We Remain Neutral on this Market

This morning we had earnings from intel that suggest that companies and individuals are beginning to buy more goods and services within the global economy. Overall retail sales month over month were down 1.5%, excluding auto sales there was an increased of 0.5%. Consumer confidence still remains very low, and corporate revenues or top-line growth is flat to negative. Sure, companies bottom line profits have increased due to massive cost cutting and job layoffs, and the big question going forward is "when are companies gong to start hiring"?

In order for the economy to have sustained moderate growth, jobs need to increase and consumer spending needs to increase. Has that occurred? If we knew the answer to this question, we would not have such a correlation between traditional non-correlating assets classes.

Right now stocks, bonds and gold are all moving in the same direction. Stocks are at a 52 week high, bonds are at decade high levels, and gold is at an all-time high. This suggest extreme uncertainty with the future direction of inflation, and economic growth.

Therefore, we are neutral on this market. We are neither buying nor are we selling. We continue to advise our clients to dollar-cost average into their retirement portfolios, and to have cash on the sidelines waiting to invest when stocks, bonds and gold behave in a non-correlating fashion.

By David A. Mascio