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Fed Minutes were released Wednesday afternoon. Here are a few of the highlights:
The Fed believes there will be more economic growth as the employment picture improves.
Fed members believe there are risks with high forward PE ratios on small cap stocks, the increased level of (corporate) asset repurchases and rise in margin credit.
Also there was a concern in the apparent decline in the average quality of leveraged debt issuances.
Fed officials saw waning benefits from monthly bond repurchases.
Most members “most concerned” about QE risks to stability.
Members thought job gains were meaningful.
Many pundits now see QE ending in 2014, not 2015. All this seemingly undoes Bernanke’s speech Friday emphasizing the Fed will retain dovish interest rates and monetary policies. Go figure?
Investors took this badly initially, punishing bond prices and increasing yields. Pundits were quick to wonder if good economic news is now “bad news.” Clearly, it’s too soon to say.
We still have to wonder what constitutes “meaningful job gains.” Currently, 11 million people collect a record amount of disability benefits from the U.S. government; nearly 49 million are receiving food stamps; nearly 11 million are collecting “emergency” unemployment benefits; and, nearly 8 million only have part-time jobs. Adding in the workers who have stopped looking for work pushes the real unemployment rate to nearly 11%. Contradicting the belief that employment is poor is Wednesday’s ADP Employment data, which has also been recently reformulated. The ADP Employment data rose to 238K vs 205K expected, and prior 22K provided further proof to some that employment was getting better.
Consumer Credit fell to $12.3 billion vs $13.2 billion expected, and prior $17.9 billion. As usual, 95% of consumer credit was attributed to autos and student loans. Markets overall didn’t like the Fed Minutes but selling overall was modest. In fact, many tech subsectors were higher on the day. Gold (GLD) and bonds (TLT) were weaker with the report while the Commodity Tracking ETF (DBC) was weaker. By the close of trading, conditions in general were mixed. Previous trends remained in force with Tech (QQQ), Biotech (IBB), Solar (TAN), and Emerging Markets (EEM) underperforming but mixed at the same time. To remind investors the Fed was still around, another POMO actio n occurred today.
Our staff also puts together the daily top 20 ETF market movers by percentage change in volume for gainers, decliners and emerging volume.
The Chart of the Day belongs to Global X Greece ETF (GREK). Yes, it’s certainly a head scratcher as one would wonder what’s so attractive here. With hot money abundant, it’s looking for a home. Perhaps all you need to know is what’s happening to the tape and chart, and little else. You might be amused and more informed by this 3-month dated article regarding Greece and it’s markets. For many, it would ring a bell as to the disconnect between Wall Street and Main Street.
The weekly chart below is highlighted by twin moving averages (5 & 10) plus our important proprietary HI/Lo indicators, which were reasonably effective over this time period. Now we see the market breakout higher as noted by GREK being in the top 20 Market Movers in the article above. If you’re interested in learning more, take a trial at the ETF Digest.
Today we featured a short video on iShares MSCI Spain ETF (EWP) from both weekly and daily chart perspectives.
Volume on the day was higher given the action surrounding the FOMC Minutes. Breadth per the WSJ was mixed to negative.
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