Tactical Investment Insights 04-06-2014

General Market Conditions – Risk Switcher(TM)
Julex has developed a four-factor Risk Switcher (TM) model to provide assessment on the general market conditions. Normally, in a “Risk On” regime (bull market), the economy is expanding, market trend is going up, market volatility is moving lower and market liquidity is plenty. In a “Risk Off” regime (bear market), the opposite happens. The model currently points to “Risk On” and favors risky assets such as equities, real estates, and high yield bonds.


Top Economic News Last Week

• U.S. Economy Added 192K Jobs In March, Unemployment Remained 6.7%
Employers added 192K jobs in March. The unemployment rate remained steady at 6.7%. The labor participation rate came in at 63.2%, up slightly from February. The report is solid but not strong, and will be likely to keep the Fed tapering continue at the current pace.
• US Manufacturing Activities Improved in March
U.S. manufacturing companies expanded in March at a slightly faster pace compared to February. The Institute for Supply Management (ISM) said its manufacturing index rose to 53.7 from 53.2 in February.
• European Central Bank Kept Interest Rates on Hold at 0.25%
ECB kept the benchmark interest rate unchanged at 0.25% though inflation rate continued falling. This week figures showed inflation fell in March to 0.5%, well below the ECB’s target of 2%.
• Fed Chairwoman Janet Yellen Gave a Dovish Speech in Chicago
In the National Interagency Community Reinvestment Conference in Chicago, Ms. Yellen said the U.S. economy and job market are still far from healthy, and still require plenty of support from the central bank. The unemployment rate stands at 6.7%, well above the 5.2%-5.6% range that Fed officials see as normal. Inflation is running just above 1%, well below the central bank’s official 2% target.

News To Watch This Week

Monday: Bank of Japan interest rate decision; US consumer credit change (Feb)
Tuesday: Alcoa kick-starts Q1 earnings season, ; Bank of Japan Monetary Policy Statement
Wednesday: FOMC Minutes; China’s trade data
Thursday: Bank of England interest rate decision
Friday: China CPI (Mar); Reuters/Michigan Consumer Sentiment Index (Apr)