Essex Financial President and CEO Chuck Cumello, appeared on MoneyLife Podcast with Chuck Jaffe to discuss his macro-economic outlook and key trends he’s seeing in the market.
Part 1 of 2
Chuck Jaffe — Money Life: Today our conversation is going to be with Chuck Cumello. He’s the president and chief executive officer at Essex Financial. If you want more information, it’s Essex DOT Financial. Yeah, the whole thing written out — www.Essex.financial — and it’s worth getting there to take a look at Chuck’s commentaries and more. Chuck Cumello, welcome to Money Life.
Chuck Cumello — Essex Financial: Well thank you very much Chuck. Very happy to be here.
Chuck Jaffe — Money Life: It is hard to do an interview at this point for me without sort of noting okay we’d like to think maybe we’ve reached some sort, or we’re getting close to some sort of investment crossroads. Inherently we understand a bull market cannot go on forever, a bond market can’t stay low forever and bad news has not been repealed and yet this market it’s not … I hate to call it a bull market at this point it’s like a ‘caterpillar’ market, it’s a sluggish market, it’s a smooth sloth market, maybe moving slowly forward almost every day without a lot of volatility but it is going on for a long time. Are we at a period where you’re thinking yep crossroads is here or crossroads is coming or are we at a period where you can’t really see when we’re going to come to that crossroads?
Chuck Cumello — Essex Financial: I don’t think we’re quite at that crossroads yet and many people have said and it’s sort of a timeworn phrase that bull markets don’t die of old age — something kills them. And right now when you take a look at the macroeconomic picture in this country and then finally around the world you’re starting to see growth as well. When you look at the macro-picture in the U.S. you just had the second quarter GDP get revised up from 2.7% to 3%. Again certainly not a roaring bull market and this has been mentioned many times that this is probably the most heated bull market in maybe U.S. history. But when you look at the macroeconomic overview of the country whether it be GDP again at 3%, you’ve got a jobs number, the most recent one that came out where although it was below expectations coming in at 156,000 new jobs, you know job growth is still pretty robust and again the challenge with August is that month historically is a month that due to the seasonality of it tends to get adjusted upwards and you did have the unemployment rate kick up a little bit to 4.4%. But the overall macroeconomic indicators of the economy including even on the business side of it with durable goods … the most recent durable good order that came out actually fell 6.8%. But most of that was due to a drop in the orders for airlines. You sort of back out transportation and they were up 0.5% from the previous month which was a 5.5% year over year increase. That’s the best run since 2010.
So there are a lot of good solid data that’s coming out that tends to support you know albeit a very slow growing economy but it’s growing nonetheless. More people are working … consumer confidence the most recent number was high and there is still the overall belief that whatever policies if they ever come out the Trump White House will be more business friendly. You have seen again a roll back in a regulatory environment. Most of that stuff tends to be more bullish for the markets. The market is, if nothing else, a forward-looking indicator. So you know we continue to be cautiously optimistic that you’ll continue to see some growth here in the US. And again as I mentioned earlier, for the longest time we were the only growth game in town albeit very slow. I think you used the word “caterpillar”. That’s a very good analogy … just a very slow growing US economy while the rest of the world was flat, or shrinking, or not growing. You’re now starting to see that growth overseas and finally the foreign markets really starting to perform better. So again we’re cautiously optimistic that we’ll continue to see this growth continue.
That’s not to say, that really the two big issues that are out there you know the geopolitical risks. President Trump was at the UN and I think I heard him … I saw something come across the screen where I think he said the North Korean leader has some sort of suicide wish or something along those lines. So you’ve got the geopolitical risk that’s always out there. The challenge and the reality is when you’re investing money over the history of the market there is always a geopolitical risk. It may differ …