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Time to Harvest Your Energy ETFs

Stocks in this article: IWB IJS PFP TDIV XOP IEO TAN KWT PBW

NEW YORK (ETF Expert) -- How good were the employment reports of October and November? It depends who you ask.

Those who believe the job market is dramatically improving want you to look at the raw number of new jobs created as well as the headline U-2 unemployment percentage; several hundred thousand jobs have been added to payrolls each month and the 7.0% unemployment stat represents a five-year low.

On the flip side, those who feel the job market is stagnant want you to examine the mass exodus from the labor force by working-aged individuals as well as the quality of the job creation itself; the unemployment rate adjusted for labor force participation is 11% while a scary percentage of the jobs created are part-timers in low wage positions.

For investors, the only real question is how it all plays out at the Federal Reserve. After all, the Fed's emergency bond-buying policy (aka QE) is the primary driver of riskier assets. So what do most investors foresee? They anticipate an exceptionally accommodative central bank over the intermediate-term (four to six months) that is likely to favor stocks.

The belief stems from the fact that the Janet Yellen Fed is aware that real household income has fallen 4.4% over the course of the current economic recovery (6/2009-11/2013), suggesting that wage growth is weak and implying that employment well-being might be overstated. It follows that, while the most recent data are encouraging, the investing population is not expecting the Fed to make any huge changes.

(Note: Should Yellen and company reduce the electronic money printing from $85 billion per month to $75 billion sometime soon, this would not be a change in direction; rather, it would merely be an effort to walk the tightrope between acknowledging the need to move away from a five-year rate manipulating endeavor and avoiding the consequences of a substantial spike in interest rates -- a yield spike that the global economy is not presently capable of enduring.)

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