ETF/No Load Fund Tracker StatSheet
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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:
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Market Commentary
Friday, June 22, 2012
US EQUITIES REBOUND ON EUROPE HOPES; EWP FLIES, VIXY CRASHES
US stocks clawed back Friday, recovering part of Thursday’s sharp losses after the European Central Bank said it will lower rating thresholds and amend eligibility criteria for asset-backed securities to ease access to funds for the region’s banks.
The move to loosen up some of the rules on collaterals that banks can offer in exchange for funds from the central bank was taken by the Governing Council of the Frankfurt-based organization in an effort to boost growth. Lovely; this is as clear of a sign as you can get that quality collateral no longer exists anywhere in Europe, which makes wonder how long this extend and pretend game can go on.
Treasuries slipped over reports that leaders of Germany, Spain, France, and Italy have decided to consult jawbone further on a €125 billion stimulus plan for the single-currency block to boost growth, equal to one percent of the 17-member economic zone’s output. I can’t wait to hear the results of that latest futile effort.
Off one percent for the week, the Dow Jones Industrial Average (DJIA) climbed 67 points to 12,640.78, after posting the second biggest fall of the year Thursday. Among the blue-chip’s 30 components, 28 finished higher.
The S&P 500 Index (SPX), also lower 0.6 percent on the week, rose 9.51 points to 1335.02 with technology fronting the gainers. All the 10 business groups closed higher for the day.
The yield on benchmark 10-year notes rose the most in two weeks after the European Central Bank announced easing of collaterals from the region’s banks to facilitate access to its funds, thus enabling EU lenders to make loans to households and small business.
Ten-year Treasury yield jumped six basis points to 1.67 percent while yield on 30-year bonds rose seven basis points to 2.76 percent in late afternoon trading, New York time.
ETFs in the news:
Spain outran global markets Friday following reports that the government is pushing for channeling money from the region’s rescue funds directly to the beleaguered banks instead of through governments.
The €100 billion already sanctioned (but not yet funded) to Spain for bailing out its struggling banks makes Madrid liable for repayment, should a credit default occurs, thus pushing the country’s debt mountain further.
Separately Spanish Finance Minister Luis de Guindos said Friday that the country will request for an additional €62 billion for bank recapitalizations after independent audits released Thursday said the country will need more bank aid.
The iShares MSCI Spain Index Fund (EWP) surged 4.31 percent, capping its third successive week of gains. The fund is up 14 percent from its recent nine-year low.
The ProShares VIX Short-term Futures ETF (VIXY) crashed 10.31 percent after the so-called fear-tracking CBOE Volatility Index (VIX) plummeted 9.81 percent. Moody’s downgrade of banks yesterday and positive developments from Europe helped calm nerves, cooling yesterday’s sudden surge in volatility.
Our Trend Tracking Indexes (TTIs) vacillated with the markets and ended the week as follows:
Domestic TTI: +1.60% (last week +2.42%)
International TTI: -3.05% (last week -3.03%)
Have a great week.
Ulli…
Disclosure: No holdings
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READER Q & A FOR THE WEEK
All Reader Q & A’s are listed at our web site!
Check it out at:
http://www.successful-investment.com/q&a.php
A note from reader Duffy:
Q: Ulli: When looking at the Mutual Fund Cutline report, what does the number +804 next to the Momentum column represent?
A: Duffy: It has not significance in regards to the momentum numbers. It merely shows the count of the funds from the cutline. The first fund above the cutline is #1, the second one is #2, etc. Below the cutline, the first fund is -1, then -2, etc.
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