One Man’s Opinion: Will Upstream Oil And Gas Companies See A Wave Of Defaults In The Near Future?

Ulli Market Review Contact

ManThe US economy is doing about 2.5 percent real growth and 4.5 percent nominal growth with the labor market tightening pretty dramatically, said Mark Kiesel, Global Head of Corporate Bond Portfolio Management at PIMCO.

The decline in domestic inflation is transitory and PIMCO agrees with Fed Chair Janet Yellen that US inflation is headed towards the 2 percent target. In a 2 percent inflation world, 10-year Treasury yields should not be at 2 percent, he noted.

Asked why 10-year Treasury yields have been hovering around the 2 percent level, Mark said people are probably looking backwards without realizing what’s going to happen going forward. The US economy is 70 percent domestic consumption and with the labor market tightening fundamentals remain strong, he explained.

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New ETFs On The Block: Market Vectors Oil Refiners ETF (CRAK)

Ulli Oil ETFs Contact

OilMarket Vectors, the exchange-traded fund issuing arm of investment management firm Van Eck Global, recently launched a “first-of-its-kind” US-listed ETF that offers a pure play exposure in global refiners.

While its common knowledge that US oil and gas producers (in the “upstream”) are bleeding, the story is quite different for oil refiners (in the “downstream”). The refining sector could actually make a killing despite crude oil prices plunging more than 60% since last summer due to low feedstock and main input costs.

That should be music to the newly launched Market Vectors Oil Refiners ETF (CRAK) and investors looking to profit from the energy sector’s decline. Oil refiners earn their profits from the difference in crude input costs and the selling price of refined products. While input costs for most refiners are decided upon the light sweet Western Texas Intermediate (WTI) oil or the heavy sour Western Canadian Select (WCS) crude oil benchmarks, prices of gasoline in pumps and other refined products are typically priced based on Brent crude, which mostly trades at a premium over WTI (or WCS).

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ETF/No Load Fund Tracker Newsletter For October 2, 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/2015/10/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-10012015/

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Market Commentary

STOCKS POST STRONG TURNAROUND TO CLOSE VOLATILE WEEK

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks on Wall Street staged a powerful comeback after plunging early Friday as investors reacted to a weaker-than-expected September jobs report. The Dow was down as much as 258 points but did a complete turnaround closing up 200 points by the closing bell. Major indexes were higher on the week with the energy sector showing relative strength and the telecom sector showing relative weakness.

To close out the week, it appears that investors are shrugging off a downright miserable jobs report, instead focusing on the positives, such as the positive impact of a weakening dollar today on business and earnings of U.S. multinationals. Wall Street may also be reacting to what it perceives now as no chance of an interest rate hike from the Federal Reserve this year.

The marquee data release this week was the jobs report. The Bureau of Labor Statistics reported that the economy added 142,000 jobs in September—well below economists’ consensus estimate of 200,000. Additionally, employment gains for both the months of August and July were revised down by an aggregate of 59,000. While this data is disappointing, what’s worse is that about 20% of the gains came from government hiring.

Next week will be a relatively slow week for U.S. economic data, with the most important release being the Fed’s September meeting minutes on Thursday. We will also be watching the trade balance figures closely on Tuesday.

With today’s rebound, it’s no surprise that all of our 10 ETFs in the Spotlight rallied and closed up. Turning in the best scorecard for the day was Healthcare (XLV) with +2.08%. Lagging the bunch were the Financials (IYF) with a meager +0.13%.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 10/01/2015

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, October 1, 2015

TOC 090315

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), broke through its long-term trend line generating a “Sell” for this arena effective 10/14/2014, which was followed by a violent break back above the line on 10/22/14 generating a new “Buy.” It was a classic whipsaw signal, and you can read more on my blog as to the events as they were unfolding.

As of today, our TTI (green line in above chart) is positioned below its long term trend line (red) by -2.79% after having generated a “Sell” signal as of 8/24/2015, which applies to all “broadly diversified domestic equity ETFs/Mutual Funds.”

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Markets Fairly Quiet To Kick Off Q4

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended mixed after cutting early losses as Wall Street kicked off the fourth quarter with investors struggling to put the worst quarterly decline in four years behind them.

Wall Street is heading into the final three months of the year still trying to gauge the impact of a slowing economy in China and the impact of coming interest rate hikes on assets ranging from stocks to bonds to commodities. Most investors are waiting for positive signs on both fronts.

In economic news, data showed U.S. manufacturing growth stagnated in September, weighed down by a stronger dollar and weaker overseas demand. A separate report showed that the number of Americans filing for unemployment benefits rose last week, while the overall trend still reflects a strengthening labor market. U.S. Treasuries were lower today.

5 of our 10 ETFs in the Spotlight managed to close higher during this see-saw day. Healthcare (XLV) took top billing with +1.01%, while the Dividend ETF (DVY) did not fare well and lost -0.63%.

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Markets Up—But Stocks Worst Qtr In 4 Years

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended sharply higher on the last day of a rough third quarter, but that shouldn’t overshadow the fact that Wall Street still posted its worst quarterly performance in four years, a quarter in which both of our Trend Tracking Indexes (TTIs) closed below their long-term trend lines, and in bear market territory, causing us to go into an all cash position for the time being.

We have now witnessed the first 10% correction in the major stock indexes since 2011, as worries of an economic slowdown in China and angst over interest rate policy and when the Federal Reserve will hike rates has taken a toll.

The rally on Wednesday (or was it a dead cat bounce?) was helped by encouraging news about the labor market. Businesses added 200,000 private sector jobs in September, according to a report by payroll processor ADP.

However grim this quarter has been, many investors are turning the other cheek in saying that solid third quarter earnings reports and stability in China could turn markets around in a heartbeat. Possible, but I just don’t think that hope is a good investment strategy to justify this kind of optimism.

With the bulls clearly in charge on the last day of September, all of our 10 ETFs in the Spotlight rallied with the lead dog being Consumer Discretionaries (XLY) with a gain of +2.66%, while Consumer Staples (XLP) lagged with +0.95%.

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