Views From The Hill

View From The Hill: May-13-2015


Equities: It’s been a very choppy market over the last couple weeks with plenty of stocks churning on below average volume. On a positive note, there have been no violations of key support levels.  The SP-500 (SPY), Nasdaq-100 (QQQ) and Russell-2000 (IWM) were all basically unchanged in terms of price performance.

Volatility: One of the shadows lurking in the darkness of this market is Volatility (VXX). Its persistent lingering in neutral territory creates a higher probability for a correction in stocks. To emphasize my point, the previous 5 of 6 consolidation phases in volatility have led to significant price spikes in the VIX.

Bonds: The 20+ Year Treasury ETF (TLT) reconfirmed that the bear market in bonds is beginning to accelerate. Prices have been declining over the last two weeks on above average volume, but are nowhere close to capitulating proportions.

Currencies: U.S. Dollar (UUP) weakness continued as it violated another key support level. Inversely, the Euro (FXE) approached the cusp of another short-term breakout. This time even the Japanese Yen (FXY) responded to this major move in the currency markets by reversing its short-term downtrend. The yen still needs to clear resistance at the May-2015 high to be garner more respect.

Commodities: Although the DB Commodities Index (DBC) was unchanged, the real story was Gold (GLD) which gapped up to a new monthly high and is now on the verge of challenging resistance at the April-2015 high. Meanwhile, Oil (USO) continues to consolidate its previous gains.

Real Estate: The long term trend for the Dow Jones Real Estate Index (IYR) was downgraded to neutral. Residential real estate, as tracked by the Homebuilders ETF (ITB) unchanged.


ETF Capital Markets Performance Summary



Market Moving Events


  • Economic Growth / EU: Flash GDP in Q1-2015 for the European Union increased quarterly to 0.4% vs. prior @ 0.3% and consensus @ 0.5%; and annually @ 1.0% vs. prior @ 0.9% and consensus @ 1.1%. Although results were below consensus expectations, any signs of increased growth in the EU is accepted as positive, given the region’s struggles.
  • Economic Growth / France: France’s GDP Flash report for Q1-2015 was annually 0.7% vs. prior @ 0.2% and consenus @ 0.7% and improved quarterly to 0.6% vs. prior @ 0.1% and consensus @ 0.4%.
  • Economic Growth / Italy: Flash GDP for Q1-2015 improved quarterly to 0.3% vs. prior @ 0.0% and consensus @ 0.2%. Annually it was flat @ 0.0% vs. prior @ -0.5% and consensus @ -0.2%.
  • Inflation / Italy: CPI for April-2015 increased monthly to 1.0% vs. prior @ 0.7% and consensus @ 0.2%. Annually, it also gained to 1.0% vs. prior @ -0.1% and consensus @ 0.0%.
  • Employment / UK: Great Britain’s employment situation in April-2015 revealed slightly mixed results but overall it was positive. Claimant counts declined to -12.6k vs. prior @ -16.7k and consensus @ -20k. Despite all, this component of the report remained unchanged @ 2.3%. The unemployment rate improved slightly to 5.5% vs. prior @ 5.6%  and earnings grew annually by 1.9% vs. prior @ 1.7%.
  • Business / USA: Busness Inventories for March-2015 improved to 0.1% vs. prior revised @ 0.2% and consensus @ 0.2%.
  • Energy / USA: The EIA Petroleum Status Report for May-5-2015 indicated drawdowns in crude oil of -2.2mm bbl vs. prior week @ -3.9mm bbl; distillates @ -2.5mm bbl vs. prior week @ 1.5mm bbl; and gasoline @ -1.1mm bbl vs. prior week @ 0.4mm bbl.


  • Consumer / USA: Retail Sales in April-2015, on a monthly basis, were 0.0% vs. prior @ 1.1% revised and consensus @ 0.2%; Less-Autos, they decreased to 0.1% vs. prior revised @ 0.7% and consensus @ 0.5%.
  • Manufacturing / China: April-2015 Industrial Production increased annually to 5.9% vs. prior 5.6%. This was below consensus estimates @ 6.0%. This was one of China’s weakest reports since November 2008. Month-over-month also reflected softness @ 0.57% vs. 0.25% prior.
  • Consumer / China: April-2015 Retail Sales annualized @ 10.0% vs. prior @ 10.2% and consensus @ 10.5%. Monthly results were slightly better @ 0.74% vs. prior @ 0.71%.
  • Inflation / Germany: April-2015 CPI came in monthly @ 0.0% vs. prior and consensus views  @ -0.1%. Annually it improved to 0.5% vs. prior and consensus @ 0.4%.


  • Economic Growth / Germany: Quarterly results for Flash GDP in Q1-2015 were 0.3% vs. prior @ 0.7% and consensus @ 0.5%. Annually, it decelerated to 1.0% vs. prior @ 1.4% and consensus @ 1.2%.
  • Production / EU: Industrial Production for March-2015 in the European Union pulled back monthly to -0.3% vs. prior revised @ 1.0% and consensus @ 0.3%. Annually it dipped slightly to 1.8% vs. prior revised @ 1.9% and consensus @ 0.8%.
  • Residential Real Estate / USA: During the week of May-8-2015, Mortgage Applications could be reflecting deceleration in the wake of anticipated higher interest rates. The Composite Index declined -3.5% vs. prior @ -4.6%; the Purchase Index was @ -0.2% vs. 1.0%; and the Refinance Index @ dipped to -6.0% vs. prior @ -8.0%.


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