Weekly Update

Weekly Update

for Week Ending April 3rd, 2020
WEEKLY MARKET SUMMARY

Global Equities: US equities ended the week lower as hopes fade for a quick resumption to a pre-COVID19 world. A wide variance among returns for the different sectors was highlighted by an over -6% drop in Financials, Utilities, and Real Estate, while the beaten-down Energy sector jumped over 5% to lead the runner up Consumer Staples’ 3.4% rise. The Dow Jones Industrial Average led the major indices to the downside, falling -2.7% on the week, while the S&P 500 Index fell -2.0%. Developed international markets underperformed again this week, with the iShares MSCI EAFE ETF (EFA) falling -3.7% as the European Union struggles to collectively agree to a plan to combat COVID19-related economic woes. Emerging Markets outperformed despite a second coronavirus flare up in China, as the iShares MSCI EM ETF (EEM) dropped just -0.7%.

Fixed Income: The yield on the 10-year US Treasury dropped around -0.1% in relatively benign fashion when compared to recent volatility, closing the week near 0.6%. Another large jump in Federal Reserve (Fed) liquidity injections allowed the second-straight week of record investment grade corporate debt issuance, with $110.5 billion hitting markets as companies beef-up cash hoards to deal with the slowdown. Sub-investment grade or high yield debt wasn’t so lucky, falling more than US large cap equities despite energy credits finding a bid, as the iShares iBoxx US High Yield Corporate Debt ETF (HYG) dropped more than -4% during the week.

Commodities: News that a US oil official has been invited to an emergency OPEC+ video meeting sent prices rocketing higher on hopes of a potential production cut that may include several other non-OPEC countries. President Trump mentioned a possible cut of 10 million barrels per day, with the potential for more to help curb the supply imbalance that threatens US shale oil producers. US energy stocks found some relief as the West Texas Intermediate oil benchmark ended the week up a whopping 33.8%, near $28.80 per barrel, as the International Brent crude benchmark rallied over 39%, to $34.68 per barrel.

WEEKLY ECONOMIC SUMMARY

Unemployment Spike: The Bureau of Labor Statistics’ Employment report showed that total non-farm payroll decreased for the first time in a decade, falling by -701k versus expectations for -150k decline. This paints a disturbing picture, as the BLS compiled this information in early March, before the broad shutdown of US businesses. This caused the official unemployment rate to jump from the 50-year low of 3.5% to 4.4%, with the worst of the data still to come. Average hourly earnings rose .4% during the month, slightly higher than expected and skewed higher due to the dynamic of lower-wage workers being laid off first.

PMI Weaker Than Headline: The IHS Markit Manufacturing Purchasing Managers Index fell into contraction territory, to 48.5, though the headline number masks the severity of the deterioration from the underlying components. A large increase in supplier delays, which usually signals strengthening demand, helped the headline number that would otherwise be in the low-to-mid 40s thanks to the steepest declines of output and new orders since the ’08-’09 financial crisis. The gauges for employment and prices fell steeply, as well, with the COVID19 pandemic rightly taking the blame.

Fed Balance Sheet Swells: Federal Reserve balance sheet assets rose by over 10% in a week, to $5.81 trillion, as the monetary authority continues to ease financial stress in a variety of ways. The Fed also announced on Wednesday that it would be easing the leverage rules placed on large banks to help provide needed credit to businesses and households affected by the pandemic shutdown. However, there are still operational issues with getting funds available to those in need, as giants such as JP Morgan and Wells Fargo struggle with a lack of detailed guidelines for providing the assistance outlined in the most recent coronavirus relief bill.

CHART OF THE WEEK

The Chart of the Week is a 3-year chart of the iShares iBoxx US High Yield Corporate Bond ETF (HYG), representing the performance of sub-investment grade or high yield corporate bonds. HYG performance has fallen into negative territory on a 3-year total return basis, below support at the 2018 low due to broad solvency concerns caused by the COVID-19 shutdown. We currently have no exposure to high-yield bonds in our Hanlon Tactical Models, and thus, have reduced weightings in our All-Weather Models and remain in appropriate weightings in the buy-and-hold portions of Hanlon Strategic Models.

Chart courtesy of StockCharts.com. Commentary, and opinions are those of Hanlon Investment Management.




HANLON MANAGED ACCOUNT PLATFORM

The Hanlon Managed Account Platform offers access to Hanlon proprietary models along with models from some of the best asset managers available in a unified managed account program. We provide you with all the tools you need to be successful and deliver a world-class client experience.

Features of the Hanlon Managed Account Platform

  • Intuitive, easy to use Advisor Workstation
  • Model Manager Marketplace with 100 model solutions consisting of Strategic, Dynamic, and Tactical models
  • New Account and Service Account ease
  • Advisor Fee flexibility
  • Billing calculation, collection, and advisor pay
  • Complete Unified Managed Account with unlimited flexibility
  • Proposal generation
  • Keep Non-managed assets in the account, not included in account risk profile
  • Keep Non-model assets in the account, included in account risk profile
  • Designate Reserved Cash in the account
  • Periodic Cash Contributions and Distributions Management
  • Performance and other Reporting
  • Client Portal
HANLON MODEL MANAGER MARKETPLACE

Hanlon’s proprietary screening process which includes longevity, performance and an extensive due diligence process has led us to some of the finest asset managers in the world, shown below.



BlackRock Logo
Dorsey Wright Logo
Hanlon Logo



NorthernTrust
Russell Investment Logo
Wilshire Logo

The information contained herein should not be construed as personalized investment advice and are not intended as buy or sell recommendations of any securities. Past performance is not a guarantee of future results. There is no guarantee that the views and opinions expressed in this Quarterly Report will come to pass. Investing in the equity and fixed income markets involves the risk of gains and losses. An investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses, or sales charges. The use of a Financial Advisor does not eliminate risks associated with investing. Consider the investment objectives, risks, charges, and expenses carefully before investing. Information presented herein is subject to change without notice. Hanlon has experienced periods of underperformance in the past and may also in the future. Hanlon is an SEC registered investment adviser with its principal place of business in the State of New Jersey. Being a registered investment advisor does not imply any level of skill or training. Hanlon is in compliance with the current federal and state registration requirements imposed upon registered investment advisers. Hanlon may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements. This Quarterly Report is limited to the dissemination of general information pertaining to its investment advisory services and is not suitable for everyone. Any subsequent, direct communication by Hanlon with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For additional information about Hanlon, including fees, services, and registration status, send for our disclosure document as set forth on Form ADV using the “disclosures & privacy” link at www.hanlon.com or visit www.adviserinfo.sec.gov. Please read the disclosure statement carefully before you invest or send money.


Request A Demo


First Name (Required)

Last Name (Required)

Email (Required)

Phone (Required)

Firm Name (Required)

Job Title (Required)

State (Required)

How did you hear about us?



What is a good time to get in touch with you?



What Would You Like To Learn About?


Contact our Sales Team at (609) 601-1200 or Sales@Hanlon.com