Tuesday, October 1, 2013

Stalemate and Shutdown

After three years of impasse but avoiding the big event, the day has finally arrived as Senate Democrats and House Republicans have failed to reach an accord on government spending and the 2010 health-care law. As a result, the White House ordered federal agencies to suspend activities that will send home up to 800,000 federal employees of the nearly 2.9 million government workforce.  Although essential functions will continue, markets, which have already felt this looming pressure recently, are sure to be further tested by not only this event but additionally as the deadline to raise the country’s borrowing limit approaches and is just a few weeks away.

We talked a bit yesterday about the various market sectors, their respective recent performance, ETFG Quant’s review and ranking of these sectors and how to use the ETFG Heatmap to analyze them.  Today, given the big news around the U.S. Government shutdown, perhaps it’s no surprise that nine out of the Top 10 ranked equity ETFs in Quant invest in underlying opportunities outside the United States.  In fact, the only domestic equity ETF in today’s Top 10 is PXMG in the 10th ranked spot. 

GXC, the China SPDR, is atop today’s rankings and is the only ETF to carry an overall ETFG Quant score above 70 today.   INCO, the Indian Consumer ETF from EG Shares, maintains the 2nd ranked spot, followed closely by EWO, the iShares Austria ETF.  

Rounding out the top 5 ranked funds today are FEZ, the SPDR EURO STOXX 50 ETF and finally ADRE the BLDRS Emerging Market 50 ADR ETF.  We will watch closely for any sector rotation and as we touched on yesterday, we will see if the Utility sector perhaps provides an opportunity to capture yield as it did in the first half of the year.

While politics can certainly impact the economy and the financial markets in which we invest, it always seems to be key during these periods to maintain a disciplined investing approach, keep your eye on your overarching investment goals and to stay close to your research.

Tomorrow, we will examine a shutdown of a different type – the shutdown of ETFs, as we review the ETFG October Liquidation Watch List.

Thank you for reading ETFG Daily Perspectives.

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