This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Emerging Markets vs. U.S. Small-Caps: Which Provides Better Reward for the Risk?


NEW YORK (ETF Expert) -- Downward revisions to economic growth have little to do with the weather in the first few months of the year. Yet, economists are already concluding that gross domestic product in the second, third and fourth quarters will be lower than originally anticipated.

Similarly, the National Retail Federation is blaming the so-called "trajectory" of 12 months of sales on the extreme weather patterns in January and February. This is giving the organization cover for less rosy sales results in the remaining 10 months of 2014.

Naturally, consumer discretionary stocks and retailers have not responded well to the news. SPDR Select Consumer Discretionary (XLY) remains one of the more dismal participants in the sector field and the XLY:S&P 500 price ratio only amplifies the weakness of the consumer relative to the broader U.S. stock market.

Read More: Jim Cramer's 'Mad Money' Recap: Next Week's Game Plan

XLY S&P 500 Price Ratio

At first blush, it is almost as if the broader market refuses to take notice of the struggling consumer. Are investors genuinely impressed, then, with the 288,000 jobs added by employers in June? Probably not. As many as 523,000 full-time jobs were lost in the same month. One in four Americans are now working part-time. Roughly 40% of year-over-year job creation has come in retail, food services or temporary assignments.

No, if investors liked the idea that GDP growth has been decelerating every year since 2012 -- if they believed the jobs picture offers genuine hope for a renaissance in wage growth -- retail and consumer-oriented equities would be booming rather than flailing.

Read More: $25 Billion Deal and JPMorgan Stumble to Aid of Bronx Homeowner

From my vantage point, the U.S. Federal Reserve will use incoming data as reason to maintain its zero percent interest rate policy longer. All the chatter about a rate hike coming sooner in 2015 rather than later is exactly that -- chatter. The sluggish economy and the cash-strapped consumer will encourage the Fed to stick with its 0% guidance for a longer period than some are talking about, emboldening risk-takers to bid the markets up to new heights.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs