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Week In Review – February 19, 2012

|Includes: EEM, EFA, IWM, SPDR S&P 500 Trust ETF (SPY)

"Resolutions are popular because everyone feels they could use a little improvement." -Marilu Henner

While markets worldwide continue to wait for a definitive resolution to Greece, risk assets remained resilient last week. Credit spreads continued to narrow, Greek stocks moved higher, and more monetary stimulus was enacted by key central banks. The Bank of Japan expanded its own version of Quantitative Easing (QE) by an additional 10 trillion yen, and for the first time explicitly stated it wants to target 1% inflation. As I have stressed in my writings, the importance of inflation targeting can not be understated in terms of forcing investors to take risk. I spoke about this extensively on Bloomberg Radio Friday in a segment which can be heard at

The global wave of liquidity is causing traders and investors to be more comfortable with the "reflation"/rising inflation expectations theme I keep stressing, with U.S. Treasury yields rising gradually. In many ways, because one central bank acts to ease credit, others soon follow. Following the Bank of Japan's actions, the People's Bank of China (PBOC) cut big banks' reserve ratio to jump start lending domestically. Other emerging economies seem to be in their own interest rate easing cycle which is still relatively early on.

We are in a situation now which favors the idea that the risk is not taking the risk. Central banks around the globe are essentially telling money that in order to keep up with the rising price of goods, you'll need to get out of bonds. I addressed this in a NASDAQ Live interview at around the 10 minute 30 second mark. It was a lengthy interview which covered many topics that I think people should begin to think about independent of whether you agree with the analysis or not.

We remain positive on markets, as our ATAC (Accelerated Time And Capital) models continue to keep us in "risk-on" mode with some changes to the underlying holdings of the portfolios we manage. I suspect there is a lot of money on the sidelines that is itching to position into markets the moment Greece is "officially" resolved, with next week likely when a resolution will come to pass. The Winter Resolution idea I came up with in late December following the Summer Crash and Fall Melt-Up writings was meant to be more a description of the environment we would be entering, characterized by low correlations and volatility, coinciding with a trend which I noted after the first week of January would likely be up. It turns out the Winter Resolution may indeed bring with it a resolution to Europe itself.

We are nearing the end of our GIPS (Global Investment Performance Standards) verification and are optimistic about our ability to update our performance data on our homepage in early March. Suffice it to say that consistent with my writings, we correctly positioned into equities for this surge higher for our clients across our Conservative, Moderate, and Aggressive Composites. I encourage you to contact us if interested in learning about how our buy and rotate investment models work. We take pride in not only being transparent and honest in our analysis, but also in the performance of the accounts we manage.

As always, I want to personally thank you on behalf of the entire Pension Partners team for tracking us and inquiring about our investment management services. My objective is to not only brand build and get our names out there, but also to offer prospective investors with a true alternative to buy and hold investing and to the type of services more traditional investment firms offer. We believe the best if yet to come for us and for our clients.

Michael A. Gayed, CFA
Chief Investment Strategist
Pension Partners, LLC
Twitter: @pensionpartners

Advantages of Pension Partners, LLC Managing Your Portfolio:

1) ATAC - strategy designed to buy and rotate, not buy and hold

2) Performance comparable to hedge funds without being one and with lower fees

3) Liquidity and transparency through the use of ETFs

4) Ease and security of using Fidelity

Summary of Writings Published Last Week:
The Lead-Lag Report: Resilience Remains for Bulls Despite Europe -

Massive Bull Market…Japan -

Europe Foreshadowing a Rally -

The Fed Wants to Be Wrong -

Central Banks: The Risk is Not Taking the Risk -

Watch the Yen, Ben -

Can Bank of England Turn U.K. Equities Into Leaders Again? -

Forget Homebuilders: China's Real Estate Return -

This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Pension Partners, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Pension Partners, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.