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Commentary

David Cleary, CFA

David Cleary, CFA is the Founder and Lead Portfolio Manager at Timber Point Capital Management. Previously he spent 23 years at Lazard Asset Management where he held a series of senior portfolio management roles over multi-asset and global fixed income strategies. Additionally, he served as the firm’s global head of fixed income, a $26 billion platform. Prior to Lazard, David worked at UBS and IBJ Schroder, mostly in fixed income asset management roles. He began working in the asset management field in 1987 upon his graduation from Cornell University, with a BS in Business Management and Applied Economics. He is a CFA charterholder.

Recent Posts

Rotation, Anyone? 4Q 2020 Outlook

A very successful competitor asset manager in Boston famously produces a periodic report where they forecast expected real returns of various asset classes for the subsequent seven years. This report is often cited in the financial press and is held by many to be the standard of prudent long term thinking about opportunities across various investments and where wise, forward looking investors should allocate their monies. Unique asset classes are very often favored while run of the mill asset classes, such as US large cap stocks and bonds, are typically viewed as unattractive.
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Whoa Dude, Check Out This Stock - 3Q 2020 Outlook

Since March, the US stock market has enjoyed a 20% bounce from its bottom seemingly on the vague promise that the US economy was going to re-open and life would resume somewhat normally.  To a subset of investors, the notion of recovery has seemed preposterous as the economic damage inflicted by COVID-19 has been so large, so unprecedented and to a great extent not fully digested by the overall economy today.   A second COVID wave, unemployment, commercial real estate, municipal finances, consumer spending, et al, are at the top of their very long worry list.
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Q2 2020 Market Outlook

This Too Shall Pass….But When? It is very hard to believe that 60 short days ago, the US economy was humming; we were at full employment, consumer confidence was high, interest rates were low, and the stock market had hit all time highs.  The sky was the limit.  Investors were bidding up new economy stocks and all looked good.  And then along came the coronavirus and we all know what happened and we won’t bore you recounting the details of what has been recounted a million times in the media and financial press.
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Addendum to Q1 2020 Market Outlook

  No sooner than we had published our optimistic outlook for economies and markets did investors experience a somewhat existential event with Friday’s US missile strike, killing Iranian’s military leader Qasen Soleimani. In as much as this event could catalyze into a greater near-term conflict between the US and Iran and more general Middle Eastern strife, we do not believe this will ultimately have a meaningful impact on the global economy...
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Q1 2020 Market Outlook

Despite fears over declining economic growth, a multitude of trade war scares and endless political bickering, 2019 has proven to be a terrific year for investors as the US stock market posted its highest returns since 2013.  And it wasn’t just US equities; bonds, non-US stocks, gold, etc. all posted extraordinary returns at lower and lower levels of risk.  Risk adjusted returns were off the charts.  To quote Frank Sinatra, it was a very good year.
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Q4 2019 Market Outlook

Taking its cue from the previous three months, markets again proved to be increasingly volatile for investors over the course of the most recent quarter.  Market returns were mixed over the entire three-month period but, in general, risk off assets outperformed.  Most notable was the performance of US Treasury securities (the ultimate risk off asset).  For the quarter, yields declined on 30-year Treasury bonds by roughly 40bps, closing the quarter at 2.1%.  During August, the 30-year bond yield hit its all-time low of 1.95%, reflecting increasing concern over US – China trade negotiations and the potential for associated economic deterioration.  As a result, total returns on long bonds for the quarter exceeded 8%!  In fact, when we look across the investment spectrum at a series of higher risk/lower risk investable choices, in virtually every instance, lower risk proved to be the superior performing investment during the quarter. 
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What Now for Bond Investors?

October 2019 | David Cleary, CFA Insights
Although equities and equity markets tend to get the bulk of the average investor’s attention, the most remarkable thing that has transpired across the economic spectrum over the past ten years has been the sharp decline in government bond interest rates to levels never seen before in the history of capitalism.  Whether driven by persistently low inflation, central bank policy, aging demographics or general economic weakness and risk aversion, interest rates have fallen across the world to the point where negative yields are a somewhat common phenomenon.
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Q3 2019 Market Outlook

The resiliency of the US equity market again was evident in the second quarter of 2019.  The trade concerns of May faded quickly and the market rallied as the Federal Reserve and the European Central Bank both indicated easier monetary policy may be forthcoming.  For the three-month period ended June 30th, the US stock market rose over 4% and has now entirely recovered all of the fourth quarter 2018 drawdown.  The S&P 500 now sits near all-time highs.  And it wasn’t just the stock market.  US bonds also posted extraordinary gains too, confounding the interest rate normalization crowd.  The US 10-year note yields approximately 2% currently, down 50bps in the last 6 months.  The total return of the Bloomberg Barclays Aggregate Bond Index exceeds 6% for the year, which is quite remarkable.  However, not all investors participated in this recent rally as virtually all other asset classes underperformed US large cap stocks and US fixed income, some by a material amount.  This recent rally has truly been highly focused between US Large Cap and Fixed Income.
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The Federal Reserve: What Me Worry?

December 2018 | David Cleary, CFA Insights
So, it’s safe to say, the market was very disappointed by the Fed’s 25 basis points tightening yesterday as well as the guidance provided for future hikes in 2019.  Reading the FOMC minutes from November and listening to Fed Chairmen Powell’s remarks at his speech at the Economic Club of New York a few weeks ago, where he said, “We will be paying close attention to what incoming economic and financial data are telling us” many market participants were led to believe that the Fed’s next actions would be more dovish.  That did not prove to be the case.
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Elections, Policy, Trade and Markets

November 2018 | David Cleary, CFA Insights
Now that mid-term elections are behind us, economic and investment decision makers can get back to business.  We will know soon how much of the October swoon was related to interest rate fears and how much was election related.  Given the market’s strong initial reaction to the election, it looks like the risk of an unexpected election outcome was indeed weighing on investor concerns. 
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