Munson's Playbook For Rest Of 2019 on The Final Round

I’m still working out the sound in my new Skype studio. It’s always a work in progress, as is the market when you get near a time of great change.

In deep thought on the yield curve. . . or perhaps falling asleep!

Jen Rogers goes though my playbook for the rest of the year. It’s pretty simple. We were more cautious earlier this year when expectations were way too high, in my humble opinion. It didn’t make sense that the trade war would just go away. Now that this has sunk in, along with an inverted yield curve (a boogie man that is misunderstood by many, studied by few) expectations have dropped considerably. So, play the crowd.

Manufacturing is way off because of uncertainty on trade (hey, we assume is the cause, don’t ever be certain) . If we get a trade deal or the concept of a trade deal aligning with a decent earnings season (should be a lot easier when the estimates go down), people as usual will probably overreact and say those magical words that it’s different this time. Well, it’s always different. We will see in the end how all this pans out, but just know that the math is always clear - statistically bailing out of stocks after an inversion is a bad idea, but that assumes you have a well diversified strategy and not simply the hot stuff at the time.

Lee Gets Grilled On Fed Cuts, Trade War, and Recession

Well, it's becoming real clear what the zeitgeist of the next few months is going to be - a huge global bet on recession and the trade war. Yes, those two things are one for now. Add this to the backdrop of foreign investors pouring money into the US because of our high interest rates and hot large cap market. We have seen this before.

Then you add the backdrop of recession signals, lowered earnings expectations, and market moving tweets to arrive at a volatile market. My take? I'm sticking to my discipline and my view hasn't changed since January - a slow second half ending in people saying it's different this time. It won't be.

Munson On Recession And Buying Dividends August 21st, 2019

I was asked my opinions by Nicole Petallides (she did 10 years at Fox Business Morning) for TDA Network. It’s a huge audience of around 750k traders. Since that is the audience, I get into the weeds on the German bond auction (who wants -0.5% for 30 years?), the huge yield of international value stocks (over 4% dividend yield, why not?), and the retest of the December lows for US small cap value (you buy retests of past lows, right?).

Here was my big issue beyond the trade talk: From Germany to France to the US - it’s all the same. Manufacturing is way off yet services is doing fine. What gives? Simple. The trade war really hurts firms that have to invest capital over the next 3-5 years. We simply have too much uncertainty for firms that are thinking of making big investments. On the other side, consumers are just fine. This fits my thesis that over the next six months you buy the weakness. Then, as people realize the recession didn’t happen overnight, markets shrug off the bad news to new highs - that is when you start taking profits and prepare for the actual recession that usually hits 12-18 months after a yield curve inversion.

The bottom line for non-traders: you stay optimistic in the face of uncertainty until 2020, then you reassess and tread cautiously.

Maria Bartiromo and Lee Munson Discus the Trade War August 20th, 2019

This week I was asked to appeark on Neil Cavuto's Your World on Fox News. Maria Bartiromo was filling in. Everyone on the panel made good points - but mine were to the point. We have a national security issue with China that is being addressed though a trade war. Why? Because in dealing with China, money talks. You can't separate trade and intellectual property/military espionage. So, apparently the President is trying to resolve this issue (we can argue about tactics all day) while trying to get the Fed or Congress to juice up the market in order to avoid an early recession. It's a modern version of "guns and butter."

Here is what I know - your odds of making money 3-12 months after a yield curve inversion are high. Estimates for the second half of this year have come down. So, I think we have 6 months of decent markets before a little caution is warranted. The best advice is to stay diversified and stick to a plan. But, it's fun to be on TV and talk about the remains of the day.

Munson and Bartiromo Talk Fed Cuts And Job Numbers 6.5.19

Summer in the city!

It's true, I love to fly out to NYC to see Maria and talk markets. She knows how to get to the heart at what is moving markets - it's her trademark superpower since she started taping on the floor of the NYSE more years ago than is polite to mention.

In this interview we talked about the Fed, and how I feel investors fundamentally don't understand the difference between Powell and past Fed chairs. Then we had to react to the ADP jobs numbers - what a horror story. It just feed my theory that we should be very careful and expect a re-test of some sort of the December lows. Okay, I'm not saying we go all the way back down (I'm not saying that won't happen either!); I'm just explaining what I'm doing for my clients on their time horizon.

Not everyday needs to be a trading day - but everyday I need to understand what is moving markets and separate out noise from reality. I also talk a little about where I would buy and take off exposure.

Munson: Why I Suddenly Care About The Fed June 2019

NYC, another name for Wall Street groupthink. . . .

At this point I thought we would have a larger summer selloff. While the retail crowd is very bearish - for once I’m with them.

My point was simple: Powell said last year if your fed fund rate inverts against the 10 year, your policy is too tight. So, that has happened and everyone is shocked and surprised the Fed might cut. Come on!

My theory is that people don’t get that Powell is a risk manager versus an ivory tower economist. If the data supports that, it will happen.

Lee Munson On Consumer Staples And Summer Correction 6.4.19

I love this new show! Some old friends are producing an hour long show that goes out to almost a million investors through the TD Ameritrade network. That's better numbers than most financial TV shows. Since I was in the city, I wanted to drop by the studio, located in the Nasdaq building, and shoot some tape.

The top was consumer staple stocks, specifically PG and CL. But, that’s not really the point I was trying to make. Sure, I use to trade stocks all day, but let me break down the core message:

1. The time to buy defensive stocks is before a correction, not after.

2. Don’t get caught up in short term stock movements - it tells you nothing.

3. Focus on the big picture and know where you would buy and take profits on a globally diversified stock and bond portfolio.

Of course, that doesn’t make great TV. So, I got into the weeds on an activist shareholder that pressed for changes at PG and made a ton of money off it. My big point? Don’t buy up some other guys winning position - cat’s out of the bag. On Clorox my point was simple, they are spending more to boost sales, but profits are suffering. My point is to beware of firms that buy revenues - a popular thing in tech-land, but it happens everyplace. Outside of that - I really ‘put it to the man’ by not wearing a white dress shirt, instead a vintage design by Ted Baker. It was so subversive, nobody even noticed. . .

Munson Talks Uber Eats/No Autonomous Cars 6.4.19

Here is a short clip about my take on how to value a hot stock. It’s simple, how is Wall Street valuing the firm? In Uber’s case, it’s about a third in food delivery. “Only the crappy places on are Uber Eats in Albuquerque” – it’s going to disappoint. Then I add some color to the conversation, and the disruptions that could happen. I keep talking about how Uber has to buy revenue, and until that stops, or the stock gets very cheap, I’ll take a pass. Again, I’m talking as a speculator – it’s not the thing we buy for our clients because they don’t need risk outside of a globally diversified stock and bond portfolio.

Tax Day - Lee Munson Hanging In NYC Talking Bank Earnings!

My hair looks great - Thanks Jessica!!!

Nothing is better after writing a big check to the IRS than being in NYC doing some interviews on my favorite shows. Okay, seeing my dentist would be better than writing a check to the IRS . . .

Okay, I admit it - I love to talk about bank earnings. Why? It tells you a lot about the health of the economy. This helps me with my portfolio management work by giving me insights. Specifically, if banks aren't expanding their loan book, the economy will find it hard to expand.

How does this help my client's? Well, if you have a major correction in the market and bank stocks are still expanding, we may make slightly different choices than if loan books are shrinking. Markets are always volatile - and you want to have a basic situational awareness of the fundamentals before pulling the trigger on a portfolio rebalance. Remember - just because you buy low cost index funds doesn’t mean you can forget the fundamentals of investing.

Munson Taking Profits April 4th 2019 on The Final Round

Each month The Final Round asks me to come on and talk about what I'm up to. This time I was able to explain how I have been taking profits in a rising market. Let's be clear - I have no crystal ball. But I do have a mandate to control risk and keep a diversified global basket of stocks and bonds. That means from time to time you need to rebalance.

In English - selling some stocks as they make big increases and buying bonds to keep the risk under control. This time around I focused on the REIT portion of portfolios. Also, I made some comments surrounding the IPO Unicorn fever. Our firm doesn't buy IPOs and we don't get involved in fads. If you want to know what was going on in my head that day, take a look.