Monday, December 31, 2018

Investor Whiplash

Monday, December 31, 2018 - First and foremost, we wish everyone and their families in advance a very happy and healthy new year and all the best for 2019!

Now onto the markets - the season of jolly proved to be a roller coaster week for investors as the markets rallied immediately after Christmas Day and ended the week up on the major indexes providing long needed relief. Investor sentiment, however, remains cautious as concerns persist ranging from quickly rising interest rates, increased questioning of confidence in the current administration as the exodus of senior White House Advisors continues, credit concerns and Brexit. Trade tensions and a growing sense of a global slowdown also weigh on investors.

US indexes ended the week in positive territory - the S&P 500 closed at 2,485.74 and the broader NASDAQ Composite closed at 6,584.52 for a weekly jump of 2.86% and 3.97 %. Nevertheless, entering the last trading day of year, the indexes YTD were still down to a negative 7.03% on the S&P 500 Index and a negative 4.62% on the NASDAQ Composite.

Market volatility the past two weeks has been accentuated by tax selling and low liquidity due to the holidays and upcoming regulatory reviews on the major financial institutions to access capital haircuts.  In January we would expect to see more liquidity reentering the markets thereby reducing the move of markets on low volume.  A number of articles attracted our attention this week showing a marked change in the market’s paradigm to an over abundance of caution.

First, we noted Mohamed El-Erian’s December 30th article in Bloomberg which sited the pullback of banks in market-making activities this month due to regulatory reviews and how market volatility could have the effect of accentuating any global economic slowdown.   See his comments at:

Second, we noted a “rant” by Jeremiah Johnson on ZeroHedge titled The Calm Before the Storm.  What struck us was his list of investor concerns and tone of the article which was reminiscent of Rick Santelli’s rant on CNBC on government bailouts which proved to be the firing shot to mobilize the popular Tea Party.  This article can be found at:

Now let’s look at our ETFG Weekly Select List 

To best support the ETF selection process, The ETFG Weekly Select List highlights the 5 most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.  We highlight a couple of ETFs that attracted our attention.

The extreme volatility the past two weeks makes us cautious but we these funds had significant jumps: SPHD went jumped 4 ratings to 1 for those looking for a high dividend play. Likewise, ITEQ, a Middle East play jumped 3 ratings to 2 as did NFRA, a natural resources play. It jumped 4 no doubt as a play on the beaten-up oil and natural resources sectors.

We suggest keeping a mindful eye on tools like our Select List and Risk and Reward Ratings that can be used to evaluate the vast set of opportunities in the ETF marketplace. Today’s market realities require a new approach to macro investing, one in which individual investors now have access to tools via ETPs to customize risk and return profiles in their portfolios. Use our Scanner to find those funds.

Thanks for reading ETF Global Perspectives!

ETFG 21 Day Free Trial:

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.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.