Weekly Market Recap
June 11, 2012
• China cut its 1-year lending rate and 1-year depositrate by 0.25%.• The IMF now considers the Chinese yuan only"moderately undervalued."
• The ISM Nonmanufacturing index rose to 53.7.• Jobless claims fell to 377,000.• The trade deficit widened to -$50.1bn.• Next Week: Retail Sales, PPI, CPI, IndustrialProduction, Sentiment.
Thought of the Week
It is hard to identify a time in which headline risk playedsuch a dominate role in investing. With uncertainty highand market-moving events slated for the next fewweeks, investor sentiment is more bearish than at anypoint in the past year. In today’s volatile markets, it iseasy to follow the crowd; however, using history as aguide, the easy choice may not always be the best one.As shown in this week’s chart, investor sentiment hasbottomed on five occasions in the past three years, withfour out of the five times leading to positive returnsover the subsequent six months. Thus, although it canbe difficult to go against the grain, history suggestsinvestors who buy when everyone else is selling shouldbenefit more than they would by following the herd.
Question of the week:
In 2010, Brazil's urbanization ratio was 87%, Russia'swas 73%, and China's was 47%; what was India'surbanization ratio in 2010?
Prior week's question:
As of May 31, 2012, how much had the VIX risen from itsMarch 2012 average level of 16.2?
Answer to prior week's question:
As of May 31, 2012, the VIX had risen 48.8% from itsMarch 2012 average.
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12,04912,21812,11912,554Dow Jones 30
3.262.452.142.2910 Year Municipal
2.961.871.471.6410 Year Treasury
0.3184.108.40.2062 Year Treasury
0.250.250.250.25Fed Funds Target
-2.480.222.552.25MSCI - EAFE
1 week YTD
4.544.073.913.8730 Year Mortgage
0.310.640.470.476 Month CD
79.8976.9478.1279.62¥ per $
1.641.551.531.54$ per £
1.461.301.241.25$ per €
115.401.6616.3113.74Russell 1000 Growth
74.912.7714.0811.18Russell 1000 Value
Wgt AvgMkt Cap(Bill)DividendYieldP/ETrailingP/EForwardIndexCharacteristics
S&P 500 Sector Returns
S & P 5 0 0 C o n s u m e r S t a p l e s T e l e c o m H e a l t h C a r e U t i l i t i e s I n d u s t r i a l s C o n s u m e r D i s c r . E n e r g y T e c h n o l o g y M a t e r i a l s F i n a n c i a l s 4 . 8 4 . 5 4 . 3 4 . 0 4 . 0 3 . 3 3 . 2 3 . 1 2 . 8 2 . 63 . 8
S & P 5 0 0 E n e r g y U t i l i t i e s I n d u s t r i a l s M a t e r i a l s C o n s u m e r S t a p l e s H e a l t h C a r e F i n a n c i a l s T e c h n o l o g y C o n s u m e r D i s c r . T e l e c o m 1 1 . 9 1 1 . 7 1 1 . 7 9 . 2 6 . 2 5 . 6 4 . 0 3 . 9 3 . 5 - 6 . 0 6 . 4
1 w e e k Y T D
1 w e e k
Y T D
Note: All returns represent total return including dividends.
Chart of the Week
72% of Investors Are Either Bearish or Neutral
AAII Sentiment Survey, % bullish