Crisis Alpha 

June 11, 2024

If the wealth advice service were in the manufacturing industry, the portfolio would be akin to what we make. Sure, there are many value-added services in addition to the portfolio, but it’s the portfolio that has to succeed for the client to reach their long-term goals. So, the more we can think about portfolio construction, the better. 

One challenge is that while portfolio construction is often based on as long a historical time period as possible, things never remain static. Markets evolve and change over time, relationships change, and the available tools in the portfolio construction toolbox also change over time. One recent change that has been a challenge is the bond/stock correlation. After a couple of decades of very low or even negative correlations between these two core building blocks, correlations are back to being positive. 

The following chart shows the 2-year monthly correlation between Canadian equities and bonds. It looks rather similar for the U.S. and global markets, but we just thought some Canadian content would be nice. The higher correlation means that, more often, equities and bonds are moving in the same direction. Nobody complains when both are moving higher, like in the past 12 months, but when they move lower together, everyone starts getting grumpy, like in 2022. The 2nd line, beta, measures not just the direction of the two asset classes but the magnitude of the relative move. 

This chart goes back to the 1950s, and clearly, there have been many periods of positive equity/bond correlations. But the recent memory of 2000-2020 was a really sweet spot. Equity/bond correlations were low or negative, which enhanced the benefits of diversification between equities and bonds. Now, this diversification benefit is more muted. As a possible silver lining, given yields are higher now, the return assumption for bonds is higher. So perhaps a bit less useful as a volatility management tool and a bit more on the return side – a decent trade-off. 

This higher correlation has many portfolio construction practitioners looking for different sources of diversification. Of course, the proliferation of different tools has augmented this behaviour as well. Many have lower correlations, but we would caution this as the main driver of a decision. 

Why do we care about correlation? In 2022, you couldn’t go a day or two without seeing an article talking about the 60/40 being dead due to higher correlations between bonds and stocks. And yet, the correlation is higher today and much fewer articles. That’s because nobody cares when equities and bonds are moving higher in unison, only when moving lower together. So, maybe we need some additional measures to augment correlations. 

Here is a good lens. Using data back to the 1950s, we looked at the one-year returns for global equities and broke them down into return range buckets. Truthfully, who cares what their bonds are doing when stocks are up 20 or 30%? But we do care much more when stocks are down -20 or -30%. More impactful – bond returns were further split from periods with negative bond/equity correlations and those with a positive correlation (last two columns). 

No denying periods with a negative bond/equity correlation that bonds are a better stabilizer during down markets. Eyeballing it, one could argue twice as good. But even when positively correlated, bonds, on average, are a decent stabilizer. Of course, these are averages that can hide a lot of information. There were 103 instances in which global equities were down on a 1-year basis simultaneously when the bond/equity correlation was positive. Bonds were higher in 77% of those instances. That hit rate moves up to 86% if you include periods when bonds were down minimally (less than -2.5%). Bonds, not broken. 

Another useful lens is ‘Crisis Alpha.’ This is looking at an asset class or strategy’s performance during periods of stress in the market. Could be a short-term correction or a longer-term bear market. If you can add value during these periods, or at least stability, that has positive attributes for portfolio construction. 

The reason we expand and show all the different instances is because each has its ideal period of market weakness, and each has episodes in which the strategy falls short. For instance, market neutral typically does well but is completely wrecked during the credit crisis. Managed futures (often a momentum strategy) did really well in 2022 but not great in a number of other periods of market weakness. 

Based on this, one could make a case for managed futures, more market neutral, and a splash of gold to better diversify a portfolio. But don’t forget these are crisis periods, and there is a whole lot of time between crises. Global stocks suffer, yet over the past 20 years, they have compounded around +8%. That market neutral index has only grown at a 0.8% annualized pace over the past two decades. And the managed futures index is a bit better at 3.6%. Defence often comes at a cost. 

Investors should start to think differently about portfolio construction and diversification. We do believe correlations may remain elevated for some time (a future edition will tackle this), and looking to expand sources of diversification appears prudent. Call it diversifying your diversification. 

But don’t get too carried away. The simple fact is when correlations are higher, it is harder to reduce portfolio volatility. Something we may have to live with. If you go too far in trying to smooth out the ride, you may sacrifice long-term returns. Would be a bit of a pyrrhic victory to enjoy a vol of 5% if the end nest egg is smaller. 

Everything in moderation – bonds still work, and some defensive diversification is clearly warranted in a more positively correlated world. 

— Craig Basinger is the Chief Market Strategist at Purpose Investments 

Source: Charts are sourced to Bloomberg L.P. and Purpose Investments Inc. 

The contents of this publication were researched, written and produced by Purpose Investments Inc. and are used by Echelon Wealth Partners Inc. for information purposes only. 

This report is authored by Craig Basinger, Chief Market Strategist, Purpose Investments Inc. 

Disclaimers 

Echelon Wealth Partners Inc. 

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Echelon Wealth Partners Inc. or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them. 

Purpose Investments Inc. 

Purpose Investments Inc. is a registered securities entity. Commissions, trailing commissions, management fees and expenses all may be associated with investment funds. Please read the prospectus before investing. If the securities are purchased or sold on a stock exchange, you may pay more or receive less than the current net asset value. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. 

Forward Looking Statements 

Forward-looking statements are based on current expectations, estimates, forecasts and projections based on beliefs and assumptions made by author. These statements involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. Neither Purpose Investments nor Echelon Partners warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. These estimates and expectations involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements. Unless required by applicable law, it is not undertaken, and specifically disclaimed, that there is any intention or obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. 

Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. 

The particulars contained herein were obtained from sources which we believe are reliable, but are not guaranteed by us and may be incomplete. This is not an official publication or research report of either Echelon Partners or Purpose Investments, and this is not to be used as a solicitation in any jurisdiction. 

This document is not for public distribution, is for informational purposes only, and is not being delivered to you in the context of an offering of any securities, nor is it a recommendation or solicitation to buy, hold or sell any security.

This Ain’t That 

June 7, 2024

The US market is up a little over 10% this year, Canada +6%, Europe +10%, and Japan +15%, while bonds are down about -1%. Huh, that sure does look like asset allocation is working well again after the car crash of 2022. Even better news is that the market is moving higher thanks to good fundamental news, not simply because central bankers are jamming more money into the financial system. 

Recession risk has continued to fade, as evidenced by the survey of economists. For the UK, Canada, US, Eurozone, China & Japan, the average probability of a recession hit a high in late 2022 at about 60% and has fallen down to a mere 25% of late. The UK, which was as high as 90% and suffered two negative quarters of GDP growth, is now down to 30%, winning the most improved ribbon. Even Canada, which is clearly struggling with higher rates, has improved from over 60% to 30%. Most are clustered around the 30% zone. 

The data has improved, with both markets and economists celebrating. This is good news, and perhaps this better economic data will make its way into improving earnings expectations – that’s what counts more. There has been some minor uptick of late, so again, it is encouraging. In addition to this, inflation continues to cool, for the most part, so more central banks should start to walk rates back down in the quarters ahead. 

Add that all up – can we justify most equity markets sitting around fresh all-time highs? Or, even more importantly, can we expect more gains to come if this is the start of a new cycle? Fueling the optimistic view is the rising price of copper and other commodities. Copper carries an honorary PhD in economics because of its widespread use in manufacturing, often implying a rising price coincides with rising broader economic activity. And copper has been on a tear. 

New cycle? This ain’t that. We would agree with the group view from economists that recession risks are diminished compared with past quarters, but would temper enthusiasm or talk of a new cycle for a number of important factors. 

1) Delayed and variable confusing lags or policy 

Rate hikes have slowed down economic growth, but that relationship remains intact. But this drag has been muted thanks to accumulated savings during the mobility-reduced period following the pandemic. And from very aggressive fiscal spending just about everywhere in the world, led enthusiastically by the US. The concern is these buffers are starting to roll over or become depleted, which will temper growth going forward. 

2) Goods spending, then services spending, now what? 

As we highlighted last month, during the stay-at-home period, we all spent money on goods. This blew up supply chains and also supercharged economic growth in 2020-21. In 2022, we all pivoted, to a degree, back to more service spending on travel, eating out, experiences, etc. This made it appear as if a recession was coming since goods spending, manufacturing, and global trade slowed. But alas, it was just a tectonic shift in spending behaviour. Now, goods spending is recovering, but is this robust demand or is it just normalizing from the depressed levels of 2022? Time will tell on this one, but our base case is this is more normalization and not the start of a new cycle. 

Normalization is good news but not great news. And with accumulated savings largely depleted due to inflation and a desire to ‘live’ despite the costs, the longevity of this improved economic activity may not endure. Just look at the US consumer. We are not concerned about the level of credit card debt, given that societies are moving towards a cashless world. However, the delinquency rate is concerning, as is the same-store sales at restaurants, which are just a notch above fast food. 

Not denying decent employment and wage gains are positives, but it would appear inflation has taken a toll. And those accumulated savings appear to be largely depleted. This is not the behaviour one would expect during the start of robust economic growth; in fact, it is the behaviour often seen near the end of a cycle. 

1) And then there is what is priced in 

I won’t harp too much on valuations, as everyone kind of knows the deal. The S&P 500 at 21x forward earnings is on the high side, but this has been the case for some time. 15x for the TSX and International equities is not cheap either. The vast majority of market gains this year have come from multiple expansions. 

We are not overly negative and currently are carrying just a moderate underweight in equities. However, for this market to move higher, we would need to see continued improvement in global economic growth, which may be challenging. Or inflation to come down materially, alleviating the pressure higher yields elicit on the equity markets. Possible, but not our higher probability path. 

Given this we are comfortable with our moderately defensive stance. 

When it comes to dividend investing, interest rates play a rather large role in determining the relative winners and losers. Not only are dividend stocks sometimes viewed as bond proxies, company earnings can also be quite rate-sensitive. It is through this lens of rate sensitivity that reveals the full spectrum of dividend stocks. On one hand, you have the highly rate-sensitive industries such as Telcos, Utilities and Pipelines and on the other are industries that are much more cyclical. We’ve long used the term cyclical yield to define these companies whose earnings depend much more on the economic cycle compared with the much more defensive rate-sensitive stocks. 

Our scoring or ranking system uses a combination of an industry’s correlation to bond yields, sensitivity to bond yields (think like Beta, but instead of relative to the market, it’s relative to yields) and an out-of-sample score for periods over the past decade of rising yields. The chart to the right depicts the full spectrum of sectors/industries within the TSX. The top grouping, Cyclical Yield, are those that we would expect to hold up better in a rising yield environment. The bottom grouping, Interest Rate Sensitive, are those that we would expect to perform best in a falling yield environment. 

We’ve long had a tilt across our dividend mandates towards cyclical-yielding dividend payers. Given the chart below, the cyclical yield has handily outperformed the rate sensitives over the past few years. The outperformance typically comes when yields have been rising. Looking back in the 2010s, there were brief periods when cyclical yield outperformed, but overall rate sensitives did quite well with the tailwind of falling yields. That all changed in late 2020, and cyclical yield has really not looked back. 

Deciding when to switch or actively tilt between rate-sensitive vs more cyclical stocks boils down to a few key considerations. 

1. Economic Indicators – Cyclicals have thrived during periods of accelerating GDP growth. The resiliency of the US economy has surprised many, and the soft landing has benefited cyclicals. Rates remain stubbornly high, along with inflation. While the path to 2% inflation and how long it will take to get there remains one of the most important macro questions out there, interest rates remain near cycle peaks. Higher-for-longer should hurt cyclicals the longer rates remain restrictive.

2. Business Cycle Phases – The business cycle remains healthy and in expansion territory. Margins have remained historically healthy, and based on the latest earnings quarter, both sales and earnings growth remain strong. While the business cycle remains healthy from a 10,000 ft perspective, when digging into the specific sectors, we do see an interesting trend developing. The chart below aggregates total net income from continuing operations across for both cyclical yield and the rate sensitives. Cyclical earnings peaked back in 2022 and have been trending lower. Conversely, rate-sensitive net income bottomed in late 2022 and has begun to recover. Relative earnings growth favours the rate sensitives, which has been aiding the lower beta tilt seen in the market of late. 

    3. Market Sentiment – Risk appetite in the market remains strong, and investor sentiment remains decidedly bullish. The AI story continues to drive strong relative performance as investors remain guided by the urge not to miss out. While the relative performance this year has certainly benefited cyclicals over the past few months, rate-sensitive stocks have actually begun to do quite well. In May, the Utilities sector was the second-best performing sector in both Canada and the US Staples, too, have been solid relative winners. This could, in fact, be an early sign that investors are increasingly looking to diversify into lower beta names.   

    4. Fundamentals – Valuations can sometimes take the back seat to investment decisions, especially in a new ear investment environment. Investors would be wise to remember that excesses are never permanent, and past trends don’t have anything to do with future performance. From a traditional valuation standpoint, certain cyclical sectors (Energy) still appear somewhat cheap, as the average P/E across our cyclical industries is still just 15.3x, compared with 19x for the Canadian rate sensitives. For cyclical companies, a low P/E doesn’t necessarily mean a stock is cheap because the P/E ratio can be misleading. During boom times, earnings tend to be high, which can make the P/E ratio appear low. During downturns, earnings drop significantly, and the P/E goes parabolic or even nonexistent. Low P/Es across the cyclical space can reflect the peak of the business cycle. Rate sensitives might have a higher P/E, but they are also, on average, trading at a sizeable discount to their average valuations. Telecom and Utility sectors, in particular, are trading at nearly a 20% discount. Undervalued assets offer a margin of safety, reducing potential downside risk. 

      Bond yields have had an extended trend higher, and dividend strategies, especially those tilted more so towards interest rate-sensitive sectors, have had a difficult go. Being active managers, we’ve had a definite tilt towards cyclical yield, which has helped. Looking ahead, the future path of the rates trajectory certainly isn’t as clear as it was back in 2020/2021. The growing consensus believes rates have peaked, and with growth rates slowing, cyclical yield may not be the best place to be. The relative cheapness and recent earnings growth trends in favour of rate-sensitives also make this space more attractive. The recent rise in global interest rates approaching cycle highs, alongside a US market trading at a high valuation (21.4x forward earnings), presents a potential challenge for the stock market. However, this environment can also be viewed as an opportunity. By strategically adding investments with higher interest rate sensitivity and inherent defensiveness, investors can position their portfolios to benefit from falling rates in the same way as increasing duration in a fixed-income portfolio. 

      After many months of steady improvement, we have seen the Market Cycle signals take a small step lower over the month of May. Market Cycle indicators are comprised of over 40 indicators that have, in the past, proven to be a good forward-looking signal for the broader economy. 

      Among the 19 US economic signals, two slipped from bullish to bearish. The Citigroup Economic Surprise index turned negative, as the data has generally been coming in softer lately. And NAHB housing activity soured. Two signals also flipped to bearish among the global economic signals. Baltic Freight rates declined, but you could put a positive spin – this is just cooling off concerns about Red Sea travel. DRAM prices fell as well. Rates and Fundamental signals remained stable. 

      On a sobering note, you can see a score for ‘Better/Worse’ in each category, with either ‘+’ or ‘-’ next to each signal. This measures the direction in which the data has travelled over the past month. Is it getting better or worse? Compared with last month, rates got worse from 3/0 to 0/2. The US economy was stable from 7/12 to 6/13, more worsening than improving but roughly the same as last month. The global economy stayed at 3/5. Fundamentals, following the earnings season, have dropped from 10/2 to 4/8, which is not good as this is a material swing in momentum. 

      Overall, it just highlights some deterioration in direction, but that does change often. 

      The only change we have made from a strategic allocation perspective is increasing exposure to emerging markets. After being underweight emerging markets for many years, we are now back to neutral. This was predicated on an elevated valuation spread between emerging markets and developed markets. Plus, improving global trade and relative earnings growth. 

      Outside this change we remain moderately underweight equities, holding a bit more bonds and cash. Among equities, we are a bit underweight in US equities and overweight internationals. Bonds have us carrying a bit higher duration. 

      Maybe the summer months will see quiet markets, or maybe this lack of volatility across many asset classes is the calm before a storm. One thing is certain: gains have been good lately, and becoming or remaining defensive feels appropriate. The back half of this year certainly has more challenges than the first half. We are going to see a big US election. We will also likely see if this uptick in global growth is a bounce or the start of something sustainable. And maybe there will be a broader central bank pivot. 

      The only certainty is that this calm won’t last. 

      Source: Charts are sourced to Bloomberg L.P. and Purpose Investments Inc. 

      The contents of this publication were researched, written and produced by Purpose Investments Inc. and are used by Echelon Wealth Partners Inc. for information purposes only. 

      This report is authored by Craig Basinger, Greg Taylor and Derek Benedet Purpose Investments Inc. 

      Disclaimers 

      Echelon Wealth Partners Inc. 

      The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Echelon Wealth Partners Inc. or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them. 

      Purpose Investments Inc. 

      Purpose Investments Inc. is a registered securities entity. Commissions, trailing commissions, management fees and expenses all may be associated with investment funds. Please read the prospectus before investing. If the securities are purchased or sold on a stock exchange, you may pay more or receive less than the current net asset value. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. 

      Forward Looking Statements 

      Forward-looking statements are based on current expectations, estimates, forecasts and projections based on beliefs and assumptions made by author. These statements involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. Neither Purpose Investments nor Echelon Partners warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. These estimates and expectations involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements. Unless required by applicable law, it is not undertaken, and specifically disclaimed, that there is any intention or obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. 

      Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. 

      The particulars contained herein were obtained from sources which we believe are reliable, but are not guaranteed by us and may be incomplete. This is not an official publication or research report of either Echelon Partners or Purpose Investments, and this is not to be used as a solicitation in any jurisdiction. 

      This document is not for public distribution, is for informational purposes only, and is not being delivered to you in the context of an offering of any securities, nor is it a recommendation or solicitation to buy, hold or sell any security. 

      The Calm Before the Calm 

      May 28, 2024

      Should it be any surprise how calm markets have become? Global equities are up 9.2% year to date. Apart from a 2% decline in January and a 5% drop in April, the trend has been steadily up to the right on the chart. We can easily slap a financial narrative on this, such as improving economic growth globally, a decent Q1 earnings season, or maybe it’s just the AI frenzy. More than a third of the advances in global equities are attributed to Nvidia, Microsoft, Amazon, Meta, and Alphabet. Whatever the cause, equity volatility has been very calm so far in 2024. But it is more than this, as it isn’t just equities. 

      The volatility in the bond market has gone super low (2nd panel in chart). The MOVE index measures volatility in U.S. Treasury Bonds [actually at-the-money options on interest rate swaps, but let’s not go down that rabbit hole]. Even though bond yields moved higher this year, the 10-year started at 4%, gradually up to 4.75%, then back down to 4.5%; these moves pale in comparison to the last couple of years. In case you forgot, the same bond in 2022 went from 1.5% to 4.0% and in 2023, yields oscillated between 3.5 to 5.0%. Looking beyond Treasuries, credit spreads are back down to or close to historical lows. Investment Grade spreads in the U.S. are 50bps. Lows in past mini-credit cycles have been 40-60bps. 

      Then, finally, there are currencies. Again, volatility has been sitting near or at lows for the past number of years. After the rollercoaster currency rides in 2020-2022, a calmness has returned. The U.S. trade-weighted dollar index has been sitting in a channel between 100 and 107 for a year and a half. The Canadian dollar, too – 72-75 cents has been the range since the end of 2022. 

      Yawn. 

      Or consider this: the S&P 500 has not had a 2% down day in 316 trading sessions dating back to February 2023. Third longest streak this millennium. Given this, it is not too surprising the VIX, which measures the implied volatility of S&P index options, is sitting down at 12 ½. The VIX uses near-term options for its measurement of volatility; even more surprisingly, the six-month VIX is dormant. Over the next six months, we will have endured a U.S. election (if it ends as scheduled) and perhaps a pivot from the Fed on interest rates. Even 5-6% out-of-the-money puts for December are only pricing in 16% volatility. 

      Insurance is cheap. 

      There is likely some downward pressure on option volatilities due to the proliferation of option strategies, especially those that write options. But given volatility has become so calm across so many markets and asset classes, we can’t really blame those yield-hungry investors. 

      The question becomes, will this calmness persist? Maybe. There is no denying that, on average, markets tend to be relatively calm during the summer months (June through the end of August). All the traders/investors off in the Hamptons, Muskoka or wherever the Londoners go could make volumes lower and have fewer folks making big changes to their portfolios. Of course, averages can be very misleading and much variation can occur. With data back to 1970, the summer months are roughly flat on average for the S&P and the TSX. A seasonal chart for the VIX also shows this calmness as volatility falls in the summer months before moving materially higher in the often challenging September/October period. 

      Not surprising that markets are gently trending higher with limited volatility; investors have become rather calm as well. In the latest survey, 47% of folks are bullish (AAII survey). Meanwhile, 26% are bearish, and 27% are neutral or undecided. We would highlight that from a sentiment perspective, when this many folks are bullish, future returns tend to be a bit on the lower side. But we will also point out that sentiment is much more reliable at market bottoms than trying to call market tops. 

      Markets are certainly eerily calm across many different geographies and asset classes, like a Muskoka lake early in the morning. Maybe it is the calm before the storm or perhaps just the calm before the summer calm. There are certainly positives from an improving trend in the global economy; earnings continue to come in healthy, and inflation is cooling, albeit in a straight line. If the market can continue to ignore the campaign rhetoric leading to the U.S. election, that would be great and unprecedented. At some point, the banter will start impacting markets, but likely not in a positive way. The consumer is getting tired and weighed down by slowing labour gains and inflation, which continues to eat away at previously accumulated savings. 

      The only thing we are pretty sure of is that volatility will rise in the second half. 

      Let’s just hope for a calm summer. 

      — Craig Basinger is the Chief Market Strategist at Purpose Investments 

      Source: Charts are sourced to Bloomberg L.P. and Purpose Investments Inc. 

      The contents of this publication were researched, written and produced by Purpose Investments Inc. and are used by Echelon Wealth Partners Inc. for information purposes only. 

      This report is authored by Craig Basinger, Chief Market Strategist, Purpose Investments Inc. 

      Disclaimers 

      Echelon Wealth Partners Inc. 

      The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Echelon Wealth Partners Inc. or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them. 

      Purpose Investments Inc. 

      Purpose Investments Inc. is a registered securities entity. Commissions, trailing commissions, management fees and expenses all may be associated with investment funds. Please read the prospectus before investing. If the securities are purchased or sold on a stock exchange, you may pay more or receive less than the current net asset value. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.

      Forward Looking Statements 

      Forward-looking statements are based on current expectations, estimates, forecasts and projections based on beliefs and assumptions made by author. These statements involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. Neither Purpose Investments nor Echelon Partners warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. These estimates and expectations involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements. Unless required by applicable law, it is not undertaken, and specifically disclaimed, that there is any intention or obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. 

      Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. 

      The particulars contained herein were obtained from sources which we believe are reliable, but are not guaranteed by us and may be incomplete. This is not an official publication or research report of either Echelon Partners or Purpose Investments, and this is not to be used as a solicitation in any jurisdiction. 

      This document is not for public distribution, is for informational purposes only, and is not being delivered to you in the context of an offering of any securities, nor is it a recommendation or solicitation to buy, hold or sell any security.