Author Archives: Scalper1

Market Lab Report – Premarket Pulse 4/5/16

Major averages fell on lower, below average volume. Selling pressure was due to the soft slide in oil prices and Fed President Rosengren’s hawkish remarks that expectations of one or zero interest rate hikes in 2016 might be “too pessimistic”, suggesting a push for higher rates. Of course, Yellin’s dovish testimony suggested the global economy must show signs of recovery before the Fed hikes rates, and such signs may be further off than expected. FOMC minutes are due out Wednesday at 2 pm ET. Futures are down more than half a percent with the European markets down more than 2% on a disappointing Factory Orders report from Germany (-1.2% month-over-month; expected 0.2%). Airline stock Hawaiian Holdings (HA) had a pocket pivot. Earnings are skyrocketing, ROE 46.5%, group rank 38. On uptrends, HA tends to obey its 10-day moving average without any violations. A violation occurs when a stock closes below its moving average then trades on a subsequent day below the low of that day.

Best Performing Bond ETFs Of Q1

Chances for the 33-year bull run in the bond market to fall flat in 2016 increased when the Fed enacted a rate hike in December 2015 after almost a decade. But in reality, bonds kept bouncing throughout the first quarter on a low-yield environment in most developed markets across the world. Thanks to China-led global market worries and the 12-year plunge in oil prices, the global market went berserk to start this year. All these buried risk-on sentiments and boosted relatively safer fixed-income securities in the quarter, pulling bond yields down. In fact, the impact of the global financial market turmoil was so deep-rooted that the Fed halved its number of rate hike estimates for 2016 from four to two in its March meeting. Also, Fed chair Yellen reaffirmed a ‘cautious’ stance on future policy tightening. Needless to say, the very move dragged down the U.S. benchmark bond yields and pushed up its prices. Notably, yields on 10-year Treasury notes dropped 41 bps to 1.83% (as of March 30, 2016) in the quarter, leading U.S. Treasury valuation to soar. Meanwhile, deflationary threats led the central banks of Japan and Eurozone to widen their already ultra-easy monetary policies. At its January-end meeting, BoJ set its key interest rate at negative 0.1%. BoJ then hinted at further cuts in interest rates if the economy fails to improve desirably. In Europe, the ECB president Mario Draghi turned super dovish in March by raising the monthly bond purchase size to EUR 80 billion from 60 billion previously. Also, ECB lowered the deposit facility rate to negative 0.4%, down from the previous rate of negative 0.3%. It also cut its main refinancing rate and marginal lending rates by 0.5% each to zero percent and 0.25%, respectively. Quite expectedly, the twin boosters of easy money policy globally and a delayed rate hike in the U.S. made fixed-income securities a winner in the first quarter. It would thus be interesting to note the ETFs that were the leaders in the bond space during the quarter. Returns are as per xtf.com . 25+ Year Zero Coupon U.S. Treasury Index Fund (NYSEARCA: ZROZ ) ZROZ follows the BofA Merrill Lynch Long US Treasury Principal STRIPS Index, which focuses on Treasury principal STRIPS that have 25 years or more remaining to final maturity. It charges just 15 basis points in expenses while the 30-day SEC yield is 2.62% currently (as of March 29, 2016). ZROZ has added 14.3% so far this year (as of March 30, 2016). The fund has a Zacks ETF Rank #2 (Buy) with a High risk outlook. DB German Bund Futures ETN (NYSEARCA: BUNL ) German bonds and the related ETFs also made an impressive rebound as these offer safety. Following extremely lower yields due to accommodative ECB policies, “German government bond yields are set to record their biggest quarterly fall in 4-1/2 years ” on March 31, 2016. The note looks to provide investors exposure to the U.S. dollar value of the returns of a German bond futures index, replicating the performance of a long position in Euro-Bund Futures. The note is up 14.3% so far this year (as of March 30, 2016). Vanguard Extended Duration Treasury ETF (NYSEARCA: EDV ) The fund seeks to match the performance of the Barclays U.S. Treasury STRIPS 20-30 Year Equal Par Bond Index. This means that this benchmark zeroes in on fixed income securities that are sold at a discount to face value, and then the investor is paid the face value upon maturity. The fund charges 10 bps in fees. This Zacks Rank #2 ETF yields 2.71% annually. The fund has returned 13% so far this year (as of March 30, 2016). DB Japanese Govt Bond Futures ETN (NYSEARCA: JGBL ) Very low bond yields following Bank of Japan’s decision to push key interest rates to the negative territory to engineer the sagging economy were behind JGBL’s surge. Many analysts are of the view that ” negative bond yields are here to stay in 2016″ for Japanese bonds. The product looks to track the DB USD JGB Futures Index, which is intended to measure the performance of a long position in 10-year JGB Futures. JGBL advanced about 9.9% so far this year (as of March 30, 2016). PIMCO 15+ Year U.S. TIPS ETF ( LTPZ ) The fund tracks the BofA Merrill Lynch 15+ Year US Inflation-Linked Treasury Index and is up 9.6% so far this year (as of March 30, 2016). As U.S. inflation improved in the quarter, TIPS ETFs came into the limelight. Original Post

Top And Flop Country ETFs Of Q1

The international stock markets had a rough run in the first quarter of 2016, with the Vanguard FTSE All-World ex-US ETF (NYSEARCA: VEU ) losing 0.6%, thanks to deflationary worries in the developed market, oil price issues, the Chinese market upheaval and its ripple effects on the other markets (see all World ETFs here ). While these issues made the country ETF losers’ list long, the space was not bereft of winners either. Several countries’ stock markets performed impressively in this time frame on country-specific factors. Plus, a soggy greenback boosted the demand for emerging market investing, increasing foreign capital inflows into those countries. In fact, the lure of international investing may be seen in the second quarter too, as the Fed is likely to opt for a slower-than-expected interest rate rise. Overall, Latin America won the top three winners’ medals, while the losers were scattered across the world. Investors may wish to know the best- and worst-performing country ETFs of the first quarter. Below, we highlight the top- and worst-performing country ETFs for the January to March period. Leaders iShares MSCI All Peru Capped (NYSEARCA: EPU ) – Up 30.8% The Peruvian market was on a tear in the first quarter, courtesy of the sudden spurt in commodity prices. After a rough patch, metals like gold and silver finally got back their sheen this year on a lower greenback. Even copper returned positively, as evident from the 2.6% return by the iPath DJ-UBS Copper Total Return Sub-Index ETN (NYSEARCA: JJC ). Being a large producer of precious metals, Peru greatly benefited from this trend, offering the pure play EPU a solid 30.8% return. iShares MSCI Brazil Capped ETF (NYSEARCA: EWZ ) – Up 27.2% While the economic growth prospects of Brazil are weakening, heightened political chaos is pushing up its market. Brazilian stocks have generally reacted positively to any political drama related to president Dilma Rousseff. Speculation that Rousseff is incapable of dissuading the impeachment proceedings that have been called against her, and the prospect of a change in governance set the Brazil ETFs on fire. Global X MSCI Colombia ETF (NYSEARCA: GXG ) – Up 22% The Colombian economy is a major exporter of commodities, from the energy sector (oil, coal, natural gas) to the agricultural sector (coffee). It has also a strong exposure to the industrial metal production market. Thus, a rebound in the commodities market led to the surge in this ETF. Though from a year-to-date look oil prices are down, commodities bounced in the middle of the quarter. This might have given a boost to the Colombia ETF. Losers WisdomTree Japan Hedged Financials ETF (NYSEARCA: DXJF ) – Down 24.1% At its January-end meeting, the BoJ set its key interest rate at negative 0.1% to boost inflation and economic growth. The BoJ then hinted at further cuts in interest rates if the economy fails to improve desirably. However, the introduction of negative interest rates weighed on the financial sector, as these stocks perform favorably in a rising rate environment. Also, the currency-hedging technique failed in the quarter due to a falling U.S. dollar. This was truer for the Japan equities, as the yen added more strength by virtue of its safe-haven nature. The twin attacks dulled the demand for the hedged Japan financials ETF, which lost 24.1% in the quarter. Deutsche X-trackers MSCI Spain Hedged Equity ETF (NYSEARCA: DBSP ) – Down 21.6% The Spanish economy is bearing the brunt of deflationary threats despite the ECB’s massive policy easing. Consumer prices in Spain are likely to decline 0.8% year over year in March 2016, the same as in February, as per Trading Economics . This led the Spain ETF to lose 21.6% in the first quarter. SPDR MSCI China A Shares IMI ETF (NYSEARCA: XINA ) – Down 19.21% Since the first quarter was mainly about the nagging economic slowdown in China, most of the China ETFs had a tough time. Within the bloc, XINA lost the most in the quarter, shedding over 19%. Original Post