Kevin M. Wilson, ChFC, PhDPresident/CEO/CIO
Dheenu Sivalingam, MBAAVP/CCO/Senior Analyst
1405 Medical Arts Building324 W. Superior StreetDuluth, MN 55802
Office: 218-464-4399 Toll Free: 877-327-5062
Fax: 218-464-4397Email: [email protected]
www.bluewatercapitaladvisors.com
Blue Water’s Monthly Market Review:
“Election Year Rally May Continue”September 20, 2012
Ted A. Pavlovich, WMSVP Wealth Management
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INTRODUCTION
TED A. PAVLOVICH
2
We Seem To Be Following The Pattern
3
GLOBAL ECONOMIC SLOWDOWN - THE EVIDENCE
KEVIN M. WILSON
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Eurozone GDP Still Falling
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Short-Term Central Bank Loans Expanding in Europe
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Chinese Economic Activity Reduced
That Sinking Feeling
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Japan Strongly Impacted
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US Mfg. Indexes Dropping Sharply
(Source: www.hussmanfunds.com)
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Leading/Coincident Indicators Falling
NRNR
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Other Indicators Negative
?
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NBER Recession Measures Mixed
THE SUMMER RALLY AND ITS ELECTION YEAR SEQUEL
DHEENU V. SIVALINGAM
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The Stock Market in Presidential Election Years
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The Seasonal and Not-So-Seasonal Facts
Historically, there is a strong seasonality in the stock market where the majority of stock market gains have been made in the November-April time period–and this effect has become more pronounced in the past 50 years.
Sell in May…
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Economic Surprise Index Partly Responsible
Month-by-Month Seasonal Pattern
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2012 S&P500 PR
Q1: 12%Q2 :-3.29%Q3: ??? (Should be Positive)
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THE FED/ECB WILL (CONTINUE TO) INTERVENE, BUT WILL IT MATTER?
KEVIN M. WILSON
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Fed Worried About Deficits And Diminishing Rate of GDP Growth
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Fed Deeply Concerned About Structurally High Unemployment
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Other Concerns Include Interest on the Debt…
…and the “Fiscal Cliff” –But Note That Effects of Cliff Are Exaggerated
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Structural Limitations on GDP Growth Make the Situation Precarious
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The Fed’s Response Has Been Bold
Fed Bal. Sheet Assets Projected To Reach $3.5T in 2013
Fed Will Now Buy $50B of MBS Per Month
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Other Central Banks Have Printed Far More Than The Fed
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In Spite of Monetary Support, Big Banks Are Just Piling The Money Up Instead of Lending It Out
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QE’s Effect on Bonds
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Fed’s QE Has Simply Offset The Dips In the S & P 500
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-58
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-17
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-20
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Many Risk Assets Have Soared, But Especially Gold
+166%
+119%
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Dow (in Gold Terms) “Low”
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Jan. 2000
Sept. 2012
THE IMPORTANCE OF INCOME STRATEGIES
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TED A. PAVLOVICH
Aug. 2012
SELL
BUY
Valuations May Limit Upside
Aug. 2012 P/B Ratio= 2.20; Bond/StockYld. Ratio = 0.76
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SUMMARY & CONCLUSIONS
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KEVIN M. WILSON
1) It May Be That If Market Rally Continues, Obama Will Win…2) It May Be That If Market Corrects, Romney Will Win…3) Unless Something Else Happens!4) In Any Case, Money Printing Will Continue Around The World5) In This Environment, An Income Orientation May Work Well6) In This Environment, Gold May Help Offset Falling Dollar
This report is provided for informational purposes only and does not constitute an offer or solicitation to purchase or sell any security or commodity and is not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Any opinions expressed herein are subject to change at any time without notice. Information has been obtained from sources believed to be reliable, for its accuracy and interpretation are not guaranteed.
Investing in securities involves risk, including possible loss of principal. Past performance should not be taken as an indication of guarantee of future performance and no representation, express or implied, is made regarding future performance.
The firm does not provide tax advice; clients should contact their attorney, accountant, or other tax adviser regarding tax matters.
“BWCA is a state registered investment adviser in all states in which it is required to be registered. All Blue Water Capital Advisors’ customer assets are held in the customer name with Fidelity Institutional Services, clearing through National Financial Services (NFS), Member SIPC, a Fidelity Investments Company as Qualified Custodian.”
Disclaimer
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