Stocks Gain On Fed News; Amazon’s Phone Hits The Market

Ulli Market Commentary Contact

WEd pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

It was the fourth day in a row that stocks gained across the board and the S&P 500 closed at a new record high. The Dow and Nasdaq both added 0.6% each. While Amazon’s new smartphone was all the rage in the news today, the real market mover was the Federal Reserve, who announced that the U.S. economy was doing well enough for the central bank to make further reductions to its stimulus (bond buying) program.

Now, back to Amazon. The company released their much anticipated “Fire” smartphone today, cementing all the recent speculation as to what would be unveiled today at the expo in Seattle. Investor responses to the phone were positive. Shares of Amazon (AMZN) climbed 2.5% to $333.67 throughout the afternoon.

In international news, Gazprom (GAZP) announced today that it has turned off the taps again to the Ukraine, citing gross overdue payments of roughly $4.5bil have not been received from Kiev. This will obviously only make matters more complicated in Europe amidst massive interest rate cuts by the ECB.

Our 10 ETFs in the Spotlight gained with six of them making new highs; all of them are currently on the plus side YTD.

Read More

Equities Manage A Third Day Of Gains

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

It was a wobbly beginning, but the major indexes managed to pick up a little steam later in the session just enough to end up in the green for the third day in a row. The gains were modest as the above chart shows.

Even a sharp rise in consumer prices in May (+0.4% after climbing 0.3% the prior month), reduced housing starts and continued violence in Iraq could not keep equities down for long and it appeared that the path of least resistance was higher.

All eyes are now feasted on the outcome of the FOMC meeting tomorrow, although it is widely assumed that there will be no change in interest rate policy in the foreseeable future.

Some of our 10 ETFs in the Spotlight edged up with one of them making a new high; 9 of them are remaining on the plus side YTD.

Read More

Markets Eke Out A Gain Driven By M&A Activity

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks mostly hovered between small gains and losses through much of the day as traders monitored the conflict in Iraq and considered its potential impact on oil prices. The S&P 500 gained 0.10%, the Dow added 0.03% and the Nasdaq posted a 0.24% gain. The markets have shown a lack of volatility recently, especially compared to the chaotic Q1 we experienced earlier this year. According to the WSJ, Monday was the 41st day in a row that the S&P 500 did not move more than 1% in either direction.

On the M&A front, medical device heavyweight Medtronic Inc (MDT) agreed to buy Dublin-based Covidien Plc (COV) for $42.9 billion and shift its executive headquarters to Ireland. The deal is seen mostly as a way for Medtronic to take advantage of lower tax rates abroad. Also, I heard today that Fusion-io Inc’s (FIO) shares jumped up 22.4% to $11.36 after SanDisk Corp (SNDK) said it will buy the company for about $1.1 billion to boost its flash storage drive business. SanDisk’s shares also gained a hearty 3.6% to $102.00.

Equities also got a boost today from the announcement by the Federal Reserve that factory production increased 0.6% last month with output improving across numerous industries. Manufacturing output in May was led by a 1.5% jump in motor vehicle production. There were also gains in the output of machinery, computer and electronic products, electrical equipment and appliances, and fabricated metal products. Production of primary metals, however, slipped. Finally, the Fed is expected to announce a further cut to its monthly bond purchasing program, but is not seen raising interest rates until mid-2015.

Our 10 ETFs in the Spotlight went sideways with 9 of them remaining on the plus side YTD.

Read More

ETFs/Mutual Funds On The Cutline – Updated Through 06/13/2014

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 398 ETFs, of which currently 376 (last week 384) 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. 86 ETFs (last week 87) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 749 (last week 757) above the line and 101 below it out of the 850 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 Fed Likely To Raise Rates In The Second Half Of 2015?

Ulli Market Review Contact

92835431When the US Federal Reserve says there’s a slack in the economy, it means lack of activity in the labor market and an unemployment rate higher than where it should be to generate sufficient inflation, said Neil Dutta, head of US Macroeconomics at Renaissance Macro Research.

There have been both optimistic and pessimistic opinions about the state of the economy. Asked which part of the economy matters most, Neil said the labor market trumps all else. The first quarter of this year was a throw away and economists might be downgrading Q1 for all sorts of technical reasons.

The earnings numbers show productivity didn’t collapse in the first quarter. At the end of the day, generating more than 200,000 monthly jobs is an achievement. The GDP data is noisy and will be subjected to multiple revisions. If the job growth continues at current pace, it’ll be a matter of time before wages pick up, he noted.

Read More

New ETFs On The Block: iShares Interest Rate Hedged Corporate Bond ETF (LQDH)

Ulli Bond ETFs Contact

104394781The market has been wary of an early rate hike by the US Fed for some time now following the recent spate of robust economic readings. The jobless rate is improving steadily while the monthly nonfarm payroll data has been picking-up gradually, signaling a continuing recovery in the labor market.

The Fed is expected to maintain its current pace of tapering and wind down its assets purchase program by October. Once the money printing stops and inflation starts to take hold, the Fed will be forced to mop up the excess liquidity from the economy. But asset-sales by the Fed may not follow soon as the central bank remains anxious about a sudden rise in long-term interest rates, derailing the recovery. Minutes from the last meeting in April make no mention of such plans either.

A similar view is prevalent in the financial markets as well. James Bullard, president of the Federal Reserve Bank of St. Louis, said in a recent seminar that investors are worried about the central bank starting an asset-sales program next year. An early intervention, they fear, will cause a sudden spike in interest rates, making it difficult for consumers to make purchases on credit and companies to borrow long term.

Read More