WEALTHTRACK

One of the striking financial characteristics of this pandemic stricken world has been the extreme divergence between the sickening economic reality on the ground and the out of this world exuberance in the stock market, which started long before now when businesses are slowly and sporadically being allowed to reopen. This week’s guest’s interpretation of the data is the polar opposite. He has widely followed economist, David Rosenberg, President, Chief Economist and Strategist at Rosenberg Research & Associates, Last week, in Part I of our interview, he told us the economy was already going into a recession when the pandemic hit, that it has dramatically deepened, and that unless there is a vaccine soon, which he doubts will happen, that the damage will be lasting. This week, in Part 2 of our interview with Rosenberg, he focuses on the markets. He says it is impossible to reconcile one of the highest unemployment rates since the Great Depression with the recent biggest 50-day post bear market rally in the S&P 500’s history and that something has to give. Despite the market’s impressive performance since the March lows, he remains bearish, calling the experience a classic bear market rally. In this week’s interview, we discuss what has led him to this conclusion. Rosenberg will also explain why he believes the pandemic has brought about a fundamental shift to what he calls a “Homebody Economy”, and what that means for investors. He agreed to share his list of “How to invest in the Post-Crisis ‘Homebody’ Economy” with us on our website. WEALTHTRACK #1651 broadcast on June 29, 2020 More info: https://wealthtrack.com/this-is-a-bear-market-rally-life-has-changed-homebody-investments-will-flourish-says-rosenberg/ Letter from the “Non-Bearish” Chief Economist: https://wealthtrack.com/wp-content/uploads/2020/06/Letter-from-the-Non-Bearish-Chief-Economist_Special_Report_2020_05_06.pdf

In the first of a two-part interview, Influential economist David Rosenberg explains why “nothing is normal” after the COVID-19 pandemic. This is a picture that Rosenberg has been painting ever since the pandemic hit. And well before that he was deeply concerned about the economy’s weakness and the stock market’s vulnerability. Dave Rosenberg is President, Chief Economist and Strategist at his independent economic consulting firm Rosenberg Research & Associates which he launched early this year with the stated priority of “…providing investors with analysis and insights to help them make well-informed investment decisions.” He is known for his tell-it-like-it-is commentary, independence of thought, and high conviction calls which are frequently far out of the consensus. He will not disappoint in this interview as we discuss why “nothing is normal.” More Info: https://wealthtrack.com/influential-economist-david-rosenberg-warns-life-is-going-to-change-permanently-after-covid-19/ Churchill: Walking With Destiny, By Andrew Roberts: https://amzn.to/2XXft9p

The impact of past pandemics on the U.S. economy and markets has important lessons for today says financial historian Richard Sylla, as does the record growth in both monetary and fiscal stimulus. More info: https://wealthtrack.com/the-financial-impact-of-past-pandemics-has-important-lessons-for-today-says-historian-richard-sylla/ Reading List: “Pandemics and Epidemics: Financial and Economic Effects” : https://www.moaf.org/publications-collections/financial-history-magazine/133/_res/id=Attachments/index=0/Pandemics%20and%20Epidemics.pdf Alexander Hamilton on Finance, Credit, and Debt: https://amzn.to/3dzvrfh Alexander Hamilton: The Illustrated Biography:  https://amzn.to/3cwM7mh A History of Interest Rates: https://amzn.to/3dtnJ6e

Central banks and governments around the world are pulling out all the stops to replace income lost from COVID-19 shutdowns, including as we have seen in the United States direct payments to individuals. We are devoting a WEALTHTRACK podcast this week to “Helicopter Money”, a concept coined by Nobel Prize-winning economist Milton Friedman who theorized that as a last resort in a deflationary depression the government could drop dollar bills from a helicopter for people to pick up and spend to “shock it out of a deep slump” with the “aim of boosting demand and inflation.” That theory has now become reality and our financial thought leader guest, Paul McCulley believes it signals a new era whose time has finally come. McCulley will discuss the far-reaching policy changes now occurring and why he believes many will become permanent. McCulley has been a WEALTHTRACK regular since the beginning, starting when he was Senior Partner at PIMCO where he was Founding Member of its Investment Policy Committee, author of the influential monthly “Global Central Bank Focus” and manager of its huge short-term trading desk overseeing an estimated $400 billion. Since retiring from PIMCO in 2010 he has been busy writing, speaking, and teaching. He is currently adjunct professor at Georgetown University’s McDonough School of Business and Senior Fellow at Cornell Law School. Influential economist and Fed analyst Paul McCulley says the concept of “Helicopter Money” from the government is here to stay and we are in a new era where monetary policy will play a subordinate role to fiscal actions. More Info: https://wealthtrack.com/influential-economist-paul-mcculley-on-the-lasting-necessity-of-record-monetary-fiscal-stimulus/ McCulley from the  WEALTHTRACK Archives: https://www.youtube.com/playlist?list=PLznI5J0QOR3PaQKEuSxDzoLjKWOBfvu7K

Can investing be simple? With the 20/20 vision of hindsight it sure looks that way.  Had investors just decided to stay in the U.S., invest in growth stocks, especially mega-cap tech stocks they would have hit the trifecta over the last decade or more. Has the COVID-19 pandemic changed that formula for success? It has not. If anything it seems to have accelerated and accentuated it. The extended FAANG family known by the acronym FAANGM for Facebook, Amazon, Apple, Netflix, Google’s parent Alphabet, and Microsoft recently comprised close to 24% of the total market cap of the S&P 500, topping what dot com stocks reached at the height of the tech bubble. Left in the dust by this juggernaut combination of U.S mega-cap tech are other stock market sectors including value stocks, small company stocks, and international markets, particularly emerging markets. It just so happens that those are the very areas that this week’s guest believes we should be focusing on now. He is financial thought leader, innovator, and investor Robert Arnott, Chairman of the Board of Research Affiliates, which he founded in 2002 as a self-described “research-intensive asset management firm that focuses on innovative products.” Among the innovations that he has pioneered is fundamental indexation - building indexes with stocks based on the size of their fundamentals, such as sales, profits, cash flow, book value, and dividends, not their stock price. The firm just published its new forecast for various smart beta strategies. Here are the highlights: Before getting into these contrarian assumptions I will ask Arnott how the pandemic and the policy responses to it have changed his investment views. WEALTHTRACK #1647 broadcast on May 22, 2020 More info here: https://wealthtrack.com/really-cheap-markets-and-the-pandemics-hidden-toll-with-financial-thought-leader-rob-arnott/ Research Affiliates smart beta strategies: https://interactive.researchaffiliates.com/smart-beta#!/strategies

No doubt about it. The stream of economic news is terrible. The pandemic induced shutdown of much of the U.S. economy, Europe and other countries has resulted in stunning declines in employment, income, sales, earnings, government revenues, and overall economic output. This week’s guest has been following and cataloging all of the economic and policy developments since the beginning of the pandemic and joins us with a summary and update on what it means for the overall economy, businesses, consumers, and investors. We are delighted to welcome Ed Hyman back to WEALTHTRACK to share his current outlook with us. Hyman has been voted Wall Street’s Number One Economist for an unprecedented 39 years in Institutional Investor’s annual survey. No one else comes even close to that record. He is Vice Chairman of Evercore, a leading independent investment banking and advisory firm, and the Founder and Chairman of its Evercore ISI division where he leads its economic research team. For months now Hyman’s must-read daily reports have described the condition of the global economy as being in “free fall” and the policy response as “massive”. Just recently however he noticed a slight change.  As he described it the economic data was still “really bad,” but it was also, “better.” He will describe both the “really bad” and the “better” for us. More info: https://wealthtrack.com/wall-streets-1-e…amaging-2nd-wave/

How different will our world be as the nation slowly returns to work on a state by state, city by city, business by business basis? In part II of our interview with financial thought leader, Jason Trennert, the Co-Founder, Managing Partner, and Chief Investment Strategist of leading macro research firm Strategas Research Partners he addresses the profound changes ahead. Trennert believes the COVID-19 experience and its economic aftermath will alter the behavior of countries, individuals, businesses, and investors for many years to come. He shares his assessment of the pandemic’s potential long-term winners and losers with us. If you missed his discussion last week, debating the merits of both the bullish and bearish case for the market and where he comes out. WEALTHTRACK Episode 1645 broadcast on May 08, 2020 More info: https://wealthtrack.com/covid-19-is-changing-economic-investment-behavior-in-profound-lasting-ways/ Leading investment strategist, Jason Trennert periodically sends out thoughtful and insightful thematic essays to his clients.  He believes the pandemic and its economic consequences mean profound changes ahead for individuals, businesses, and investors. He was kind enough to share his viewpoints with us. FREEDOM IN A FRACTIONAL RESERVE SOCIETY I and II Long-Term Losers From the Pandemic: https://wealthtrack.com/wp-content/uploads/2020/05/TRENNERT-Pandemic-Losers.pdf Long-Term Winners From the Pandemic: https://wealthtrack.com/wp-content/uploads/2020/05/TRENNERT-Pandemic-Winners.pdf

This week’s guest was concerned about high market valuations before the global pandemic hit and was recommending clients raise some cash.  It’s a call he and his team have reiterated since. He is Jason Trennert, Co-Founder, Managing Partner and Chief Investment Strategist of Strategas Research Partners, Trennert and his team have been busier than ever assessing the macro effects of the pandemic shutdown including policy, the public, and private sectors of the economy and the markets. In a recent report to clients, Trennert laid out the main arguments in the bull vs. bear debate and where he and his team stand now.  As he put it, “In times of acute stress in the markets, I find myself doing less modeling and more thinking.” We asked him to share his investment thoughts. WEALTHTRACK #1644 broadcast on May 01, 2020 More info: https://wealthtrack.com/leading-investment-strategist-jason-trennert-lays-out-the-bullish-vs-bearish-cases-mid-shutdown/

We are witnessing massive policy responses of historic proportions. The fiscal and monetary reaction to the COVID-19 shut down of economies around the world has been unprecedented in its size and speed. How effective will it be and who stands to benefit from the stimulus? Who is at most risk of being left behind? We have measured answers from a major player in resolving the Global Financial Crisis a decade ago.  John Lipsky, who was the First Deputy Managing Director at the IMF from 2006-2011 during the height of the crisis joins us with his in-depth analysis of the policy response then and now and perspective on current risks. He raises serious concerns about the economic health of southern Europe, Italy in particular and emerging market countries as well.  It’s a heads up for the international exposure of our portfolios. John Lipsky Former Acting Managing Director, International Monetary Fund Johns Hopkins University School of Advanced International Studies: - Distinguished Scholar at the Henry A. Kissinger Center for Global Affairs - Senior Fellow, Foreign Policy Institute WEALTHTRACK #1643 published April 24, 2020

When economies started shutting down in various parts of the world we all knew that the economic numbers would be bad. How could they not be? We are just now getting some measure of the initial damage in terms of unemployment, business activity, and earnings. For some longer-term perspective on the economic and financial damage we are experiencing and some investment guidance I reached out to a trusted source for some advice. Nick Sargen, now Senior Economic Advisor at Fort Washington Investment Advisors, who has 50 years of experience as an international economist and global money manager. He is also the author of two timely books, Global Shocks: An Investment Guide for Turbulent Markets and Investing in the Trump Era: How Economic Policies Impact Financial Markets.  A student of financial crises, Nick’s thoughtful and knowledgeable assessment of the state of the economy and markets and his advice for investors is definitely worth hearing.  WEALTHTRACK #1642 published on April 17, 2020 More info: https://wealthtrack.com/expect-more-economic-market-damage-as-pandemic-repercussions-multiply-says-investment-veteran/