MRM Commentary

Commentary

Monthly Investment Commentary

May 2020

      Have We Reached the Bottom of the Economic Valley?

      We’re not out of the woods yet, but optimism is far outweighing pessimism on Wall Street. Remember, the market isn’t a perfect mirror of the economy, it’s a relative-to-expectations tool — we don’t need to recoup all lost GDP or job losses, we just need to begin climbing out of this economic valley. And anecdotal evidence indicates we’re doing just that. So much so, the NASDAQ has erased all of 2020’s historic decline and turned positive on the year. Much remains uncertain (a vaccine is likely the silver bullet).



      MRM NET COMPOSITE PORTFOLIO RESULTS (As of 04/30/2020)
      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

      China
      In an upside surprise, China exports rose 3.5 percent in April, smashing analysts’ expectations of an 18 percent decline. The China Association of Automobile Manufacturers also reported a 1 percent increase in auto sales to 1.98 million, following a 43 percent drop in unit sales in Q1. Several automakers independently confirmed the positive turn in China.

      Vaccine Candidates Going Through the Paces
      Pfizer last week launched human trials of a potential coronavirus vaccine in the U.S. that contains genetic instructions that “teach” the body to attack the coronavirus. Another company, Moderna, is prepping a phase 2 vaccine trial (with 600 people) and could reach phase 3 by summer. According to the World Health Organization, there are more than 100 vaccines currently in development as of April 30.

      A 122-month Streak Ends
      Economic activity in the services in the U.S. — which represents the largest share of the economy — contracted for the first time since 2009 in April, ending a 122-month period of positive readings. The Institute for Supply Chain Management’s survey of non-manufacturing companies reached 41.8 in April, down from 52.5 in March (any reading below 50 indicates contraction). Businesses are facing challenges adjusting to new restrictions, while uncertainty about the severity and duration of coronavirus impacts to supply chains, finances and workers continues to weigh on sentiment.

      MRM'S VIEW

      Unemployment surged to 14.7 percent in April, eclipsing the post-WWII record of 10.8 percent reached in 1982. A total of 20.5 million Americans lost their jobs in April, in what was the steepest decline in payrolls since the Great Depression. However, about 18.1 million of those unemployed persons believe their job loss is temporary. When, and how many of those 18.1 million people ultimately return to work will determine our trajectory out of this valley.

      Source: Northwestern

      MRM model holdings as of March 31, 2020

      Allocations

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      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.

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