Monthly Insight: February 2012

In February the US stock market had its fifth consecutive positive month which brought the S&P 500 to 1320. There has been increased attention on Iran and continued focus on Greece. Volatility stayed flat as the VIX Index remained below 20, mainly due to the expectations that Greece will finally restructure its sovereign debt. The Western standoff with Iran has caused threats in oil supply as Iran is the five largest oil producer in the world and second largest oil producer in OPEC. The threats from Iran, robust demand from emerging markets and improving economic data in the US brought oil prices of WTI to $109 and Brent Crude to $123. February unemployment rate stayed at 8.3% and industrial businesses continued to expand as PMI climbed to a 10-month high of 64 from 60.2 in January.

With the recent rally and the debt crisis in Europe eased momentarily, we project world markets to be flat over March. However, high crude oil price adds a new layer of uncertainty for global GDP growth in 2012. The price of gasoline has risen 10% in the U.S. on a national basis and has surged 20%-30% compared to one year ago. In February the Global Equity Fund has shifted to a momentum focused strategy to capture the macro trends as conditions seem to improve but uncertainty remains. The fund is currently overweight upward in energy market and weighed more into the healthcare and technology Mexico, Brazil, Columbia and the Philippines, as well as the utility, tech and health care sectors.