Markets

Fed Tapering Could Hurt This ETF...And It's Not One You'd Expect

ETF Professor — Fri, 24 May 2013 20:24:19 +0000

One of this week's most prominent themes has been speculation that the Federal Reserve is either going to wind down or soon end its $85 billion per month asset-buying activities. Not surprisingly, that has not been particularly good news for U.S. stocks and other riskier assets.

Beyond the usual ETF suspects such as mortgage-backed securities, mortgage REIT funds and high beta sector plays that could be harmed by the end of quantitative easing, a surprising candidate for end-of-QE vulnerability has entered the conversation. That ETF is the iShares MSCI Turkey Investable Market Index Fund (NYSE: TUR), one of 2013's emerging markets ETF stars.

Barclays published a list of investments that could be hit if QE ends and Turkish stocks made that dubious cut.

"Investors who are concerned about the reversal of Fed easing should consider short positions in assets with high elasticities to the Fed and expensive valuations versus history. Turkish equities and US defensives appear vulnerable," according to part ...

Market Wrap for Friday, May 24: Stocks Close Week Near Unchanged Mark

Scott Rubin — Fri, 24 May 2013 20:20:46 +0000

A day after a sell-off hit much of the world, but spared the United States, the U.S. market was essentially flat on the last trading session of the week. Although there are signs that a pullback may be imminent, investors continue to pour money into U.S. stocks on expectations that the bull market will continue. Although the S&P 500 finished slightly lower on the week, the widely watched average is already up a little less than 16 percent in 2013.

Major Averages

The Dow Jones Industrial Average climbed a little less than 9 points, or 0.06 percent, to 15,303.

The S&P 500 fell around 1 point, or 0.06 percent, to 1,650.

The Nasdaq lost less than a point, or 0.01 percent, to close at 3,459.

Durable Goods

Durable goods orders rose 3.3 percent in April after falling 5.9 percent for March. This came in ahead of the consensus which expected durable goods orders to rise 1.6 percent.

Excluding transportation, durable goods orders increased 1.3 percent in April after falling 1.7 percent in March. This compared to consensus estimates calling for an increase in durable goods for April of 0.5 percent.

Commodities

Energy prices were mixed to end the trading week. Late in the day, NYMEX crude futures were down 0.32 percent to $93.95. Brent contracts were last up 0.11 percent to $102.55. Natural gas fell around 0.59 percent on the day and was last trading at $4.24.

Precious metals were marginally lower on the session. Heading ...

It's Time to Think About Obscure Middle East ETFs

ETF Professor — Fri, 24 May 2013 18:16:23 +0000

Geopolitical concerns and perceived liquidity risk are among the issues that have kept investors from embracing Middle East stocks and ETFs in recent years. A prime example of a market hampered by those issues is Egypt.

The Market Vectors Egypt ETF (NYSE: EGPT), the lone ETF devoted exclusively to North Africa's largest economy, has had its share of struggles at the hands of negative news flow. However, that does not mean the entire Middle East investment thesis is damaged. Actually, the opposite is true.

"The Middle East markets may be associated with higher levels of risk as a result of the seemingly constant conflict-oriented headlines coming out of the region (i.e., from Israel, Syria, Iran, Iraq, Egypt, to name just a few of the dicey spots)," said WisdomTree Research Director in a new research note. "Yet at least the market moves this year illustrate that not all news is bad. Many of the Middle East economies are growing as they develop significant infrastructure spending with their oil wealth in an effort to diversify their economies."

Indeed, some Middle East markets, many of which are classified by index providers as frontier markets, are found among the world's high fliers in 2013. ...

Consider Fundamentals Before Bailing on Japan ETFs

ETF Professor — Fri, 24 May 2013 17:06:35 +0000

Perhaps Japanese stocks and the corresponding ETFs had things too good and too easy to start 2013. The abridged version of the story goes like this: Prime Minister Shinzo Abe garnered more confidence among average Japanese citizens than his recent predecessors, the yen tumbled against the U.S. dollar to levels not seen in several years and Japanese stocks responded by becoming Asia's best performers this year.

Then came Thursday, a day that saw Japanese stocks suffer their worst one day performance in more than two years. Friday's Asian session was no day at the beach, either. The Nikkei 225 started the day in fine fashion only to careen down to 14,000, before rebounding by more than 600 points. Days like Thursday and Friday are enough to make participants question the veracity of Japan's rally and some analysts have done just that.

This may be a "blood on the streets" scenario where cooler heads eventually prevail, particularly if USD/JPY continues to rise.

"With the equity market rising in conjunction with earnings expectations, I believe the case for Japan's equity markets is intact," said WisdomTree Research Director Jeremy Schwartz in a note. "A ...

Mid-Day Market Update: Infoblox Jumps On Upbeat Results, Sears Declines

Jake L'Ecuyer — Fri, 24 May 2013 16:56:34 +0000

Midway through trading Friday, the Dow traded down 0.20 percent to 15,264.01, while the NASDAQ fell 0.29 percent to 3,449.33. The S&P was also down, declining 0.31 percent to 1,645.38.

Top Headline
Yesterday, Pandora Media (NYSE: P) reported upbeat revenue for the first quarter. Pandora posted a quarterly net loss of $28.6 million, or $0.16 per share, versus a year-ago loss of $20.2 million, or $0.12 per share. Excluding one-time items, Pandora lost $0.10 per share. Its revenue surged 55% to $126 million. However, analysts were expecting a loss of $0.10 per share on revenue of $124 million.

Equities Trading UP
Infoblox (NYSE: BLOX) shot up, gaining 12.34 percent to $24.72, after the company reported upbeat Q3 results. Dean Foods Company (NYSE:

Mid-Morning Market Update: Markets Fall, Pandora Posts Higher Revenue

Jake L'Ecuyer — Fri, 24 May 2013 14:36:12 +0000

Following the market opening Friday, the Dow traded down 0.26 percent to 15,255.34, while the NASDAQ fell 0.55 percent to 3,444.19. The S&P was also down, declining 0.47 percent to 1,642.82.

Equities Trading UP
Infoblox (NYSE: BLOX) shot up, gaining 15.55 percent to $25.42, after the company reported upbeat Q3 results. Pandora Media was also up ...

Stocks Hitting 52-Week Lows

Lisa Levin — Fri, 24 May 2013 14:13:16 +0000

Wireless Ronin Technologies (NASDAQ: RNIN) shares reached a new 52-week low of $1.106. Wireless Ronin's common stock will move to the OTCQB on May 31, 2013.

Mattersight (NASDAQ: MATR) shares touched a new ...

Stocks Hitting 52-Week Highs

Lisa Levin — Fri, 24 May 2013 14:03:18 +0000

Pandora Media (NYSE: P) shares created a new 52-week high of $18.98 after the company reported upbeat revenue for the first quarter.

Infoblox (NYSE: BLOX) shares touched a new 52-week ...

Durable Goods Orders Rebound, Up Two of Past Three Months

Gene Balas — Fri, 24 May 2013 13:40:43 +0000

New orders for manufactured durable goods in April increased $7.2 billion or 3.3 percent to $222.6 billion, the U.S. Census Bureau announced Friday. This increase, up two of the last three months, followed a 5.9 percent March decrease. Orders generally increased across the board with only a couple exceptions. Note that durable goods orders can be volatile, and the gains in April generally did not make up for decreases in March. Still, February orders advanced 6.4 percent.

In one positive development, companies invested more in their equipment and other capital goods. Orders for non-defense capital goods excluding aircraft, a key component of the report, advanced 1.2 percent in April after edging up 0.9 percent in March. This doesn't quite reverse the 4.8 percent drop in February, however. Still, it does show that companies might be a bit more optimistic about the future as this shows they are investing more in their businesses. Other details of the report, however, show more of a mixed picture.

Among those categories where a rebound in April only partially offset March dips include primary metals, which inched up 0.5 percent after a drop of 5.8 percent (though this followed a February increase of 10.6 percent). Fabricated metals increased 1.2 percent after ...

Technical Forecast for Natural Gas

Jason Sen — Fri, 24 May 2013 13:20:15 +0000

Natural Gas moved back up towards 4.230/250 for another chance to exit longs & try shorts & hit support at 4.163/133 to bottom out as expected. We then shot through 4.230/250 to keep the upward momentum going for a test of 4.310/ 324 today. If attempting ...

Unilever's Kees Kruythoff Talks Magnum Prospects In The Ice Cream World

Jason Cunningham — Fri, 24 May 2013 13:15:41 +0000

Kees Kruythoff, President of Unilever's (NYSE: UN) North American division, appeared on CNBC's Squawk Box to talk ice cream. Of the company's over 400 brands, ice cream is one of its biggest businesses. Unilever holds various forms of the sweet frozen treat including the popular and fast growing, Magnum brand--the number one ice cream in the world.

"The market leader in the world in ice cream came to the biggest ice cream market in the world two years ago, and so Magnum is now here in the U.S.," Kruythoff said in regards to the ...

Technical Forecast for WTI Crude

Jason Sen — Fri, 24 May 2013 12:35:51 +0000

WTI Crude hit our target & support at 92.80/75 & although we tested the 200 day moving average at 92.30 we just held on to allow longs to be held for the expected bounce. We then reached resistance at 94.40/50 where we advised to try shorts & this was the exact high. Today the outlook is a little more positive so be ready with stops on ...

Technical Forecast for RBOB

Jason Sen — Fri, 24 May 2013 12:34:55 +0000

RBOB Gasoline bounced ahead of 277.95/10. This is good support as stated yesterday & we look oversold in the short term so we would expect a bounce from here if seen today. Exit shorts & try longs with stops below 276.60.

We face resistance in the 282.46-283.60 area which did ...

Technical Forecast for Brent Crude

Jason Sen — Fri, 24 May 2013 12:33:43 +0000

Brent Crude broke support at 101.35/20 but being very oversold in the short term we bounced ahead of our buying opportunity at 100.26 & recovered to 102.40/50 resistance. This has held the bounce as expected but the outlook is more positive today so a push above here looks likely for a test of moving ...

The Truth Behind AAPL's Numbers

David Trainer — Fri, 24 May 2013 12:31:12 +0000

A picture is worth a thousand words and so is Figure 1. Figures 2 is good too. The inescapable truth behind Apple's (NASDAQ: AAPL) valuation is that market expectations are way too high.

Apple’s ROIC Is An Ephemeral Aberration

This article provides some empirical evidence behind my putting Apple (AAPL) in the Danger Zone last week because its return on invested capital (ROIC) is outrageously high. That fact underscores why valuing this company or any other with the expectation that such a high ROIC was sustainable would be a mistake.

Figure 1 plots the market value of the top 1500 companies by market cap that I cover against ROIC. This figure illustrates just how far out there APPL’s ROIC is. It also illustrates the expected impact on the stock’s market value when the ROIC comes back to earth.

Betting on Apple’s ROIC continuing to be an outlier is foolish. I see AAPL’s ROIC rejoining the pack within the next few years, and the market will reflect that mover even sooner.

In my last article on AAPL, I explained why I think AAPL’s ROIC would fall to at least as low as Google (NASDAQ: GOOG) or Microsoft’s (NASDAQ: MSFT) ROIC, which are 34% and 71% respectively. I think, given the competitive markets in which AAPL competes, the company’s ...