I'll be out of the office for the better part of the week, so I'll be brief and to the point.
The market continues to be incredibly resilient. The rebound off the March lows now stands at an impressive 28% for the DJIA.
The massive amount of liquidity being thrown at the economy seems to be working, but the next trick will be how the Fed is going to handle a $2 trillion budget deficit adding to an already $13 trillion dollar debt. If they don't pull a rabbit out of a hat, it's clear that we will have to deal with much higher interest rates and much higher inflation.
Higher interest rates and higher inflation down the road will eventually lead to another catastrophe in the housing market. While loans make payments much more affordable now, down the road higher interest rates will have the opposite effect.
Here are our Top 10 ETF's for the week of June 9th:
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
-Gold
-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
