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ALL SEASON INVESTING WEEKLY 03-11-2012

Top Stories Last Week

  • Greek Bond Swaps

Greece carried out the biggest debt restructuring in history, which was worth 172 billion euros. Over 80% of its private lenders have agreed to accept new bonds with a 53.5% haircut in face value. The stock market rallied back after the swap deal went smoothly. However, Greece may still need a third rescue package for the period 2015-2020 because the Greek economy could continue shrinking in the next couple of years.

  • Robust US Job Growth

The U.S. created 227,000 jobs in February. The unemployment rate was unchanged at 8.3% as nearly half-a-million workers re-entered the labor force in search of jobs, the Labor Department reported. Although the past three months of full-time job growth was the fastest since the end of the 2007-2009 recession and marked the best performance since early 2006, economists pointed to higher gas prices, stagnant wages, a downturn in Europe and slower growth in China as potential drags on U.S. expansion.

  • Chinese National People's Congress Lowered Growth Rate Target to 7.5%

In its annual meeting of National People's Congress, China sent a strong signal Monday of its intention to focus more on the quality rather than speed of economic expansion, lowering a largely symbolic growth target to 7.5%, and to transform to a more domestic consumption-oriented economy. After three decades of double-digit economic growth, China faced limited supply of natural resources, environmental pollution and rising labor costs. The stock markets declined on the news.

  • Central Banks Kept Interest Rates Low

Global central banks including Reserve Bank of Australia (NYSE:RBA), European Central Bank (ECB) , Bank of Canada (BOC) and Bank of England (NYSE:BOE) all kept interest rates on hold at historically low levels. Cheap money was abundant throughout the global economic system, planting seeds for another asset bubble and inflation.

  • Iranian Nuclear Program

Israel's prime minister Benjamin Netanyahu warned he would not countenance a long delay in launching an attack on Iran's nuclear sites, though President Barack Obama said there was still time for diplomacy. An attack by Israel or US will create more uncertainties in Middle East and move the oil price higher.

Top Stories to Watch This Week

  • Federal Reserve Bank Meeting

Fed will meet to decide on monetary policies. It is expected to keep interest rates unchanged. Watch out for any policy statement changes after two consecutive good job reports.

  • US Retail Sales

US Retail Sales is expected to increase by 1.0% in February thanks to the warm weather and improving job markets.

  • Bank of Japan Meeting

Bank of Japan is expected to keep interest rates at 0 - 0.1% range. Watch out for any changes in the asset purchase program.

  • Reserve Bank of India Meeting

India's central bank is expected to keep interest rate at 8.5%. Watch out for any surprised move here.

  • Eurozone industrial production

Eurozone industrial production is expected to increase by 0.7% in January after contracting by -1.1% in December. Watch out for signs of stabilization in Europe.

Weekly Performance Summary

All the portfolios declined as results of negative performance of IWM, EFA, VWO, AMJ, and HYG during the week.

Life Cycle Portfolio Solutions WTD MTD YTD 1-YR
(as of 12/11)
5-YR
(as of 12/11)
Aggressive -0.9% -0.2% 8.1% 12.4% 16.4%
Moderate -0.9% -0.3% 6.5% 12.4% 14.8%
Conservative -0.9% -0.4% 4.7% 12.5% 13.7%
Defensive -0.8% -0.5% 3.0% 13.2% 12.5%
S&P 500 Index 0.5% 0.4% 9.6% 2.0% -0.3%
Barclays Bond Index -0.4% -0.5% -0.1% 10.3% 6.9%

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Disclosure: I am long SPY, IWM, EFA, VWO, IYR, AMJ, GLD, GSG, HYG, JNK, AGG, TIP, IEF, TLT, VNQ.