Uncertainty surrounding the Japan natural disasters, and unknown consequences from the affected nuclear facilities, pushed the Japanese Nikkei down by over 1,000 points in early trading yesterday.
The domestic indexes followed the path down but to a lesser degree and staged a nice recovery as the chart above shows. The market reaction was based on only scant news reports but lots of rumors and assumptions. Hard facts were hard to come by, or to verify, so reaction was bound to be negative.
Yesterday started out to be a difficult day in all of the global markets as the Nikkei sank some 6% in the aftermath of Japan’s devastating earthquake and tsunami.
The domestic major indexes pulled back right after the opening as well, but the drop was contained in terms of magnitude. Mid-day buying kept the damage limited with the S&P; 500 losing only 0.61%.
With smartphones being all the rage, an ETF consisting of the major players in this business was recently brought to the market. FONE started trading some 3 weeks ago as MarketWatch reports:
“The index includes companies primarily involved in the building, design and distribution of the handsets, hardware, software and mobile networks associated with the development, sale and usage of smartphones,” said First Trust Portfolios L.P. in a fact sheet on the fund.
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First Trust ETF strategist Ryan Issakainen said that before launching any new fund, the firm establishes that investor appetite exists and that the product has investment merit in a long-term strategy.
Bill Gross wrote and interesting piece in InvestmentNews titled “Who will buy Treasuries when the Fed doesn’t?” Let’s look at some highlights:
Speaking of investment tips, no clue or outright signal could have been any clearer than the one given in December 2008, labeled “Quantitative Easing.” While the term was new, the intent was obvious: (1) pump public money into the financial system to replace private credit that was being destroyed in the process of deleveraging; (2) lower interest rates on intermediate and long-term mortgages/Treasury bonds and in the process flush money into risk assets – most visibly the stock market; and (3) forecast publically then hope that higher stock prices would lead to a wealth effect, and in turn generate new private sector lending, job creation and a virtuous circle of economic expansion that would heal the near-fatal wounds of Lehman and its aftermath. If that was the game plan, then so far, so good, I’d say. Interest rates are artificially low, stocks have nearly doubled since QE I’s first announcement in December of 2008, and the U.S. economy will likely expand by 4% this year, although a $1.5 trillion budget deficit must share QE’s Oscar for most stimulative government policy of 2009/2010.
Out of the 1,000 or so ETFs that are currently available, I feature about half of them in my weekly StatSheet via the Master ETF list. The other half is too new and not yet worthy of tracking, since I like to see about 9 months of price data in order to be able to evaluate their trends.
Out of the 500 that I monitor, there are many tiny ETFs as far as net assets are concerned. Some will not survive, which brings up the question “What happens when an ETF folds?” Should you be worried?
My latest No Load Fund/ETF Tracker has been posted at:
http://www.successful-investment.com/newsletter-archive.php
A roller coaster ride took the starch out of the current uptrend, and the major indexes lost for the week.
Our Trend Tracking Index (TTI) for domestic funds/ETFs has moved above its trend line (red) by +4.16% (last week +5.58%) and remains in bullish mode.