Market Outlook | June 10, 2019...MARKET SENTIMENT. 3 EconomicActivity ... ISM PMI dropped to 52.10,...

Market Outlook | June 10, 2019

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Expansionary or Restrictive?

FEDERAL RESERVE ACTIVITY Is the economy growing or

shrinking?

ECONOMIC ACTIVITY

How expensive are assets? Where do

they stand relative to historical

prices?

VALUATIONSAre asset classes in positive or negative

trends? How are asset classes trending

relative to each other?

MARKET SENTIMENT

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Economic Activity● The ECRI Weekly Leading index dropped 1.1 this week and is down -1.26% year over year.● ISM Manufacturing dropped to 52.1 from 52.8 previously.● ISM Non-manufacturing picked up to 56.9 from 55.5.● Non-farm payrolls grew by only 75k from 224k in the previous month.

Equity Markets● Broad markets had a good week. The Dow was the leader, gaining 4.85% (DIA).● The VIX closed the week down -12.83% at 16.30.● We mentioned a sellable bounce could materialize. We are in that bounce. Markets are no longer oversold.

Factors● High Beta and momentum were the top performing factors last week, up 5.13% and 5.11% respectively. Dividend growth was also up

4.98%, showing strong relative strength.Sectors● Materials gained over 9% last week. Semiconductors had a good week as well, finishing up 5.98%.

Intermarket● Lumber gained 0.68% against Gold last week.● Copper declined -3.06% against Gold last week.● High Yield bonds (JNK) gained 1.72% against Treasuries (TLT).● Stocks gained against bonds and gold last week (VT:IEF = 3.23%) (VT:GLD = 1.07%).

Fixed Income, Commodities, Currencies● The 10 year yield was down 5 basis points to 2.09%● Precious metals were up 2.73% for the week.● Industrial metals were down -1.32%.● Emerging market bonds rallied 1.88% (EMB).● The Euro gained 1.50% against the dollar and 1.21% against the Yen.

© 2019 WealthShield LLC. All Rights Reserved. This is provided for informational purposes only and should not be considered a recommendation to buy or sell a particular security. Past performance is no guarantee of future returns. Please see attached disclosures.

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Chart of the Week: ISM PMI dropped to 52.10, continuing the down trend that began in mid 2018. Growth has continued to slow in the US since peaking in the third quarter of 2018.


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Chart 2: US ISM Non-Manufacturing picked up to 56.90 this month. The trend is still down, indicative of the larger growth slowing trend in the US economy.


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Chart 3: Non-farm payrolls grew by only 75k last month. Year over year growth slipped to 1.6%.


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Chart 4: The ECRI Weekly Leading Index fell last week. The year over year growth rate of the four week average of the WLI is now -2.06%.


8

Chart 5: The Dow Jones Industrial was the top performing stock market last week, gaining 4.85% on the week. The weakest market was emerging markets, gaining 1.15%.


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Chart 6: Materials were the top performing sector on the week, gaining 9.06% on the week. Communication services was the worst performing sector, up 1.02%.


10

Chart 7: High Beta was the strongest factor for the week, gaining 5.13%. Momentum followed, gaining 5.11% for the week. The weakest factor was the small cap factor, which gained 3.46%.


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Chart 8: Emerging market bonds and high yield were the top performing bond market segments, gaining 1.88% and 1.86% respectively. The weakest performing segment was long-term Treasuries, which gained 0.14% for the week.


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Chart 9: The CRB index finished the week down-0.54%. Industrial metals and agricultural commodities were the laggards, while precious metals were the leaders. Lumber also gained over 3% on the week.


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Chart 10: The Euro was stronger against the dollar last week by 1.46% and stronger against the Yen by 1.29%. The dollar weakened over -1.20% on expectations of several rate cuts to occur over the next 12 months. Bitcoin dropped -4.79% on the week.


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Chart 11: The Dow Jones Industrial Average (DIA) rallied almost 5% last week. It remains in a positive trend. Transports remain weak though and are not confirming.


15

Chart 12: High Beta (SPHB) bounced 1.15% against low volatility (SPLV) last week. Support is holding for now. Continued leadership from SPHB could result in further upside for the broad markets.


16

Chart 13: Momentum (MTUM) gained another 5.11% last week and is near all time highs. After lagging for the better part of 2019, the momentum factor is close to breaking out.


17

Chart 14: Materials rallied 9% last week (XLB). This was a monster move, right as this particular sector was approaching a reversal in trend. It remains in a positive trend.


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Chart 15: During an otherwise bullish week, small caps continued to drop against large caps, shedding almost -1%. Something doesn’t look right.


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Chart 16: Copper dropped over -3% against Gold last week and is at the bottom of the support range. A continued drop would signal upside momentum in volatility.


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Chart 17: High Yield spreads compressed on the week, but still remain above the lows set last year. A breakdown would signal further upside in risk assets, a breakout to the upside would signal a risk off move.


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Chart 18: Lumber finally stopped the bleeding, bouncing over 3% last week.


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Chart 19: Gold is close to breaking out above tough resistance at the $1350/oz level. Gold gained close to 3% last week as the dollar weakened.


23

Chart 20: Short-term breadth improved significantly last week. However, measures of long-term internal strength failed to reverse. Improving market internals are needed to confirm that the recent market action has staying power.


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Confirming Evidence of a continued rally:

● US stocks are in a positive trend relative to Gold (intermediate).

● Stocks staged an impressive rally and broad markets are back above

key moving averages.

● Short-term market internals improved last week.

● High Beta led all factors last week.

● High Yield spreads compressed.

Non-Confirming evidence of a continued rally:

● The ECRI weekly leading index is down year over year.

● Copper continued to break down.

● Small caps continued to deteriorate against large caps

● Precious metals led all commodity segments.

● Long-term market internal measures remain weak.

● Stocks (All World w/ US) are back in a negative trend.

Underweights:

Credit, Growth, Cyclicals, Small Caps, Developed markets,

Overweights:

Treasuries, Low Volatility, Utilities, REITS, Technology, Consumer

Staples, Dividend Growth, High Quality, EM


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Past performance is no guarantee of future returns. This is WealthShield’s current assessment of the market and may be changed without

notice. The visuals shown are for illustrative purposes only and do not guarantee success or certain level of performance. This material

contains projections, forecasts, estimates, beliefs and similar information (“forward looking information”). Forward looking information is

subject to inherent uncertainties and qualifications and is based on numerous assumptions, in each case whether or not identified herein.

This information may be taken, in part, from external sources. We believe these external sources to be reliable, but no warranty is made as

to accuracy. This material is not financial advice or an offer to sell any product. There is no guarantee of the future performance of any

WealthShield portfolio. The investment strategies discussed may not be suitable for all investors. Before investing, consider your

investment objectives and WealthShield's charges and expenses. All investment strategies have the potential for profit or loss.

Benchmarks: The index / indices used by WealthShield have not been selected to represent an appropriate benchmark to compare an

investor’s performance, but rather are disclosed for informational purposes. Detailed information regarding the indices is available upon

request. The volatility of the indices may be materially different than that of the portfolio.

WealthShield is a registered investment adviser. Registration does not imply a certain level of skill or training. More information about

WealthShield including its advisory services and fee schedule can be found in Form ADV Part 2 which is available upon request.

DISCLOSURE


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Market Outlook | June 10, 2019...MARKET SENTIMENT. 3 EconomicActivity ... ISM PMI dropped to 52.10,...

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