Despite Fed’s “Last Call”, US Stocks Advance On ECB’s QE After-Party

Posted on Posted in Views From The Hill

By J Clinton Hill, Capital Markets Strategist @ Hillbent.com

Investment Market Commentary

etf-commentary-equities-bonds-currencies-commodities-real-estateUS stocks continued advancing despite the Fed’s having given several “last calls” in preparation to shut down this party. The Dow-30 Industrials (DIA), SP-500 (SPY), and Russell-2000 (IWM) made new record highs and the Nasdaq-100 (QQQ) finished just 0.13% within breaking its on record.

On a sector basis, Consumer Discretionary (XLY), Industrials (XLI), and Technology (VGT) are also trading in market record territory.

In other asset classes, the negative momentum in Treasury Bonds (TLT) and Gold (GLD) has accelerated and the US Dollar (UUP) gapped up to test former resistance levels.

So what gives with the abounding optimism in the stock market?

  • Well, the latest word is that the ECB is throwing an “after-party”. Yes, that’s right. On Thursday, Mario Draghi decided to extend QE until the end of 2017 vs. the previous deadline @ April-2017. At first glance it reduced its asset buying to €60 per month from €80, but the extension actually increases the total amount of purchases.
  • Also spiking the punchbowl was the Bundesbank, raising Germany’s 2016 GDP estimate to 1.9% from 1.7% and 2017 economic growth to 1.5% from 1.4%; and lifting inflation estimates to +0.3% from +0.2%, while lowereing 2017 inflation to 1.4% from 1.5%.
  • On another front, China’s inflation in November beat expectations with the CPI accelerating to its fastest pace in 7 months @ +2.3% y/y vs. estimates @ +2.2% and its PPI indicating its biggest move in 5 years @ +3.3% y/y vs. +2.3%. In addition to this, November’s exports were up for the first time in 8 months @ +0.1% y/y vs. estimates @ -5.0%, while gained the most in 2 years @ +6.7% y/y vs. estimates @ -1.9%.
  • Lastly, speculation surrounds this weekend’s meeting in Vienna among OPEC and non-OPEC members to explore the option of further production cuts.

That’s our summary as we break for the weekend. Be safe and enjoy the hustle and bustle of the holiday season! (Please refer to our ETF summary table below for a performance analysis of asset classes.) 

 


ETF Performance Summary

 

RS 1Yr Exchange Traded Fund Last Chg % Chg
  Equities  
100 DJ-30 Industrials (DIA) 197.69 1.41 0.72%
100 SP-500 (SPY) 226.51 1.36 0.60%
99 Nasdaq-100 (QQQ) 119.50 0.93 0.78%
99 Russell-2k (IWM) 138.31 0.27 0.20%
84 EAFE (EFA) 58.72 0.25 0.43%
80 Emerging Mkts (EEM) 36.17 -0.19 -0.52%
60 Europe FTSE (VGK) 47.73 0.26 0.55%
76 Latin America 40 (ILF) 28.40 0.05 0.18%
73 Brazil (EWZ) 32.82 -0.19 -0.58%
6 Japan (EWJ) 51.25 0.15 0.29%
92 Pacific Ex-Japan (EPP) 41.77 -0.04 -0.10%
85 FTSE China 25 (FXI) 37.47 -0.22 -0.58%
0 VIX Short-Term Futures (VXX) 25.97 -0.31 -1.18%
     
  Major Equity Sectors  
100 Consumer Discretionary (XLY) 84.31 0.19 0.23%
54 Consumer Staples (XLP) 52.04 0.74 1.44%
99 Energy (XLE) 76.60 0.24 0.31%
84 Financials (XLF) 23.75 0.05 0.21%
46 Healthcare (XLV) 68.85 0.83 1.22%
99 Industrials (XLI) 63.98 0.29 0.46%
99 Materials (XLB) 51.50 0.01 0.02%
41 Real Estate (XLRE) 30.97 -0.02 -0.06%
100 Technology / Info (VGT) 123.02 0.65 0.53%
89 Telecom (IYZ) 33.81 0.01 0.03%
56 Utilities (XLU) 47.96 0.50 1.05%
     
  Bonds & Fixed Income  
1 20+ Yr Treasury (TLT) 117.50 -1.48 -1.24%
7 Aggregate Bond Fund (AGG) 107.84 -0.33 -0.31%
45 Treasury Inflation Protection (TIP) 112.80 -0.52 -0.46%
30 Investop Corp Bond (LQD) 116.20 -0.45 -0.39%
91 High Yield Corp Bond (HYG) 86.49 0.04 0.05%
21 Pimco Intermed Muni Bonds (MUNI) 52.67 0.18 0.34%
22 High Yield Muni (HYD) 29.25 -0.21 -0.71%
     
  Currencies  
95 US Dollar Bullish (UUP) 26.24 0.11 0.42%
2 Euro Trust (FXE) 102.58 -0.54 -0.52%
27 Japanese Yen Trust (FXY) 83.70 -0.96 -1.13%
     
  Commodities  
96 DB Commodity Index (DBC) 15.60 0.08 0.52%
33 Gold (GLD) 110.40 -1.17 -1.05%
79 US Oil (USO) 11.44 0.13 1.15%
     
  Real Estate  
57 DJ Real Estate (IYR) 77.32 -0.06 -0.08%
86 DJ Home Construction (ITB) 28.81 -0.27 -0.93%
44 Residential Real Estate Index (REZ) 61.44 -0.08 -0.13%

 

Signing off @ Hillbent…

 

(For more a more detailed and extensive coverage of ETFs, please refer to our premium research service, ETF LookOut Points.)

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