ETF Tracker StatSheet
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WALL STREET ENDS LOSING WEEK AS FED FEARS LOOM LARGE
- Moving the markets
Wall Street had a rough week, despite a slight uptick on Friday. Investors were worried that the Fed might hike rates sooner and faster than expected, erasing most of the early gains by the end of the day. All the major indexes closed the week in the red, with Small Caps taking the biggest hit.
Apple had a bad week too, as China cracked down on iPhone usage. The AI basket, which was supposed to be the next big thing, also disappointed and fell behind Nvidia. Regional banks continued their downward trend for the fifth time in six weeks.
The latest economic data, such as the lower-than-expected jobless claims, added fuel to the fire of rate hike fears. Traders now think there is more than a 50% chance that the Fed will raise rates in November, after skipping September. August was a tough month, with weak data, and September doesn’t look much better.
Meanwhile, the banking crisis is still simmering in the background, but no one seems to notice. Banks are using more and more of the Fed’s emergency funds, as money market funds attract more cash than ever. $42 billion flowed into money market funds last week, reaching a new record of $5.625 trillion.
This creates a huge gap between money market funds and bank deposits, which keeps growing every week. It means that banks must sell their underwater bonds or borrow from the Fed to meet withdrawals. Neither option solves the banking crisis, which will probably come back to haunt us soon.
Bond yields were mixed today, with the 2-year yield moving away from its 5% peak earlier this week. The dollar kept climbing higher and higher, thanks to rising bond yields. It has now gained for eight weeks in a row.
Oil prices also rose for the ninth time in eleven weeks, nearing the $90/barrel mark. Gold was slightly lower for the week. In short, nothing has changed much, so we are still stuck with the same dilemma: too strong data could lead to higher real rates (bad for risk assets), and too weak data could hurt the next quarter’s earnings.
So, what’s your bet?
2. “Buy” Cycle Suggestions
The current Buy cycle began on 12/1/2022, and I gave you some ETF tips based on my StatSheet back then. But if you joined me later, you might want to check out the latest StatSheet, which I update and post every Thursday at 6:30 pm PST.
You should also think about how much risk you can handle when picking your ETFs. If you are more cautious, you might want to go for the ones in the middle of the M-Index rankings. And if you don’t want to go all in, you can start with a 33% exposure and see how it goes.
We are in a crazy time, with the economy going downhill and some earnings taking a hit. That will eventually drag down stock prices too. So, in my advisor’s practice, we are looking for some value, growth and dividend ETFs that can weather the storm. And of course, gold is always a good friend.
Whatever you invest in, don’t forget to use a trailing sell stop of 8-12% to protect yourself from big losses.
3. Trend Tracking Indexes (TTIs)
Wall Street had a lackluster day, as an initial rally faded quickly. The major indexes managed to close slightly higher, but still ended the week in the red.
Our TTIs also moved a little from yesterday’s close.
This is how we closed 09/08/2023:
Domestic TTI: +1.30% above its M/A (prior close +1.35%)—Buy signal effective 12/1/2022.
International TTI: +2.66% above its M/A (prior close +2.97%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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