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, Friday Investment Talk: US Market Update, Diversification, and Asian Market Opportunities

AVC partners discuss corporate bonds from some surprising names now considered “Fallen Angels”. Gold, inflation and the undervalued gold miners are discussed in relation to the current overbought market. Thursday’s huge sell off is a set up for a last run of strength before real seasonal weakness sets in.

, Friday Investment Talk: US Market Update, Diversification, and Asian Market Opportunities

Markets are still bullish, although even more overbought than last week. Today’s unexpected employment report provides fuel for higher prices. MLPs are leading momentum in all high dividend paying ETFs. Defense and Transportation (Airlines) showed strength this week. Value plays have rebounded sharply, while software companies look vulnerable with high valuations. Defaults are rising. Investors have piled money into cash equivalents. We look at the EUR/USD and Palladium also.

, Friday Investment Talk: US Market Update, Diversification, and Asian Market Opportunities

Stocks are still bullish from a technical point of view – the Put/Call ratio is overbought, but not yet negative.

All time highs for percentage of stocks above their 50-day moving averages (95%).

Seasonality is generally weak in summer months, but summers are better in election years than other months in election years, and better than in summer months in non-election years. Research from Bank of America,

Cylicals could take the lead in the summer, as social media and tech companies under polical pressure.

Since broad domestic equity indices posted a bottom on March 23rd, they have not looked back. In fact, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average have each rebounded with price returns in excess of 30%.

As a result of this upward movement a number of indicators have turned positive. What does this mean longer term for equity markets?

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US and China tensions are beginning to boil over after China passed a plan to increase its security presence in Hong Kong.

The US State Department no longer considers Hong Kong to have significant autonomy and now threatens to revoke the special current special status it enjoys.

Which US listed companies derive large amounts of revenue from Hong Kong and China? We look at how changes affect these companies and the indexes they comprise.

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, Friday Investment Talk: US Market Update, Diversification, and Asian Market Opportunities

We have a just launched the first session of our new weekly “Friday Investment Talk” series. This week Alan, Mike, and I discuss the continuation of the bull market’s posture. Mike speaks of how client’s ‘fear of missing out’ leads to overly concentrated portfolios. Alan highlights how the recent Chinese sell off could be a buying opportunity, as other Asian markets look strong.