Monday, August 22, 2016

Lots Just Around the Corner

In addition to the Presidential race, there are two familiar topics that have become part of the daily conversation for Wall Street this year:  interest rate hikes and oil prices. All year, these talking points have been able to spark a rally and kill one just as fast with no remorse. With Economist and Central Bankers meeting this coming week, the market took a deep breath from some of the highs they made two weeks ago. The Economic Symposium is taking place from Thursday through Saturday in Wyoming. Investors will be listening closely to Janet Yellen’s Friday speech to see if major economic data has made Fed officials have either dovish or hawkish viewpoints for a possible interest rate hike in September or more likely by December.

With the event looming, investors were relatively quiet by mid-week, pulling out only about $328M from broad based equity exchange traded funds and putting in about $195M to fixed income ETPs, according to the ETFG fund flows reports.

In other economic news, OPEC made some bulls on oil come out of the woodwork in the last two weeks as prices rallied up 9% due to a change in sentiment about a possible freeze on oil production coming soon. The United States Oil (USO) ETF rose over 21% since the month of August started, going from $9.44 to $11.34. SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has also been riding the oil rally wave moving from $32.76 on August 1st to $37.64 on August 19th. XOP currently has a 68.6 ETFG Quant score and is ranked as a “B” overall grade in the ETFG Quant model. It also carries a 7 Green Diamond reward rating and 6 Red Diamond risk rating in the ETFG rating system.

In the end, major indexes are still riding high considering where we’ve come since the beginning of 2016. Let’s see what the Yellen affect will do to the Market this week and if OPEC will continue its bullish sentiment on a possible production freeze.

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