That Was The Week That Was-2nd Week June

 

  Good News First! Markets Sprang Wednesday Across the Board in a Broad Based Rally With 3 Stocks Advancing for Every 1 Declining. Markets opened remarkably higher and stayed that way. Closing the DJIA + 235 with all 10 sectors in the S&P 500 Index up. Eight were up more than 1%! The reason is some sectors have already been oversold, especially in the tech sector.The rally continued into commodities. Utilities and REITs, hit by higher interest, rallied as well. CNBC.COM 6/10/2015

3 Bucket Retirement Income

The above illustrates a common 3 bucket retirement income strategy with one major flaw. The fixed income bucket is poised to leak as the Fed raises rates. Even a nominal rate hike will cause the fixed income sector to contract. Investors can reduce this risk by increasing the guaranteed or cash bucket to one-two years income and the balance in a diversified portfolio of dividend paying common stocks, mutual funds and ETFs. Financial Planners and insurance agents extoll the virtues of the 3 and even 4 bucket income strategy using fixed income for the second bucket and more adventurous investments in oil-gas, timber and commodities for the fourth bucket. Question on your ‘retirement income bucket asset allocation or to design a retirement income plan call me.586 295 0430.

 

STRONG MAY JOBS REPORT EASES CONCERNS ABOUT WINTER DIP.

The NY Times reported June 6th that employers added 280,000 jobs in May. The stronger than anticipated jobs report will also lead the Federal Reserve to begin raising rates. Carl Tannenbaum, chief economist at Northern Trust, said that this was confirmation that the economy is performing well and the first quarter was an aberration.

 

Last Week the following chart illustrated how investors are rotating assets. WSJ 6/6/2015

Market Taper Tantrums May Persist as Economic News Gets Better & Fed Gets Closer to a Rate Hike. Perhaps the market thinks ‘Volcker’ when a Rate Hike is discussed. This Fed may not be that aggressive.

 

DOW THEORY PROPONENTS SAY STOCK MARKET TOOL IS SIGNALING A CORRECTION IS COMING.

 CHART WALL STREET JOURNAL JUNE 7 2015,

Dow Theory states that any lasting upside in the Dow Jones Industrials must be accompanied by the same upside in the Dow Jones Transports. The DJT are down 6.9% ytd while DJIA is +0.2%.

IGNORE THE NOISE!

Both Bogle and Buffett tell investors to ignore all the noise of a market collapse by dread-mongers. Investments go up and go down, and the goal is to find a balance that produces a steady, compounding return which minimizes the impact of a poorly timed emotional reaction.  MARKETWATCH.COM 6/8/2015 PHOTO BY GETTY

Robert C. Doll, CFA Nuveen Asset Management.

• U.S. and Global economic growth should improve later this year.
• Rising bond yields and interest rate increases may cause more equity market volatility.
• The long-term outlook is brighter, and we think (Doll) investors should retain ‘overweight’ positions in equities. June 8, 2015 Volume 3.23 Weekly Investment Commentary.

Expect ‘Kick The Can’ as a Solution to The Greece Problem. CNBC DISCUSSION 6/9/2015.

Greek bailout talks remain at an impasse, reported IBD, June 10th.  Frustration is running high with Greek PM Tsipras. Damage to the Greek economy is worse than it could have been if the deal was made back in February. The Syriza, left wing political party Tsipras heads, is called incompetent and created needless more economic damage to Greece than it needed to. Jacob Kirkegaard of the Peterson Institute for International Economics, said, It’s not even clear if the extension idea will be accepted.’ 

Now CNBC is saying what I said last week- It’s a sideways market- or it could be- as the market sorts out whether a batch of economic date means the economy is improving enough for the Fed to hike interest rates.Julian Emanuel, equities and derivatives strategist at UBS said,’ …trading sideways is a continuation…we think it resolves itself higher but there’s too much uncertainty here how to move higher,,,it may take multiple weeks of continued churn.’ CNBC.COM 6/9/2015

or Not as Wednesday’s rally may have finally broke open the flood gates.

Retail Sales Jumped in May, Brightening Growth Outlook!  The Commerce Department reported that retail sales surged in May with purchases of cars and other goods. Consumer spending, economists say, is likely to remain fairly strong in the coming months, supported by higher savings, rising home prices and a tightening labor market. Stocks closed mildly higher with the Dow closing +38.97 and the Naz unchanged. Reuters 6/11/2015 and CNBC.COM 6/11/2015

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

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