The Dueling Fed Governors
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August 20, 2014

8-20-2014 3-23-19 PM Fed Talk

The question of our time for investors remains when will interest rates rise? Fed Minutes released Wednesday only enhanced the debate and doubts within the Fed. Friday Fed Chair Janet Yellen will try to for some clarity when she makes her views known at Jackson Hole.

In the meantime, stock markets which were up fell slightly shortly after the Minutes were released only to rise again to close higher. But the Minutes did cause the bond yield curve to flatten which isn’t a good thing long term.

Earnings news featured retailers with Target (TGT) disappointing news leading investor interest. And, naturally the results were weak and so was forward guidance. But in this bizzaro world currently the stock rallies nearly 2%. Not all results were weak as Home Depot (HD) and Lowe’s (LOW) were quite positive. This in turn boosted Retail ETF (XRT).

Economic data was scant Wednesday but China’s preliminary manufacturing data will be released Thursday which could have a serious impact either way. So too will U.S. data like Jobless Claims, PMI Manufacturing Index Flash, Existing Home Sales and Leading Indicators. Of significance is an early warning from bad car loans (subprime car loans) as repossessions are growing sharply.

In afternoon trading it appears Bank of America (BAC) will settle mortgage violations to the tune of $17 billion. It sounds like a lot of money but the way it’s structured and given how much tax-payer money was given to them, this is a slap on the wrist—the stock rose. Very little reporting is taking place currently on the re-growth in the Credit Derivative market is which according to the IDSA is running around 2.3 M contracts or back into the trillions of dollars.

Leading market sectors higher included: S&P 500 ETF (SPY), DOW (DIA), Energy (XLE), Industrials (XLI), Retail (XRT), Consumer Discretionary (XLY) REITs (ICF), Value (VTV), Dollar (UUP), Semiconductors (SMH), Homebuilders (ITB), Solar (TAN), Hong Kong (EWH), Thailand (THD), Australia (EWA) and Crude Oil (USO).

Leading market sectors lower included: Gold Miners (GDX), Gold (GLD), Bonds (TLT), Japan (EWJ), Turkey (TUR), Germany (EWG), Austria (EWO), France (EWQ), Euro (FXE), Cow (COW), and Global Timber (CUT).

We published a short chart video on iShares MSCI Hong Kong ETF (EWH) where hope for a Shanghai/Hong Kong Exchange link was positively received.

The top 20 market movers by percentage change in volume whether rising or falling is available daily.

Volume picked up slightly due to FOMC Minutes release. Breadth per the WSJ was positive.

8-20-2014 4-44-42 PM Diary

Charts of the Day
  • SPY 5 MINUTE

    SPY 5 MINUTE

  • SPX WEEKLY

    SPX WEEKLY

  • INDU WEEKLY

    INDU WEEKLY

  • RUT WEEKLY

    RUT WEEKLY

  • NDX WEEKLY

    NDX WEEKLY

  • BAC WEEKLY

    BAC WEEKLY

  • KBE WEEKLY

    KBE WEEKLY

  • XLF WEEKLY

    XLF WEEKLY

  • XLI WEEKLY

    XLI WEEKLY

  • SOCL WEEKLY

    SOCL WEEKLY

  • XLB WEEKLY

    XLB WEEKLY

  • XLY WEEKLY

    XLY WEEKLY

  • XRT WEEKLY

    XRT WEEKLY

  • XLE WEEKLY

    XLE WEEKLY

  • XLP WEEKLY

    XLP WEEKLY

  • VTV WEEKLY

    VTV WEEKLY

  • CVY WEEKLY

    CVY WEEKLY

  • IEF WEEKLY

    IEF WEEKLY

  • TLT WEEKLY

    TLT WEEKLY

  • UUP WEEKLY

    UUP WEEKLY

  • FXE WEEKLY

    FXE WEEKLY

  • FXY WEEKLY

    FXY WEEKLY

  • GLD WEEKLY

    GLD WEEKLY

  • GDX WEEKLY

    GDX WEEKLY

  • SLV WEEKLY

    SLV WEEKLY

  • JJC WEEKLY

    JJC WEEKLY

  • USO WEEKLY

    USO WEEKLY

  • COW WEEKLY

    COW WEEKLY

  • DBC WEEKLY

    DBC WEEKLY

  • VGK WEEKLY

    VGK WEEKLY

  • VEA WEEKLY

    VEA WEEKLY

  • VWO WEEKLY

    VWO WEEKLY

  • EWA WEEKLY

    EWA WEEKLY

  • EWC WEEKLY

    EWC WEEKLY

  • EWU WEEKLY

    EWU WEEKLY

  • EWY WEEKLY

    EWY WEEKLY

  • EWZ WEEKLY

    EWZ WEEKLY

  • RSX WEEKLY

    RSX WEEKLY

  • EPI WEEKLY

    EPI WEEKLY

  • FXI WEEKLY

    FXI WEEKLY

  • NYMO DAILY

    NYMO DAILY

    The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.


     

  • NYSI DAILY

    NYSI DAILY

    The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.


     

  • VIX WEEKLY

    VIX WEEKLY

    The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.


     

Closing Summary

Even with a slightly more “hawkish” sentiment from dueling Fed governors investors seem confident Chair Yellen will have an opportunity to clean things up Friday. She has in the past toned down previous commentary with dovish comments of her own.

We have a long list of meaningful data on Thursday including China’s PMI Manufacturing Flash and also in the U.S. In addition will be Jobless Claims, Leading Indicators and Existing Home Sales.

Let’s see what happens.

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...

Headshot David Fry xsmall

Dave Fry is founder and publisher of ETF Digest and has been covering U.S. and global ETFs since 2001.

He is the author of "Create Your own ETF Hedge Fund: A Do-It-Yourself Strategy for Private Wealth Management" published by Wiley Finance and "The Best ETFs: U.S. Equities, A Companion Guide to Building Your ETF Portfolio".



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Disclaimer

ETF Digest™
 

Disclaimer: The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell only any security. Market sectors and related ETF's are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotation's aren't predictive of any future market action rather they only demonstrate the author's opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com

 

ETF Digest

Market Summary
NYSE Composite Index S&P 500 Index Nasdaq Composite Index Russell 2000 Small Cap Index NYSE Composite Index S&P 500 Index Nasdaq Composite Index Russell 2000 Small Cap Index 10 Year Treasury Note Yield Gold Bugs Index Morgan Stanley High Tech 35 Index Market Chart
Commodity Quote Change Change % NY
Gold1,300.502.300.18 % 00:50
WTI Crude Futr96.830.420.44 % 00:16
Index Quotes Change Change % Local
CRB289.411.130.39 % 13:48
US Dollar82.21-0.08-0.09 %13:39
Index Quotes Change Change % Local
VIX11.61-0.17-1.44 %13:28
MSCI Value Daily MTD YTD
Brazil2565.3910.73 %5.55 % 15.66 %
Russia681.6180.35 %3.45 % -13.38 %
India505.9850.05 %1.99 % 24.23 %
China67.079-0.13 %1.62 % 6.30 %