One Man’s Opinion: Will Negative Reports Before The December Fed Meeting Derail A Rate-Hike This Year?

Ulli Market Review Contact

ManThe latest non-farm payroll report has come as a relief for most market observers and makes Federal Reserve chair Janet Yellen’s job easier, said Diana Swonk, chief economist at Mesirow Financial.

The 271,000 job additions in October not only dramatically reduce chances of a dissent (for a rate-hike) in her inner circle, but also among Charlie Evans (out of Chicago Fed) who is voting at the December FOMC meeting. Evans was temperate in his comments about the latest job report anyways as one of the things that he has been waiting for – wage acceleration – has been partly achieved (wages grew at 2.5 percent annual pace).

While the labor participation rate has fallen short of expectations, the latest report gives the economy a chance to move at the right direction and affirms the belief the economy is strong enough to handle a rate-hike, she noted.

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New ETFs On The Block: Goldman Sachs ActiveBeta US Large Cap Equity ETF (GSLC)

Ulli Equity ETFs Contact

InvestingGoldman Sachs Group Inc, one of the most reputable financial institutions in the world, has been conspicuous by their absence from the US exchange-traded funds industry for over two decades.

That changed recently when Goldman Sachs Asset Management – the fund manager overseeing more than $1 trillion assets, rolled out their first ETF based on the so-called “smart beta” methodology – a catchall phrase for funds that follow indexes with rules-based and quantitative investment strategy.

Till recently, Goldman’s name would be linked with two small ETNs – the $125 million GS Connect S&P GSCI Enhanced Commodity Total Return Strategy ETN (GSC) and the $7 million Claymore CEF-Linked GS Connect ETN (GCE).

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ETF/No Load Fund Tracker Newsletter For November 6, 2015

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

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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-11052015/

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Market Commentary

MARKETS CLOSE OUT ANOTHER WEEK OF GAINS

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended mostly higher Friday and bond yields spiked after an impressive October jobs report may increase the odds that the Fed will pull the trigger and raise interest rates for the first time in nearly a decade at its next meeting in December.

Despite the S&P 500 sinking fractionally on Friday to just under 2100, all three major indexes posted their sixth straight week of gains. Over the past five trading sessions, all three rose 1% or more.

The employment report that had analysts’ heads spinning today showed that 271,000 jobs were created in October. This was almost 100,000 more than the 182,000 figure that had been projected. The only fly in the ointment was that, when looking under the hood, all gains went to the age group of 55-69, while the 24-54 year olds actually lost jobs—not anything that MSM found worthy of reporting.

Stocks continue to recover with flying colors from the market’s first correction, a drop of 10% or more, that hit in late August. The rebound has been fueled by better-than-expected third-quarter earnings in the U.S. (after sharply lowered expectations) and economic stimulus from central banks in Europe and China. Let’s see if the market can continue to find more upside momentum next week.

Only 2 of our 10 ETFs in the Spotlight managed to eke out a gain today with the leader being the Financials (IYF) at +0.70%, while the Select Dividend ETF (DVY) gave back the most losing -1.34%.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 11/05/2015

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, November 5, 2015

TOC110515

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

 

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: BUY — since 11/03/2015

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) and finally generated a new “Buy” signal effective 11/3/15. The TTI is currently positioned +0.57% above its long term trend line. Be sure to log in to the blog for daily updates.

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Equities Directionless Before Jobs Report

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

It was a see-saw kind of day with no clear direction, as tomorrow’s looming jobs report kept traders on edge. We saw small gains and small losses before settling slightly below the unchanged line.

On the horizon continues to be the “will they or will they not” scenario about a possible rise in interest rates in December. Voicing his view was Atlanta Fed President Lockhart, who chimed in by saying that the case for a rate hike will “continue to firm up.” His message did nothing to move the markets out of their 2-day consolidation phase.

The dollar rallied pushing down some commodities and crushing oil, which dropped from $48/barrel yesterday to $45 today. Even good earnings from Facebook and Ralph Lauren could not push the indexes into plus territory at the close.

3 of our 10 ETFs in the Spotlight bucked the trend and closed up led by the Financials (IYF) with +0.52%. On the losing side, Healthcare (XLV) took the dubious honors with a loss of -0.32%.

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First Day Of Losses In November; Fed To Blame?

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks were trending upwards throughout the early part of the day, but fell after Fed Chair Janet Yellen said that a rate hike at its December meeting is a genuine possibility. The drop snapped a two day rally that pushed the Dow back into positive territory for the year. The Dow is still approaching its record 18,000 level, and many analysts see surpassing that high water mark as a legitimate possibility by year end.

In earnings action today, media giant Time Warner (TWX) topped earnings estimates with ease and also beat revenue expectations. On the other hand, shares of Papa John’s tumbled 14% after reporting slow third quarter sales and stating that they anticipate continued slower growth through the end of the year.

Also in the world of food giants, today Kraft Heinz (KHC) announced that it will close seven plants in north America over the next two years as part of a downsizing effort  that will eliminate about 2,600 jobs.

Finally, it was not a great day for energy stocks. The S&P Energy (.SPNY) fell about 1% as U.S. crude oil dropped about 3% to close at $46.54 a barrel.

All of our 10 ETFs in the Spotlight followed the indexes lower. Consumer Discetionaries (XLY) fared the worst with -0.65%, while holding up best was the Dividend ETF (DVY) with -0.19%.

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