Markets End Lower For Fourth Straight Day

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Markets dropped again today following a weak reading on holiday retail sales and a disappointing earnings report from JPMorgan (JPM). The consensus amongst analysts regarding the lower earnings is that the bank has been dragged down by ongoing legal costs.

Renewed turmoil in commodities also weighed on investors, as did a global growth downgrade from the World Bank for 2015. The World Bank now expects global growth of 3% this year vs. an initial estimate of 3.4%. The downgrade is due mainly to weakness in Europe, Japan and emerging markets

Crude oil rebounded a bit today. Both West Texas Intermediate and Brent Crude gained at least 4% and now stand around $48.50 a barrel.

Still, many earnings reports to come later this week. In the banking world, we’ll hear from Bank of America (BAC), Citigroup (C), Blackrock (BLK) and Goldman Sachs (GS). Stay tuned!

9 of our 10 ETFs in the Spotlight slipped as the roller coaster ride continued, 1 ETF closed up (DVY) and 3 ETFs managed to stay on the plus side YTD as section 2 below shows.

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Dead Cat Bounce Takes Markets For A Ride

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

It was a wild and bumpy ride on Wall Street today. Volatility continued, and we saw the Dow swing back and forth to the tune of 400 points before closing in the red. Early gains were largely driven by upbeat investor sentiment reacting to Alcoa (AA) posting a top notch earnings report, Apple (AAPL) being upgraded, and as well receiving better-than-expected Chinese trade data. But once markets had climbed about 2% higher it seemed like investors took that as a signal to start selling and take profits.

Oil prices fell to just below $45 a barrel early in the day, however the slick fossil fuel was able to pare back losses by the close of trading. Oil now stands at $46.11 a barrel.

In other economic news, The World Bank trimmed its outlook for global growth today, saying a strengthening U.S. economy and plummeting oil prices won’t be enough to offset deepening trouble in the eurozone and emerging markets. Apparently, the World Bank said it expects the global economy to expand 3% this year, up from 2.6% in 2014, but still slower than its earlier 2015 forecast of 3.4%.

We still expect to hear earnings reports from major banks and Intel later on this week. So, stay tuned!

2 of our 10 ETFs in the Spotlight ended higher during this roller coaster ride; 3 ETFs are on the plus side YTD as the table below shows.

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Big Price Swings/Oil Take Markets Lower

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Volatility continues to be the name of the game thus far in 2015. Major indexes saw huge price swings, however, all of them closed the day in the red. The culprit impacting markets most seemed to once again be oil. Oil prices dropped another 5% today to close at $46.07 per barrel, its lowest level since April 2009.

Earnings season is picking up again. Alcoa (AA) is scheduled to post quarterly earnings after the closing bell, while financials JPMorgan Chase (JPM), Wells Fargo (WFC), Goldman Sachs (GS) and Citigroup (C) are amongst big banks due to report later in the week. Intel (INTC) is set to post earnings on Thursday as well.

There was some positive M&A news today. NPS Pharmaceuticals (NPSP) got a pop today (and was one of the most actives on the Nasdaq) after announcing that they had come to an agreement with Shire Plc to sell the company for $5.2 billion.

Let’s stay tuned to see if some positive earnings announcements can lift markets higher through the end of the week!

Only one of our 10 ETFs in the Spotlight managed to close up while the other ones retreated. Despite the sell-off this year, 3 ETFs have remained on the plus side YTD as the table below shows.

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ETFs/Mutual Funds On The Cutline – Updated Through 1/9/2015

Ulli ETFs on the Cutline Contact

Below are the latest ETF Cutline reports, which show how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs/MFs are positioned.

The first report covers the ETF Master List from Thursday’s StatSheet and includes 410 ETFs, of which currently 237 (last week 243) are hovering in bullish territory.

The second report includes only High Volume ETFs. To clarify, High Volume (HV) ETFs are defined as those with an average daily volume of $10 million or higher.

These ETFs are generated from my selected list of some 97 that I use in my advisor practice. It cuts out the “noise,” which simply means it eliminates those ETFs that I would never buy because of their volume limitations. 34 ETFs (last week 34) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 298 (last week 338) above the line and 548 below it out of the 846 that I follow.

Take a look:

1. ETF Master Cutline Report

2. ETF High Volume Cutline Report

3. MF Cutline Report

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.

If you missed the original post about the Cutline approach, you can read it here.

One Man’s Opinion: Is The Recent Drop In US Labor Force Participation Rate Cyclical?

Ulli Market Review Contact

92835431The US economy created 252,000 jobs in December, higher than the 220,000 that IHS Inc projected, said Nariman Behravesh, chief economist at IHS Inc. The November nonfarm payroll number was so high – which seemed fluky – that most economists thought there would be a pullback.

The higher numbers indicate the recovery will continue to be solid going into 2015. That said, the decline in wage numbers is troubling; more importantly the drop in unemployment rate to 5.6 percent from 5.8 percent was almost entirely due to a 273,000 drop in the labor force, which is not good news. The Fed could delay its rate-hike decision due to the drop in labor force participation rate, he noted.

Asked if the US economy is witnessing a new paradigm where the labor market continues to improve but labor force participation rate declines or stays at low levels, Nariman answered in affirmative. Some of the recent labor-market trends could be structural with demographics playing a role in it.

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New ETFs On The Block: SPDR MSCI ACWI Low Carbon Target ETF (LOWC)

Ulli Equity ETFs Contact

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State Street Global Advisors (SSGA), the exchange-traded fund issuer behind the SPDR range of products, recently unveiled the world’s first low-carbon ETF in order to give investors exposure in a fund that cares for the environment.

The newly-launched State Street MSCI ACWI Low Carbon Target ETF (LOWC) focuses on companies that are carbon-efficient and emit less-amount of green-house gases compared to their peers.

Nevertheless, the low carbon emphasis should not lead you to think that LOWC employs some obscure investment theme or holds a raft of no-name stocks. Rather, the portfolio contains a slew of familiar, large cap companies from different sectors, including energy.

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