ALL SEASON INVESTING WEEKLY 04-08-2012 | Disappointing Spanish Bond Auction and US Job Reports Drove Stocks Lower

Top Stories Last Week

  • Disappointing Spanish bond auction

 In an auction of medium-term debt, Spanish government only sold €2.6 billion ($3.5 billion), which was at the bottom end of the €2.5 billion to €3.5 billion target it was looking to raise from the sales of bonds. The ten-year yield rose by 22 basis points to 5.63%. A month ago, the yield was 4.9%. European stock markets tumbled as a result.

  •  US economy added 120K jobs, much lower than expected

The U.S. Labor Department said employers added 120,000 jobs, the fewest in five months and much less than the median economist forecast of 205,000.   Yields on 10-year Treasuries dropped by 13 basis points and S&P 500 futures tumbled 1.1%.

  • Global PMI manufacturing reports

PMI manufacturing indexes from US to China and UK are showing expansions in manufacturing activities in March, though Euro-zone’s manufacturers are continue struggling. Chinese manufacturing index rose to 53.1 up from 51 in February. The March reading in the official report was the fourth consecutive monthly increase. The report has helped to ease concerns about a potential hard landing for the world’s No. 2 economy. The US gauge rose 53.4, better than economists’ forecasts. It provides further sign on the world’s largest economy’s gaining a stronger foothold.

  • ECB, BOE, RBA kept interest rates on hold

European Central Bank, Bank of England and Reserve Bank of Australia kept interest rates on hold at 1%, 0.5% and 4.25%, respectively, though all of them recognized the improving outlooks of the economies.

Top Stories to Watch This Week

  • Global Inflation Reports

The US, Germany and China will report consumer price index. Watch out for signs of inflation picking up.

China: CPI is expected to increase to 3.4% from 3.2% YOY.

Germany: CPI is expected to decline to 2.1% from 2.3% YOY.

US: CPI is expected to decline to 2.6% from 2.9%.

  •  Chinese GDP

Chinese economy is expected to slowdown further to 8.4% from 8.9% last quarter.

  •  Bank of Japan meeting

Bank of Japan will meet to decide monetary policy and is expected to keep interest rate unchanged at 0.1%. 

Weekly Performance Summary

All the portfolios declined slightly 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 -0.7% -0.7% 11.9%
IWM US Small Cap -1.5% -1.5% 11.0%
EFA Developed Market Equity -3.4% -3.4% 7.0%
VWO Emerging Market Equity -0.7% -0.7% 13.0%
Dividend Assets
IYR US REIT -1.3% -1.3% 9.2%
AMJ US Energy Master Trust 0.0% 0.0% 1.6%
Commodities
GLD Gold -2.4% -2.4% 4.2%
GSG Commodity 0.2% 0.2% 5.7%
Bonds
HYG US High Yield -0.5% -0.5% 2.1%
AGG US Bond 0.0% 0.0% 0.2%
TIP US Treasury Inflation Indexed Bond 0.0% 0.0% 0.9%
IEF US Treasury Bond 0.5% 0.5% -1.4%
TLT US Long Term Treasury Bond 0.9% 0.9% -6.2%
SHY US Short Term Bond 0.0% 0.0% -0.1%

Table 2: Weekly 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 -1.2% -1.2% 7.2% 12.4% 16.4% 16.1%
Moderate -1.0% -1.0% 5.7% 12.4% 14.8% 14.4%
Conservative -0.7% -0.7% 4.0% 12.5% 13.7% 12.8%
Defensive -0.5% -0.5% 2.4% 13.2% 12.5% 11.1%
Concentrated Portfolio -1.4% -1.4% 4.7% 12.1% 19.1% 19.3%
S&P 500 Index -0.7% -0.7% 11.9% 2.0% -0.3% 2.9%
Barclays Bond Index 0.0% 0.0% 0.2% 10.3% 6.9% 5.8%
CPI Inflation 3.2% 2.3% 2.5%

 

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