One Man’s Opinion: Are Inventory Fluctuations Part Of Business Cycles?

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Man

The latest headline gross domestic product number might be disappointing, but beyond the visible decline there is positive story as consumer spending was robust and businesses were still investing – albeit at a slower pace than what was witnessed in the second quarter, said Lindsey Piegza, chief economist at Stifel Fixed Income.

The big question, however, remains if the US economy is going to continue the momentum from here as durable goods orders have tumbled after taking a wrong turn and it’s likely to be a struggle now for the economy going forward to maintain current year’s 2 percent growth pace as the year-end approaches, which would be a major concern for the Federal Reserve, she noted.

The third-quarter GDP reading slumped due to the drawdown in inventories, which indicates CEOs are concerned about building up too much stockpiles. Asked why CEOs would be nervous about higher inventories, Lindsey said companies are concerned about the modest gain in consumer spending; annual consumer spending growth now stands at 3 percent and without remarkable gains in hiring along with strong income growth, consumer spending is poised to decline from here.

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New ETFs On The Block: ProShares MSCI Europe Dividend Growers ETF (EUDV)

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EuropeProShares, the largest US provider of alternative exchange traded funds, recently launched a so called smart-beta fund that targets European companies with a proven track record of growing dividends.

While the global economic turmoil, including China’s slowdown, has hit European companies hard, when it comes to paying dividends they don’t disappoint investors – as of August 31, 2015, the dividend yield of the pan-European STOXX Europe 600 Index stood at 3.4 percent compared to S&P 500 benchmark’s little over 2 percent and 2.2 percent for the MSCI USA Index. That said there’s no denying the significant weakening of the euro this year has helped European companies absorb some of the shocks.

The newly launched ProShares MSCI Europe Dividend Growers ETF (EUDV) tracks the MSCI Europe Dividend Masters Index, which screens the universe of the parent index – the MSCI Europe. MSCI Dividend Masters Index selects stocks based on their payout history over the past 10 years and companies that have managed to grow dividends year-over-year are included in the index.

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ETF/No Load Fund Tracker Newsletter For October 30, 2015

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ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2015/10/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-10292015/

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Market Commentary

A STRONG MONTH FOLLOWED BY A WEAK ENDING

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

While October might go down in history as the month that made up for all the losses since August, this week we saw mainly sideways activity with an ugly close today.

Central banks were the dominating market force this month as most economic data points disappointed generating more speculation that an interest rate hike may not be as imminent as had been feared. In the end, that is all that markets need these days in order to bounce back to keep the bullish trend alive.

Actual macro data appear to be no longer of any importance as a poor US jobs report along with a weakening dollar kept the low interest rate dream alive. Helping matters was continued weak global growth, which prompted the ECB to hint at the possibility of more stimulus causing equities to stay in rally mode.

Only 2 of our 10 ETFs in the Spotlight closed up led by Consumer Discretionaries (XLY) with +0.21%. On the downside, the Financials (IYF) gave back the most by surrendering -1.29%.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 10/29/2015

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ETF/Mutual Fund Data updated through Thursday, October 29, 2015

TOC 101515

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 8/24/2015

TTI

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in above chart) has recently crawled above its long term trend line (red) by a scant +0.46%, which is not a clear enough break to the upside to generate a new “Buy” signal. Please see the daily blog posts for more details.

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Going Nowhere

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

It was a slow day on Wall Street today. All indexes ended slightly lower, mostly due to the fact that we heard a bit of disappointing news on the state of our economy.

The government reported today that the economy grew at a slightly lower-than-expected 1.5% in the third quarter. That was a sharp drop from the 3.9% growth in the second quarter and below the 1.6% growth expected by economists.

We received an impressive earnings report from Starbucks (SBUX) today. The company announced that sales were up 18% in Q3 on $4.9 billion in revenue that was largely attributed to a 4% increase in global consumption. Their earnings for Q3 came in at 43 cents a share, which is 6 cents higher than a year earlier.

Wall Street is still trying to figure out whether or not an interest rate hike could take place later this year, after the Fed’s comments yesterday. Most analysts seem to be of the mindset that the odds are 50-50 at this point.

6 of our 10 ETFs in the Spotlight closed lower during this directionless session. Leading to the downside was the Global 100 (IOO) with -0.50%, while gaining the most was Healthcare (XLV) with +0.45%.

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Stocks Up And Down, But End On Fire Wednesday

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Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Wall Street at first reacted negatively this morning after the Fed left interest rates unchanged and signaled a December rate hike was still on the table, but then recovered as the afternoon wore on with the Dow ending up nearly 200 points.

In earnings today, we heard from a number of tech companies. Camera maker GoPro (GPRO) disappointed after reporting a lower-than-expected rise in quarterly revenue, citing lower demand for its wearable cameras in the Americas. Twitter (TWTR) bombed on earnings due to slowing user growth. Yelp (YELP), on the other hand, posted a fantastic 40% in quarterly revenue as more local businesses are advertising on its platform.

Apple (AAPL) reported numbers that most analysts were expecting, so the stock did not move too much today. For the September quarter, it earned $1.96 per share on $51.5 billion in revenue and sold 48.05 million iPhones, which is a 22% jump compared to the previous year.

In M&A news, we heard today that IBM has agreed to acquire The Weather Company’s data and digital properties, a deal valued at more than $2 billion. IBM will own mobile and web assets, including weather.com, but it will not own the company’s primary TV asset, the Weather Channel.

9 of our 10 ETFs in the Spotlight closed higher lead by the Financials (IYF) with +2.32% while the only loser of the day was Consumer Staples (XLP) with -0.57%.

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