Now that we’ve put what has been a very eventful first half of the year behind us, it’s time to turn our attention to what I call the three “E”s — Earnings, Europe and Emerging markets.
On the earnings front, we saw Alcoa (AA) kickoff earnings season with a solid revenue and earnings beat. And while the industrial commodity firm’s numbers were sound, we didn’t see any significant gains in the wider market because of it. In the weeks to come, we’ll be seeing a deluge of earnings reports, and the numbers for the latest quarter, as well as the outlook for companies in the coming quarter, are likely to determine which way stocks will head for the remainder of the year.
Earnings for many of the world’s largest multi-nationals also will tell us about the second “E”, Europe. As we all know, Europe has been riddled with debt problems, and those problems still are very much on the table. We also know that Europe’s economy has been slowing significantly over the past year, and that could also put a lot of pressure on earnings of companies that derive much of their revenue from the eurozone.
As for the final “E”, Emerging markets, it’s all about China. The country’s economic slowdown is the lead dog driving the rest of Asia, and the entire emerging market sector, and so far this year it’s been all about the bear. The chart above of the emerging market ETF tells the tale better than any words.
The decline in emerging markets since March also has put pressure on the entire world equity market index. The chart below of the Vanguard Total World Stock ETF (VT) also shows the decline in world markets since the March high.
As the three “E”s go, so too will the fourth “E” — the Equity markets.
Until we get some clarity on these factors, I think the best move for investors is to be very cautious and conservative with your equity allocations. There will be plenty of time to make money when the three “E”s get a bit clearer.
The only problem then is we’ll have to turn our attention to yet another “E”, the Election.
BOND-ing with the Latest ETF Report
The second quarter is in the books, and that means it’s time for you to get your new Fabian ETF Report.
This quarter’s list shows details on more than 1200 ETFs holding over $1.1 trillion in assets.
So far this year, there have been 95 new ETFs introduced into the market, and by far the biggest of them all is the PIMCO Total Return ETF (BOND). This fund has grown to $1.7 billion in assets in just over four months!
Other notable funds in the report include the Morningstar Multi-Asset Income Fund (IYLD), which is the first multi-strategy, “fund of funds” income product. There’s also the SPDR Barclays Short Term High Yield (SJNK), a new way to play the short-term bond market. Finally, there’s the MarketVectors Unconventional Oil and Gas (FRAK), the first ETF of its kind in the unconventional oil and gas extraction space.
Click here to get your quarterly rundown on all of the 1200-plus ETFs today, and never be left out of the ETF loop again.
On Being Ready
“Do not be tense; just be ready, not thinking but not dreaming, not being set but being flexible. It is being ‘wholly’ and quietly alive, aware and alert, ready for whatever may come.”
The great martial artist knew that being ready at all times is one of the keys to success in the battle called life. When it comes to your money, you also must always be ready. As we’ve seen over the past several years, just about anything is possible in this market.
Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Alert readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Click here to ask Doug.
To the best within us,
P.S. Today’s challenging market conditions require even more knowledge than ever for investors and traders like you to keep pace with the latest market intelligence to safeguard your portfolio and to profit from opportunities that only may be available for short periods of time. Join me at this year’s MoneyShow San Francisco, August 24-26, at the San Francisco Marriott Marquis to hear recommendations and advice about how best to profit in 2012 and beyond! Register FREE today by clicking here, going to DougFabian.sanfranciscomoneyshow.com or by calling 1-800/970-4355 and mentioning priority code 027879.