MRM Commentary

Commentary

Monthly Investment Commentary

OCTOBER 2019

    Markets Outlook

    Stocks rose globally on optimism that Chinese and U.S. officials made progress in negotiations that laid the groundwork for a truce on additional tariffs. Positive comments on the Brexit front added to the optimism, leading international developed-market stocks to record their biggest weekly rise in four months. We think reduced uncertainty can be a catalyst for improved returns in international equities, but we would also caution that trade negotiations are ongoing, and more twists and turns could prompt volatility, as they have in the past.



    MRM NET COMPOSITE PORTFOLIO RESULTS (As of 09/30/2019)
    MRM Group claims compliance with the Global Investment Performance Standards (GIPS®).
    Please contact MRM Group to obtain a Compliant Presentation and/or MRM's list of Composite descriptions.

    MRM Portfolio

    Slower Growth but No Recession
    We don’t see a recession materializing in the coming year, extending this already longest-ever expansion through 2020. A healthy labor market and fresh stimulus from the Federal Reserve are key pillars of support, but trade, election and geopolitical uncertainties are increasing headwinds.


    Domestically, household debt levels remain elevated and housing investment continues to slow, which we think will dictate a slower pace of growth. We suspect the combination of impaired business confidence stemming from the U.S./China trade spat, along with the lagged effects of the Fed’s rate hikes will be on display as we enter 2020. However, lower corporate and household borrowing costs and further progress on trade negotiations make a case for sustained growth.

    International Outlook
    Overseas equities underperformed last quarter as trade tensions escalated, manufacturing activity contracted, and the U.S. dollar rose. Trade and other geopolitical uncertainties, including Brexit, are likely to keep volatility elevated, but we expect growth to stabilize and returns to improve.


    Global manufacturing activity continues to struggle in the face of weaker global trade and shaken business confidence, with export-reliant economies such as Germany the most affected. Positively, most major economies are experiencing better trends in their services sectors and tight labor markets, which reassures us the global economy is not likely headed into a recession. Headwinds remain, but we believe any de-escalation in trade tensions could be a catalyst for a rebound in international equities also.

    MRM'S VIEW

    Tariff tensions, geopolitical challenges such as Brexit, and tepid global growth pose challenges for equity returns. An impeachment inquiry in the U.S. adds to the headline risk that may, at times, unsettle investor sentiment. However, history shows that economic and corporate conditions, not politics, are what matter most for long-term stock performance.

    Source: Kourkafas

    MRM model holdings as of September 30, 2019

    Allocations

    IMPORTANT DISCLOSURES

    MRM Group, Inc. ("MRM") is an SEC registered investment advisor and an independent management firm that is not affiliated with any parent organization. Using quantitative selection methods, each MRM strategy searches within a well-defined universe of securities, using consistent investment criteria to identify attractive investments and create diversified portfolios. MRM seeks to provide long-term capital growth by generating above-market returns, protecting principal and managing volatility.

    Allocations

    The portfolios do NOT use inverse or leveraged ETFs. Universe vehicles may change, from time to time, when approved by the principal of MRM Group at its sole discretion.

    BENCHMARK NOTES

    The S&P 500 Index with dividends is an unmanaged composite of 500 large-capitalization companies whose data is obtained from the Standard & Poor's website. S&P 500 is a registered trademark of McGraw-Hill, Inc. The MSCI EAFE Gross Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada, with data from the MSCI website using price with reinvestment of dividends. The performance of blended benchmarks is shown for comparison because MRM uses securities which track indices related to these products. An investment cannot be made directly into an index.

    DISCLOSURES

    MRM Group claims compliance with the Global Investment Performance Standards (GIPS®). MRM has been independently verified for the periods January 1, 2008 through present. The verification report is available upon request. Verification assesses whether (1) MRM has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) MRM's policies and procedures are designed to calculate the present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

    Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models, through mathematical algorithms, attempts to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, updated with new data, or can accurately predict future market, industry, and sector performance.

    Valuations are computed and performance is reported in U.S. dollars. Client performance may differ based upon the structure of a particular investment program. For example, some programs are structured as wrap fee programs in which trading costs and brokerage commissions are included in one all-inclusive wrapped fee. As such, these costs may be higher than if the client were to pay trading costs and brokerage commissions separately. The standard management fee is 2.0%. Deviation from the model's diversified structure may result in different risk, return, and diversification characteristics and would therefore not be representative of the models.

    All information contained herein is for informational purposes only. This is not a solicitation to offer investment advice in any state where it would be unlawful. There is no assurance that this platform will produce profitable returns or that any account will have results similar to those of the platform. Past performance is not a guarantee of future results. You may lose money. Factors impacting client returns include individual client risk tolerance, restrictions client may place on the account, investment objectives, choice of broker/dealer or custodians, as well as other factors. Any particular client's account performance may vary substantially from the program results due to, among other things, commission, timing of order entry, or the manner in which the trades are executed. The investment return and principal value of an investment will fluctuate dramatically, and an investor's equity, when liquidated, may be worth more or less than the original cost. Investors should consider the investment objective, risks, charges, and expenses carefully prior to investing.

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