INSIGHTS FROM FIRST FOUNDATION

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The Week Ahead – Groundhog Day

Welcome to “The Week Ahead” where we take a moment to provide our thoughts on what we can expect in markets and the economy during the upcoming week.

In Bill Murray’s 1993 classic, Groundhog Day, he portrays a TV weatherman caught in a time loop. No matter what he did throughout the day, he would awaken to  Sonny and Cher’s “I Got You Babe” playing on the radio. Who can forget when he went as far as kidnapping Punxsutawney Phil in an attempt to break the time loop! The markets seem have been stuck on a time loop as well: macro fears followed by central bank relief. As my colleague Cal Jones noted last week, U.S. assets have continued to be a global safe haven for investors amidst global macro fears. This past week we saw yields continue their historic downward move as the 30-year U.S. treasury dropped to an all-time low of 1.89%. Meanwhile, the 10-year U.S. treasury slipped below 1.50%, a level last seen during last August’s global recession fears. Following the FOMC minutes, the market is currently pricing in a 93% chance of one rate cut this year and a 65% chance of two.

While the year is still young, investors have already seen the start and end of World War III (tongue in cheek) or better known as the Iran/U.S. conflict of 2020, the accidental shooting down of Ukraine International Airlines Flight 752, China/U.S. signing the “Phase One” trade deal (temporarily ending the trade war), Russian President Vladmir Putin further tightening his power in Russia, Brexit finally occurring, President Trump’s impeachment trial, and Covid-19 turning into a global pandemic.

The week ahead will be jam packed with a second reading of GDP and inflation for the fourth quarter of last year. Housing has been a tailwind for growth as mortgage rates continue to remain low and we’ll see if there’s further momentum in home sales across the nation. Lastly, consumer confidence and sentiment will be monitored closely. The U.S. consumer is the engine to our domestic economy, accounting for 70% of GDP, and so far has been able to shrug off many of the macro worries over the past few years.

Data deck for February 22–February 28

Date

Indicator

Period

February 25

Consumer Confidence

February

February 26

New Home Sales

January

February 27

Initial Jobless Claims

----

February 27

4Q 2019 GDP (Second reading)

4Q19

February 27

Core PCE

4Q19

February 27

Durable Goods Orders

January

February 27

Pending Home Sales

January

February 28

Personal Spending

January

February 28

Personal Income

January

February 28

Advance Goods Trade Balance

January

February 28

Chicago Purchasing Managers

February

February 28

University of Michigan Consumer Sentiment

February

 

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Please remember that past performance may not be indicative of 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 First Foundation Advisors), or any non-investment related content, made reference to directly or indirectly in this blog 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 blog serves as the receipt of, or as a substitute for, personalized investment advice from First Foundation Advisors. Please remember that if you are a First Foundation client, it remains your responsibility to advise First Foundation, 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. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. First Foundation Advisors is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the First Foundation Advisors’ current written disclosure statement discussing our advisory services and fees is available for review upon request, or at firstfoundationinc.com.  Please Note: First Foundation Advisors does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to First Foundation Advisors’ web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Andrew Chan, CAIA, Managing Director of Portfolio Strategy
About the Author
Andrew Chan, CAIA, Managing Director of Portfolio Strategy
Mr. Chan serves on the investment team and is responsible for conducting investment manager research and portfolio construction. As a member of the investment committee, he provides market commentary and investment insights. Mr. Chan’s responsibilities include overseeing client portfolios, calculating risk metrics, conducting the rebalancing of client portfolios, and evaluating the selection of new investment managers. With over 10 years of wealth management experience, Mr. Chan has played key roles across various aspects of investment and wealth management. Prior to joining First Foundation Advisors, Mr. Chan was most recently a portfolio manager at U.S. Trust where, in addition to his daily responsibilities, he served on numerous internal committees including the investment manager committee, the portfolio model committee, and the strategic technology committee. He also served on the in-house strategic consultant committee reporting directly to the President of U.S. Trust. Mr. Chan is a graduate of the Wharton School Executive Program on Investment Management and holds a Bachelor of Arts degree in Business Administration from the University of California, Riverside. He is a Chartered Alternative Investment Analyst (CAIA). Mr. Chan serves on the executive board for CAIA Los Angeles and is the Interim President for the association. Read more