February kicked off with about a ¾% gain for stocks across the board, mostly on better economic news and anticipation of a Greek debt deal. China’s factory orders and manufacturing increased in January, providing further support to our view of a soft landing. There were some market participants who looked at this news in a negative light and raised concerns over China tightening monetary policy as a result of this strength. In our view this is highly unlikely, as the strength has not impacted housing prices, which is China’s primary concern. Additionally, Germany reported strong manufacturing and export figures, giving hope that a European recession might not be as steep as some fear. Lastly, bulls were encouraged by comments from Greek Finance Minister Evangelos Venizelos that negotiations between Greece and its private creditors are close to a deal. As a result, S&P sectors were universally higher, lead by financials.

Investors should remember that although the global macro picture is improving, we expect some data points to be mixed, even negative. This is likely to reintroduce some market volatility. More significantly, we will need to see if the asset class performance diversion remains. We certainly hope so, as it will provide continued opportunity for skilled portfolio managers and market participants to out-perform the S&P 500 on both a risk adjusted and absolute basis.

Log onto financialtalkshow.com today at 10:00 AM to hear a continuation of this discussion and our view, when our Chief Investment Officer Bill Krivicich joins the program. Also, at noon today, Oliver Pursche our President and Co-Portfolio Manager of the GMG Defensive Beta Fund will be co-hosting the hour with Cheryl Casone on Fox Business News.

by thebetafund.com