We need to exercise some caution when Wall Street and the financial media begin using new terms to describe the economy and the stock market.
A few years ago the buzz word for the economy was "Goldilocks", and now it is "Green Shoots".
I am optimistic that the economy has averted a depression like disaster, but a slower growth recovery may be in the cards until job news starts to look a little better.
The truth of the matter is the stock market has rebounded from depressionary levels- or at least close to it. The recent rally seems to be an adjustment into a recessionary environment instead of something much worse.
The stock market usually begins to recover about six months before the unemployment rate peaks.
The big worry is (and there always is one) of course is the U.S. dollar, and the impact a falling dollar will have on longer term interest rates. Foreign nations such as China and Russia said they would consider shifting assets to other safe havens like International Monetary Fund bonds.
The more worthless the U.S. currency becomes, more investors will become interested in valuable assets such as commodities, energy, and agriculture.
Here are our Top 10 ETF's for the week of June 16th:
1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) IYF: iShares Dow Jones US Financial Sector
6) DDM: Ultra Dow 30 Proshares ETF
7) PGJ: PS Golden Dragon China Fund
8) SSO: ProShares Ultra S&P500 Trust
9) CASH
10) CASH
Here are our Top 10 Fidelity Sector Funds for June 2009
1) FSPTX: Technology Portfolio
2) FSRBX: Banking
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSCPX: Consumer Discretionary
6) FSCSX: Computers & Software
7) FSCHX: Chemicals
8) FNARX: Natural Resources
9) FSENX: Energy
10) CASH
For the Week:
-Retail sales rose 0.5% last month. Core retail sales, excluding autos, gas and food rose only 0.1%. In May, gas sales rose 3.6% on higher gasoline prices adding 0.3% to total sales.
-Walmart announced last week that it will no longer be reporting same-store sales every month.
-Jobless claims came in at a less than expected 601,000 versus the 625,000 economists were expecting. Now that GM and Chrysler are officially bankrupt, I would expect the auto dealership shutdowns to add to the jobless numbers in the months ahead.
-Gold
Gold gave back -$15.50/oz to close at 939.20.
Inflation threats lifted the CRB Index again last week.
Crude Oil price soared +$4.31/bbl this week to close at 72.75.
-The U.S. Dollar
We scaled back our exposure to the equity market last week. We will continue to reduce exposure as the markets reach our target of 950-1050 on the S&P 500.
The Fed in its April minutes basically gave us a major warning shot across the bow. They said that they don't believe a meaningful recovery is underway, and were skeptical of the sudden stabilization that many are calling for. In short, the Fed is still projecting a deeper recession and a sluggish recovery.
Is anybody listening?
Our current asset allocation is as follows;
85% Equities: (Normally 95%) Aggressive
72% Equities: (Normally 80%) Moderately Aggressive
56% Equities: (Normally 60%) Moderate
36% Equities: (Normally 40%) Moderately Conservative
18% Equities: (Normally 20%) Conservative
