Stocks received a nice boost to start Thursday trading, as investors focused in on a recent Q&A session from Fed Chairman Ben Bernanke. The statements were made at a conference at the National Bureau of Economic Research, and were well-received by those looking for stimulus programs to continue a little longer.
In the session, the Chairman said, ‘You can only conclude that highly accommodative monetary policy for the foreseeable future is what's needed in the U.S. economy’. He also stated that the current unemployment rate of 7.6% ‘probably understates the weakness of the labor market’, suggesting to many that Bernanke isn’t as hawkish as many might have initially thought (read QE Tapering Could Make These Bond ETFs Winners).
The statements also imply that tapering may not begin in the immediate future, potentially pushing a reduction of bond buying into the end of the year, if not 2014. It also suggests that even if a 6.5% unemployment rate is hit, this may not cause a rise in rates as the ‘real’ unemployment rate—especially when counting underemployment—is far higher than the 6.5% target and that more accommodation may be necessary to get back to full employment.
This news was very well received by the markets, as a number of securities took off in Thursday trading with the S&P 500 adding about 1%. However, a few corners of the market did even better on the day, and we have highlighted a few of the biggest ETF winners that surged thanks to Bernanke’s dovish comments below:
Gold ETFs
More easy money is good news for precious metal investors, as it could help to push the dollar down and increase the appeal of alternative assets. After all, gold had been doing pretty well for much of the Fed’s easy money history, though it has traded sluggishly—to put it mildly—as of late due to talk of a wind down in the QE program. (more)
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This week, the chart of the S&P 500, $SPX, SPY, shows a 2.9% rise to close at 1.680, manifesting an Elliott Wave 2 Up, after having achieved a recent Elliott Wave 5 Up High as presented in Daneric’s post Elliott Wave Update ~ Thursday 11 July 2013, suggesting that it will be entering an Elliott Wave 3 Down; these are the most destructive of all economic waves, as they for all practical purposes wipe out all the wealth garnered on the previous five waves up.
ReplyDeleteUS Stocks, VTI, rose 2.9% to a new high; Germany, EWG, recovered 6.1%. Since May 1, 2013, it has been Peru, EPU, Chile, ECH, Turkey, TUR, Indonesia, IDX, Thailand, THD, and Brazil, EWZ, and the Emerging Market Mining, EMMT, leading the Emerging Markets, EEM, lower as is seen in their combine ongoing Yahoo Finance chart.
In the yield bearing equity sectors, Utilities, XLU, recovered 4.7%. Of the yield bearing sectors, Mortgage REITS, REM, together with Emerging Market Financials, EMFN, remain sold off since the “extinction event” of the rise in the Interest Rate on the US Ten Year Note, ^TNX, on May 24, 2013, as is seen in their combined ongoing Yahoo Finance Chart
Of note the Elliott Wave Surfer chart of the EUR/JPY shows an Elliott Wave Top on May 24, 2013, when the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.01%. This seen also in the Stockcharts.com chart of FXE:FXY. It was at this time that the leverage of carry trade investing collapsed, as is seen in the daily chart of the Optomized Carry Trade, ETN, ICI.
The Interest Rate on the US 10 Year Note, $TNX, closed lower at 2.60%, enabling Aggregate Credit, AGG, to rise 0.92% this week.
This week Commodities, DBC, rose 2.3%; the chart of West Texas Intermediate Crude, $WTIC, rose 2.5%, to close at 106.24; the chart of Spot Gold, $GOLD, rose 5.8%,to close at $1,285, as the US Dollar, $USD, traded 1.8% lower to close at $83.12.
The power of this week’s rally is seen in the chart of World Stocks, VT, in relation to Aggregate Credit, AGG, that is VT:AGG, rallying to its highest ever value, suggests that Liberalism’s moral hazard based, Peak Stock Wealth, VT, was achieved the week ending July 12, 2013, as investors used margin credit to take stocks to their likely peak achievement, on the leverage of the world central banks’ monetary policies of investment choice, and schemes of credit expansion, such as quantitative easing. CBS reports Stocks hit new high after Bernanke speech buoys investors, where the Fed Chairman commented at a NBER event, "So you put that all together, and I think you can only conclude that highly accommodative monetary policy for the foreseeable future is what's needed in the U.S. economy."
In the age of Authoritarianism, and its policies of diktat and schemes of debt servitude, wealth can only be preserved by investing in and taking possession of gold bullion either in physical form or by trading on an Internet Platform such as Bold Is Money or Bullion Vault.