Market Chat

Ep. 118 DECEMBER 2021 Market Update. Topic "Inflation, strains and a three year winning stretch." by Brouwer & Janachowski

Ep. 117 NOVEMBER 2021 Market Update. Topic "The inflation debate takes a new turn" by Brouwer & Janachowski

Ep. 116 OCTOBER 2021 Market Update. Topic "Solid recovery but inflation around" by Brouwer & Janachowski

Ep. 115 SEPTEMBER 2021 Market Update. Topic: "How will the China contagion affect the markets?" by Brouwer & Janachowski

Ep. 114 AUGUST Monthly Market Update Webcast TOPIC: "Delta slows it down" by Brouwer & Janachowski

Ep. 113 JULY 2021 Monthy Market Update Webcast TOPIC: "Is Growth Slowing?" by Brouwer & Janachowski

Ep. 112 Market Update - "Inflation: 1970's or temporary?" by Brouwer & Janachowski

Topic: "What does economic stimulus and inflation mean for your investments?"

Topic: After the stimulus bills, what's next?

Ep. 109 The Inflation Debate with Christian Thwaites by Brouwer & Janachowski

Ep. 108 "Is the market too expensive?" by Brouwer & Janachowski

Ep. 107 "Low rates and record stock markets. But what about 2021?" by Brouwer & Janachowski

Ep. 106 Market Update: "Will 2021 be better?" by Brouwer & Janachowski

Ep. 104 Markets face their biggest challenge in November. by Brouwer & Janachowski

November Market Update Webcast Replay - Audio Only

Ep. 103 Markets and run up to election. by Brouwer & Janachowski

Ep. 102 What could trip the market up?

ep. 101 Second quarter was great for investing but bad for the economy. Now what? by Brouwer & Janachowski

Ep. 100 Why are stocks roaring and the economy tanking? by Brouwer & Janachowski

Ep. 99 The market dropped 20% - Now what? by Brouwer & Janachowski

Ep. 98 Market Update March 9, 2020 by Brouwer & Janachowski

Ep: 97; A good Start to the year. Can it last? by Brouwer & Janachowski

Market Chat, December 17, 2019 Topic: Outlook 2020 Image: Sadness of the King; Henri Matisse

Market Chat, November 21, 2019 Topic: Will consumers derail the economy? Image: Rites of Lililth, 1945 by Mark Rothko

The Days Ahead: Short week and jobs numbers. Market took on a lot. Again. The U.K. suspended Parliament pending the last round of Brexit negotiations. And if that sounds extreme and constitutionally questionable, it is. There was another attack on Fed independence. We think the Fed will weather it all but it's unsettling. Treasuries rallied again but this is very much part of a global trend. Stocks are up on the week but we’re writing this on Wednesday so time for more action. Meanwhile, before heading out of the office for a break, this is a summary of all the stuff that’s gone on... Read this week's full market report: https://www.bandjadvisors.com/blog/touching-zero Subscribe for more updates: https://www.bandjadvisors.com/subscribe

The Days Ahead: Fed minutes and lead up to Central Bankers’ Jackson Hole meeting. Read this week's full market report: https://www.bandjadvisors.com/blog/dusty-recesses Subscribe to get the latest market updates: https://www.bandjadvisors.com/subscribe

This is a recording of our August 2019 conference call. If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe

Markets had two things on their mind. One, the G-20 meeting and, two, quarter end rebalancing. What? Yes, rebalancing is a big deal given how many funds (think of all those target dates funds, pension accounts, risk-parity funds) have to maintain their Equity/Fixed Income allocations. After a barn-storming start to the year, with Treasuries up 7%, equities up 14% and similar recoveries in international and emerging markets, many portfolios will have rebalanced in the last week or so. Outside the technical side, markets are running on low rates, the expectation of lower rates and the hope of a trade deal. Fair enough, but those have been the headlines for months now. We need a new narrative to keep things moving. While 2019 has been good (see below for our mid-year scorecard), we've only advanced some 4% since January 2018 with two corrections of 10% and one of 20%. Now sit back and enjoy the G-20 meeting. - - - Learn more about Brouwer & Janachowski's wealth management services: www.bandjadvisors.com

This is a recording of our June 2019 conference call. Learn more about Brouwer & Janachowski's wealth management services: www.bandjadvisors.com

Short week. Second estimate at Q1 GDP. Stocks opened lower seven out of the last 10 trading days. That means stocks sold off overnight in Asia and Europe but then picked up in the U.S. trading day. That shows high-risk avoidance. No one wants to be long overnight and find there’s no volume. Who can blame them? Stocks were down for the week amid trade tensions, weak manufacturing orders and lower oil prices (down 13% this year). The deflation forces are showing up in a strong dollar and another rally in 10-Year Treasuries. The yield hit an inter-day low of 2.39% (it was as high as 3.2% in October). A 10-Year note trading at $96 back then is now at $104 and that excludes coupon payments. If the slow down continues, trade talks deteriorate and inflation keeps slipping, we would not be surprised to see the 10-Year trade with a 1 handle. - - - Learn more about Brouwer & Janachowski's wealth management services: www.bandjadvisors.com

This is a recording of our March 2019 conference call. If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe

Job numbers. Most of the economic data was weak. That includes the ISM Manufacturing, pending and existing home sales and personal income. But these were all very much expected. The Fed’s move back in January (“we’re patient”) looks exactly right. It's not often that expectations and results are so finely tuned. But this time we knew the tax cuts would run out of steam and uncertainty around China, Europe, trade and government shutdowns would lead to lower numbers. Jerome Powell repeated them all in his talks with Congress last week. Two points. First, slowing, not a recession. A recession is not two quarters of declining GDP. It’s a far more complicated run of data that includes GDP, employment, claims, hours worked and trade sales (full list here). And those are not flashing red. Second, this should keep rates low for a while. The 10-Year Treasury is at 2.75%, only 20bps higher than two years ago. It’s been a stunning start to the year. In the first two months, the S&P 500 is up 11.5%, small and mid caps up 15%, China up 27% and Europe up 11%. We'd like to see a pause but would remind ourselves that markets do not correct by going sideways. So having some protection in place seems fine. As 2009 begins to run off the 10-year returns , we’d like to celebrate that the 10-year compound rate of return in stocks is now 16.75%. - - - Learn more about Brouwer & Janachowski's wealth management services: www.bandjadvisors.com Subscribe to our email newsletter: www.bandjadvisors.com/subscribe

The Days Ahead: Shorter week. No major economic news. One-Minute Summary: When the Fed announced it would stay patient a few weeks ago, some tired punters thought, “Aha Trump got to them.” But, the Fed was actually spot on. The economy is weakening (no, not recession). This week we saw a low CPI report at 1.6%, the NFIB (a proxy for small businesses) optimism index plunged, retail sales came in very low and on Friday, industrial production (IP) fell 0.6%. The last one is all about China. As the China index falls, so does the U.S. The business equipment sub-component of IP was down 1.5% and automotive down 15%. That’s all trade war related. The folk over at the Atlanta Fed revised down expected growth for Q4 2018 to 1.5%. It had started at 3.5%. So growth is slower and one of our favorite Fed Presidents (here she is), reiterated the China, European, Brexit, trade and growth risks and underscored the whole “patient” mode. The 10-Year Treasury traded in a very narrow and bullish range. It’s now 2.67% and yielding only 25bps more than 3-month bills. A year ago, that was 120bps. That’s why we’re in the Treasury FRNs. Hey, look, it’s all on trade right now. How are the talks going (“great”)? Are there concessions and commitments from the Chinese (probably)? Will the tariffs be delayed (yes)? The market feels a little nervous for sure and most indicators of liquidity are well below 2018 levels. That feels like a market wanting to go up but worried about being caught out. We're still 5% below the ding-dong highs of August but up 11% from the December lows. Again, Small Cap has outperformed by even more and Emerging Markets are up 8%. For the record, we’d like to see a consolidation. But as we've learned along the way, “rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.” There are lots of problems with government shutdowns. One is that the IRS missed 16 days of tax refunds. So far this year, there has been $21bn of tax refunds compared to $29bn at the same time last year. It may continue. The IRS thinks only 10% of taxpayers itemized in 2018 compared to 30% in 2017. It seems fewer people over-withheld so the normal March-April boost in retail sales may not happen (h/t Cap Eco). - - - Learn more about Brouwer & Janachowski's wealth management services: www.bandjadvisors.com Subscribe to our email newsletter: www.bandjadvisors.com/subscribe

One-Minute Summary: January was a good month. Stocks up 8%, small company stocks up 11%, international and Emerging Markets up 6% to 9% and bonds trading in a narrow and bullish range. More data confirmed that China trade talks weigh on people’s mind. The Chicago PMI index dropped from 65 to 56 in a month. We don't usually talk about this index much but it’s Chicago and Boeing is headquartered in Chicago and Boeing sells a lot of aircraft to China…2,000 in all and 1,000 in the last five years at $350m each. So when we look at the New Orders component of the Chicago PMI and see it at a two-year low, we know how sensitive things are to the trade, er, talks. The Fed announcement (see below) did more to drive stocks than earnings. Earnings were generally good and are up 12.4% YOY. But the hard comp numbers are coming up as 2018 had all the tax cut benefits so analysts are looking at low and perhaps negative growth for Q1 2019. We're not concerned. The market has priced in the slowdown and it mostly comes from energy and tech stocks. We're also seeing a bounce back from bombed-out stocks. There are 38 stocks up more than 20% this year but the same stocks were down 25% in 2018. This seems a good sign as the market leadership is broader and investors are not just bidding up tech names. The best sector this year has been Energy, which peaked in 2015 and fell 38% to its December low. It’s up 13% since then. We're in an easy money phase right now. That won't last too long because the data is going to start improving. The market overdid it on the downside in 2018. It may be overdoing it on the bounce back in 2019. - - - Learn more about Brouwer & Janachowski's wealth management services: www.bandjadvisors.com Subscribe to our email newsletter: www.bandjadvisors.com/subscribe

This is a recording of our January 2019 conference call. - Learn more about Brouwer & Janachowski's wealth management services: www.bandjadvisors.com - Subscribe to our email newsletter: www.bandjadvisors.com/subscribe

More Fed speakers should echo Powell’s comments. Inflation numbers out. We're always suspicious of market moves over prolonged holidays. Many traders and investors are away and some markets, like Japan, were only open for three days in nearly two weeks of business.  Europe checks out for nearly 10 days. So “small news makes big impact” or “worst day since last one” are headlines you see a lot. This is what we think is going on: 1. Economy weaker but not stopped and not near recession. 2. The inverted yield curve story is overdone but that doesn't stop people talking about it. 3. Volatility is normal. But if you haven’t seen it in a while it feels awkward. 4. The government shutdown, impasse and partisanship should not be a major problem. 5. 2018 was a bad year for multi-asset investors. The only markets not in correction or bear territory are Brazil and India. 6. Earnings and dividends are both likely to continue to grow 10%. There are no major profit warnings. 7. U.S. Treasuries have done well but they may be too pessimistic about a recession. 8. Trade and China are the very big elephants in the room. And will remain so. - - - Learn more about Brouwer & Janachowski's wealth management services: www.bandjadvisors.com - - - Subscribe to our email newsletter: www.bandjadvisors.com/subscribe

This is a recording of our December 2018 conference call. If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

The Days Ahead: Small business optimism indicator. Fed will be in slient mode. One-Minute Summary: We're writing this the day before the jobs number. This is typically a major data point for traders but we’re not traders and there’s probably no number that would lead us to change our outlook. Why? Well the estimate is for around 190,000 new jobs, compared to 250,000 last month but these numbers are subject to very big revisions…as much as 50,000 either way. We know the unemployment rate will remain around 3.7%. The only item that may move the market is if there’s a big jump in average hourly earnings. But, if you've been following us, you’ll know we think real wages are unlikely to move much. The markets had a very busy week. Much of the trading action is prop desks, algos and macro funds closing trading positions towards year-end. It’s not a time to react to headlines. Any view one has is likely to be mown down by stop loss trading. In the last 10 days, we've seen five days where the intraday move was more than 1.5%, six consecutive days of rises and one where the days started very badly and closed up. Or as Leon Cooperman said “[quant managers] have created a tremendous amount of volatility in the market, scared the public, [and] effectively raised the cost of capital to business.” - - - Learn more about Brouwer & Janachowski's wealth management services: www.bandjadvisors.com Subscribe to our email newsletter: www.bandjadvisors.com/subscribe

The Days Ahead: New jobs numbers. Unless it’s a shocker, the Fed will raise in December One-Minute Summary: We never like markets when they depend on a single outcome or announcement. It makes for very nervous trading whenever you hear “markets are waiting on X for direction”. Last week it was Chair Powell on the outlook for rates and, of course, the President on whether there would be progress on trade talks with President Xi. That’s fine. The trade talks are front and center of any discussion about the direction of global trade and economic well-being. But just as these problems took many years to develop, they’re unlikely to be solved over a dinner. We can hope for some sort of delay on the January tariffs. Markets would like that. If it's “no deal”, we would expect risk assets to take a step down. Subscribe to our email newsletter: www.bandjadvisors.com/subscribe Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

Anyone hoping for a quiet week was disappointed. The market suffered a 3.5% two-day loss before recovering on Wednesday. For most investors, this year has not left much to be thankful for. Nearly all asset classes we know have weakened: gold, commodities, large cap, international, emerging, credit and event Treasuries. The S&P 500 is up for the year but by the thinnest of margins. There were no new problems last week nor were there any resolutions to the problems. We'll restate these because they're important and none really lend themselves to quick fixes: China trade: all eyes on the G20. So far, no breakthrough Peak earnings: companies may face higher wage bills or just decide not to expand Economic slowdown: this week it was lower industrial production and soft, but not deteriorating, numbers in housing. Fed rate hikes: no hint that the Fed is concerned about the weaker economy and will let up on rates This week also saw another indicator that the Kabuki theatricals on trade are hitting home. Here’s a story about farm produce rotting because of collapsing Chinese demand. And here’s a chart showing declining Chinese import of manufacturing components and the decline of U.S. durable goods orders. If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: www.bandjadvisors.com/subscribe Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

One-Minute Summary: We, for one, are very glad October is over. See below for what we think has gone on. When all markets correct, we usually find it’s a good idea for the dust to settle and see what has fundamentally changed. As we’re fond of saying, prices change more than facts and the last few weeks have seen investors hitting the sell button and asking questions later. The markets finished higher for the week but sill had one of their worst months for some time. Earnings were phenomenal with the weighted average growth rate at 24%...that’s up from 19% a week ago but that's what happens when big index weightings like Google, Apple and Facebook turn in 30% to 40% growth rates. The market looks very oversold to us. Expect healthier markets once November elections are done. -- If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: www.bandjadvisors.com/subscribe Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

This is a recording of our October 2018 conference call. If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

The Days Ahead: Earnings and trade news, especially China as manipulator. One-Minute Summary: It’s difficult to pinpoint the catalyst for the market sell-off this week. Most of the culprits were known for weeks. Trade, China, rates, tech problems, October seasonals. We knew all that. No central bank said or did anything they hadn't said already. So what was it? We'd point to two factors. One, technical. There are plenty of algorithm strategies. They see a price break and start dumping stocks to protect the positions. So, when Nasdaq broke its 200-day moving average on Wednesday, a lot of trading strategies kicked off. Don't expect great numbers from quant or hedge funds this year. Two, rates. Tuesday was also a day when the U.S. Treasuries fell. There were some big Treasury auctions that didn't help. But markets panic when investments meant to move in opposite (stocks and bonds) directions start tracking together. Treasuries rallied later in the week so normal service resumed. We'd also point out that our own “Fear” measures (gold, Yen, Swiss Franc and the 2-Year Treasury) barely moved so this wasn't a wholesale rush to safety. We think most of the recent 25bp increase in the 10-Year Treasury is catch up. It was clearly over sold and the rally on Friday brought that back to only a 10bp increase. Many investors have played the inverted yield curve story…that, yes, short rates would increase but longer rates would remain anchored because the economy was going to peak soon. We feel that's broadly true but the 10-Year hadn't moved enough to adjust. The economy, after all, will probably grow around 3% this year, which is close to its 70-year average. Yet Fed Funds are at their lowest since 1964. There was no major economic data. Inflation came in low and consumer confidence dipped a little. We would not consider either relevant to the week. -- If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: www.bandjadvisors.com/subscribe Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

The Days Ahead: Fed meets and will raise rates. One-Minute Summary: Stocks reached another record high. We're now up 10.1% for the year and up 15% since the mini correction in February. Small caps have done even better at 16.1% and 19%. We've seen stocks rotate. That's when stocks that were previously unloved come back in favor. We looked at sectors like Consumer Staples, one of the worst performing sectors, which was down 5% to the end of August but rallied 2.3% so far in September. Tech, the clear winner for most of this year, is down for September. It’s happening at the stock level, of course. Exxon, the sixth largest company in the S&P 500, was down 4% from January to August. It’s up 6% so far in September. It’s the same story with companies like Caterpillar, Altria, Cigna and some major insurance companies. What this tells us is that prior favorites like Tech and Small Cap are taking a breather or open to profit-taking and lagging companies are having their day. It doesn't change our Small Cap outlook…Tech is different, it’s under some regulatory pressure and much more expensive. Small Caps have a relatively high exposure to REITs, Financials and Specialty Retail…all of which have come under recent, temporary pressure. The dollar looks like it peaked a month ago. It was up 9% from February but has since weakened against some key currencies…down 4% against the Swiss Franc, 3.5% against the Euro, 2% against the Yen and 3% against sterling. Yes, the dollar has the rate advantage but exchange rates are also driven by confidence, diversification and capital flows. The U.S.’s twin deficits (current account and budget deficit) are heading the wrong way and eventually they’ll show up in the exchange rate. We don’t think anyone’s winning the trade war. Despite the big numbers from the Administration, the tariffs amount at worst, to $60bn, which is less than 0.3% of U.S. GDP and a drop in the bucket compared to the $220bn of tax cuts coming into the U.S. economy. Because so much of the imports from China are intermediate goods (here’s the list, it’s 195 pages), the costs may show up in higher prices or squeezed margins some months from now. But it won't be big and it won't solve the broader “Made in China 2025” problems. Also big news: the sector definitions for the S&P 500 will change on September 24. We’ll no longer have a tech sector at 28% of the index. Instead we’ll drop Telecom and have a new Communication Services group. It will bring in some companies which are now Consumer Discretionary, like Comcast and Netflix, and some which are now in Tech, like Google and Facebook and will be around 11% of the S&P 500. Expect some rebalancing trading on Monday. --- If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

This is a recording of our September 2018 conference call. If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

The Days Ahead: Second estimate of Q2 GDP and Personal Income. One-Minute Summary: There are indications that markets are becoming inured to tweets. What would have shattered confidence a few years ago now passes for normal. The noise-to-signal ratio in investments is always high. What seems important at the time, probably doesn't count very much for long term investments. We look at the economic cycle, inflation, earnings and rates. Data on most of those fronts didn't change much. Stocks had a good week, especially small caps. Emerging Markets were up 2.5% but the news from China (trade) and Turkey (currency) was unchanged. Put it down to summer volumes. The main story was the dollar, which weakened by 1.6%, its worst week since February. If you want to get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

The Days Ahead: Jackson Hole Symposium, which is often a good source of Central Bank think. Very thin economic reports and corporate earnings season is all but done. One-Minute Summary: Consumer confidence fell. That surprised some but we think it’s not tied to claims and employment, which are running well. But to wages. I know we bang on about this a lot and there are plenty of others following the same story. Wage increases are barely positive and we believe even those numbers are inflated by supervisory pay. In other words, non-supervisory employees are seeing negative growth in real wages. There are many more workers than bosses so we think the average number is misleading. And it’s been happening all year. There are plenty of plausible and conflicting reasons why this is happening but none are important to markets right here right now. We'll just leave it that consumer spending cannot sustain a 4% growth rate. Wages aren't strong enough. Gold was down (it usually drops if the dollar strengthens). The S&P 500 finished mostly higher with defensive sectors (telecomm and staples) ahead. The 10-Year Treasury was up. Economic news was mixed. Slow housing starts. Strong retail sales. Productivity growth stayed around its recent, not-so-great trend. Tesla dropped and Elon Musk apologized. If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

The Days Ahead: Earnings mostly over. Productivity report One-Minute Summary: Strong week for equities with not much to change the tone of good results, modest inflation and economic numbers and a truce of sorts on the trade side. Tesla said, “enough of this reporting nonsense, we’ll go private”. Then thought about it. Then couldn’t decide. Normally, we’d ignore stocks like these but the company has a record short position and there’s a lot of money at stake proving or disproving the Tesla dream. We raise it because, well, it’s just not good when i) CEOs announce market sensitive news by Tweet ii) there are convertible and iii) regular bond holders to consider and iv) there’s a very convoluted process for buying out shareholders that may just leave them shareholders, if they want. It’s just, you know, not good governance. And they're not the only ones. Call us old fashioned. Here and here have the best take on it and the SEC is on the case. Berkshire Hathaway (BRK.B) had a good week. It reports on a Saturday to keep the news cycle at bay. One big change was that unrealized gains on the stock portfolio now report through the Income Account. This is a weird rule. Berkshire holds $50bn of Apple stock, which is around 10% of Berkshire’s market capitalization. If Apple goes up, Berkshire now has to recognize that through the income statement. So, in Q1 investments showed a loss of $7.8bn and in Q2, a profit of $5.9bn. You get volatility in return for transparency, I suppose. Some might like that. The core operating business did well and that was mostly what drove the stock up 5% for the week. The 10-Year Treasury auction went well. As we wrote last week, this was a record amount of $26bn and we were concerned dealers would have trouble placing it all. But no, it was well bid. But it adds to our concern that the yield curve will invert. Meanwhile, the TIPS curve inverted last week for the first time in 10 years. We should note that the yield curve inversion is not a sure recession indicator (see here) but more of a concern that growth will slow. Which we already know from other data. If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

The Days Ahead: Big 10-Year Treasury auction. Inflation numbers. One-Minute Summary: One of those weeks when you think lots of stuff happened, markets must be going bonkers. But stocks had a good week. Earnings continued to do well and of course, Apple, had a strong week. It’s now 4% of the S&P 500 and $1 trillion. It’s an even higher weighting in 8 out of 10 of the largest ETFs, ranging from 4% for an S&P 500 tracker and 15% in the Technology Sector fund (ticker XLK). Not to spoil the party, but we’d remind readers that Altria has been a much better stock since Apple’s IPO back in 1980. One hundred dollars invested in Apple back then is worth $55,000. For Altria it’s $88,000. The slow and steady increase in Altria along with dividends was a better investment than the long no-dividend policy of Apple and the 17 wilderness years. Still, great company and justifies much of the run-up in the S&P 500 in the last few weeks. Trade was front and center again. The U.S. Trade Representative raised the stakes by increasing tariffs on $200bn of goods from 10% to 25% but not until September. The Chinese shot back announcing yet unspecified tariffs on $60bn of U.S. imports. The U.S. exports around $120bn of goods to China every year so, yes, the Chinese may be running out of retaliatory measures. There’s a sort of trade truce with the EU right now so expect more on the China trade for a while. If markets seem numb to the trade issues it's because there’s still a big gap between what’s been threatened and what’s been implemented. However, the Yuan/$ rate is getting a lot of attention. The Yuan has weakened by 8% since April, negating much of the effects of higher tariffs. That's one reason why we’re a little cool on Emerging Markets right now and taking protection. Elsewhere, the job numbers were lower than expected and average hourly earnings didn't move much. The numbers won't change the Fed’s mind on a September hike. The 10-Year Treasury broke through 3% for one day and settled back to 2.95%. If a 3.9% unemployment rate isn't enough to push yields higher, what is? We'd say earnings and wages (not increasing), a better trade deficit (no), more confidence from the Manufacturing and Non-Manufacturing sector (no), more aggressive talk from the Fed (not there either), or higher inflation (see next week but probably not). If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

This is a recording of our August 2018 conference call. If you want to join us live next time or get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com

The Days Ahead: More corporate earnings. Initial estimate of Q2 GDP. If you want to get future updates about new episodes, subscribe to our email newsletter: bandjadvisors.com/subscribe One-Minute Summary: There should have been plenty to upset markets this week. The President questioned the level of the dollar and Fed policy, trade tariffs rose again, the EU made a strong trade deal with Japan, housing starts were down, retail sales weak and one of the regional Fed surveys showed that companies are seeing higher prices which they do not expect to be able to pass on (which means a margin squeeze). The yield curve continued to flatten. Netflix had a bad quarter. Yet things kept moving along well enough. Why? Let’s deal with the first one. The President can criticize the Fed for raising rates but we think Chairman Powell will disregard any and all such comments. He’s going nowhere and the Administration can do nothing about Fed policy. They're stuck with him. On the others, the market is growing sanguine. The trade pressures are built into the market’s wall of worry for now. Sure, things could get worse but the underlying economy is moving slowly forward and, as we've said before, companies are reporting great earnings. Thank the tax cuts. The path of rate increases is steady and Chairman Powell reassured markets and politicians not to expect policy surprises. We did see some increase in short-term rates with 3-month Treasury Bills trading above 2% for the first time since September 2009. This was expected. So far this year, the Treasury market has had to absorb $720bn of net new public debt. That’s what happens if you cut taxes in a late-cycle economy. In the same period last year it was -$74bn. Last week, there was $22bn of T-Bill (i.e. 3 month bills) net new issuance and there’s $130bn coming in the next two months. So why aren't rates higher? Because the economy is expected to slow, real wages are flat and because the Fed has clearly signaled where it expects equilibrium rates to settle: not much above where we are. Did you like this podcast? Be sure to rate and review us on Apple Podcasts: bandjadvisors.com/itunes Ask us your financial questions in your review and we'll answer them in the next episode. We appreciate your feedback! Learn more about Brouwer & Janachowski and our wealth management services: www.bandjadvisors.com