Confusion still reigns. Are U.S. equities a good idea or bad? The bond inflows still seem to be strong and distrust of equities remains strong.
Europe is still a game of “hide the sausage” as the ball gets tossed around between Greece, Spain and Italy. The rhetoric between Draghi, Merkel, and the Bundesbank is still uninspiring but somehow it holds together, even though the EU seems to be patched with chewing gum, baling wire and duct tape. The game of the Banks buying sovereign Bonds in the auctions, and then lending them back to the Governments, who are backed ultimately by the ECB, is beyond comical, but so far it’s kept the proverbial can down the road. It feels more like a game of musical chairs or a merry go round – when the music finally stops it will certainly be interesting.
The Non-Farm payrolls grew by a whopping 114,000 jobs in September and yet somehow the actual unemployment rate dropped .4 %, to 7.8 % – doubtful a move that significant (down from 8.2%) has ever happened before, and certainly not that I can remember with such small Non-Farm Payroll growth. It’s unbelievably convenient, if not downright suspicious, for a sitting President up for reelection next month and beaten badly in his first debate appearance (or not) to get such a gift from the Bureau of Labor statistics. This is the same BLS who routinely “makes up” the Birth-Death rate of new Businesses, and considers a plus or minus 75,000 monthly revision to be within the statistical norm.
October has been action packed in years past, but November certainly looks like another month to watch. Greece runs out of money, Spanish elections in Catalonia, we elect a new President, and the USA moves another month closer to the fiscal cliff. Will Spain’s Mr. Rajoy be the first major country to officially ask for an EU bailout?
At home we just don’t get a warm and fuzzy feeling about a lame duck congress coming together to do the right thing and extending the Bush tax cuts for any length of time. I am certain they were originally designed to be permanent, but had to be sunset just to give political cover. Anyway, perhaps we will all be surprised, and the easiest thing will be no heavy lifting, and as even Mr. Clinton suggests, extend them for another year. This will allow the new politicos time to settle in, line up their new constituents, meet their new lobbyists, and generally get a chance to catch their limited breath. Somehow the concept of raising taxes on this fledgling recovery, in the midst of a global economic recession, and in some case a depression, hardly seems like the formula for a sustained recovery. Oh boy doesn’t this political system, and its inherent risk aversion – i.e. being a one term senator or congressman – seem broken?
In our portfolios, some changes are coming, some rebalancing here as things have gotten slightly off target. We see adding some Microsoft (MSFT) to the US Equity allocation. We expect to add some more Commodity exposure, swapping some gold (GLD) for some gold miners (GDX), looking to tweak the Oil & Gas allocation, and then adding to the real estate exposure.
All things considered, we continue to stay away from trying to interpret the daily machinations of the various markets, to keep us from rushing from one side of the boat to another, our sight is on the horizon and steady at the wheel.
Certain investments discussed in this presentation are for illustrative purposes only and there is no assurance that the adviser will make any investments with the same or similar characteristics as any investments presented. The investments are presented for discussion purposes only and are not a reliable indicator of the performance or investment profile of any composite or client account. Further, the reader should not assume that any investments identified were or will be profitable or that any investment recommendations or that investment decisions made by model managers in the future will be profitable.
Certain investments discussed are held in client accounts as of September 30, 2012. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or that investment decisions we make in the future will be profitable.
Certain of the information contained in this presentation is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Covestor believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
