View From The Hill: BOJ Policy Decision Surprises Markets and Scares Investors

Posted on Posted in Views From The Hill
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Sometimes the best surprise is no surprise at all, but the Bank of Japan thought otherwise. It pitched the market a curve ball last night when it decided not to increase its QE stimulus program and leave rates unchanged. Instead, it decided give the negative interest rate policy it implemented in January more time to have a positive effect on its stagnant economy. The SPY (SP-500 ETF) was off @ -0.91%.

Facebook (FB) @ +7.20% killed (a very positive thing :mrgreen: ) its quarterly earnings report and further distinguished itself from other technology leaders such as Apple (APPL) @ -3.06%, which we already knew delivered disappointing results. However,  today’s news of activist investor, Karl Icahn, exiting from the stock sent AAPL’s share price even lower and ultimately anchoring the Nasdaq-100 (QQQ) into another day of being underwater with negative returns.

Regarding the US economy, GDP for the 1st quarter came in @ 0.5% vs. estimates @ 0.7%. However, employment trends remain strong as Jobless Claims for the week of April-23rd-2016 reported 257k vs. estimates @ 260k. The 4-week moving average for this indicator also declined to 256k vs. a prior revised report @ 260.75k.

Today’s top performing exchange traded funds were Gold (GLD) @ +1.89%, US Oil (USO) @ +0.72% and, of course, the VIX (VXX) @ +5.85%. Bonds also offered investors an alternative for safety with the 20+ Year Treasury Fund (TLT) @ +0.41% and Treasury Inflation Protection (TIP) @ +0.52% advancing.

Now, let’s get on to the laggards. Although crude oil caught a bid today, the Energy Sector (XLE) failed to do so as it closed down @ -1.49%. Suffering the most were equities in Japan (EWJ) @ -4.56% and the DJ Home Construction Index (ITB) @ -3.56%.

(For the rest of the story, see our performance summary table below.)

 

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