Markets Dislike Yellen’s Update; China Concerns Remain

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Investors weren’t too thrilled by what they heard from Janet Yellen during her first meeting in charge of the Fed. U.S. stock markets backed off today amid worries that the U.S. Federal Reserve could end up raising interest rates as soon as the spring of next year. The greenback and U.S. Treasury yields appreciated sharply after the Fed announcement while the major indexes dropped as the chart above shows.

Worries about China have sent copper prices reeling, falling more than 7% since March 6 in the wake of tepid economic data, while the base metals sector has dropped well over 6% this month. Deutsche Bank said earlier this week that heightened market volatility in the Chinese RMB currency market, alongside China’s first domestic bond default, have sparked market fears that commodity financing deals in China could unravel. Such an event has the potential to also result in widespread metals liquidation. Optimism that the Ukraine crisis won’t worsen pushed gold prices down $17.70 to $1,341.30, sending the gold sector about three per cent lower.

In corporate news, JPMorgan Chase (JPM) sold its physical commodities business for $3.5 billion, after new regulations crimped its ability to control power plants, warehouses, and oil refineries.

Our 10 ETFs in the Spotlight headed south as well with 7 of them still remaining on the plus side YTD.

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Food…Get It While It’s HOT…And Cheap

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The markets continued their upward trend from Monday, as the chart above shows, with all major indexes ending on the plus side.

The big news today included a surge in U.S. food prices on the horizon, Russia annexing Crimea, and a Microsoft swell to near-record levels not seen since 2000.

The Wall Street Journal reports that retail U.S. food prices may increase as much as 3.5% this summer, threatening to exacerbate an already-tepid economic recovery. Prices are set to increase for multiple staples, including coffee, vegetables, and meat. The price increase would be the largest in three years, as international demand rises and the California drought continues to affect supplies.

This morning, Russian President Vladimir Putin signed a treaty to place the Ukrainian region of Crimea under Moscow’s domain over objections from U.S. President Barack Obama and a number of leaders in Europe. Russia will take control of the region, which is of cultural and military importance to the world’s largest nation. This news today seemed to sooth investor anxiety over escalated tensions between the two countries.

Shares of Microsoft Corp. (MSFT) gained 3.94% today. The jump comes after reports emerged that new CEO Satya Nadella will unveil an iPad app on March 27. The release will be Nadella’s first public appearance since his January appointment and will center on Microsoft’s “mobile first, cloud first” strategy that will be the hallmark of the CEO’s tenure. The last time that Microsoft hit $40 was in July 2000.

Our 10 ETFs in the Spotlight followed upward momentum with 7 of them showing gains YTD while 2 of them made new highs again.

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Equities Back On Track As U.S. Data Remains Strong

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

U.S. equities climbed today, with the S&P 500 bouncing from its worst weekly drop in the past seven, as concerns eased over the situation in Crimea, while economic data indicated the economy was improving after a winter slowdown. The geopolitical tension had weighed on equities last week, with the S&P 500 falling 2 percent and the CBOE Volatility index (VIX) jumping to its highest since early February on Friday.

Economically-sensitive sectors led the way higher on Monday, with both technology and industrials up 1.3 percent. Google Inc gained 1.6 percent to $1,192.10 while General Electric Co (GE) rose 1.3% to $25.43. In the latest economic data, manufacturing output recorded its largest increase in six months in February and factory activity in New York state expanded early this month. The U.S. Federal Reserve’s massive stimulus has helped keep a floor under equity prices, and I am looking ahead to the outcome of a two-day meeting of the Fed’s policy-setting committee, which begins Tuesday.

In company news, Chinese e-commerce giant Alibaba Group Holding Ltd said on Sunday it would begin the process toward a U.S. initial public offering, ending months of speculation. Shares of Yahoo Inc (YHOO), which has a 24% stake in the company, jumped 4% to $39.11, one of the best performers on the benchmark S&P index.

General Motors Co. (GM) is recalling 1.55 million vans, sedans and sport-utility vehicles, citing concerns over brakes, seat belts and air bags, adding to 1.6 million cars recalled this year due to faulty ignition switches. The automaker also said it expects about $300 million in expenses in the first quarter to cover the cost of repairs for the more than 3 million vehicles. Ouch!

Our 10 ETFs in the Spotlight rallied with 7 of them showing gains YTD while 2 of them made new highs.

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ETFs/Mutual Funds On The Cutline – Updated Through 03/14/2014

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 361 (last week 364) 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. 70 ETFs (last week 73) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 706 (last week 769) above the line and 143 below it out of the 859 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: Will Energy And Financial Services Drive US Growth Going Forward?

Ulli Market Review Contact

92835431America’s potential GDP growth has been pegged at a dismal two percent, which could be unacceptable to many, including the US Fed. Aggregate supply-growth over time creates wealth, so if there’s less potential GDP, there’s less to share, which is a bad thing, said Vincent Reinhert, Chief US Economist at Morgan Stanley.

Asked if Americans should learn to live with this new low growth regime, or if there was a policy prescription to boost growth to 2.5 percent, Vince said the important question that needs to be asked is how the economy slipped to 2 percent from 2.5 percent five years ago or almost 3 percent ten years ago.

The US economy endured a severe financial crisis that destroyed a lot of wealth, followed by a poorly performing economy that shallowed out the human and physical capital stock, which resulted in the slowdown in growth. Some things are easy to change while there are others which are much difficult to deal with. US population growth is slowing while the size of aging the population is increasing. Demographics would suggest there is a secular downtrend in labor force participation rate, Vince noted.

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New ETFs On The Block: Cambria Global Value ETF (GVAL)

Ulli International ETFs Contact

95519646Mebane Faber’s Los Angeles, California-based Cambria ETF Trust and Cambria Investment Management LP launched its fourth exchange-traded fund recently, the Cambria Global Value ETF (GVAL). GVAL is a passively-managed strategic-beta fund and tracks the Cambria Global Value Index.

The NYSE-Arca listed fund is comprised of 100 stocks from the world’s 11 most undervalued developed and emerging market countries, as determined by the index provider. The 11 countries currently included in GVAL are Greece, Russia, Ireland, Hungary, Spain, Australia, Brazil, Czech Republic, Israel, Italy and Portugal.

The underlying index first screens its investment universe of 45 countries, including Australia, Austria, Belgium, Brazil, Canada, Chile, China, Columbia, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Luxemburg, Malaysia, Mexico, Morocco, Netherlands, New Zealand, Norway, Peru, Philippines, Poland, Portugal, Russia, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, UK and the US.

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