Friday, October 18, 2013

Inflation in the future?

It’s been an interesting week to say the least.  Many people are looking forward to closing this week and recharging over the weekend.  Today is a good day to review the ETFGsm Quant model to see how the events this week may affect the market over the coming days and weeks.

Looking at the top 25 ETPs:
 - 12 are focused on North America
 - 6 on Asia-Pacific
 - 3 are Global
 - 3 on Europe
 - 1 on broad Emerging Markets.

  Over time we have seen Quant favor domestic over foreign and vice versa.  Today it seems pretty well split taking a broad view.  However, if you dig into the list a little you definitely notice a theme.  Most of the domestic products are focused on providing exposure to the energy or natural resources sector.  Is the ETFGsm Quant model saying that it sees inflationary forces coming in the near future?  It kind of looks that way.  What it doesn’t say is if that is going to come from economic growth or through monetary policy.  Quant doesn’t try to explain why things are happening, it tries to highlight current and higher probability future trends based on factors that started in Academia and have progressed to being tested by the market.

We hope everyone has a great weekend and thank you for reading ETFG Daily Perspectives

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