Jordan Wealth Management Group - ScotiaMcLeod Truro

I am getting concerned. While not new, there is much stronger sentiment today Greece is that much closer to a partial default on their debt, or that bondholders will have to accept some sort of restructuring such as voluntarily extending maturities out as much as 30 years. The price drops on Greek bonds today was significant enough that I would have expected it to gain a headline or two and turn the markets negative. …but not so far!

Everyone instead is focused on earnings season which is looking pretty good to date this quarter; and waiting for Bernake’s first-ever post-FOMC press conference tomorrow to learn more of the Fed’s outlook, interest rate decision and quantitative easing comments. The one way you do see an effective drop in the US market is in their weakness relative to most currencies, including our own. Their market domestically may be up; but as a foreign investor, their continued dollar weakness brings reduced value all the same.

While not quite there yet, and it is likely unwise over the medium to longer term to be out of cyclical stocks – as the secular growth and demand story from China and other emerging countries is still there, I am getting closer to reducing my positive bent towards owning cyclical stocks (metals, oils) and increasing my focus on more defensive sectors like financials and Telco’s. Usually you could wait for a signal from the Federal Reserve that they were going to raise rates as a signal to reduce your cyclical exposure – but we may not get it this time. This gets tougher because I am also concerned with defensive dividend stocks because they can be less attractive if interest rates rise; even though they likely will do better than cyclicals, especially if they have the ability to increase dividends to offset any higher interest rate environment.

Please give me a call or send me a message if you want to discuss how this affects your portfolio. Ted