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WEEKLY Economic And Market Review 04-15-2012 | Stocks Ended The Worst Week Of 2012 On China Slowdown

Top Stories Last Week

  • Equity Markets Dropped

Stocks fell Friday after China reported its economy slowed than anticipated, capping their worst week of the year. Early in the week, the euro-zone crisis resurfaced amid worries that Spain will be unable to keep its public finances under control and will require bail-out at some point. Still, the markets weren't a straight line down. Hopes for additional central bank easing and enthusiasm for Alcoa Inc.'s earnings report helped a two-day rally before Friday.

  • Consume Prices in US Increased at a Slower Pace

The cost of living in the U.S. rose at a slower pace in March as the run-up in energy prices eased, supporting the view of some Federal Reserve policy makers that inflation will ebb. Consumer prices increased 2.7 percent in the 12 months ended, the smallest 12-month gain in a year.

  • Chinese Economic Growth Continued Cooling Down

China's first-quarter economic growth cooled to its slowest pace in 11 quarters amid weak export growth and sluggish construction activity. Gross domestic product grew 8.1% in the first quarter, according to the National Bureau of Statistics, below analysts' expectations of an 8.3% expansion. Analysts viewed this as a gradual slowdown rather hard-landing.

  • Bank of Japan Kept Interest Rate Unchanged at 0.1%

Bank of Japan, which stood pat and kept interest rate at 0.1% on Tuesday, has remained under political pressure to offer further stimulus to a fragile economy with consumer inflation hovering around zero, well below the 1 percent target.

Top Stories to Watch This Week

  • Earning Reports

Some large companies such as Citigroup, Bank of America, Morgan Stanley, and Microsoft will report earnings this week.

  • US Retail Sales, Housing Starts and Existing Home Sales

The retail sales released by the US Census Bureau is expected to increase by 0.4% in March. Housing starts and the existing home sales are expected to increase slightly to 700k and 4.63MM, respectively.

  • Euro-zone Crisis and Spanish Bond Auctions

Spain will test investors' confidence in its debt-laden economy this Thursday when it tries to sell new 2- and 10-year bonds after its borrowing costs jumped at auctions last week.
The weak demand for Spanish debt gave markets awake-up call after a couple of months of growing confidence, fed by the 1 trillion euro ($1.3 trillion) wave of cheap 3-year cash pumped out by the European Central Bank since December.

Weekly Performance Summary

All the portfolios declined as results of negative performance of all risk assets during the week.

Table 1: ETF Performance

Asset Class Return     Last Week Return MTD Return YTD Return
Equities          
  SPY US Large Cap -1.90% -2.61% 9.76%
  IWM US Small Cap -2.50% -3.95% 8.19%
  EFA Developed Market Equity -1.32% -4.68% 5.63%
  VWO Emerging Market Equity -1.39% -2.07% 11.41%
Dividend Assets          
  IYR US REIT -0.85% -2.10% 8.29%
  AMJ US Energy Master Trust -1.23% -1.23% 0.34%
Commodities          
  GLD Gold 1.60% -0.78% 5.83%
  GSG Commodity -0.83% -0.63% 4.79%
Bonds          
  HYG US High Yield 0.17% -0.37% 2.24%
  AGG US Bond 0.67% 0.68% 0.82%
  TIP US Treasury Inflation Indexed Bond 1.44% 1.48% 2.32%
  IEF US Treasury Bond 1.51% 1.97% 0.10%
  TLT US Long Term Treasury Bond 3.48% 4.41% -2.93%
  SHY US Short Term Bond 0.13% 0.14% 0.01%

Table 2: Portfolio Performance

Portfolio Solutions WTD MTD
(1 day delay)
YTD
(1 day delay)
1-YR
(as of 12/11)
5-YR
(as of 12/11)
10-YR
(as of 12/11)
Aggressive -1.1% -2.3% 6.1% 12.4% 16.4% 16.1%
Moderate -0.7% -1.7% 5.0% 12.4% 14.8% 14.4%
Conservative -0.2% -0.8% 3.9% 12.5% 13.7% 12.8%
Defensive 0.3% -0.1% 2.8% 13.2% 12.5% 11.1%
Concentrated Portfolio -1.7% -3.0% 3.0% 12.1% 19.1% 19.3%
S&P 500 Index -1.9% -2.6% 9.8% 2.0% -0.3% 2.9%
Barclays Bond Index 0.7% 0.7% 0.8% 10.3% 6.9% 5.8%
CPI Inflation       3.2% 2.3% 2.5%

For more information about the multi-asset investment strategies, please visit allseasoninvesting.com.

About ALL SEASON INVESTING: All Season Investing is an investment blog, created in December 2011 to offer investors insights and researches on how to implement a dynamic multi asset allocation strategy with the low-cost index funds or ETFs to achieve consistent returns while limiting downside risks through all stages of a market cycle.

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