Bulls Ignore Global Events

Economic data Friday included the much awaited Employment Report which surprised forecasters with a more positive report: 175K vs 150K exp & prior revised higher from 113K to 129K.  The unemployment rate climbed from 6.6% to 6.7%. Inside the numbers the average hourly earnings are dropping which isn’t good news for economic growth.

Other economic data included International Trade (Trade Deficit) which wasn’t good: -39.1 billion vs -39 billion exp & prior -38.7 billion.

Consumer Credit $13.7 billion vs $14 billion exp & prior reduced from $18.8 billion to $15.9 billion. Revolving credit dropped $225 million which made auto and student loans 102% of total credit. Student loan delinquency over 90 days past equals a mind-boggling $124 billion.

Forecasts for number of new jobs contained in Friday’s Employment report included: Bank of America, 115K; Deutsche Bank, 120K; Goldman Sachs, 125K; and, Citigroup, 135K. This reminds me of ETF Digest Sacred Cow #9: “If you must forecast, forecast often.”  

In China it’s reported $13 trillion in corporate debt is outstanding a credit bubble exists there. The first non-bailed out default occurred today by Chaori Solar which missed its interest payment. Heretofore, China had bailed-out some firms but apparently that’s not going to be the case going forward. This event negatively affected Emerging Markets (EEM) Friday.

Further, events in the Ukraine continue as Russia’s Gazprom has threatened to cut off gas supplies as chief Alexei Miller said: “Ukraine has de-facto stopped paying for gas. We cannot deliver gas for free. Either Ukraine pays the debt and pays for current supplies or the risk appears a return to the situation at the start of 2009.” This situation caused European stocks and related ETFs (VGK) to decline sharply. But the EU has said it will help Ukraine pay the bill since it’s in their interest since they rely on it for nearly a third of their energy needs.

U.S. markets were higher early as bulls were enthusiastic about the Employment Report, but later stocks turned red on Gazprom news and a more detailed view of job numbers. And, of course it doesn’t help that reports indicate Russia has 30,000 troops in Crimea and the U.S. guided missile destroyer Truxton has entered the Black Sea. All this could make for an interesting geopolitically driven weekend. And, as we go to posting, Reuter’s reports Russian troops are storming Crimean Air Force base. (Hmm, I wonder if the oligarchs trade markets with inside Putin information?) Nevertheless, U.S. major market indexes were able to eke-out small gains.

Leading markets higher Friday included: Financials (XLF), Banks (KBE), Regional Banks (KRE), Retail (XRT), Industrials (XLI), Agriculture (DBA) Oil (USO) and few others.

Leading markets lower Friday included: Gold Miners (GDX), Gold (GLD), Silver Miners (SIL), Silver (SLV), Metals & Miners (XME), REITs (IYR), Homebuilders (ITB), Solar ETF (TAN), Biotech (IBB), Emerging Markets (EEM), Germany (EWG), Europe (VGK), Turkey (TUR), China (FXI), Brazil (EWZ, Coal (KOL), Russia (RSX), Asia ex-Japan (AAXJ) and many more.

Today we featured a short video on Market Vectors Gold Miners (GDX) from both weekly and daily chart perspectives.

The top 20 market movers by percentage change in volume whether rising or falling is available daily.

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