Chicago, St.Louis, Oklahoma City, Santa Fe, Phoenix: My Drive Through The US Heartland
Geographically fascinating with all the changing landscapes and topography: The vast cotton fields of Texas (miles of the white stuff yet to be harvested) was the "jaw-dropper" (i.e. first time for that) as was the Ponderosa Pine forest on the climb down the mountains from the New Mexico desert to the Arizona desert: spectacular mountain scenery.
It began with back to back University of Notre Dame Fighting Irish victories over the University of Miami Hurricanes (football) and over the University of Connecticut (UConn) Huskies (hockey) in South Bend, Indiana. An excellent start!
But there was certainly anecdotal evidence of a subdued US populace with those whom I engaged: this election has frightened many, you could feel it, the energy was missing. Folks talk about it and shake their heads. The sports were a welcome distraction for them.
Chicago was big and bustling, but the airport seemed to be more crowded with sports enthusiasts than business travellers (Cubs fans, Indians fans, college sports fans) and traffic was reasonably light.
St. Louis was a ghost town, but it was Sunday night and they do not have a football team this year. Monday morning in the gym, every TV add that I saw was political all the way through the ballot and the adds were all negative about the other candidate. Normally I like the variety of US advertising, rather than the same commercials played over and over again on Canadian stations, but this was over the top.
Traffic was pretty light heading out of ST. Louis and there were fewer commercial trucks on the roads than I might have expected in a strong vibrant economy (which it appears, is not happening).
Oklahoma City (oil country) was empty. Gas prices at $1.75 per gallon (or $1.75 for 3.75 litres = less than $.50 per litre and if you convert to C$, about $.67) Wow! No wonder sales of F150's are picking up. In this part of the world the pick-up truck rules!
Texas is vast and you can see forever, but what struck me most was not oil drilling, but enormous wind mills, everywhere. There is a subtle change happening and it does not favour the oil economy.
We drove through mostly "red"states (i.e. Trump support), but I must say, there were only a few instances where there was very visual Trump support (billboards, etc.). I am surprised that Arizona is listed as a swing state, when they have never before voted for a Democrat for President.
Oh and we listened to plenty of "Bloomberg Radio" on the satellite radio along the way and the advertising is always interesting: especially the "guaranteed principle, 12% REIT's for Brooklyn buildings" really ? (if the risk free rate of return is 0%, then these must have some very risky catch, eh?)
So the Fed remains on hold (at least until December), more uncertainty over Brexit as a panel of London judges ruled that it must be voted on by the British parliament and of course Clinton's lead has narrowed.
All that has lead to greater uncertainty and higher volatility:
And weaker stock prices...
As sellers have taken over the market on the uncertainty... and the 1 year total return on our benchmark All Country World Index has dipped below the break-even point into negative territory.
We (at High Rock) see volatility continuing to rise and have protected ourselves and our clients (because unlike many advisors, we invest in the exact same models as our clients: we "eat our own cooking", as it were).
But of course, we are not advisors, we are a portfolio management company that specializes in wealth management. There are enormous differences between the two that very much favour the client. Yet with all the same safety features you would get through the standard advice channel of a bank - owned advisory and fee transparency to boot (as well as the expertise and experience) and likely better service.
There is an alternative.
Are you protected from volatility? We are!
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