Despite a rough first week of March, US Equity Markets ended the
week up strongly with the Large Cap weighted S&P 500 closing at 2,822.48
and the broader NASDAQ Composite closing at 7,688.53 for a weekly gain of 2.89%
and 3.78%. The tragic 737 Max 8 crashes and subsequent grounding of the
aircraft weighed down the DJIA with Boeing being the main culprit. Nevertheless,
the S&P 500 and NASDAQ Composite Indexes are up a solid 12.49% and 15.87% year-to-date,
putting the indexes on course to make up for lost ground in Q4 2018.
This Tuesday and Wednesday, the Fed Open Market Committee will meet
as markets will be awaiting Wednesday’s news conference on the meeting for any
new indications on Fed moves. Investors in Asia will be focused on the
technical charts showing a bottoming in Chinese equities and the news of a
no-resolution of the Brexit situation.
While news on immediate horizon concerning the US – China Trade
issue may indicate progress, we would caution investors that the problems
plaguing the Boeing 737 MAX 8 factor greatly in these discussions according to an
article in Sunday’s Financial Times.
Why? Because Chinese Airlines and Leasing Companies account for some 10% of
Boeing’s 737 Max Orders. This shortfall in plugging the trade gap with the US
will not be easy to make up as there is simply not enough high ticket items
manufactured in the US to plug the gap. Hence any investors should be cautious
with any rallies based on resolution of trade issues. The Boeing factor will
simply draw discussions out.
We expect market volatility to pick up with an upward bias this
week. We do not expect any surprises at the FMOC press conference with Chairman
Powell this Wednesday. The “Fed Put” is
well intact.
Sectors that will likely benefit from the continuing weaker dollar
include Energy, Materials (Commodities), Industrials and Emerging Market
Countries carrying high debt levels, Mexico, Turkey, Brazil, South Africa and
Russia. Again, investors who share this view should use the ETF Screener in
conjunction with the Select List to place their bets.
Investors seeking safety in this environment should consider
utility and REIT ETFs which provide yield and some price movement
participation. This creates opportunities for traders and active investors who
can use ETFs to take advantage of real-time market volatility – both up and
down!
To take advantage of this, we suggest looking 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 for investors seeking to benefit from US dollar weakness: in Materials, GOAU, GDX, and SGDJ; in Energy
OIH, EMLP score high while PXI moved up; in Industrials, FLM, FIDU, CARZ top
the group. Oddly, there was not a lot of
movement in the rankings this week.
Thank you for reading the ETF Global Perspectives!
ETFG 21 Day Free Trial: https://www.etfg.com/signup/quick
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