Blow the whistle – it’s halftime!
What a first half it has been, I suspect more tricks than treats in the second half of the year. The first half ended with a bang and fireworks, we haven’t yet had our Independence Day celebrations! Let’s see what is in store for the back of 2012.
Let’s review briefly what happened to see if there are some clues out into the future. Bonds were clearly the big winner as yields plunged on a ‘risk off’ trade. The uncertainties over Greece and other European countries was causing pressure on global growth. The US came through with low GDP considering the favorable environment provided by the Fed. Given the amount of stimulus it would seem a higher growth than 2% would be seen but there are other factors in play affecting the number.
Greece was once again on the radar and a cause for angst. Money flowed right out of stocks and into fixed income rapidly as the safety in bonds was good enough (even with low yields) until the clouds disappear. China is an interesting case, they are betwixt and between right now, looking for growth to continue but fearful of inflation (as they should be).
Finally, the first half saw the debut of Facebook, one of the worst planned/executed IPO’s in the history of mankind. It can only get better from here. Enough said.
Some of the worst performing sectors in the first half were financials, energy (oil/exploration), retail/restaurants, resources, gold, silver and coal. Financials/brokers were pasted in the first quarter as low rates, regulations and aversion to stock market risk likely hit their bottom lines. Not to mention JP Morgan and their multi-billion dollar trading snafu from Europe, which sets up major mistrust from the public.
As we look out to the next six months this last week has me more encouraged about better action ahead. Some stocks are breaking out nicely from solid bases, big money flows are starting to come in which exudes confidence and more liquidity. Volatility is down for now and while the markets can get ugly again (we have an election to deal with in five months which WILL shape our future and a debt crisis still unresolved) the perception is the major dragon has been slayed.
I look for comebacks in energy, resources, industrials (on the back of China getting re-charged), agriculture/fertilizer (my favorite group) and steel. Technology is always on the radar and some are looking prime for a move. I will be sticking with the themes that worked best. Earnings season is coming up, which always offers some excitement!
Here’s to a wonderful Independence Day and second half of 2012, and let’s hope that Mayan calendar was wrong!