About the author

Paul Nolte

Paul Nolte has been serving families’ financial needs for over 30 years. Before joining Kingsview in 2014 as a financial advisor and a member of the investment committee, Paul managed portfolios at a private wealth advisory firm. He also served as a Lead Portfolio Manager for Banc One and National City, helping set investment policies for portfolio managers firm wide.

With his strong interest in analytics, Paul devises a financial strategy that helps clients plan for the future – not only theirs, but also for their beneficiaries. He tailors his advice for each client by integrating their life goals and personal finances while also working with their attorneys and accountants to cover all their financial needs.

Paul has also served in various capacities on the boards of the Elmhurst YMCA, DuPage Easter Seals, Elmhurst Swim Team, Elmhurst Police Pension and Elmhurst Fire Pension. You can hear him regularly on WGN and WBBM Radio in Chicago as well as quoted in various business outlets nationwide.

– Illinois Wesleyan University, BA Business 1984
– DePaul Kellstadt Graduate School of Business, MBA Finance 1992
– Chartered Financial Analyst® designation awarded 1993
– Member, CFA® Society of Chicago

POSTS BY THE AUTHOR

SVP Paul Nolte Interviewed on TD Ameritrade Network

TD Ameritrade Network interviews Senior Vice President & Portfolio Manager, Paul Nolte, On The Gold Futures Rising As The Market Falls On Coronavirus Fears.

Watch the full morning segment here: TD Ameritrade Network

Nolte Notes 2.24.20

Yes, but on the other hand… so goes the analysis for stock investors. The coronavirus continues to grab headlines, especially when discussing earnings, economic growth or even estimates for the full year 2020. As a result, “safe haven” investments like the dollar, gold, and treasury bonds are all rallying. On the other hand, risk assets just hit all-time highs and stocks highlighting some of the hits to earnings also rose, like Deere, on expectations the virus impact will be short-term. The recent surge by Sen. Bernie Sanders worries Wall Street as a democratic socialist is seen as harmful to stocks. On the other hand, expectations are rising that Trump will have an easier time against Sanders, which Wall Street sees as bullish. Stocks like Tesla and Virgin Galactic have more than doubled already this year, with neither one showing a profit and still in cash-raising mode. On the other hand, utilities and REIT stocks are hitting all-time highs. Trying to make sense of the markets and economy today is enough to drive anyone crazy. On the other hand, some say it is crazy to be investing today.

The well above average reading from the Philadelphia Fed is feeding into expectations that the US manufacturing sector is improving. However, the IHS Markit flash index fell into contractionary territory, last seen in 2009. This week we’ll get national activity, housing, and confidence data, which all may be impacted by the recent news around the coronavirus. The uneven economic data creates an environment where depending upon one’s views, a bullish or bearish case can be made. Housing remains strong as low-interest rates and steady demand push prices higher. As mentioned above, manufacturing may be on the way back and employment remains very strong. The flipside is worries about the virus spreading, poor leading economic indicators and recent downgrades to earnings for the coming quarter. As a result, we would expect the markets to remain volatile as investors try to grasp the overall direction for the economy and the impact of the virus on earnings and global growth.

The beneficiary of the volatility in the equity markets continues to be bonds. Worries about a bond bubble and an inverted yield curve (where short-term rates are higher than long-term rates) are once again making the rounds. For those holding Treasury or high-quality bonds, they should see the return of their principal upon maturity, no matter the direction of interest rates. However, investments in lower-quality bonds, long-term bond mutual funds and various derivations of “bond-like” investments may have a harder time providing comfort when investors run to the safety of bonds if equities remain volatile. The inversion of the yield curve is a function of investors running into the safety of treasury bonds, especially long-term, pushing the yields below those on short- term treasuries.

For all the handwringing about the decline last week, stocks remain within a whisper of all-time highs. Many industry sectors are above long-term average prices, as do many of the broader stock averages. To be sure, stocks would need to fall about 10% to begin to threaten those long-term averages. The most vulnerable parts of the markets remain those that have risen the most over the past year, which are the odd couple of technology and utilities. Technology stocks have, so far, been immune to the virus news as they are viewed as safe places to get both earnings and revenue growth no matter the economic backdrop. Utilities have benefitted from the declining interest rate environment. As investors seek income in a world near zero, they have piled into the “safe” sector pushing up returns to close to that of tech stocks. It is not likely that both are correct. If rates fall, economic growth will be difficult to achieve, crimping the valuations and prices of technology names. On the other hand, if technology investors are correct, economic growth should be sustainable enough to allow interest rates to slowly rise, hurting the returns on utility names.

The markets are likely to be beholden to the virus news and impacts on global growth. If reports show spreading of the virus around the globe and not contained within China, expect stocks to fall in the weeks ahead. Bond investors should be the recipient of the “bad” virus news, as long as the bond quality remains high.

The opinions expressed in the Investment Newsletter are those of the author and are based upon information that is believed to be accurate and reliable but are opinions and do not constitute a guarantee of present or future financial market conditions.

SVP Paul Nolte Interviewed on TD Ameritrade Network

TD Ameritrade Network interviews Senior Vice President & Portfolio Manager, Paul Nolte, On Gold Hitting A 7 Year High.

Watch the full morning segment here: TD Ameritrade Network

SVP Paul Nolte Interviewed on TD Ameritrade Network

TD Ameritrade Network interviews Senior Vice President & Portfolio Manager, Paul Nolte, On How Retail Sales Impacts Bonds, Gold And U.S. Dollar

Watch the full morning segment here: TD Ameritrade Network

SVP Paul Nolte Interviewed on Bloomberg

Watch the full interview here.

SVP Paul Nolte Interviewed on TD Ameritrade Network

TD Ameritrade Network interviews Senior Vice President & Portfolio Manager, Paul Nolte, On Crude Oil Prices.

Watch the full morning segment here: TD Ameritrade Network

SVP Paul Nolte Quoted In Tech Central

Read the full article here: Tech Central

SVP Paul Nolte Quoted In Bloomberg

Read the full article here: Bloomberg

Nolte Notes 2.10.20

“Go away kid, you bother me”, delivered as only WC Fields could do, could also be used for the market’s reaction to the coronavirus news after two weeks. Once the Chinese markets opened after their Lunar celebration, the Chinese central bank injected $174 billion into their financial system. The global markets cheered by rising last week, with the US markets tacking on 3% from the prior Friday’s close. What changed? Sure, the economic data in the US was a bit better, with employment still at generational lows. The manufacturing and service indices improved from December’s levels. However, little truly changed over the course of a week the spurred the markets significantly higher, outside of the injection of money into the Chinese financial system. That money is now flowing around the world. The argument is not that the markets should be trading higher or lower, but the solution to every problem, whether the virus, modestly slower economic growth or low inflation, is to open the monetary flood gates. The only inflation that we are seeing is in the financial markets as they once again reach record highs. We’ll get a read on consumer inflation this coming week. Judging by the data from the employment report, inflation should remain modest. The impact of the slowing of the Chinese economy will likely be felt around the world through at least the summer months.

Leading the chargeback to all-time highs was once again the technology sector. Interesting in that technology companies rely upon China for components and is a huge end market for products and services. Slowing growth there is likely to impact technology companies when they report second and third quarter figures later this year. Outside of the SP500, the picture is a bit bleaker, but that could change if the markets continue to move higher. The net number of stocks rising vs. falling in both the tech-heavy Nasdaq and small-cap stocks. Until that gets resolved, which could happen with further advances, a warning flag is flying that the “recovery” rally is narrow in scope. The rally has been focused on the very large US stocks at the expense of many of the smaller companies. We have said the market was due for a breather, but a two-week decline that gets erased by the end of the third week hardly qualifies. Earnings have generally been coming in above expectations, but companies have been warning about lackluster growth going forward due to the virus outbreak and lingering issues around trade.

Checking out the futures markets for the Fed funds is a good way to guess what investors are expecting from the Fed later this year. Although they have said they are likely to be on the sidelines for much of the year, the futures markets are saying, with 80% certainty, that they will drop rates as much as twice before the end of the year. Our bond model tends to agree that the path of least resistance for interest rates is indeed lower. What makes this interesting is that the economy continues to generate jobs, and the rate of economic growth remains in the 2% range. Not tremendous, but in line with the past 10 years. Fed Chair Powell did refer to the possible impact of the virus and that central banks could react to an economic slowing. Monetary conditions remain very easy today, by a variety of measures. The yield curve is once again flattening, which could be a sign too that growth is already slowing. There will be lots to watch in the weeks ahead.

Not much has changed in the SP500 sectors, with technology leading the charge and the rest falling in line behind. One notable group that we have highlighted in the past is energy, which continues to struggle as oil prices have fallen from just over $60/bbl to $50/bbl. That decline has put pressure on many companies that have relied upon their ability to borrow in the public market, to keep the lights on. We saw a similar picture late in 2015, when energy prices dropped and the financial markets declined, worried about bankruptcies in the sector. The energy companies are also big players in the high yield bond market and could impact investors searching for yield in these markets.

Our optimism over the coming year is getting tempered a bit by the issues around the coronavirus. Economic growth will slow and the impact upon earnings is, today, unknown. This may be a period where bonds once again shine relative to stocks.

The opinions expressed in the Investment Newsletter are those of the author and are based upon information that is believed to be accurate and reliable but are opinions and do not constitute a guarantee of present or future financial market conditions.

SVP Paul Nolte Interviewed on TD Ameritrade Network

TD Ameritrade Network interviews Senior Vice President & Portfolio Manager, Paul Nolte, On The Employment Situation In The Morning Segment & On What Is Moving The Gold Market In The Afternoon Segment.

Watch the full morning segment here: TD Ameritrade Network

Watch the full afternoon segment here: TD Ameritrade Network

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