Market Update
(all values as of 10.30.2020)

Stock Indices:

Dow Jones 26,501
S&P 500 3,269
Nasdaq 10,911

Bond Sector Yields:

2 Yr Treasury 0.14%
10 Yr Treasury 0.88%
10 Yr Municipal 0.94%
High Yield 5.72%

Commodity Prices:

Gold 1,878
Silver 23.72
Oil (WTI) 35.71

Currencies:

Dollar / Euro 1.17
Dollar / Pound 1.29
Yen / Dollar 104.44
Dollar / Canadian 0.75
 

Period of Calm Before the Storm

With the release of the FOMC minutes, it looks like September will begin the unwinding of the Fed’s $4.5 trillion balance sheet.  New York Fed President William Dudley has said that the private sector should be willing and able to absorb nearly $2 trillion in Treasuries and agency mortgage backed securities (MBS) in the next few years.  His view is based on a steady 2% growth rate for the economy for several years, and a tame inflation rate.  The mild, low-volatility environment the Fed envisions in the near-to-intermediate term is one that is difficult to reconcile based on some of the numbers we’re seeing.  There’s a historical risk in the Fed reducing its balance sheet.  The central bank has embarked on this reduction six times in the past – 1921/1922, 1928/1930, 1937, 1941, 1948/1950, and 2000; all but one of those episodes ended in recession.

 

 

 

While none of these events directly point to an imminent recession,  Shamrock Asset Management is constantly looking past the horizon to see the storm before it approaches the shore.  The Investment Committee feels the U.S. economy has entered into late cycle expansion and thus you have seen our tactical strategies shift to more defensive U.S. sectors.  We continue to favor international equities and could become more bullish on U.S. equities if we see positive movement on corporate tax reform, infrastructure spending, and deregulation.  Geopolitical risks regarding North Korea are factored into Shamrock’s investment decisions but understanding the rationale of a mad man (Kim Jung-un) is difficult at best.  Please contact Melissa Terrill at 214-265-9400 or at mterrill@ShamrockAdvisors.com to schedule a call with your dedicated Shamrock Relationship Manager to discuss your portfolio’s positioning and our outlook for the remainder of 2017.