"Do not go where the path may lead; go instead where there is no path and leave a trail." - Ralph Waldo Emerson
Markets fell modestly last week in the U.S. as emerging economies came into focus. As I've mentioned in prior writings, now that Greece has defaulted and Credit Default Swaps were settled successfully, it's time to focus on the next potential negative and scare which is a slowdown in China. Lower demand for commodities and talk of an impending "hard landing" in the world's second largest economy is now the next major focal point and excuse for investors to not believe in stocks and the run-up experienced so far this year.
Ed Dempsey and I have continued to stress the reflation story in our writings and interviews, and a China slowdown only furthers the argument. China has tremendous room to stimulate should its economic growth weaken significantly, which only means more liquidity getting pushed into the financial system. While near-term concern is growing, what is being missed is fiscal and monetary action still to come.
We have now officially entered the Spring, allowing us to discuss our next major "call" on broader markets following the Summer Crash, Fall Melt-Up, and Winter Resolution. You can read about the "Spring Switch" idea in the writings linked to at the end of this Week in Review. Alternatively, you can watch Ed Dempsey's video update on the idea on our YouTube channel at www.youtube.com/pensionpartners. I also was interviewed on CNBC last week discussing the idea in a segment which can be seen at http://video.cnbc.com/gallery/?video=3000079924. I ask you to consider if the Spring Switch is happening in your own thinking in terms of how one perceives stocks. After all, despite the long awaited Greece default, the Dow hovers around 13,000, S&P 500 around 1,400, NASDAQ around 3,000, Nikkei above 10,000, etc. The fear everyone had over Greece has led us to being close to new all-time highs for the Dow.
In terms of our ATAC (Accelerated Time And Capital) models we run in the management of our client accounts, we remain in "risk-on" mode in equities, with some rotation last week into higher beta areas of the market. Market internals still point towards a favorable environment for stocks. The difference is that Emerging Markets could be in their own mini-correction currently as the U.S. appears to be decoupling while demand for assets rises domestically. This actually is exciting since it means that there is a lot of room at some point this year for Emerging Markets to substantially outperform the U.S., which our models should help us determine the timing of.
We continue to remain optimistic about the future, and continue to show in our writings and interviews how we think and why the way we approach investing is different than anything else on Wall Street. Reach out to us if interested in learning more about our portfolio management services - using our buy and rotate approach we can provide you with a different type of methodology for putting money to work in today's buy and rotate environment.
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: Financials Hurt Correction Odds - http://www.minyanville.com/business-news/markets/articles/XLF-JNK-TIP-EFA-UUP-VWO/3/20/2012/id/39983
Stock Market Trends: From Winter Resolution to Spring Switch - http://www.minyanville.com/business-news/markets/articles/markets-financials-Fall-Melt-Up-Utilities/3/21/2012/id/40014
Time for an Energy Comeback During Spring Switch -
Is the Homebuilders Bottom for Real? - http://www.marketwatch.com/story/is-the-homebuilders-bottom-for-real-2012-03-19
The Spring Switch Begins - http://www.marketwatch.com/story/the-spring-switch-begins-2012-03-21
Rising Interest Rates and the Spring Switch - http://www.marketwatch.com/story/rising-interest-rates-and-the-spring-switch-2012-03-23
Revisiting the Winter Resolution - seekingalpha.com/article/442171-revisiti...
Here Comes Spring from Behind? - seekingalpha.com/article/445501-here-com...
The Spring Switch of 2012, Or the Great Re-Allocation - seekingalpha.com/article/449051-the-spri...
Lumber and the Spring Switch of 2012 - seekingalpha.com/article/453291-lumber-a...
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.