Scalper1 News
Uncertainty seems to be the only thing that’s certain in the global investing backdrop. Several developed and emerging markets are dragging their feet currently, with the U.S. being the lone star planning a policy tightening. Since China messed up the global market with a bout of downbeat economic releases, all eyes were on the August U.S. job data as only this could throw light on the Fed’s rate hike decision. But like all other economic hints, the August job data also puzzled investors. The U.S. economy added 173,000 jobs in August which fell below the market expectation of 220,000 and the previous month’s tally of 245,000. If this was not enough, U.S. job numbers in August grew at the most sluggish pace in five months . While this raises questions about the domestic economy, a few investors might choose to look at the unemployment rate which dropped to 5.1% from 5.2%, the lowest since April 2008. A more-than-seven-year low unemployment rate should bolster the case for an imminent policy tightening. Additionally, average hourly wages rose 0.3% sequentially and 2.2% year over year. The average work week also nudged up to 34.6 from 34.5 in the prior and the year-earlier months. Rate Hike or Not? Now, this job picture gives fewer cues over the Fed’s imminent course of action. This coupled with the latest China issues makes the case more ambiguous. On the one hand, there’s an improving service sector, decent consumer confidence, a pretty strong housing market and a fall in unemployment rate hinting at the September lift-off. On the other hand, the missed job expectation in August is blurring the vision. Investors should not forget that there is always room for positive revisions in the monthly job numbers which might once again spark off a debate over Fed tightening. Whatever the case, several ETFs will be on the prowl to capitalize on this payroll-related news. ETFs to Move Among them, top U.S. equities ETFs SPDR S&P 500 ETF (NYSEARCA: SPY ), Dow Jones Industrial Average ETF (NYSEARCA: DIA ) and PowerShares QQQ Trust (NASDAQ: QQQ ) deserve special mention. On September 4, SPY, DIA and QQQ dived 1.5%, 1.7% and 1.2% respectively but started to gain their lost ground later on. Other ETFs that are highly vulnerable to Fed decisions are gold bullion ETFs including SPDR Gold Trust ETF (NYSEARCA: GLD ), emerging market ETFs like iShares MSCI Emerging Markets ETF (NYSEARCA: EEM ), Treasury bond ETFs like iShares 20+ Year Treasury Bond ETF (NYSEARCA: TLT ) and last but not the least the U.S. dollar ETF PowerShares DB US Dollar Bullish Fund (NYSEARCA: UUP ). While stocks and emerging market ETFs might underperform on policy tightening (as there will be a cease in cheap dollar inflows), UUP should gain. Gold ETFs will take a dive on a stronger greenback and treasury ETFs will start retreating on higher yields. Now it depends on how investors individually view the August job data and position their portfolio before the upcoming policy meet. Original Post Scalper1 News
Scalper1 News