October is here, starting with some early morning fog and cooler temperatures. You can feel and see change, especially this year. I find myself dressing not warm enough or to warm these days. Everything is in full swing with school, work, and of course, the upcoming holidays. So much to do and be aware of. Listen up; your portfolio needs your attention too, especially this year. 

September was pretty much on par with our expectations. I get spooked thinking about October. PMI came out Monday was lower than expectations and below the 50 level at 47. Above fifty and the nation is in expansion, below and it is in contraction. This is the third time in four months it has dropped lower than what the market expected. The month of Halloween has other frights too. 

Many of the key issues in 2019 have some decision points that could move markets one way or another. September escaped these haunts, but we knew the time to pay the piper was coming. BREXIT is one of those dangerous-looking characters this month. The U.K. is due to leave the EURO on October 31st. Boris Johnson says they are leaving with or without a deal. He would prefer a deal. It feels that after years, a vote of no confidence, and another Prime Minister this may be the moment. 

Yes, we are going to talk about the U.S. China trade war. September was given a pass, but October doesn’t seem that fortunate. It is a haunted house issue where around every corner, there could be a new fear. This last week, a comment to delist the Chinese Over-the-Counter (OTC) stocks was made. Besides moments of comments that could move the market, the two countries have plans to meet to move the negotiations forward. The last meeting for the Chinese to tour our farmland was cut short. Even now statements such as the Chinese PM Xi saying, “No Force can stop the Chinese people and the Chinese nation” draw a conclusion this is a tall order. The expectations are that an agreement will be reached. This is propping the market up, and some say artificially. If one isn’t achieved much of the optimism will be bled out. I still don’t see how an agreement is reached. Time will tell. You can “count” on it.

Most are expecting some boo this month. Volatility this month has been up the last few months, and it has been a key month in the last few years. Stay disciplined in your approach. The Feds have dropped rates twice now. It’s wise to follow their lead and their research. Be cautious as this month unfolds and be prepared to take advantage of any swings. There can always be surprises like the oil refinery bombing. I am suggesting to park some profits, lock in some interest rates, and be patient. Don’t be tricked and get that treat in Bootober. 

If you have questions on a particular company or investment and would like our feedback, contact us at my email below. Our team will research and respond to you with our recommendation and opinion.   

Andrew F. Kotyuk, CIMA* is CEO and Principal of Alpha Wealth Management LLC

For questions or investment topics, please email me afkotyuk@alpha-wealth.com.

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Of course, there are other differences between the two. The player says, “I’ll take ‘Liz and Don’ for $400!” Alex would read, “The one who served in the military.” The winning answer-question would be “Who is the Queen of England?”

Certainly, it’s not the president of the United States. As we all know, Trump’s rich daddy got a podiatrist to write up a diagnosis of bone spurs for his son, real or imagined, which meant that he got to avoid the draft.

The queen, then princess, who had a rich daddy herself, begged and pleaded until he allowed her to enlist in England’s uniformed Auxiliary Territorial Service during World War II. She served as a mechanic and truck driver. We’ll never know if that thought crossed her royal mind as she sat beside the president during ceremonies marking the 75th anniversary of D-Day.

He certainly was on his best behavior and did nothing that would have turned the solemn commemoration from D-Day into T-Day.

In fact, he was relatively subdued during his entire visit to London — a state visit complete with all the pomp and ceremony that the Brits do better than anyone.

Trump, as we well know, loves pomp and ceremony. Now that he’s witnessed the spectacle that greeted him in London, do not be at all surprised if Commander in Chief Trump returns to the U.S. and insists on the creation of an elite unit, whose uniforms include the big bearskin hats that the Coldstream Guards wear. Oh sure, there were demonstrations too, complete with that fat-baby balloon, but he didn’t seem to notice.

He also didn’t seem to notice those subtle digs from Queen Elizabeth and Prime Minister Theresa May. Addressing Trump at her state banquet in Buckingham Palace, the queen, in her oh-so-proper way, cited the two nations’ postwar cooperation in creating “an assembly of international institutions.”

Since President Trump has trashed those very same institutions, like NATO, put that down as a sneer on the usual royal stiff upper lip. Meanwhile, outgoing Prime Minister May gave the American leader Winston Churchill’s own draft of the 1941 Atlantic Charter. That document years later became an underlying argument for the United Nations, another body that Donald Trump regularly disparages. So that was more snarkdeftly administered, of course.

It’s likely that it was so deft that POTUS didn’t even notice, but his political enemies back home could take some lessons in nuanced put-downs from those two. Perhaps it’s their British accent.

Whatever the national style, both countries are flirting with economic disaster. The U.K. has Brexit, negotiations over the bitterly contested divorce from the European Union, which is the manifestation of a harsh swing to the right. The U.S. has the prospect of tariffs, used as a weapon that does great harm to both the target nation and the one pulling the trigger.

Back to our game show: If Alex Trebek’s clue is “It’s the future of both the U.S. and U.K.,” the correct question is “What is in serious jeopardy?” Bob Franken is an Emmy Award-winning reporter who covered Washington for more than 20 years with CNN.

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On Friday, tomorrow, the Federal Reserve Chairman Jerome Powell and the
Federal Reserve will decide and announce whether they should lower interest rates.
The Federal Reserve runs the Central Bank and sets policy decisions to lower or
raise interest rates in the U.S. Use of interest rates to slow down inflation during
times an economy expands too fast and inversely, in the face of slowing economy
or recession, lowering interest rates stimulates the market. After raising rates in
December, the Reserve has been under increasing pressure to lower interest rates.
The Central Bank has gone from “a long way to neutral” to, “act as appropriate to
sustain the expansion.” So, should they stay or should they go and lower rates?

Right now, the market only has less than a 30% chance the Fed will lower rates in June, however, the July probability is at a firm 85%. With the G-20 summit coming the end of the month and the Reserve not yet willing to admit the December rate hike was a mistake, are among the top reasons why they will stay.

The data though is pointing strongly that their goals of inflation and employment of prime-aged workers are nowhere near being accomplished. Rates being raised too high or too quickly has a negative impact resulting in a slowing of an economy.
It appears this is the story that the data points the Fed’s follow are painting.

Okay, what does all of this economics lingo mean to an investor and their money? It’s simple. You see what your money market pays your idle cash in checking, savings, or brokerage account is in direct correlation to what the Fed’s do with interest rates. Or on-line and in the bank, you will see banners promoting what the certificate of deposit (CD) rates are. They always have a decimal out to a hundredth. When the Reserve lowers rates those signs go down to only paying you the hundredths and no numbers in front of the decimal. Rates going up start to show pretty good numbers in front of that little dot.
This is where you need to become familiar with fixed income and for what term to buy a bond or CD for, longer or shorter. Again, think about it.

It is the opposite of how you would want to borrow money. How would you match up how
long to lend money based on how well it paid you? If the Central Bank starts to lower interest rates you will no longer be able to lend at the higher interest rate you were just able to last time you invested. When rates start to drop a portfolio should move out of short-term interest rate positions and into longer-term positions to lock in the higher rates. How long is determined by your need of liquidity and the risk and return that’s right for you.

Right now, economists and analysts have forecasted and the market has priced in a rate drop by 0.50%. Consider maturing CD bonds, fixed income mutual funds or ETF into at least a little longer-term option. This will stay any downside in interest rates and keep your income from going. Be ok with yourself if they stay or go. Enjoy the Clash and remember black is better than red when it comes to portfolio performance numbers.

Andrew F. Kotyuk, CIMA* is CEO and Principal of Alpha Wealth Management
LLC, send questions or comments to afkotyuk@alpha-wealth.com.

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