One Man’s Opinion: Is The Federal Reserve Likely To Initiate Tapering In September?

Ulli Market Review Contact

92835431US July nonfarm payrolls data came in at 162,000, well below the 200,000 forecasted by most economists, and showed the labor market continues to improve, but at a frustratingly slow pace, said Mohamed El-Erian, chief executive officer and co-investment officer at PIMCO.

Internal factors like earnings, long-term unemployment rate, labor participation rate and youth unemployment rate indicate the situation is very fragile. So, the signals that go out to the public are very different from the signals that go out to the US policymakers. The signals to the policymakers are two-fold: First, (the Congress) should refrain from creating extra headwinds because of the imminent debt-ceiling discussions when congress meets; and second, the FOMC members and the Federal Reserve should realize the job on hand is very complicated, Mohamed added.

Asked how damaging a political-gridlock could be for the economy, Mohamed said the polarization in Washington is a matter for concern since it creates headwinds for the economy and slows down the pace of growth. It is hoped that Congress has learnt its lesson from the 2011 debacle and will not put itself in a similar situation. If it hurls itself into a mine-field situation similar to 2011, it will create additional uncertainties for the economy. The matter can get compounded further because of the forthcoming German elections in September. Hence the latest employment report should convince policymakers not to create further headwinds, he noted.

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New ETFs On The Block: Wisdomtree US Smallcap Dividend Growth Fund (DGRS)

Ulli Dividend ETFs, Small Cap ETFs Contact

139868600WisdomTree, the New York-based fifth largest sponsor of exchange traded funds, continues with its launching spree this year amid a strong bull market. The number of new launches this year has already surpassed the total number of launches in the previous two combined and given the phenomenal success of their start performer this year – the Japan Hedged Equity Fund (DXJ); it’s quite likely the company will continue to explore niches in an effort to beat the markets.

The new product – the WisdomTree US SmallCap Dividend Growth Fund (DGRS), focuses on the small cap sector of the market but with a unique feature in that it targets growing dividend paying securities. Investors often tend to overlook the small cap companies due to higher returns volatility.

However, small cap stocks have historically outperformed their large cap peers during bull markets. Also, small cap stocks tend to be tied more closely to the domestic market, and with the US economy showing signs of durable growth; they are likely to become more attractive than blue-chip large caps which are more sensitive to global developments.

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08-02-2013

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, August 2, 2013

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2013/08/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-08012013/

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Market Commentary

Friday, August 2, 2013

BULLS SHOW UP LATE TO KEEP RALLY ALIVE

U.S. equity markets rebounded off the morning lows to close narrowly in positive territory at record highs, extending yesterday’s rally, while the dollar weakened as traders digested a disappointing July nonfarm payroll report and what that means for future Federal Reserve policy.

Elsewhere, Treasuries rallied in the wake of the tepid data, which included a roughly in line read on personal income and spending, as well as smaller-than-expected rise in factory orders. The Dow Jones Industrial Average closed 30 points higher (0.2%) at 15,658, the S&P 500 Index gained 3 points (0.1%) to 1,709, and the Nasdaq Composite added 13 points (0.4%) to 3,689. The opening slip took place as investors reacted to a weaker-than-expected July jobs report.

Nonfarm payrolls increased 162,000 in July, below the consensus of 183,000. Additionally, the prior two months were revised down by a total of 26,000 jobs. Moreover, private sector payrolls increased by 161,000 in July, versus the forecasted gain of 195,000, after expanding by an downwardly revised 196,000 in June. However, the unemployment rate fell from June’s 7.6% rate to 7.4%, compared to the expected decline to 7.5%, as the civilian labor force participation rate dipped to 63.4% from 63.5%, and the number of persons employed part time rose for economic reasons.

Although the July job growth figure and previous revisions were disappointing, steady employment growth continues, with the economy adding an average of nearly 190,000 jobs over the past twelve months, enough to keep chipping away at the unemployment rate. Also, the outlook for further job growth appears to be intact.

Meanwhile, personal income rose 0.3%, below the consensus of 0.5%. Moreover, personal consumption expenditures (PCE) rose 0.5% in June, in line with the consensus. Inflation pressures picked up somewhat. The PCE price index rose 0.4%, while its core picked up 0.2%. Both measures, however, remain well below the Fed’s longer-term inflation target of 2.0%. Finally, factory orders rose 1.5% m/m in June, compared to the 2.3% increase that was expected by economists. Treasuries traded higher following the data.

Yield on the 2-year note declined to 0.30%, the yield on the 10-year note fell to 2.60%, and the 30-year bond rate dropped to 3.70%. Although stocks moved lower initially, the S&P erased almost all of its early losses as participants fell back on the Federal Reserve’s pledge to provide support to the markets for as long as economic data continues to paint a lukewarm picture.

The recovery effort in equities was assisted by the relative strength of consumer discretionary, materials, and technology sectors. Markets were higher on the week, as the DJIA gained 0.63%, the S&P 500 Index appreciated 1.1% and the Nasdaq Composite Index was higher by 0.38%.

Our Trend Tracking Indexes (TTIs) edged higher as well and closed the week as follows:

Domestic TTI: +3.90% (last week +3.32%)

International TTI: +7.45% (last week +6.66%)

Have a great week.

Ulli…

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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 Bob:

Q: Ulli: I have a question that has come to my mind a few times and was wondering if you could answer a question I have about M-Index on your Master Lists for both Funds and ETF’s.

What I was wondering is how the M-Index is calculated.  I see you place the most emphasis on using this number to sort the Funds or ETF’s on a particular list.  Better said that instead of sorting, I probably should save their ranking on each list.  For me, knowing how the M-Index was calculated would help in my understanding of what you select as being most important in your ranking system.

Thank you for your help.  Wonderful information you provide us.

A: Bob: The M-Index calculation is no secret. In #6 of the glossary it states this:

The M-Index (Momentum Index) shows the average non-weighted momentum ranking of a fund or ETF. The average is calculated from the existing 4wk, 8wk, 12wk and YTD momentum numbers. The higher the number, the more upside momentum a fund has.

However, volatility is increased at the same time. If you’re conservative, drop down a few

numbers from the top of the ranking food chain.

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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 Friday, August 2, 2013

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2013/08/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-08012013/

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Market Commentary

Friday, August 2, 2013

BULLS SHOW UP LATE TO KEEP RALLY ALIVE

U.S. equity markets rebounded off the morning lows to close narrowly in positive territory at record highs, extending yesterday’s rally, while the dollar weakened as traders digested a disappointing July nonfarm payroll report and what that means for future Federal Reserve policy.

Elsewhere, Treasuries rallied in the wake of the tepid data, which included a roughly in line read on personal income and spending, as well as smaller-than-expected rise in factory orders. The Dow Jones Industrial Average closed 30 points higher (0.2%) at 15,658, the S&P 500 Index gained 3 points (0.1%) to 1,709, and the Nasdaq Composite added 13 points (0.4%) to 3,689. The opening slip took place as investors reacted to a weaker-than-expected July jobs report.

Nonfarm payrolls increased 162,000 in July, below the consensus of 183,000. Additionally, the prior two months were revised down by a total of 26,000 jobs. Moreover, private sector payrolls increased by 161,000 in July, versus the forecasted gain of 195,000, after expanding by an downwardly revised 196,000 in June. However, the unemployment rate fell from June’s 7.6% rate to 7.4%, compared to the expected decline to 7.5%, as the civilian labor force participation rate dipped to 63.4% from 63.5%, and the number of persons employed part time rose for economic reasons.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 08/01/2013

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, August 1, 2013

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

The Domestic 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 Trend Tracking Index (TTI—green line in above chart) has bounced off its long term trend line (red) by +3.73% after briefly dipping below it late in June.

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 line to the downside. Be sure to tune in for the latest updates.

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Cheerful Data Pushes S&P Through The 1,700 Level

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

U.S. equity markets shrugged off yesterday’s lackluster performance to close Thursday trading session nicely higher, with the Dow and S&P 500 indices soaring into record high territory in the wake of a stronger-than-forecasted U.S. manufacturing report and better-than-expected sector reports out of China and the Eurozone.

The Standard & Poor’s 500 Index advanced above 1,700 for the first time, a level the index had struggled with in the past few sessions, and registered a record high close of 1706.87. All 10 S&P 500 sectors in the black, though growth-sensitive financials, industrials and consumer discretionary shares registered the biggest gains.

The financial sector advanced 1.7% as all top components posted gains with American Express leading the way. Elsewhere, industrials received significant support from transportation companies. Transportation stocks soared even as crude oil returned to its mid-July highs. The energy component advanced 2.5% to $107.70 per barrel. While most of today’s action in the equity markets took place during the opening minutes, treasuries and the dollar were a bit more active. Treasuries ended on their lows as heavy selling put significant upward pressure on yields.

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