June 24, 2011
Market Update
Good afternoon,
I should likely not write anything about the markets until
next week, but I cannot help myself. I feel somewhat compelled to write.
Especially after a rather interesting week like the one we just witnessed.
If we look at a chart of a Canadian Index ETF that tracks
the TSX then we see that the TSX is and has been trading below the 200 day
moving average since June 1. The S&P index has bumped down to the 200
day moving average three times in the past week.
And the Bond Index that I am tracking turned upwards in the
first week of April. Even on days when the stock markets are trying to turn
positive the Bond market maintains it upward trend line.
Earlier this week various governments dumped some 60 million
barrels of oil on the markets with the objective being to reduce the
price of oil. They succeeded. They want to drive down the cost of fuel because
they have no other ammunition left to throw at a slowing economy.
Interest rates are as low as they can go without going to zero. The various
quantitative easing programs have really been a colossal failure. And the job
markets are not looking very good in Canada nor in the US. So they wish to
drop the price of gas. That might encourage the consumer to get back into a
spending mode! All I can say is “do not be fooled.” Do not start
spending wildly because gas dropped to 113 cents per litre. Jobs are
still very scarce so hold onto the one you have.
Mr. Bernanke has stated earlier this week that the growth in
the US will not be as high as he had predicted just six weeks ago.
So why would I bring this to your attention? After
all, all CV Benefits clients are already invested in Bond Funds. But I
just thought you might need something to talk about other than the weather for
the next few days. So have a chat about these charts. And keep paying down
debt.
I have attached charts of the three indexes I speak about in
this email. They are one year charts.
So those are just some random thoughts for you to chew on.
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