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ARCHIVED Weekly Reports, Investment Strategy Reports and Monthly Newsletters

Mast Report Week 10/13/17

This week's Report recounts the October 19, 1987 record percentage decline in U.S. stock prices. What led to the decline and what caused it are discussed. Financial markets were relatively quiet over the past week. On the U.S. economy, worries about low and decelerating inflation seem to be misplaced. Retail sales rebounded, helped by motor vehicle sales and higher gasoline prices. Labor market conditions are strong, which means that employers are encountering tight supplies of workers. Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

Click for INVESTMENT REPORT
Mast Report Week 10/06/17

This week's Report discusses the continued rise in stock prices and the reason for it. On the economy, September employment fell due to the impact of hurricanes. Despite this, trends in employment remain positive. Survey's of both the manufacturing and nonmanufacturing sectors show impressive strength. However, growth in the U.S. economy likely slowed in the third quarter and remains modest at or just above 2%. Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

Click for INVESTMENT REPORT
Mast Investment Strategy Week 09/29/17

The Investment Strategy report provides advice for asset allocation in portfolios. Riskier asset classes continue to outperform, resulting in less attractive valuations. This can continue, but the margin for error is becoming smaller.

Click for INVESTMENT REPORT
Mast Report Week 09/29/17

Stock prices continued to rise and prices of Treasuries again fell in the last week of September. Leadership in the U.S. stock market has shifted to favor small cap value stocks.

Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

Click for INVESTMENT REPORT
Mast Investment Letter October 2017

Leverage/Debt pressure is building in the economy, financial assets and within and against wealth management products. The implications of this building pressure are opportunities for unencumbered and prepared investors. Increasingly fast quantitative investment methods are accumulating investor assets in concentrated, leveraged and ultimately illiquid financial asset pools. Low interest rates, already forcing investor emotion, continue to incent high financial asset prices and lower expected returns, even if acceptable relative to those low interest rates. There are tools to use for both investment offense and defense, other than product and wealth management stories.

Click for INVESTMENT LETTER
Mast Report Week 09/22/17

Yields on U.S. Treasuries have risen modestly since September 8th in response to the Federal Reserve's decision to start to reduce its securities' holdings in October and to a likely rate hike in December. Further modest increases in Treasury yields are expected. This will create headwinds for stocks, but strong growth in earnings and dividends will be a positive offset.

Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

Click for INVESTMENT REPORT
Mast Report Week 09/15/17

Investors' appetite for risk returned this past week, as global stock prices generally rose and were led by U.S. shares. Oil and the U.S. dollar also rose. Safe haven assets, notably U.S. Treasuries and gold, fell. Several reports on the U.S. economy for August show negative impacts of hurricane Harvey. Retail sales and industrial production both fell. Expectations for stronger U.S. economic growth in the third quarter have waned, but inflation looks to be picking up.

Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

Click for INVESTMENT REPORT
Mast Report Week 09/08/17

Investors' caution and uncertainty has increased. It has been reflected in rising gold prices, sharp declines in the U.S. dollar, and lower yields on Treasuries. The heightened caution and uncertainty seems to have been related to President Trump. Also discussed is a recent Wall Street Journal on "black swan" investment products. There are some lessons to be learned. On the economy, labor markets continue to tighten, with increasing shortages. Motor vehicle sales continue to fall, and the solid expansion in the nonmanufacturing sector continues.

Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

Click for INVESTMENT REPORT
Mast Report Week 9/1/17

The week ending 9/1/17 U.S. stocks turned in a good week. While nearly all major classes of financial assets are overvalued, economic growth and corporate earnings and dividends are increasing. This helps stocks more than other asset classes. The past week's batch of economic reports is reviewed, and nearly all were positive. Be sure to also see the Investment Strategy Report about August information, period ending 8/31/17.

Click for INVESTMENT REPORT
Mast Report Investment Strategy 8/31/17

The monthly Asset Allocation Strategy Report for August 31st is posted. Do you and your investment advisor or wealth manager have a well defined and consistently applied strategy for how to allocate your investment assets among major asset classes? Does that strategy take into account changing financial market and economic conditions? Or is it set up based solely on your investment needs, objectives, and tolerance for risk, to be reviewed and rebalanced periodically, irrespective financial market and economic conditions? Most "strategies" only deal with the second question, like planning for a trip. That's important, but it's incomplete. Having the right vehicle and a good driver are needed to address the first question. This Report specifies the approach and process we use to address the equally important, but often overlooked first question. Included at the end of this report are key metrics included in the discussion.

Click for STRATEGY REPORT
Mast Investment Letter September 2017

Accumulating funds from investors dissatisfied with decelerating expected returns from public markets, investment products are experiencing declining value of leveraged and illiquid investments. Financial product engineering increases risk profile for uninformed investors and their wealth management sales people. These are very important leading indicators for investor asset and security allocation. Investor feelings preclude attention to actual conditions in the investment ecosystem.

Click for INVESTMENT LETTER
Mast Report Week 08/25/17

This past week President Trump said he would shut down the federal government if Congress did not provide funding for a wall on the Mexican border. The federal government would also run out of money sometime in October, if Congress does not raise the debt ceiling and pass bills on spending. Financial markets' response to this was that these things would not happen. Mr. Trump also returned to his prior position to withdraw the U.S. from NAFTA. Were this to happen, it would have negative economic consequences.

Stock prices generally rose slightly for the week, again led by emerging market shares. Gold continued to rise on political uncertainties. Oil continues to struggle to move above $50. On the economy, rates of growth in home sales have slowed, while new durable goods orders continued to gradually improve.

Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

Click for INVESTMENT REPORT
Mast Report Week 08/18/17

The fallout from President Trump's response to recent violence in Charlottesville Virginia added to the prior week's verbal exchanges with North Korea's Kim Jong Un. Regardless of one's agreement or disagreement with the President's policies, his approach is increasingly seen as chaotic, disrupting, and lacking control. This risks undermining his agenda and has been associated with the underperformance of U.S. stocks since early June. Also discussed is the massive flow of investors' funds into indexed ETF's. In our view, it is not ETF's that are the concern, but that asset allocation in many funds that use ETF's is on autopilot and is not based on or consider market conditions. Finally, on the economy, strong growth in retail sales in July will not be sustainable unless growth in personal incomes pickup.

Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

Click for INVESTMENT REPORT
Mast Investment Newsletter August 2017

Data is growing about the wealth management investment product pile-up with veg-o-matic concentration of cross-factoring and derivative hedging. Investors generally change wealth managers once each market cycle, sticking with the second manager through inevitable product losses and "waiting" for investment recovery. This time, however, baby boomer investors, pension plans and insurance reserve funds have much less time remaining for recovery from product losses.

Click for INVESTMENT LETTER
Mast Report Earnings 08/15/17

Corporate earnings, based on S&P 500 Index operating earnings, have rebounded strongly since the second quarter of 2016. Second quarter earnings are estimated to have increased by 18.4% from a year earlier. Continued strong gains in earnings are forecast for the second half of this year with full year 2017 earnings expected to be 19.7% higher than 2016. Dividends also continue to rise strongly for the S&P 500 Index. Strong growth in earnings and dividends continue to be positive for stock prices. Continued growth will be needed to propel stock prices higher if yields on longer maturity Treasuries rise.

Special Reports provide a review of business, economic or market topics covering longer monthly or quarterly periods of time

Click for EARNINGS REPORT
Mast Report Week 08/11/17

Tensions between the U.S. and North Korea dominated financial markets over the past week. Moves in markets were what would have been expected. Stocks and the U.S. dollar fell, and yield spreads on corporate bonds widened. Low risk assets rose, notably gold and U.S. Treasuries. While not insignificant, changes clearly did not reflect any panic. On the U.S. economy, inflation rates stayed low in July. The job market remained tight, as job openings continue to rise sharply. Productivity has improved some, but is still below average. Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy.

Topics of current interest and importance are also discussed.

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Mast Report Week 8/04/17

Weekly Reports provide updates on financial markets and the U.S. economy, as well as discussions of current timely topics. This week's Report discusses why stocks are not likely to either rise or fall very much. On the economy, employment posted a solid gain in July, but rates of change are slowing. The labor market has increasingly been tightening with more workers needed to fill jobs. Recent slower growth in real personal incomes and lower personal savings are likely to moderate growth in consumer spending.

Click for INVESTMENT REPORT
Mast Investment Strategy Report 7/31/17

The Investment Strategy report is distributed monthly at the end of the month. The Report provides a recommended investment strategy for long-term investors with balanced portfolios. Assessments are provided for major classes of financial assets, supported by specific measures and metrics. If you manage your own portfolio, or clients' portfolios, or are interested in our assessment, this Report merits your attention.

Click for INVESTMENT STRATEGY REPORT
Mast Report Week 7/28/17

With earnings growing strongly and dividends continuing to rise, the environment for stocks remains positive. But this is also reflected in high valuation levels on stocks. Expected real long-term rates of return are low for financial assets compared to historical norms, but on a relative basis, stocks are remain more attractive. The Federal Reserve is expected to start reducing its holdings of Treasuries and mortgage backed securities in late September. The result will likely be slightly higher yields on Treasury bonds. The Fed probably will not raise its target for the federal funds rate until mid December.

On the economy, real GDP grew at a 2.6% annual rate in the second quarter. New orders for durable goods continue to strengthen. New home sales remain strong, while sales of existing homes are increasing only modestly, due to declining existing homes for sale. Home prices continue to rise, but recently at a slower pace. Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

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Mast Report Week 7/21/17

Stock prices continue to rise, and some investors and members of the financial media are perplexed by this. We think they are not focusing enough on solid growth in earnings and dividends and are using an incomplete measure to value stocks. Yield spreads on corporate bonds continue to narrow due to strong growth in corporate earnings and Federal Reserve policies that are expected to remain very accommodative due to low inflation. On the U.S. economy, it looks as if real GDP grew at a 2.5% rate in the second quarter. Labor markets continue to tighten. And single-unit housing starts and permits continue to grow.

Weekly Reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed.

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Mast Investment Newsletter 7/17
Political groups dance around identity conflict leaving the administrative state to control fully 35% of the U.S. economy. Loan products populate investor accounts with much unprotected risk, keeping boomer assets in wealth management accounts and off taxpayer-risked government backing. Yield curve becomes a worldwide central bank phenomenon. Price behavior is good measurement of human behavior, and much more useful for investment decisions in comparison to valuation. See the weekly report.Click for JULY INVESTMENT LETTER
Mast Report Week 7/14/17
Weekly reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed. This past week Fed Chair Janet Yellen provided semiannual testimony to Congress. Her main objective seemed to be to calm concerns that the Fed would tighten monetary policy too fast and too much. Supported by sluggish inflation and a drop in retail sales in June, she was successful, giving financial markets just what they wanted. As would be expected, Treasury yields fell, stocks rose, and the dollar weakened. Despite high valuations, the environment remains generally favorable for stocks. The economy continues to grow at a modest pace of about 2%, with evidence indicating growth will continue at about this pace. Expectations for much faster growth continue to wither. Click for INVESTMENT REPORT
Mast Report Week 7/07/17
Weekly reports provide a review of financial markets and recently released reports on the U.S. economy. Topics of current interest and importance are also discussed. This week's discussion looks at less accommodative monetary policies from the U.S. Federal Reserve and other major central banks and the implications for yields on longer maturity Treasuries and stocks. As for economic reports, employment rose strongly in June, but rates of change over longer periods continue to slow. This is likely to persist, as will modest growth in the U.S. economy. See the weekly report.Click for INVESTMENT REPORT
Mast Investment Strategy Report 6/30/17
Stock environment is mixed, positive earnings recovery mostly energy, moderate economic growth, buybacks and dividends great stock internals, but all these things decelerating. Stock valuations high, but justified by relatively low fixed-income expected returns. Good time to look at those low fixed income returns, spreads, credit, real returns, duration risks. See the strategy report.Click for INVESTMENT STRATEGY REPORT
Mast Report Week 6/30/17
Dollar weakness 2017 year to date is good for U.S. investors into international indexes. Notable style and sector rotations occurred in June. Trending now for 2.06% first- half real GDP growth, giving the 2% answer for everything related to markets and the economy. There is good news in real domestic private final sales. Longer term durable goods trending slowly higher. See the weekly report.Click for INVESTMENT REPORT
Mast Report Week 6/23/17
Major averages posted modest moves, some major sector moves up and down however. Ying and yang, growth/value continues. Term premium since 12/8/16 is now 84bps skinnier. Tech stock Q1 earnings gains sure support good price move, health sector not so much, but that sector Q2 earnings estimates very strong. Labor market conditions remain OK, but the degree of improvement is moderate after best such measurements since 1976. See the weekly report.Click for INVESTMENT REPORT
Mast Report Week 6/16/17
Fed Funds rate path estimated to 2019. Inflation not meeting expectations, therefore the reflation trade deflates along with treasury yields. Big news from Fed is framework for reduction of $4.5 trillion securities on their books, based on established caps down to about $3.2 trillion in three years. How and when will this effect yields? Along with reduced inflation expectations, all of the yield declines recently have come from decreased inflation expectations, not from the real yield. Other economic reports indicate continued moderate economic growth, but decelerating from previous periods. See the weekly report.Click for INVESTMENT REPORT
Mast Report Week 6/9/17
Fed meeting is this Wednesday for discovery of yield curve intentions, economic implications and the faux-growth world, fear of flatness and other growth indignities. Large Cap Growth got knocked off its pedestal last week as Large Cap Value caught a bid. Commodities surging on Chinese economic impulses. See the BLS JOLTS report for trending labor conditions. Atlanta Fed GDP NOW analysis marks down 2Q GDP prospects since May 31 report, see why that happened. Read our Mast Report for the past week.Click for INVESTMENT REPORT
Mast Report Week 6/2/17
What's up with that? Stocks and bonds both going up. Answer seems to be TIPs yield real return, implying lower economic growth while equities imply higher earnings growth, maintaining equity high valuation price. Record low unemployment but decelerating labor force growth. Durable goods spending boosted real personal consumption expenditures, helping Q2 GDP prospects with "NOW" estimate currently =3.4%. LMV (autos) 12 mos. unit sales peaked at 7.06% Feb. 2015, down to -1.04% May 2017. See these and other observations for the week ending June 2, 2017 in our report.Click for INVESTMENT REPORT
Mast Newsletter 6/2/17
Financial markets continue good momentum. What are positions of major financial asset indexes, what do market factors tell us the return expected? Migration to index investments shutting down traditional financial products: hedge funds, mutual funds and alternatives. "New" quant funds building up to potential group momentum disasters, nothing new there. Low interest rates leeching into all private and public financial transactions, much price distortion just below the surface of everything. Click for MONTHLY NEWSLETTER
Mast Investment Strategy 5/31/17
Heading into June, economic and business conditions are positive and reflected in the prices of financial assets. Fixed income term premium and credit spreads narrowing, recommending reduction of duration and credit risks. Good business and market conditions support higher equity prices, but lift them to lower than average expected returns, overvaluation and an average equity risk premium thanks to the low-growth and low-interest rate inspired long TIPS yield. Putting them together, the numbers talk.Click for INVESTMENT REPORT
Mast Report Week 5/26/17
Positive investor momentum continues, operating earnings up 21% QTR 1 2017 and same forecast QTR 2. Overvaluation results with expected long term real return down to 4%, taking us back to July 2001 in that model. Emerging markets continue to emerge while chasing Europe momentum starts to run out of steam. Large cap growth gets larger investor fan base, continues strong. Through QTR 1 2017 4 QTR average real GDP +1.73%, down from recent high +2.92% QTR 2 2015. See the weekly report on markets and economy here Click for INVESTMENT REPORT
Mast Report Week 5/19/17
Geo-political risks impacted financial asset trading last week: U.S. stocks flat, Brazil declines, Europe strong, large cap U.S. leading domestic equity component. Low volatility of U.S. stocks implies expectations of insignificant financial asset price changes, either up or down. GDP Now analysis indicates 4.1% Q2 GDP growth. Plant capacity utilization ranging 75-77% is not inspirational for business investment. Labor conditions remain tight, needed skills increasingly sparse, fewer immigrant workers cause reduced labor supply available. See the weekly report on markets and economy here Click for INVESTMENT REPORT
Mast Report Week 5/12/17
Much concern about low market volatility, perceived risk. This weekly report we look at standard deviation of monthly rates of return for S&P 500 Index as a good measurement, how it compares to popular metric VIX Index. Here is hint on the results: number 2 pops up again as significant. In this case, related to both standard deviation and equity risk premium. There is information here which tells us what the markets are saying about good expectations related to all the qualitative chatter, both political and economic. As for markets last week: continued emerging market and European strength, U.S. growth outperforms lately, yields flat, oil bouncing around, gold flat, some pick up in producer prices while CPI still tame. Click for INVESTMENT REPORT
Mast Report Earnings 5/10/17
Summary conclusions from Q1 2017 earnings results are 2.99% equity risk premium, lowest level since end-2007, requires, among some other conditions, continued earnings improvement, remaining substantially dependent on energy sector rebound, but also continued good growth from popular tech and health sectors. Since Q2 2016 earnings trough, trailing 4Q up 13.8% since then, still -2.4% below Q3 2014 peak. 50.3% of that increase resulted from energy sector. Not surprisingly, energy earnings rebound coincident with oil price performance. Of total year 2017 analysts earnings estimated increase expected proportion from energy sector 28%, tech sector 28%. At these equity valuation levels and risk premium, many things much continue to go as well as estimated, economic growth, earnings increases, dividends and buybacks. Your comments and questions encouraged, these earnings conditions are crucial for equity market price performance and behavior over the next nine months Click for INVESTMENT REPORT
Mast Report Week 5/5/17
U.S. growth remains moderate, Europe improving. Riskier assets attractive, absolutely expensive but relatively average. Small cap underperformed since 12/12/16, large cap growth most appealing. No Fed surprises, tightening labor market. Light truck sales remain strong against weak sedans. See week report for readers and subscribers here: Click for INVESTMENT REPORT
Mast Newsletter 5/1/17
Real GDP and interest rates 2% or 3%, it is a big deal for markets. See interesting string of analysis: monetary policy and velocity, demand and debt, and the winner is? There is a new member of the $1trillion club. Thanks for referring the letter to others who may benefit. This research is meant to serve readers and investors with context among asset classes, within financial asset markets and specific index and security strategies to adjust risk and expected returns. Click for MONTHLY NEWSLETTER
Mast Investment Strategy 4/28/17
Absolute expected equity returns are thin, but still competitive when compared with fixed-income alternative, ergo risk premium remains at average due to continued low TIPS yield as the long term risk-free alternative. Credit spreads are getting slim and keep duration risk at about 5.7 years, same as aggregate bond index duration. High yield risk is on, below average credit spread, not for risk averse portfolios. Click for INVESTMENT REPORT
Mast Report Week 4/28/17
Economic news from the past week featured. Moderate growth GDP and components thereof. Strong fixed investment picked up some slack. Savings remained OK with some consumer reticence. Low supply of existing homes decreases sales and boosts prices. Click for INVESTMENT REPORT