Luxury Back?

Friday's NYT had an article about the rich starting to spend again, albeit cautiously. I like the trade idea, but still as more of a brand/emerging markets play. There is a Luxury Index ETF, sponsored by Claymore (which keeps spinning out more and more nichey products) and the Robb Report. The symbol is ROB, trading volume is modest, biggest names in the index are Swatch (?), Richemont, Wynn, PPR, Coach, Nordstrom and Christian Dior (Swatch is below 6% of the weighting). So, if you think people are about to start paying retail again to wear couture, smoke Dunhills and swill Moet Chandon, here's a pretty pure play.

Claymore/Robb Luxury Index ETF

Red Flag for Stocks

The backdrop for investing in the US stock market has gotten worse. The market bounce off the bottom anticipated an economy that hasn't been the bust that doomsayers predicted. The international backdrop now (sovereign debt concerns/euro stability) coupled with a high degree of complacency, however, is not a good combination. Liquidity driven rallies, with the accompanying high valuations, tend to end very badly.

Cash reserves are also very low, according to this Bloomberg piece from today.

S&P Rally Slowed by Fastest Cash Depletion Since 1991-Bloomberg News

Caveat emptor, which is Latin for watch your ass.