One Man’s Opinion: Will A Stronger Dollar And Higher Interest Rates Trigger A Correction In US Equities?

Ulli Market Review Contact

ManInvestors may not have realized but something interesting happened in the third quarter of 2015; corporate earnings declined year-over-year in the July-September quarter for the first time since July 2009.

While one quarter doesn’t show a trend, earnings quality going forward doesn’t certainly look good, said Larry McDonald of Societe Generale. Financial engineering by S&P 500 companies have been stretched to the limit through tax inversions, buybacks and dividend payouts; they generated a ton of earnings momentum over the last three years, pushing valuations to a record high.

But now markets have reached to the point where valuations are “at the bone” and the quality of earnings is progressively getting worse, he noted.

Read More

New ETFs On The Block: FlexShares US Quality Large Cap Index Fund (QLC)

Ulli Equity ETFs Contact

Financial DataInvestors that are increasingly betting on a US recovery in the midst of a turbulent global economic scenario possibly should focus on large-cap US companies as part of their core holding. While there are nearly 120 exchange-traded funds that focuses on large-cap US equities through a variety of strategies including fundamentals, size, value, growth, sector, size, earnings, dividend yields etc, a fund that targets multiple factors were missing from the mix.

FlexShares, the ETF issuing arm of Northern Trust, recently launched a large-cap focused multi-factor smart-beta fund to fill the void. The FlexShares US Quality Large Cap Index Fund (QLC) seeks exposure in US large caps that exhibit distinguishable quality, value and momentum characteristics. The quality factor has always been under the lens of long-term investors and thanks to exchange-traded funds, they have also become most accessible off-late.

Quality of stocks is generally measured by a firm’s ability to maintain and raise dividend payouts though it must be mentioned that application of quality factors is still pretty much evolving among investors. FlexShares applies three criteria to measure quality: cash flow, profitability and management efficiency.

Read More

ETF/No Load Fund Tracker Newsletter For November 20, 2015

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

————————————————————-

THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2015/11/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-11192015/

————————————————————

Market Commentary

S&P 500 GAINS +3.26% AFTER LOSING -3.63% THE PRIOR WEEK

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

For sure it’s a nutty market. Of course, MSM headlines only boast about the S&P posting its largest weekly gain in a nearly a year; it’s long forgotten that it lost -3.63% the prior week, its worst in some 4 years with the net gain being a negative 10 points.

Helping this week’s recovery were some strong earnings and comments from the usual array of Fed officials opining that “the path of interest rate increases is likely to be gradual,” supporting hopes that if an increase occurs in December, the markets won’t be startled.

Of course, just because the Fed is talking about an increase, it’s far from certain that it will actually happen. My viewpoint is that economic data sure don’t show the strength required to support a raise in rates. Nevertheless, the markets are nearing the upper range of the sideways pattern, but we’ll have to wait and see if a clear breakout occurs in order for us to commit to equities again. Please see section 3 for important details.

8 of our 10 ETFs in the Spotlight ended higher on the day as Consumer Discretionaries (XLY) took the lead with +1.20%. On the downside, Consumer Staples (XLP) gave back -0.71%.

Read More

Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 11/19/2015

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, November 19, 2015

TOC 111915

If you are not familiar with some of the terminology used, please see the Glossary of Terms.

 

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: SELL— since 11/04/2015

TTI

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in above chart) recently crawled above its long term trend line (red) and finally generated a new “Buy” signal effective 11/3/15. The market subsequently dropped, and we exited again on 11/13/15. As of today, the TTI has inched back above its trend line by +0.26%, which is not enough of a breakout to generate a new “Buy” signal. Stay tuned for daily blog updates.

Read More

Stocks Remain In Flux; Keurig & Smucker Gain

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Of course, the potential interest rate hike remains on everyone’s mind as we head into 2016. However, whether or not the rate hike will take place still remains TBD but, more importantly, how will the markets react? Given the global economic landscape, I don’t think a hike is a given at this time, so we’ll have to linger in uncertainty for a while longer and watch our Domestic TTI for clues as to continued upward momentum and a potential new Buy signal.

In the meantime, we can focus on other aspects of the market. In tech today, mobile payments processing company Square (SQ) commenced their IPO and opened for trading at $11.20 a share, which was about $2 higher than $9 price that was expected throughout Wall Street.

In the food biz today, Keurig-Green Mountain (GMCR) gained after raising its quarterly dividend and putting forth some well-needed guidance heading into 2016. Though, the positive news overshadowed their weak Q4 numbers that showed sales slid 13% as demand weakened for its coffee potts and makers.

We also heard today that JM Smucker (SJM) gained after beating sales and earnings estimates. The food company reported a $40 increase in sales, which was mostly driven by its $3.2bil acquisition of Big Heart Pet Brands earlier this year.

Our 10 ETFs in the Spotlight were mixed with 6 of them closing up, led by the Global 100 (IOO) with +0.33%; 4 of them ended up lower led by Healthcare (XLV), which got clobbered -1.68%.

Read More

Markets Hold Strong Despite Paris Event; Is A New Domestic “BUY” In The Making?

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Financial markets have held up well so far this week after the attacks in Paris Friday that sparked global concern about the economic impact of terrorism. Stocks moved higher Wednesday after the release of the Fed minutes of October, as the Dow logged a third straight day of gains and the S&P 500 moved back into the black for the year.

According to minutes of its October 27-28 meeting, the Federal Reserve policymakers agreed that the economy and labor market “could well” be strong enough to withstand a hike in interest rates in December. The officials said global troubles had eased and a delay could increase market uncertainty and undermine confidence in the economy.

The Fed also has expressed concern about persistently low inflation and said it must be reasonably confident inflation will return to the Fed’s 2% goal in the medium-term. That’s all it took and equities went into rally mode. Of course, we know that the Fed and not economic data determine market direction, as general macro data are showing anything but strength. Some analysts seem to think that the Fed needs to hike in order to save face; after all, you can only cry “wolf” so many times before you lose credibility.

Be that as it may, the question for us is whether the reboud of the last 3 days will provide enough momentum in order to break us out of the trading range in which we’ve been stuck for several weeks. With the Domestic TTI now having ventured again above its trend line by a fraction, after spending only 5 days below it, I will want to see more staying power accompanied by a stronger piercing of the line before issuing a new “Buy.” Stay tuned for more details.

All of our 10 ETFs in the Spotlight jumped higher with the leader being Healthcare (XLV) with a gain of +1.95%, while the Dividend ETF (DVY) lagged a little but gained +1.34%.

Read More