November 10, 2023
By Steve Blumenthal
“We see two big forces that will continue to exert upward pressure on long rates and downward pressure on the economy: 1) the need to sustain a restrictive monetary policy until key economic conditions have settled into their desired levels and 2) an emerging liquidity hole in the bond market.”
– Bob Prince, Greg Jensen, Karen Karniol-Tambour. Bridgewater Associates
The second stage of tightening has begun—the consequence of poor prior decisions.
Next up is an emerging liquidity hole in the bond market. “Then it comes to be, that the soothing light at the end of your tunnel, is just a freight train coming your way.” Metallica, “No Leaf Cover”
The current state of play: $33.7 trillion of U.S. National debt, $680 billion in current annual interest expense on that debt, $1.48 trillion annually in Medicare-Medicade expenses, $1.37 trillion annually in Social Security expenses, and $827 billion annually in defense spending. Source: USDebtClock.org
The problem remains unchecked and growing. The U.S. government ran a $1.7 trillion deficit last fiscal year. In a New York minute, the debt hole will be $35 trillion in 2024, and $50 trillion by the end of the decade is likely—no need to wait until then. The pressure is now.
The second tightening isn’t coming from the Fed; it is a tightening forced upon the system by market participants. In a recent paper, The Bridgewater CIOs wrote about “a unique configuration of market forces.” Essentially, the large supply of Treasury Bonds coming to the market will drive the yield on longer-duration Treasurys higher. This is a supply vs demand issue.
“With respect to the emerging liquidity hole in the bond market, US government borrowing on the long end of the yield curve is about to rise to very high levels, well in excess of the existing demand to buy bonds. The impact of this liquidity hole has been delayed by the Treasury funding its substantial fiscal deficit via T-bills, with the demand for those T-bills coming from a residual excess of liquidity left over from prior MP3 policies. Going forward, government borrowing will shift to the long end, and the store of excess liquidity will gradually decline until it is gone. This will force supply to clear at a market price determined much more heavily by private sector investors, whose demand for bonds has been far less than the future required demand. The sell-off in bonds in the third quarter began when it became clear that issuance was on the rise.
The second stage of the tightening cycle can be clearly seen in the market action. Earlier in the tightening cycle, short-term interest rates rose and dragged long-term interest rates higher. Then, beginning in October 2022 and lasting almost a year, there was a reprieve. Hikes in short-term interest rates continued, but bond yields traded sideways, reflecting market expectations for future easing, combined with the Treasury circumventing the pressure on long rates by issuing T-bills funded by excess central bank reserves. In the third quarter, both conditions shifted as described above, initiating the next stage of the tightening cycle, led by long rates.
Looking ahead, if the T-bill rate stays at 5% or higher, to get a risk premium in bonds you need a bond yield of 5.5% or higher. And given the coming supply of bonds and the withdrawal of central banks from buying them, demand will need to come from private sector investors, who will require a risk premium relative to cash.
A week ago, yields dropped, and equities rallied mainly due to a weaker-than-expected jobs report—the result of investors anticipating a change in Fed policy. The Fed can keep the Fed Funds rate unchanged or even lower rates, but due to the size of the deficit and expanding debt hole, the subsequent tightening can come from rising longer-term Treasury yields. There are consequences to free money.
And it feels right this time
On this crash course with the big time
Pay no mind to the distant thunder
New day fills his head with wonder, boy
Says it feel right this time
Turned around and found the right line
“Good day to be alive, sir
Good day to be alive”, he said
Then it comes to be that the soothing light at the end of your tunnel
Was just a freight train comin’ your way
Then it comes to be that the soothing light at the end of your tunnel
Was just a freight train comin’ your way, yeah
Don’t it feel right like this?
All the pieces fall to his wish
“Sucker for that quick reward, boy
Sucker for that quick reward”, they say
Weak demand from yesterday’s Treasury bond auction for 30-year Treasury bonds sent yields higher and bond prices lower. This and hawkish comments from Fed Chairman Jerome Powell led to the sell-off in stocks and bonds. More specifically, Powell hasn’t dismissed the possibility of raising rates. “If it becomes appropriate to tighten policy further, we will not hesitate to do so,” Powell said. He later backed off some of those statements, expressing a more dovish tone.
We are near the end of the most aggressive Federal Reserve rate hiking cycle since the early 1980s. The message in today’s missive is to set your sights on the long end of the Treasury curve. The Fed has far less influence on long-term Treasury yields.
Grab that coffee and find your favorite chair. We are “Entering the ‘Second Stage of Tightening.” The consequences of being a “Sucker for that quick reward.” More below. Coffee hot, lights on. Let’s go.
Here are the sections in this week’s On My Radar:
- Entering the Second Stage of Tightening
- The Yield Curve is Uninverting
- Random Tweet
- Personal Note: Season Finale
- Trade Signals: Weekly Update, November 8, 2023
(Reminder: This is not a recommendation to buy or sell any security. My views may change at any time. The information is for discussion purposes only.)
If you are not signed up to receive the free weekly On My Radar letter, subscribe here.
Entering the Second Stage of Tightening
By Bridgewater CEO’s, By Bob Prince, Greg Jensen, Karen Karniol-Tambour
Implications of the Next Stage of the Tightening Cycle
While it is happening through the bond market, the implications of the second tightening cycle go far beyond bonds.
For the economy, we should see higher short-term and long-term rates for longer produce a grinding pressure on growth. As future easing is pushed back, the level of real interest rates has vastly diminished the incentives to borrow and leverage up relative to the stimulative real rates of the past 15 years. The credit system is healthy enough that an acute contraction in credit is not the most likely outcome, but a higher level of rates that persists for longer will close the arbitrage between the level of interest rates and the level of growth (changing the economics of leveraging up private assets) and, on the margin, will redirect income from spending to debt service, as existing debts are refinanced at higher interest rates.
For equities, as bond yields rise to compete with cash, the equity market becomes more uncompetitive relative to bonds, propagating the impact of higher cash rates out the risk curve. It’s important to realize that the primary support to equities this year has been contracting risk premiums, enabled in large part by the past liquidity reprieve and expectations that cash rates would soon fall. But lower cash rates cannot be relied on to restore risk premiums relative to cash because conditions do not justify a cut in rates. And given grinding pressures on growth and restrictive policy that discourages an acceleration in credit, it is not likely that an acceleration in earnings will restore the competitiveness of equities relative to bonds, as earnings are more likely to be a contributing drag. Instead, restoring risk premiums in equities relative to bonds and bonds relative to cash likely requires higher yields and lower prices. The shift in liquidity dynamics that is now happening is an impetus for this process to begin.
For the US dollar, the continued need for tight policy for now has been a support as the economy has stayed strong, though much of this strength is already in the price of the dollar, limiting upside. Going forward, there is more ambiguity. If tightening breaks through to growth and assets, its net effect can turn to a headwind; meanwhile, the secular backdrop for the dollar is not attractive given a multidecade high in the real exchange rate, a relatively wide current account balance, and the potential for massive US Treasury issuance to spill over to a balance of payments imbalance that could pressure the dollar and bond yields.
Around the world, as the tightening cycle has progressed, the divergences have grown. There are now many differences in the nature of tightening pressures across the US, Europe, the UK, Australia, and Canada; the secular and cyclical picture in China and Asia more broadly; between EMs that tightened aggressively and those that didn’t; and in the pricing across currencies, equities, and bonds in each economy. As a result, some of the biggest opportunities in this environment are in relative value trades and non-USD currency cross-rates. We elaborate more on these divergences below.
The biggest unknown relates to the potential productivity impact of the technology breakthrough in AI and large language models. The pricing can make more sense if we are on the verge of a substantial and sustained rise in productivity. The level of wages would imply a lower inflation rate. The discounted growth in earnings would make more sense. And a higher level of real interest rates could be sustained with less impact on the economy. Bond yields would still need to rise to provide a risk premium to the new equilibrium level of real short-term interest rates, but the economy and equities could more easily withstand those interest rate effects. Our latest research on these effects can be found here.
How Did We End Up in a Second Tightening Cycle?
For much of the past year, many of the usual impacts of tightening were offset, producing a lull that may as well have been a pause in tightening. As a result, although we are now 18 months into one of the fastest and biggest tightening cycles in history, when you look at unemployment rates, activity levels, or stock prices, you see few signs of its effects. Why has the impact of this tightening been so muted? There were three big, interrelated drivers that produced resilience, which are now reversing.
1. A big deficit expansion that was funded “for free” produced a liquidity reprieve that allowed money to flow into both cash and assets.
This year saw a big expansion in the US fiscal deficit despite a strong economy. This was funded at the short end with almost no net bond issuance, so the economy experienced the benefit of a fiscal deficit expansion putting money in household pockets but without upward pressure on yields. And, unusually, the money to fund the deficit largely didn’t have to come from sources that could be used for spending or purchases of other risky assets. The money to purchase the T-bills that were used to fund the deficit largely came from essentially inert cash that had been parked at the Fed’s reverse repo facility. As T-bill rates rose and were in line with or slightly higher than the repo facility, money shifted from that facility into T-bills, allowing the deficit to be funded without absorbing capital that was in productive use. The result was a greater amount of money available to purchase long-duration and risky financial assets than there would have been otherwise.
The liquidity that was released from this process offset the impact of quantitative tightening. Money was able to flow into both cash and assets simultaneously. The positive inflows that occurred into both money market funds and equity funds were a sign of this liquidity environment.
2. Strong balance sheets and dissaving let households keep expanding their spending despite the contraction in credit.
Although the tightening had the usual impact of curtailing borrowing, growth remained resilient.
While the liquidity environment discussed above helped support growth, another important factor was the unique strength of balance sheets due to prior MP3 policies. COVID-era stimulus had allowed households and corporates to build up strong balance sheets and cash buffers. This allowed them to keep spending well in excess of their incomes, though as they did so, their balance sheets normalized to a substantial degree. At the same time, falling energy prices provided relief to households, especially in Europe.
3. While spending did decline, it produced a fall in inflation without a contraction in growth, due to the extreme imbalance between high spending and supply.
Earlier in the cycle, MP3 policies had driven nominal spending well above supply. As the tightening began to slow spending from highs, supply was still trying to expand to catch up to the level of spending. As a result, the fall in spending had a disproportionately large impact on inflation versus growth. In response to falling inflation, markets discounted a quick end to the tightening and a pivot to easing, supporting assets.
The net of these impacts was to allow spending to keep growing, growth to stabilize, unemployment to stay low, and money to keep flowing into asset markets.
You can see how these dynamics affected the US equity market by decomposing the drivers of equity performance into the impacts of risk premiums, discount rates, and discounted cash flows. As spending was able to continue, cash flows were resilient to the tightening, while the liquidity reprieve supported a contraction in risk premiums and limited the headwind from rising discount rates over the past 12 months. The fall in risk premiums more than offset the headwind from rising discount rates. These dynamics have led to a net unchanged equity market since the rise in interest rates began, rather than a deeper and more extended decline.
Across Economies, We See Increasingly Divergent Conditions and Pricing
In the US, real growth has remained particularly resilient as the significant fiscal easing allowed households to keep spending even as they pulled back from borrowing. Inflation has fallen to be closer to the Fed’s target but remains too high. The continued resilience in growth, coupled with the tightness of the labor market, risks reaccelerating inflation from here. At the same time, the growing supply/demand imbalance for bonds as QT continues and issuance picks up means that the liquidity-hole dynamic is likely to be felt most acutely in the US.
The UK and Europe face more difficult and more stagflationary conditions. Inflation is further above target and growth is weak, near zero. In both economies, inflation is far too high, and wages are rising at a rapid clip, supported by tight labor markets and union actions to secure pay increases. Policy makers are trying to thread the needle between keeping policy tight while avoiding a meaningful contraction. The longer that inflation remains higher than desired and the farther from target that it is, the more acute the choices will become and the more likely that a downturn will be necessary. Market pricing in Europe is very different than in the US. The ECB has fallen behind this tightening cycle, offering significantly lower yields. The equity market is already discounting much weaker growth, and the euro is competitive.
Japan is in a completely different part of the cycle. Slower reopenings following the pandemic and a smaller fiscal easing meant that the imbalances in Japan were not as severe as elsewhere. This allowed the BoJ to maintain an easy policy for longer. More recently, with inflation now holding at-to-above their target, we are seeing policy makers respond by gradually removing extraordinary accommodation. The pace of adjustment has been slow, so we are seeing market action that classically indicates an unsustainably easy policy, characterized by a rate rise led by long rates with a weakening currency. This calls for a faster policy shift that would accelerate the rise in bond yields and could potentially generate a sharp bounce in the currency (and the yen is prone to this, historically). Equity valuations remain attractive, though less so than earlier in the year.
China is in the midst of a secular deleveraging that will likely take many years to work through at the same time as domestic and international political risk have risen markedly. After the initial bounce in growth earlier this year from the pivot away from zero-COVID, growth has slowed. Policy makers are transitioning the economy toward a consumption-driven model of growth. Overall, growth remains weaker than desired, as the debt overhang in the property sector remains a significant drag, employment growth has been modest, and savings rates have risen. Low inflation rates imply that policy can remain accommodative, but the prioritization of deleveraging some sectors and avoiding excessive leveraging up in others has limited the aggressiveness of the stimulus so far. Looking forward, we expect policy to remain easy but restrained. That said, the increase in risk and likelihood of slower growth are well discounted across the equity, bond, and currency markets.
Across other emerging markets, the peak impact of tightening dollar liquidity has likely passed. At the same time, there are big divergences between emerging markets. Latin American economies tightened a lot and are poised to benefit from a reconfiguration of global supply chains. Emerging Asian economies are heavily impacted by China and generally weaker, with much less of an inflation problem. Emerging Europe is dealing with extremely high inflation via tight policy.
Building a Resilient Portfolio to Navigate the World as It Swings from Disequilibrium to Equilibrium and Back Again
With respect to the positioning of portfolios, it is important to recognize that the vast majority of global economies and their market pricing remain in a state of disequilibrium. In a state of disequilibrium, economic and market volatility is higher, assets tend to underperform cash, and the path back to equilibrium is iterative, requiring, as a function of the size of the disequilibrium, a number of years to resolve.
For perspective, economies and markets were roughly in equilibrium in 2019. Then there was a big down caused by the pandemic, which triggered a lot of stimulation, which produced a big up, which triggered an aggressive tightening, which caused a big down, then a pause, and now, four years since the last equilibrium, another tightening led by the long end. Such iterations will continue until desired conditions are met, at which point we will probably be in a fine-tuning-type environment until excesses once again occur, at which point we will go through another version of the cycle. No economy has remained in equilibrium indefinitely, and generally not for long. Recognizing the reality that economies and markets will continue to go through periods of equilibrium and disequilibrium, with each having its own characteristics, it seems logical that building a portfolio of assets and alphas that is as resilient as possible across these shifts should be a high priority. For us, high returns with low environmental bias have always been our overarching goal.
You can find the full piece and disclosures here.
You can access Bridgewater research commentary here.
Not a recommendation to buy or sell any securities. Opinions expressed may change at any time.
The Yield Curve is Univerting
Everyone is hoping for the Fed to pivot and lower interest rates—the stock market rallies with each whisper of softening economic data. Unfortunately, history advises caution. The message in this section if for investors to be careful in what they wish for.
I’ve been sharing this next chart with you every month for many months. Recessions are the grey bars. Plotted is the number of months from when the yield curve first inverted to when a recession started. The median lead time is 11 months. The “We are here (16 months) arrow points to where we sit at October 2023 month-end.
I’m showing you the 6-month Treasury Bill yield vs the 10-year Treasury Note yield as this is my go-to. Notice on the chart the ‘We are here’ arrow points to the spread between the two yields moving toward 0. Meaning, it is univerting. This is a normal occurrence prior to recessions starting.
The subdued jobs report released last week led many on Wall Street to predict that the Fed would stop raising interest rates. Markets rallied on the news, and bond yields fell. It’s a little perverse when bad news is good and good news is bad, but that’s how it sometimes goes. Since the Fed is uber-focused on the jobs data and inflation data, many investors viewed the report favorably, meaning the Fed would stop raising rates and move towards lowering rates. Interest rates declined, and stocks rallied. Powell poured cold water on that hope in his speech yesterday.
The message in this section is that the hope for a soft landing is, in Vegas terms, a long shot.
William Hester, CFA, points out that we should stand on high alert when the yield curve first inverts, but a better signal is when it normalizes by one percent or more. He uses the spread between 3-month vs 10-year Treasurys. That just happened.
Skip down and look at the orange arrows in the next chart. The arrows point to the periods when the yield curve was uninverted by 100 bps. Mainstream thinking is wrong. All the bad stuff happens in a recession, and the message here is a recession is near—important signal: orange arrow upper right in the chart.
Oh that “soothing light.”
From William Hester, CFA, Senior Research Analyst, Hussman Strategic Advisors
Normally, long-term interest rates are higher than short-term rates. When short-term rates are higher, we say that the “yield curve” is “inverted.” The idea that the yield curve is a capable recession forecaster seems like it’s always been part of the economist’s toolbox. But it’s actually a newish indicator. Although earlier research exists, the yield curve gained popularity on Wall Street after a 1996 paper out of the Federal Reserve Bank of New York titled The yield curve as a predictor of U.S. recessions. Following the release of that paper, the slope of the yield curve continued to demonstrate its value, helping to forecast the recessions that followed in 2001 and 2008, and cemented its reputation.
The curve even inverted for a few weeks during the summer of 2019, prior to 2020’s Covid-induced recession, keeping its streak alive. Many argue that bond traders got lucky in that instance, since there was no way to forecast the pandemic recession as early as the summer of 2019. But leading indicators were negative through this period, the ISM was below 50, the Conference Board’s Consumer Confidence was down on a year-over-year basis and the global economy was slowing noticeably. So even by late-2019, the economy looked to be slowing to a point where an exogenous shock would likely send it into recession. Our own models indicated that the risk of recession was already “increasing but not decisive.” ECRI’s Lakshman Achuthan likes to call these periods windows of vulnerability for the economy. My own take is that there’s no asterisk needed in the record books for the yield curve’s 2020 recession forecast. The streak should be considered intact.
But even though the initial inversion of the curve typically gets the attention, investors should keep their eye on the curve un-inverting. The inversion of the curve is more useful as a signal to start paying attention to potential economic weakness, because the economy has likely entered into a window of vulnerability.
In contrast, the un-inverting of the curve has been a timelier signal of oncoming trouble. Not only that a recession is approaching, but also the likelihood of upcoming weakness in the stock market. The arrows in the graph below show the occasions where the spread between the 3-month Treasury bill yield and the 10-year Treasury bond yield was inverted, and it either became un-inverted, or the slope of the curve steepened by at least 100 basis points. Although the curve remains inverted, because of the surge in long-term interest rates in recent months the yield curve has now steepened by more than 100 basis points. (SB – Bold emphasis mine)
Not a recommendation to buy or sell any securities. Opinions expressed may change at any time.
Annual S&P 500 Contribution of the 10 Largest
- YTD in 2023, the top 10 stocks in the S&P 500 Index accounted for 96.5% of the S&P 500 Index return of 11.7% so far in 2023.
- Not normal. Not healthy. See next chart.
Follow me on X (formerly Twitter) @SBlumenthalCMG
Not a recommendation to buy or sell any security. For discussion purposes only. Current viewpoints are subject to change.
Personal Note: Season Finale
Yesterday, Susan’s Malvern Prep Friars boys team celebrated a fun 2-0 win in the final game of the Pennsylvania Independent School second division state playoffs. The top eight schools competed for the state title; the bottom eight were placed in the second division: the prize, The Commonwealth Cup. The team would have preferred competing in the top grouping, but the boys and Coach Sue were happy for the win. Me too. With soft pretzels, the boys headed to the locker room as the football team took the field.
I know it seems odd, but one more regular season game remains, and a winning record is at stake—a game at 10 am tomorrow at the mighty Springside Chestnut Hill School. The plan is to pick up some cheesesteaks from the best cheesesteak place in Philadelphia. Then, race back to support the Malvern Prep football team.
As the football team took to the practice field, an athletic-looking defensive back came over to ask if he could have a soft pretzel. Of course, I said. What’s your name? He confidently answered. Are you any good? He looked me straight in the eyes and smiled with even more confidence. What’s your number? I asked. Number 7, he said. I’ll be watching you tomorrow. I like it when people are watching me, he said. This kid has got to have game. It’s going to be fun to watch. Go Friars!
Save this address for your next visit to Phila – Dalessandro’s Steaks, 600 Wendover St, Philadelphia, PA 19128
Finally, speaking of football, check out this fun short clip. I hope it makes you smile. Click on the photo to watch this short SNL clip. It’s a happy pill!
It’s a fun weekend ahead, and I’m looking forward to it. I hope you have fun plans too.
If you are not signed up to receive the free weekly On My Radar letter, subscribe here.
Trade Signals: Weekly Update, November 8, 2023
“Extreme patience combined with extreme decisiveness. You may call that our investment process. Yes, it’s that simple.”
– Charlie Munger
Notable this week:
The dashboard of indicators and the stock, bond, developed, and emerging market charts, along with the dollar and gold charts, are updated each week. We monitor inflation and recession as well. If you are not a subscriber and would like a sample, reply to this email, and we’ll send you a sample.
The letter is free for CMG clients. It is designed for traders and investors seeking a better understanding of the current macro trends.
You can SUBSCRIBE or LOGIN by clicking on the link below.
The views expressed herein are solely those of Steve Blumenthal as of the date of this report and are subject to change without notice. Not a recommendation to buy or sell any security.
With kind regards,
Forbes Book – On My Radar, Navigating Stock Market Cycles. Stephen Blumenthal gives investors a game plan and the advice they need to develop a risk-minded and opportunity-based investment approach. It is about how to grow and defend your wealth. You can learn more here.
Stephen Blumenthal founded CMG Capital Management Group in 1992 and serves today as its Executive Chairman and CIO. Steve authors a free weekly e-letter entitled, “On My Radar.” Steve shares his views on macroeconomic research, valuations, portfolio construction, asset allocation and risk management.
Follow Steve on Twitter @SBlumenthalCMG and LinkedIn.
IMPORTANT DISCLOSURE INFORMATION
This document is prepared by CMG Capital Management Group, Inc. (“CMG”) and is circulated for informational and educational purposes only. There is no consideration given to the specific investment needs, objectives, or tolerances of any of the recipients. Additionally, CMG’s actual investment positions may, and often will, vary from its conclusions discussed herein based on any number of factors, such as client investment restrictions, portfolio rebalancing, and transaction costs, among others. Recipients should consult their own advisors, including tax advisors, before making any investment decision. This material is for informational and educational purposes only and is not an offer to sell or the solicitation of an offer to buy the securities or other instruments mentioned. This material does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors which are necessary considerations before making any investment decision. Investors should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, where appropriate, seek professional advice, including legal, tax, accounting, investment, or other advice. The views expressed herein are solely those of Steve Blumenthal as of the date of this report and are subject to change without notice.
Investing involves risk. Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CMG), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CMG. Please remember to contact CMG, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. CMG is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice.
No portion of the content should be construed as an offer or solicitation for the purchase or sale of any security. References to specific securities, investment programs or funds are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations to purchase or sell such securities.
This presentation does not discuss, directly or indirectly, the amount of the profits or losses realized or unrealized, by any CMG client from any specific funds or securities. Please note: In the event that CMG references performance results for an actual CMG portfolio, the results are reported net of advisory fees and inclusive of dividends. The performance referenced is that as determined and/or provided directly by the referenced funds and/or publishers, has not been independently verified, and does not reflect the performance of any specific CMG client. CMG clients may have experienced materially different performance based upon various factors during the corresponding time periods. See in links provided citing limitations of hypothetical back-tested information. Past performance cannot predict or guarantee future performance. Not a recommendation to buy or sell. Please talk to your advisor.
Information herein has been obtained from sources believed to be reliable, but we do not warrant its accuracy. This document is general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purposes.
In a rising interest rate environment, the value of fixed-income securities generally declines, and conversely, in a falling interest rate environment, the value of fixed-income securities generally increases. High-yield securities may be subject to heightened market, interest rate, or credit risk and should not be purchased solely because of the stated yield. Ratings are measured on a scale that ranges from AAA or Aaa (highest) to D or C (lowest). Investment-grade investments are those rated from highest down to BBB- or Baa3.
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
In the event that there has been a change in an individual’s investment objective or financial situation, he/she is encouraged to consult with his/her investment professional.
Written Disclosure Statement. CMG is an SEC-registered investment adviser located in Malvern, Pennsylvania. Stephen B. Blumenthal is CMG’s founder and CEO. Please note: The above views are those of CMG and its CEO, Stephen Blumenthal, and do not reflect those of any sub-advisor that CMG may engage to manage any CMG strategy, or exclusively determines any internal strategy employed by CMG. A copy of CMG’s current written disclosure statement discussing advisory services and fees is available upon request or via CMG’s internet web site at www.cmgwealth.com/disclosures. CMG is committed to protecting your personal information. Click here to review CMG’s privacy policies.