The news overall has been poorly received. Retail sales were up a little, but widely missed consensus estimates (.2% vs .6% previous and .5% consensus). Best Buy (BBY) missed estimates again ($.47 vs $.51 estimated). This is the season when you'd expect Same Store Sales to be positive but they were down (-.1%). Nevertheless, markets shrugged this off early on hopes that the Bernank would deliver the goods with more QE--which didn't happen, and everything negative.
So what we have now is little confidence in Europe and an obvious pattern of a developing recession. The slowdown in China is becoming clearer; Brazil GDP is also moving rapidly lower; India reported its first industrial output decline in 2 years after 13 straight interest rate increases, and so it goes.Earnings warnings are becoming more ubiquitous and will challenge forward-looking PE estimates, not to mention stock prices. The problem we face with low interest rates presently is they're killing seniors and savers and haven't helped the housing market one bit. A high supply of bank owned inventory sits without resolution but needs large bulk sales. It sounds cruel, but letting it fester does more damage overall. Announcing that interest rates will stay low for another two years doesn't stimulate potential home buyers to act. They figure time is on their side and prices keep falling, so why do anything? Further, corporations are hording cash and find it more rewarding (at least for those with stock options) to buy back shares rather than payout dividends or make useful investments beyond buying up the competition. The bottom line Tuesday is stocks were sold hard after bulls had a chance to digest the non-news from the Fed. The Bulls launched a programmed "stick save" on the DJIA at the 200 day moving average, but no other index could match that. Gold continued to fall as the dollar rose and bond prices were strong. And the beat goes on... Volume increased substantially on Tuesday especially after the Fed announcement. Breadth per the WSJ remains negative. You can follow our pithy comments on twitter and join the banter with me on facebook. SPY - The SPDR® S&P 500® ETF is a fund that, before expenses, generally corresponds to the price and yield performance of the S&P 500 Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details IWM - The iShares Russell 2000 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the small capitalization sector of the U.S. equity market as represented by the Russell 2000 Index. The index represents the approximately 2,000 smallest companies in the Russell 3000 Index.
See more details QQQ - PowerShares Capital Management LLC is passionate about our goal of delivering the highest quality investment management available through one of the more benefit-rich investment vehicles ever created, the exchange-traded fund.PowerShares QQQ¿, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock®", is an exchange-traded fund based on the Nasdaq-100 Index®. The Fund will, under most circumstances, consists of all of stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. The portfolio is rebalanced quarterly and reconstituted annually.
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