Monday, November 7, 2016 - US Equity Markets continued their longest losing streak in 36 years having 9 consecutive down days thru Friday. Uncertainties plagued investors. First, a Clinton victory became more uncertain as the days passed and her solid lead eroded daily with the news headlines. Accordingly, as Trump narrowed the gap, stocks began to sell off as investors began to calculate the consequences of a Trump victory. The VIX index ended the week at 22.5. Pharmaceutical stocks tumbled as news that US prosecutors are nearing an end to their investigation into suspected price collusion in the generic drug space. Upside volatility returned to UK assets as England’s High Court ruled that the Parliament would need to approve the UK’s departure from the EU. Oil prices dropped as attempts to stabilize production fell apart due to internal discourse. Despite the drop in oil prices, Energy related ETFs such as IEO, XLE, IXC, FILL, IYE, OIH, PXI, XES, look attractive with Scores of 69 or better according to our models.
Mixed news from economic indicators fueled investors’ fears that a Fed interest rate hike is right around the corner. While Consumer Spending declined sharply in Q3 from Q2, going down from 4.3% to 2.1% due to a decline in consumer confidence – no doubt from the uncertainties surrounding the election, ISM manufacturing survey rose despite a stronger dollar rising from 51.5 in September to 51.9 in October – exceeding most economists forecast. More importantly, the ISM Services Prices Index also rose which added ammunition for Hawks to raise interest rates to keep the economy from overheating. Average hourly earnings for private sector workers rose 2.8% year-over-year. Additionally, job numbers for August and September were revised upward. Unemployment dropped to 4.9%. The Treasury Yield Curve steepened which led investors to pull money out of fixed income ETFs in favor of TIPs and TIP related ETFs like TIP, IPE, LTPZ, SCHP, SIPE, and STIP.
With one day to go until voters take to the polls, ETF traders gambling on a Trump victory might consider shorting multinationals and foreign stocks of export oriented Asian Countries, as well as Mexican assets – both the peso and stocks. Coal sensitive ETFs like KOL, RSX for Russian Stocks and a number of ETFs offering Gold/Silver exposure, such as SGDJ, SIL, and SGDM could bode well short-term in the event of a Donald victory. Cowboys could play the leveraged double,triple or Short ETFs for the Election week trade.
Thank you for reading ETFG Global Perspectives!
ETFG 21 Day Free Trial: https://www.etfg.com/signup/quick
Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. ETF Global LLC (“ETFG”) and its affiliates and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively ETFG Parties) do not guarantee the accuracy, completeness, adequacy or timeliness of any information, including ratings and rankings and are not responsible for errors and omissions or for the results obtained from the use of such information and ETFG Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of such information. ETFG PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall ETFG Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages.
ETFG ratings and rankings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. ETFG ratings and rankings should not be relied on when making any investment or other business decision. ETFG’s opinions and analyses do not address the suitability of any security. ETFG does not act as a fiduciary or an investment advisor. While ETFG has obtained information from sources they believe to be reliable, ETFG does not perform an audit or undertake any duty of due diligence or independent verification of any information it receives.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested. Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate. Where an investment or security is denominated in a different currency to the investor's currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor.
Post a Comment
Note: Only a member of this blog may post a comment.