Monday, June 3, 2019

A Drop in Yield...

Monday June 3, 2019 - With markets closed Monday in observance of Memorial Day, stocks declined for the fourth week in a row due to rising trade tensions and geopolitical uncertainty. The S&P 500 moved below its 200-day moving average while volatility, as measured by the Cboe Volatility Index (VIX), spiked on Friday but remained a bit below its highs earlier in the month. Investors who focused on this month’s stock market pullback may have missed the more unexpected drop in the 10-year Treasury rate to 2.13% at the end of May. That’s the lowest rate in almost two years and once again below the 2.29% rate on 3-month Treasury bills – an inverted yield curve.

Although historically an inverted yield curve has been a reliable recession signal, it hasn’t been very useful for investors: Stocks have risen over the following year about half the time. Recessions have followed, but the delay has ranged from six months to nearly three years. Low interest rates and beneficial Fed policies have been a key source of support for rising stock prices, so don’t let short-term recession fears prompt you to alter your long-term investment strategy. Summing up, the S&P 500 finished the week down 74 points, the DJIA fell 770.65 points and the NASDAQ Composite dropped 183.86 points.

ETFG Quant Movers – those ETFs who have had the largest weekly change in their respective, overall ETFG Quant ratings:

ETFG Quant Winners: This week’s biggest winner was Global X MSCI China Consumer Discretionary ETF (CHIQ) gained 8 points to end the week with a Quant score of 48.33. iShares MSCI Global Silver Miners ETF (SLVP) rose 7.23 points to 58.81 while Franklin FTSE Brazil ETF (FLBR) finished in a close third, gaining 7.21 points to finish with a Quant score of 55.79. Rounding out the top five were SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and Global X DAX Germany ETF (DAX) gaining 6.84 and 6.80 points respectively.

ETFG Quant Losers: This week’s biggest loser was iShares U.S. Infrastructure ETF (IFRA) falling 9.42 points to a Quant score of 46.20. AdvisorShares DoubleLine Value Equity ETF (DBLV) dropped 8.49 points to 47.45. Rounding out the bottom five were AAM S&P 500 High Dividend Value ETF (SPDV) down 7.88 to 39.56, SPDR Portfolio Small Cap ETF (SPSM) down 7.82 to 46.67 and SPDR Portfolio Mid Cap ETF (SPMD) ending up at 47.29 down 7.73 from last week.

ETFG Weekly Select List - the five most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model. Because of the sectors success on the 1W Quant Rating of the ETFG Heat Map, we’d like to highlight some substantial movement in the Basic Materials Sector when comparing this week’s Select List to last. SPDR S&P Metals & Mining ETF (XME) fell from the top spot last week to fourth this week, while iShares MSCI Global Silver Miners ETF (SLVP) went from being unranked to the top spot. Global X Gold Explorers ETF (GOEX) retained the second spot on the select list while U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU) was bumped up one spot to third. Rounding out the Basic Materials Sector on this week’s list is newcomer ETFMG Prime Junior Silver ETF (SILJ). Seemingly in line with every time economic uncertainty arises, investors have turned to precious metal ETFs to pad their portfolios and hedge against the risk of recession losses.

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