A weak unemployment report coupled with bad news from Hungary about their financial position, led the stock markets to decline significantly on Friday.

It is our belief that the market action in May and so far in June indicates a change in the current capital markets cycle. Our current view is that the stock market highs seen in late April and early May, are the highs for this current cycle. Morris Segall agrees and says that, “SPG Trend Advisors believes that we are moving toward a short-intermediate trading range on the Dow 30 Industrials (see index disclaimer) between 9,000 and 11,000.”

Segall states that, “while the U.S. economic news has been improving since last summer, going forward, the economic news becomes more problematic as the Government stimulus recedes”.

In prior months, Lowe Wealth Advisors has focused on the U.S. consumer as being one of the keys to sustainable economic recovery and growth. Consumer spending is critical in stabilizing and potentially growing corporate earnings. The unemployment numbers on Friday were most certainly disappointing and will not spur consumers to spend. In fact, we believe that as consumers open their brokerage statements and see the losses in May, risk aversion will grow and spending will retrench just when the economy needs it the most.

Lowe Wealth Advisors concludes that while a recession is still not likely, the pace of the U.S. economic recovery may be slowed substantially by the current stock market decline and European situation. For our actively managed discretionary portfolios we continue to focus on strategies tilted toward potential preservation and defensiveness.

You should expect a volatile week in the stock markets with Europe being the likely driving force in direction. Lowe Wealth Advisors will continue to update you as appropriate.

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice. Not all portfolios are actively managed. If you have a question about how your account is being managed please contact us. Generally accounts less than $150,000 are not actively managed. An Index is a portfolio of specific securities (common examples are S&P, DJIA, NASDAQ), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. Past performance is not indicative of future results.

Important Disclosures

• Not all portfolios are actively managed. If you have a question about how your account is being managed please contact us.
• No diversification can completely protect against market risk or other risk factors with investing. A diversified portfolio could still lose money.
• An Index is a portfolio of specific securities (common examples are S&P, DJIA, NASDAQ), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. Past performance is not indicative of future results.

Foreign investing carries additional risk such as currency risk, political risk and different accounting standards.

*Lowe Wealth Advisors is a registered investment advisor.