Eric Zizich:
It’s now time for four year money. We’re joined by David Nelson, CEO of NelsonCorp wealth management. Welcome back, David.

David Nelson:
Thank you. Appreciate it.

Eric Zizich:
Well, strong start for the stock market to the year.

David Nelson:
Sure.

Eric Zizich:
Then things have kind of struggled a little bit. So how does the risk landscape look?

David Nelson:
So risks, there’s three major risks that we reference as far as on a regular basis and today I brought along a slide to kind of walk us through visually as for as to see. The big daddy’s on the top here. I’m going to start on the easier ones as far as on the bottom. So this is looking at a year as far as the volatility, as far as the market and normal times, you’re going to be in the neighborhood of 15 give or take. We started the year very elevated. We’re at 25 settled down for a while. Then we had a spike here.

David Nelson:
This is the trade war as far as popping up and now we look at as far as the end of the year, it popped up again. But overall it’s been a very, very docile market. We’ve gone months as far as without a 1% move, as far as up or down. That’s changing as far as as we speak. Now, the second one here, we see the trend line is down. This is looking at, it’s called the index. This is as far as leading index is trying to tell us as far as where the market’s going to go and we’ve had 11 straight months as far as where it’s dipped. We’ve got a little uptick as far as some good news here as far as towards the end of the year, and the beginning of this year. So that’s terrific. And then the big daddy of them all is looking at what we talk about the inversion.

David Nelson:
We brought this up on three different occasions, but the inversion took place in May. And the inversion is where short-term interest rates go above long-term interest rates. Generally speaking, that’s a very bad sign as far as a recession on the way. Not immediately, but 12 to 16 months down the road. We got out of that, interest rates turned back. We were fairly stable here. Now over the last week or so, we’ve seen it again as far as the inversion taking place again. This is not what we want to see as far as stock markets are concerned.

Eric Zizich:
Not at all. So compared to last year, would you say things are looking positive?

David Nelson:
So overall things are looking up a little bit. We have a little recap as far as just the Slide Two here that we’ll kind of show and what we’ve tried to do is the inversion is pretty much the same. We’ve got the leading indicators that’s improved slightly and then we look at volatility up until last week. This has been a really nice improvement as far as what’s taken place here. So, overall, if we had to say improved, gone down, we would say it’s ticked up a little bit, which is good news. But probably not enough based on what’s happening over the last week or two.

Eric Zizich:
So some good and bad news there.

David Nelson:
Yes.

Eric Zizich:
So David, are there any themes that viewers can take away?

David Nelson:
Yeah, I would say the biggest thing is to stay focused on the risks that exist out there. The CEO index, which is a really important proxy as far as the market has been pretty negative now for a while. Generally speaking, that that is saying that the profits down the road aren’t going to be as far as where we want them to be and it’s generally a pretty good indicator, and that one has been pretty soft for quite some time. So be careful now’s not the time to be a hero.

Eric Zizich:
Definitely. And giving us a landscape of what to expect in 2020 David, thanks for joining.

David Nelson:
Thank you, Eric. Appreciate it.

Eric Zizich:
And you can find our conversation on OurQuadCities.com.