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While U.S. markets seem on bullish cruise control toward year-end, overseas markets like China (FXI) and other Emerging Markets (EEM) continue to see heavy selling. A taper of a different sort (tighter credit) from the PBOC knocked markets lower. Emerging markets are just quite weak globally continuing a downward trend since they’re very dependent on strong China trade. It didn’t help that Turkey (TUR) markets declined over 7% on corruption charges that included gold smuggling, bribery, and money laundering in government tenders.
Economic data released Thursday included an ugly Jobless Claims report with a stunning 379K claims vs 330K expected, and prior at 369K–this is as high a reading as March. The total population of 1,374,031 now on extended benefits, which may run out due to a new budget proposal, would be deemed as “dropped from the work force”, sending the unemployment rate down by as much as 0.8%. This is how weird BLS data has become.
Existing Home Sales were weak at 4.9M vs the 5.02M expected, and prior at 5.12 M. This isn’t good as mortgage rates are rising. A report scheduled to be released Friday will note cash buyers of residential real estate was a record 42% of all transactions in November. So, rising mortgage rates shouldn’t slow some buyers down.
The Philly Fed Survey reported a reading of 7 vs 10 expected, and prior 6.5; and, Leading Indicators were up 0.8% vs 0.7% expected, and prior at 0.2%.
The DJIA gave headline writers another opportunity to feature another new all-time high. But, as many traders know, the DJIA is just “window dressing for the tourists.” The real action isn’t that much in sync.
Leading sectors included Metals and Miners (XME), Oil (USO), Natural Gas (UNG), and Solar (TAN). Laggards included REITS (IYR), Gold Miners (GDX), Gold (GLD), Retail (XRT) Homebuilders (ITB), Small Caps (IWM), and many overseas markets. The dollar (UUP) was steady and bonds (TLT) were slightly weaker. As to the latter, the yield curve is something to be watched closely now.
We featured a short video today on Solar ETF (TAN) which seems to closely parallel energy markets like crude oil.
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