Watch the CPK Market Action Report: June 2021In the early days of May the markets experienced a minor selloff forcing all of the major indexes to spend the rest of the month trying to recover from the losses. Could the quick rebound be an indication of more upward movement to come, or just a reflection of a temporary weakness in the ten-year treasury leaving the markets to continue grinding sideways for the time being?Watch the full Market Action Report now: June 2021INTRO TAGIn the early days of May the markets experienced a minor selloff forcing all of the major indexes to spend the rest of the month trying to recover from the losses. Could the quick rebound be an indication of more upward movement to come, or just a reflection of a temporary weakness in the ten-year treasury leaving the markets to continue grinding sideways for the time being?That action starts, NOW! INDEX PERFORMANCE RECAPAfter a multi month rally, stocks retraced some of their gains for the year and spent much of the month trying to recoup those losses. The Dow Jones Industrial closed up 1.84% while the S&P 500 eked out a gain of just .29%. The Nasdaq on the other hand had a much steeper hill to climb and closed down 2.02% for the month. EQUITY UPDATEStocks came into the month riding on the shirt tails of some pretty spectacular earnings results due to the reopening of the economy and massive stimulus. Just as I suggested last month, stocks encountered some turbulence early on. While they were able to eventually recover from their losses, I am not expecting markets to be off to the races. At the current levels, the Dow and S&P are both up approximately 80% from their March 2020 lows and the Nasdaq is up 67% for the same period. While I agree that a reopening economy should bode well for the markets, we have entered what is traditionally the worst performing six months of the year. Additionally, we would have to see near perfect economic conditions, and I am pretty sure, the Feds much anticipated disclosure to start talking about tapering QE is not included in that perfection. My bet to hear such an announcement is on the Jackson Hole Economic Symposium August 26-28.BOND UPDATEMay saw another spike in the 10 yr yield nearly reaching 1.70% before settling back down at 1.58% at month end. The timing of the spike aligned perfectly with the selloff in stocks. While the 10 yr yield showed support at the 1.54% level, I expect it to continue to be range bound until we see another close above 1.74%. Don’t let that fool you into thinking it can’t play havoc on the markets within that range.COMMODITY UPDATEThe commodity space was on fire in May. After a steep decline during the middle of the month, oil was able to bounce right back and close up 5.4% at $66.91 which is the top of the $60-$67 range it has been drifting in for a while. It is still very plausible we will see a breakout to the top side in the near future.Copper also took it on the chin during the middle of the month along with stocks but rallied back on news that China would be supporting private businesses with stimulus and loans to offset rising commodity prices. Copper posted a 4.60% gain for the month closing out at $4.67.Gold was screaming hot. The precious yellow metal closed out the month at its best levels since January, up 7.85% to $1906.90. It is unlikely the Fed’s tapering will create much of a rally for the dollar and that will be a positive for the precious metal. CURRENCY UPDATEThe US dollar declined throughout the month closing just under $90 at $89.83. While I don’t think the dollar is in jeopardy of a material decline, I do believe it will struggle to mount a strong rally as long as the Fed remains the most dovish of the major central banks. However, as I stated earlier, I think that will change as we enter the August-September timeframe.ECONOMIC UPDATEInflation is now well above the Fed’s preferred measure of 2%. As we go forward, the key concern remains whether or not it will just be temporary. The durable goods report shows that business spending remains strong. Additionally, the labor market is continuing to improve as jobless claims dropped to 406k. A normal number should be in the low 300’s. The first week of June will be an important one as it is jobs week. These numbers are important after seeing a weaker than expected number in April. Another soft report could signal a tight labor supply and worsen the already noticeable inflation on wages and inflation.GEOPOLITICAL UPDATEThings seem to be heating up in advance of the upcoming summit in Geneva between Presidents Biden and Putin. Putin has been beefing up his military presence along its Western border with Ukraine. After Biden stated he would pressure Putin to respect human rights, Russia responded Monday by stating it would send what it described as “uncomfortable” signals to the US in advance of their talks. Relations between the two countries are at post-Cold War lows. THE WRAPAs we plan for the month of June, it appears the markets will most likely just continue to grind sideways until we get another macro event. That event seems to be the Fed’s pending announcement to taper quantitative easing. While I think we will hear rumblings from the July 7, FOMC minutes and their July 28 meeting, I don’t think an actual announcement to start tapering would be made until late August during the Jackson Hole Economic Symposium and the actual tapering would probably not start until November or early 2022. Regardless, all of this could trigger a taper tantrum and become a real headwind for stocks.CPK FOCUSFor the month of June, our models continue to hold a 30% cash allocation.Our broad focus is on domestic equities and commodities.On the Domestic front, our attention remains on Small Cap Growth, Small Cap Value, Small Cap Blend and Mid Cap Growth. Our favored sectors are Consumer Cyclical, Financials, Basic Materials, Industrial and Energy.As for Commodities, our focus is on Energy and Industrial Metals.CPK DISCLAIMERAs a reminder, my current allocation is not a recommendation. Regardless of what happens next, investors like you need to have a simple and yet solid financial plan that reduces RISK, COSTS and TAXES while securing the necessary income you need to maintain your lifestyle throughout retirement.If you don’t have a plan OR you’re not comfortable with the plan you have, call me today to get pointed in the right direction.I’m Chad Kunc and that puts a wrap on the June 2021 Market Action Report. Thanks for joining me. It’s time for me to get back to the markets.And that action starts, NOW!