Economic data Friday included Personal Income & Spending which was highlighted by a negative (-0.1%) reading in spending; a great Chicago PMI report (65.5 vs prior 63) but featured an increase in prices paid and an employment decline; and a slight rise in Consumer Sentiment to (81.90 vs prior 81.80).
Stocks struggled all day Friday as some early to the party took profits and left for the weekend. Friday’s can be like that often. Most market action historically takes place Tuesday-Thursday barring unusual event days. But hey, markets are a little different these days wouldn’t you agree? Some pundits are getting hip to the idea that complacency (see VIX below) is getting a little long in the tooth. FT's Gillian Tett notes that, as we have vociferously explained, almost every measure of volatility has tumbled to unusual low levels, "this is bizarre," she notes, "financial history suggests that at this point in an economic cycle, volatility normally jumps."
"Investors in the options markets are not pricing in any big macro risks. This is very unusual." In reality, as Hyman Minsky notes, “market tranquility tends to sow the seeds of its own demise and the longer the period of calm, the worse the eventual whiplash”. But, again this Fed-fueled ZIRP and QE market is nothing like we’ve seen before. Oh wait, that’s ending right?
Its obvious markets enjoyed an excellent month of May but you don’t need me to point that out. And, pulling out a worn hackneyed phrase “sell in May and go away” sometimes works and then doesn’t. But now we enter June with markets stretched and the Fed reducing (oh, the horrors of it!) QE even further.
Leading market sectors higher included: Retail (XRT), REITs (ICF), Utilities (XLU), Consumer Staples (XLP), Semiconductor (SMH), Nuclear Energy (NLR), Italy (XLI), China (FXI), Spain (EWP), Nickel (JJN) and Aluminum (JJA)
Leading market sectors lower included: Small Caps (IWM), Homebuilders (ITB), Biotech (IBB), Metals & Mining (XME), Steel (SLX), Silver Miners (SIL), Emerging Markets (EEM), South Korea (EWY), Taiwan (EWT), Brazil (EWZ), Mexico (EWW), Latin America (ILF), Turkey (TUR), India (EPI), Russia (RSX), Indonesia (IDX), Gold (GLD), Crude Oil (USO), Coal Producers (KOL), Solar (TAN), Silver (SLV), Agriculture (DBA) and Natural Gas (UNG).
The top 20 market movers by percentage change in volume whether rising or falling is available daily.
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Livio S. Nespoli has been a broker, registered investment advisor, and financial publisher since 1985.