One Man’s Opinion: Will Equity Markets Provide Double-Digit Returns In The Second Half Of 2015?

Ulli Market Review Contact

ManInvestment Guru Carl Icahn’s recent observation about inflated asset prices and a probable sharp pull-back in equity indices caused some volatility for the stock markets this week.

The reality is when investors look at the second half, they have to measure their expectations a little bit, said Michael Fredericks, Managing Director at BlackRock Asset Allocation. Valuations of most asset classes now range between “somewhat expensive” and “expensive,” and investors need to temper their expectations.

That said; BlackRock believes instruments such as high-yield bonds are still a good source for consistent and steady returns, while the revision of earnings estimates has been severely negative for equities. The Federal Reserve said last week investors should be prepared for higher volatility/risk in equities and BlackRock believes markets are unlikely to give double-digit returns in the second-half of the year, he noted.

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New ETFs On The Block: Global-X Yieldco Index ETF (YLCO)

Ulli Bond ETFs Contact

Worldwide ideasAfter Investment guru Carl Icahn’s latest warning this week that all asset classes in the US are overvalued and equity markets are likely to witness a sharp pullback later this year once the rate-hike cycle gets underway, many analysts are suggesting relatively safer high-yield bonds in certain sectors that are largely immune to interest rates.

If spreads narrow toward the end of the year, fixed-income securities up in the high-yield hierarchy are likely to outperform the markets. Global X Funds, known for its successful array of unconventional income funds, recently broke new grounds with the launch of its so-called “yieldco” exchange-traded funds. The newly unveiled Global X YieldCo Index ETF (NASDAQ: YLCO) is an attempt to diversify the firm’s existing suite of income products through the alternative asset-class route.

To be sure, YLCO is the first fund of its kind that targets a unique subset of the broader income generating asset class named “yieldcos,” which are publicly traded renewable (solar, wind, biomass, tidal-wave etc) energy corporations and closely resemble Real-Estate Investment Trusts (REITs) and Master Limited Partnerships (MLPs).

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ETF/No Load Fund Tracker Newsletter For June 26, 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/2015/06/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-06252015/

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Market Commentary

S&P 500 SLIPS AS GREECE WEIGHS ON MARKET

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

It was a nothing day as the major indexes meandered above and below their respective unchanged lines. In the end, the S&P 500 gave back a meager 0.43% for the week, which is minor if you compare it to the Chinese market, which dropped almost 7.4% today.

It was the same old story about Greece’s negotiations with its creditors; things are getting very slippery with a concrete agreement not being on the horizon. A line in the sand has been drawn by the Germans stating that a solution needs to be in place before the markets open on Monday.

Well, I won’t hold my breath but wish that Greece would finally do the unavoidable and default, since it’s inevitable anyway. Why prolong the agony? Nevertheless, there is another meeting of the euro finance ministers scheduled for Saturday to attempt to hammer out a last minute deal.

Domestically, consumer sentiment rose to its highest level in almost 6 months, which supported equities for a while but the ongoing Greek soap opera was too much of a negative.

9 of our 10 ETFs in the Spotlight managed to eke out again with the leader being the Dividend ETF (DVY), which added 0.59%. Closing slightly in the red was Healthcare (XLV) with a 0.14% loss.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 06/25/2015

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, June 25, 2015

TOC021915

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 10/22/2014

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 above its long term trend line (red) by +1.86% keeping us in the market with our established positions.

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Greece And Economic Data Pull Indexes Down

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The early move to the upside turned into a dud when the usual culprits, namely Greece and the domestic economy, combined forces that gave the bear the upper hand for this session.

Also weighing on market sentiment was the miserable performance of the Dow Transportation Index, which is now down some 10% from its peak reached in late November. This index is often viewed as representative of the state of the economy.

Domestically, consumer spending shot up sharply showing the biggest gain in some 6 years and jobless claims remained at a decade low. Some of the economic reports of the recent past have shown improvement, which these days is a bad thing as it increases the chances of the Fed raising rates sooner than hoped for.

Meanwhile, it should be no surprise to you that the Greek soap opera continues with all its nuances. A Thursday morning meeting failed to generate consensus, so we’re back to square one.

9 of our 10 ETFs in the Spotlight headed south and closed lower with the Financials (IYF) suffering the most by losing 0.71%. Bucking the trend was our YTD winner, Healthcare (XLV), which managed to eke out a 0.55% gain.

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A Slippery Back Diamond Slope

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

After two days of gains, it was time for a reversal. To no surprise, the culprit turned out to be another failed set of negotiations between Greece and its EU creditors. It was the Greek headlines that moved the markets to the downside, as disappointment over progress prevailed. Another meeting was scheduled for tonight…

The domestic news featured the revised GDP number for the 4th quarter to only -0.2% from a previous -0.7%, which was in line with expectations. On the earnings front, home builder Lennar (LEN) reported better than expected second quarter earnings pushing its share price up by 3.8%.

All of our 10 ETFs in the Spotlight joined the market pullback and closed lower. Holding up the best was Consumer Staples (XLP), which gave back 0.45%. The most volatility was seen in the Global 100 (IOO) as it surrendered 2.40%.

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