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June 2021 Monthly Outlook - Fully Invested Bear
Financial markets basically traded sideways during May, with stocks gaining 0.5% (S&P 500), while interest rates declined slightly dropping 0.05% (US 10yr Treasury).
We have a number of key economic reports and events in June that may dictate whether the market continues to trend sideways or makes a move either up or down. On June 4th we get the May Jobs report, which will be an indication of how the job market is recovering with the economy opening up. June 15 -16 is the next Federal Reserve Board meeting, and I will be watching how they respond to the rising inflation we are seeing. June 30th brings the start of 2nd quarter corporate earnings reports.
June is also a weak month for stocks, producing positive results only 40% of the time over the last 20 years with average returns for the month roughly negative 1%.
Two other factors I am watching closely:
Based on the above, I am operating as fully invested bear. In the short to medium term, I am cautious about a potential correction. Longer term, I believe the bull market and economic recovery from Covid-19 has further room to run. As such, we have tightened up our risk levels but remain fully invested in broadly diversified portfolios and will adjust as conditions dictate.
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June Calendar of Events (comments and additions for future months are always welcome)
June 14th Flag Day
June 20th Summer begins – it’s certainly going to be a different summer. Enjoy it safely
June 20th Father’s Day – wishing all father’s, grandfathers, and great grandfathers a wonderful day.
Sources: Bloomberg, Ned Davis Research, Day Hagan Asset Management, CNBC
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