Quarter 2021 | Fixed Income Commentary

Published on July 16th, 2021

Second Quarter 2021 | Fixed Income Commentary

Market Overview

Fixed income markets climbed higher throughout the second quarter as declining US Treasury yields supported valuations. Roosevelt’s Current Income Portfolio returned 1.7% gross, with corporate bond and preferred securities gaining by 1.4% and 3.0%, respectively. By comparison, the Bloomberg Barclays Intermediate Corporate Bond Index returned 1.7% and the ICE BofA Fixed Rate Preferred Securities Index returned 3.0%.

During the quarter, the Consumer Price Index surprised investors to the upside and rose by 4.2% in April. The largest advances were concentrated in areas most affected by the pandemic such as air fares, lodging and used car prices, which support the FOMC’s narrative that the building inflationary pressures are transitory. Moreover, retail sales and employment data have fallen short of expectations, spending on durable goods moderated, and housing starts declined sequentially, as rising input costs and labor shortages began to take hold. After rising during April and peaking in early May, lumber prices declined by month end.  Taken together, incoming data throughout the quarter may have softened inflationary concerns somewhat and caused 10Y US Breakeven Inflation levels, which are indicators of expectations for future inflation, to decline by 3 bps.

In June, the Federal Reserve sent a hawkish signal in the FOMC meeting by discussing the potential tapering of asset purchases sooner than previously expected and by updating dot plot expectations to reflect two 25 bp interest rate hikes in 2023. The unexpected shift from the Federal Reserve’s previous stance on “FAIT” (Flexible Average Inflation Targeting), whereby the FOMC would let the economy run hot with an inflation target above 2%, to average ~2% over time, put into question just how much the Federal Reserve is willing to let inflation go before taking steps to curtail economic growth. Expectations of an earlier lift-off by the Federal Reserve in raising interest rates, coupled with continued slowing consumer demand, mixed employment data, and concerns over new cases of the delta variant, have slightly dampened the economic growth outlook . As a result, 10Y US Real Yields have fallen by 24 bps and contributed to most of the decline in 10Y US Treasury yields as well as in the spread between 2Y and 10Y US Treasury yields, which fell by 27 bps and 23 bps, respectively.

Second Quarter 2021 decline 10Y US Treasury and 10Y US Real Yields:

Source: Bloomberg

Lower government yields, and a flatter overall yield curve, have led longer duration securities to outperform. Corporate bonds with maturities in the 5-10 year range gained by over 1% this quarter and recovered some of their losses from earlier in the year. In addition, retail, $25 par, predominantly fixed-rate coupon preferred securities gained by 3.3% during the quarter, while institutional, $1,000 par, fixed-to-floating rate coupon preferred securities saw gains of 2.5%.

The resulting flatter yield curve, however, has also made attractive reinvestment opportunities in fixed income markets harder to find, as there is less incentive to take on duration risk for only modestly higher yield compensation. Nevertheless, we continue to fund portfolios with attractive yields and a shorter duration than benchmark intermediate-term investment grade corporate bond and preferred securities markets. We also continue to favor high coupon, low duration, fixed-rate coupon preferred securities, in addition to fixed-to-floating rate coupon preferred securities, to diversify our interest rate risk exposure and protect against the potential for rates to go higher. Our goal to enhance yield and reduce risk is unchanged, and we believe the portfolio is defensively positioned to withstand potential volatility and earn reliable income regardless of the underlying economic environment, expectations for inflation or the path of interest rates in the future.

As of June 30, 2021

June 2021 | Equity Commentary

Published on July 13th, 2021

June 2021 | Equity Commentary

Market Overview

We believe the United States is very close to full reopening, with nearly all 50 states removing pandemic-related restrictions for vaccinated adults. Stocks may have largely priced in the economic rebound, but better-than-expected earnings and growth outcomes—combined with a still-dovish Federal Reserve and a retreat in longer-duration Treasury bond yields—continue providing upward support for equities. Approximately 80% of stocks in the S&P 500 Index are in an uptrend, underscoring the healthy breadth in the stock market. The S&P 500 added another 2.3% for the month, bringing year-to-date gains (through June 30) to 15.2%.

The U.S. economy appears to be humming. Consumers are largely driving the growth, armed with accumulated savings from the past year. According to the Bureau of Economic Analysis, pending volume on consumer goods is over 10% higher than pre-pandemic levels, and early data suggests consumers are now shifting their dollars to services. Spending on leisure and discretionary services (travel, restaurants, etc.) rose 0.7% from April to May, while spending on furniture and cars fell by 2.8% over the same period.

Business investment is also trending favorably, in our opinion. Data from the Federal Reserve Bank of St. Louis shows that nonresidential private fixed investment, which is a proxy for business investment, increased at a seasonally adjusted annual rate of 11.7% in Q1, following double-digit increases in Q3 and Q4 of last year. Following the “Great Recession” of 2008-09, businesses seemed more reluctant to invest in capital and equipment, and labor was cheap. In the current economic recovery/expansion, labor is tight and wages are rising, so it appears that businesses are opting to increase spending on computers, equipment, software, and other technology infrastructure in an effort to drive productivity. There is also apparently greater desire in the business community to build supply chain resiliency and to ‘on-shore’ more production, all of which is being helped along by historically cheap borrowing costs.

In the first six months of the year, the U.S. economy added about 3.3 million jobs, but is still 7.6 million jobs shy of the employment level attained prior to the pandemic. Perhaps unsurprisingly, new jobs at restaurants, hotels, stores, salons, and other in-person service industry roles accounted for nearly half of all payroll gains since the start of the year. Even though millions of Americans remain unemployed, the labor market is tight, which has created headaches for businesses while giving workers some leverage—according to ZipRecruiter, about 20% of all June job postings offered a bonus, up from 2% of jobs advertised in March. Wages are also being pressured higher.

In May, the median existing home price crossed $350,000 for the first time ever, marking a 23.6% jump from the previous year. In fact, it was only 11 months ago that the median existing home price topped $300,000 for the first time1, underscoring sharp price pressure as many urban workers migrate around the country and buy homes for remote work setups. Persistently low mortgage rates and a fairly drastic supply/demand imbalance (where demand far outweighs supply of homes) are also pushing home prices up. A 2021 report from the National Association of Realtors found that home construction over the last 20 years has fallen 5.5 million units short of historical trends. 

These are all key factors driving home prices higher, but the depth and breadth of housing demand may be best explained by demographics. A large share of workers under 40 (millennials) have jobs that allow hybrid/remote work, and many are first-time homebuyers. But there are also just a lot of millennials in America—according to the U.S. Census Bureau, the largest age cohort in 2020 was individuals between the ages of 25 and 35.

Oil prices have soared past $70 a barrel, approaching a six-year high and putting pressure on gas prices across the country. Demand has returned to the global economy and to the U.S. faster than supply has kept up. Last year, OPEC cut output by 9.7 million barrels a day, but they have only brought back about 4 million barrels since then. In OPEC’s June meeting, the United Arab Emirates (UAE) balked at an agreement to increase overall production by 400,000 barrels a day each month through late 2022, largely because the UAE wants much of that production for itself. OPEC data suggests the market needs an additional 2 million barrels a day by the end of the year. Without additional supply, oil prices could remain at elevated levels in the months ahead.

By the narrowest of margins, in June President Biden and a group of 10 centrist senators agreed to a roughly $1 trillion infrastructure package. According to a list distributed by the White House, the bipartisan spending bill includes agreement to the transportation-related items on Biden’s priority list, with new investments in the electrical grid, transit, roads, bridges, and other forms of infrastructure. The cost of the spending would be covered by “repurposing existing federal funds, public-private partnerships and revenue collected from enhanced enforcement at the Internal Revenue Service.” Within days, however, the deal’s passage was in jeopardy, as President Biden alluded to wanting the $1 trillion package to be accompanied by an anti-poverty bill and other parts of his $4 trillion American Jobs Plan. Republicans balked and Biden walked back his comments, reminding us how fragile any bipartisan agreement on spending will ultimately be. It is reported that Congress will be working towards a deal on this legislation in the coming weeks, prior to the August recess.

Market leadership started to shift over the last month or so. From the late last year through the middle of May, the so-called ‘reflation trade’ outperformed; cyclicals, value stocks, and the shares of many companies believed to benefit most from the reopening of the economy led the market—the Russell 1000 Value index rose +15% compared to just +2% for the Russell 1000 Growth index. But since then that trade has reversed, with growth stocks outperforming value stocks (+2%). This rotation in equity markets was commensurate with a rally in U.S. Treasury bonds, which saw the 10-year Treasury bond yield decline from around 1.7% to around 1.4%. This decline in Treasury yields marked a reversal from the sharp rise early in the year, and may be sending a signal about falling investor expectations for economic growth and inflation going forward. It is too early to tell how this story plays out, but equity market leadership could be choppy as we get more clues from the economic data about inflationary trends.

As of June 30, 2021

Walmart’s Flipkart raises fresh funds for $38 billion valuation as IPO looms

Published on Jul. 12, 2021

Jason Benowitz Featured in Reuters “Walmart’s Flipkart raises fresh funds for $38 billion valuation as IPO looms”

“It is a triumph for Walmart as investors were initially skeptical of the U.S. retailer’s tie-up with Flipkart,” said Jason Benowitz, senior portfolio manager at Roosevelt Investment Group. He added the success of Flipkart bolsters India as a destination for foreign investment. Read the Full Article Here

Midyear Check-in: Navigating An Early Cycle Economy

Published on Jul. 20, 2021

July 19, 2021 – Midyear Check-in: Navigating An Early Cycle Economy

John Roscoe, CFA, Chief Investment Officer, and Jason Benowitz, CFA, CMT, Senior Portfolio Manager, sat down to discuss the latest updates in the financial markets from this past quarter. In this webinar, they also discussed:

  • Reopening: driving economic activity, corporate earnings, and market returns
  • Inflation: the great debate, and the Fed reaction function
  • Washington: advancing plans to tax, spend, and regulate

Corporate Buybacks Gain Steam With Banks Poised to Boost Buying

Published on Jul. 6, 2021

Jason Benowitz Featured in Bloomberg “Corporate Buybacks Gain Steam With Banks Poised to Boost Buying”

While repurchases are likely to rise as economic growth continues, corporations may opt to allocate more cash to capital expenditures like technology and factories, according to Jason Benowitz, a senior portfolio manager at Roosevelt Investment Group. He’s not worried about the prospect of reduced buybacks weighing on the broader market.

Read the Full Article Here
Roosevelt Investments