One Man’s Opinion: Will The Federal Reserve Keep Rates Low To Boost Consumption?

Ulli Market Review Contact

92835431Following the Fed’s two-day monetary policy meeting this week, Chairwoman Janet Yellen said the central bank is going to stay accommodative for a long time after it ended its monthly bond-buying program this year, reassuring markets a rate hike is not likely any time soon, said Vincent Reinhart, chief US economist at Morgan Stanley.

Asked if Morgan Stanley agrees with Fed vice-chair Stanley Fischer, New York Fed chief William Dudley etc that the US central bank should push ahead with current policies and not change course, Vince said the Fed is going to keep rates low for a very long time. It’s conventional macro wisdom. There’s still resource slack in the economy; inflation is picking up, but it’s still below the Fed’s target of 2 percent. So, policymakers have still got some room to run, he noted.

Noted economists like Milton Friedman, Ben Bernanke and Richard Timberlake have all said central banks are always behind the curve. Asked if Janet Yellen fell short of expectations this week, Vince said policy rate in every country is asymmetric. It goes up a lot more slowly than it goes down because policy tightening is done in a planned fashion.

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New ETFs On The Block: SPDR Euro STOXX Small Cap ETF (SMEZ)

Ulli Europe, Small Cap ETFs Contact

146026450Europe is expected to witness stronger credit flow in the real economy after the European Central Bank cut its key interest rates this month. Investors are optimistic EU countries will recover from the prolonged recession that started in 2008 and stave off deflation successfully after the ECB’s intervention.

As the business cycle improves, European equities, particularly small cap stocks, are expected to outperform other asset classes since they tend to be highly correlated to local economies.

State Street Global Advisers, the asset management arm behind the SPDR brand of exchange-traded funds, has unveiled a Europe-focused ETF that targets small companies across Europe. The newly launched SPDR Euro STOXX Small Cap ETF (SMEZ) tracks the Euro STOXX Small Index – a gauge consisting of small capitalization companies domiciled in countries within Europe that have adopted the euro as their currency (There are 28 countries in the European Union, but only 18 use the euro).

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06-20-2014

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For June 20, 2014

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2014/06/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-06192014/

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Market Commentary

Friday, June 20, 2014

STOCKS ON PATH OF RECORD BREAKING TRAIL

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks nudged deeper into record territory today, rounding out a solid week of gains for the market. For the week, the three major U.S. stock indexes rose 1 percent respectively. The Dow is now within 53 points of 17,000 while the Standard & Poor’s 500 is just shy of 2,000 after rising 6 percent this year.

As we all know, M&A deals have been a big market mover this year. The value of corporate deals has surged 62 percent to $798 billion this year, from $494 billion a year ago, even though the number of acquisitions is about 3 percent lower than last year, according to Dealogic. Earlier this week, we saw Tyson Foods (TYS) finally win the bidding war to buy Hillshire (HSH) for $8.6 billion on Monday. The company ended up paying $63 a share for the food company about two weeks after rival poultry producer Pilgrim’s Pride (PPC) made an initial bid of $45 a share.

The economy fared pretty well this week, and the stock market reacted positively to the Federal Reserve’s announcement on Wednesday, in which the Fed noted that “growth in economic activity has rebounded in recent months,” supporting the case that the steady reduction in asset purchases is indicative of the Fed’s belief that the economy is on stable footing.  The Fed’s commentary seemed consistent with general sentiment of a modestly growing economy, a slowly improving labor market, and moderate inflation.

Our 10 ETFs in the Spotlight gained for the week with 4 of them making new highs today; 9 of them are remaining on the plus side YTD.

2. ETFs in the Spotlight

In case you missed the announcement and description of this section, you can read it here again.

It features 10 broadly diversified ETFs from my HighVolume list as posted every Monday. Furthermore, they are screened for the lowest MaxDD% number meaning they have been showing better resistance to temporary sell offs than all others over the past year.

In other words, none of them ever triggered their 7.5% sell stop level during this time period, which included a variety of severe market pullbacks but no move into outright bear market territory.

Here are the 10 candidates:

MaxDD

All of them are in “buy” mode, meaning their prices are above their respective long term trend lines by the percentage indicated (%M/A).

Year to date, here’s how the above candidates have fared so far:

YTD

To be clear, the first table above shows the position of the various ETFs in relation to their respective long term trend lines (%M/A), while the second one tracks their trailing sell stops in the “Off High” column. The “Action” column will signal a “Sell” once the -7.5% point is taken out in the “Off High” column.

3. Domestic Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) joined the bulls and headed higher closing the week as follows:

Domestic TTI: +3.68% (last Friday +3.36%)

International TTI: +4.66% (last Friday +4.52%)

Have a great weekend.

Ulli…

Disclosure: I am obliged to inform you that I, as well as advisory clients of mine, own some of these listed ETFs. Furthermore, they do not represent a specific investment recommendation for you, they merely show which ETFs from the universe I track are falling within the guidelines specified.

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READER Q & A FOR THE WEEK

All Reader Q & A’s are listed at our web site!
Check it out at:

http://www.successful-investment.com/q&a.php

A note from reader Roslyn:

Q: Ulli: This is in regards to your 10 ETFs in the spotlight. I noticed that XLY has been lagging all year and merely bouncing around its long-term trend line without making any headway. Are you planning to replace this laggard at some time?

A: Roslyn: Yes, I will reevaluate all 10 ETFs at some point, probably the end of the year and replace them with those that fall within the stated guidelines of having a low MaxDD percentage. In the meantime, stick with those that are performing well or make your selections from Thursday’s StatSheet.

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WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?

Do you have the time to follow our investment plans yourself? If you are a busy professional who would like to have his portfolio managed using our methodology, please contact me directly or get more details at:

https://theetfbully.com/personal-investment-management/

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Back issues of the ETF/No Load Fund Tracker are available on the web at:

https://theetfbully.com/newsletter-archives/

ETF/No Load Fund Tracker Newsletter For June 20, 2014

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

————————————————————-

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

https://theetfbully.com/2014/06/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-06192014/

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Market Commentary

Friday, June 20, 2014

STOCKS ON PATH OF RECORD BREAKING TRAIL

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks nudged deeper into record territory today, rounding out a solid week of gains for the market. For the week, the three major U.S. stock indexes rose 1 percent respectively. The Dow is now within 53 points of 17,000 while the Standard & Poor’s 500 is just shy of 2,000 after rising 6 percent this year.

As we all know, M&A deals have been a big market mover this year. The value of corporate deals has surged 62 percent to $798 billion this year, from $494 billion a year ago, even though the number of acquisitions is about 3 percent lower than last year, according to Dealogic. Earlier this week, we saw Tyson Foods (TYS) finally win the bidding war to buy Hillshire (HSH) for $8.6 billion on Monday. The company ended up paying $63 a share for the food company about two weeks after rival poultry producer Pilgrim’s Pride (PPC) made an initial bid of $45 a share.

The economy fared pretty well this week, and the stock market reacted positively to the Federal Reserve’s announcement on Wednesday, in which the Fed noted that “growth in economic activity has rebounded in recent months,” supporting the case that the steady reduction in asset purchases is indicative of the Fed’s belief that the economy is on stable footing.  The Fed’s commentary seemed consistent with general sentiment of a modestly growing economy, a slowly improving labor market, and moderate inflation.

Our 10 ETFs in the Spotlight gained for the week with 4 of them making new highs today; 9 of them are remaining on the plus side YTD.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 06/19/2014

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, June 19, 2014

Table of Content082312

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 10/25/2011

TTI

Our main directional indicator, the Domestic Trend Tracking Index (TTI), broke through its long-term trend line generating a Sell for this area effective 8/9/2011. Over the recent past, we’ve seen the TTI hovering slightly below and above this dividing line between bullish and bearish territory. The clear break to the upside occurred on 10/24/11 and, effective 10/25/11, a new Buy signal for domestic equities went into effect.

As of today, our TTI (green line in above chart) is positioned above its long term trend line (red) by +3.80%.

To avoid a potential whip-saw, a Sell signal to move out of all domestic equity positions will be generated once we have clearly pierced the red line to the downside. Be sure to tune in for the latest updates.

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A Last Minute Move To The Plus Side

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

It was a roller coaster ride but, in the end, the major indexes managed to stage a turnaround, with the S&P 500 closing at a record level for the 21st time this year.

The afternoon rally may have been a delayed response to Janet Yellen’s statement in which she confirmed rates to remain low for the forseeable future as the labor market is far from firing on all cylinders. Due to that slack, economic numbers will have to show some considerable improvement in order to justify a change in interest rate policy.

Today’s econ reports were well received with the weekly jobless claims dropping while layoffs were at very low levels. The Phili Fed manufacturing index surprised many analysts by jumping to its best reading since September.

In the commodity world, Brent crude surpassed $115 a barrel for the first time in 9 months and gold came alive, rallied sharply and closed above the 1,300 level.

Our ETFs in the Spotlight rallied with 8 of them making new highs; 9 of them are currently on the plus side YTD with only XLY lagging as it has all year.

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