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Central bankers worldwide have warned they will have to hold interest rates at higher levels for longer despite recent progress in the fight against inflation. Following the Fed’s indication of more rate hikes next year, the risk of a recession has increased notably. In addition, the Federal Reserve predicted in its economic forecast that the […]
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The Fed is likely to keep hiking rates well into 2023. Amid the possibility of persistent monetary tightening, economists have projected a 70% chance of U.S. recession in 2023. Bill Adams, the chief economist at Comerica Bank, said, “The US economy is facing big headwinds from surging interest rates, high inflation, the end of fiscal
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If you could only use one indicator for the rest of your life, what would it be? How do you personally use it? JC Parets, All Star Charts: Price. It’s the only thing that we can count on as factual. And since we know that market returns are not random, but in fact asset price trend,
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“It’s been a long year, and people are tired as hell. Rightfully so.” Man, I feel those words in my bones. How about you? We’re in the final stretch of 2022 with just a few weeks left in December. At Friday’s close, the market was sitting a little below 4,000, although it feels like we’ve
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As yet another indication of a sea change in the macro-economic environment, the Bank of Japan signaled a shift in its monetary stance today by announcing that the 10-year government bond yield can go as high as 0.5%, up from the previous cap of 0.25%. With the era of easy money in the rear-view mirrors,
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Several countries enhanced their defense spending with the Russia and Ukraine war causing heightened geopolitical tensions. Among others, the European Union is targeting a €70 billion rise in defense spending over the next three years. The demand for U.S.-made firearms, military aircraft, explosives, and vehicles has surged significantly. The defense industry is expected to grow
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Copper futures have closely followed the trajectory of the zigzag that was outlined this summer in the post titled “Copper Fears Recession”. Below is a copy of that monthly chart to refresh your memory.
Source: TradingView
The majority of readers bet that the price would remain above $3. Within the same month, the price reached a valley of $3.13 and subsequently recovered. This vote is still valid as the price hasn’t crossed that handle yet.
In the next weekly chart update, we will examine the outlook further.
Source: TradingView
This is a closer look at the second red leg down shown on a bigger time frame in the summer. When the first leg up within a bounce in copper futures was unfolding, it looked promising at the beginning.
The hope has evaporated with the second leg up that has shaped a classic “dead-cat bounce” hitting only the minor 38.2% Fibonacci retracement level. It was close to touching the purple barrier of the moving average at the round level of 4, but failed.
This consolidation after the AB part was called the “BC” segment, and chances are high that was it, especially after the Fed’s Chair Powell revealed last week that “17 of the 19 [FOMC members] wrote down a peak rate of 5 percent or more, in the 5 range. So that’s our best assessment today for what we think the peak rate will be.” So it would seem another hike or two is in the pipeline.
The Fed still fears inflation rather than recession. The copper futures market is a barometer of the economy, so it reacted immediately. After the Fed hiked its interest rate projection for 2023, the price lost 20 cents by the end of the week. According to the RSI, it followed the consolidation path to retest the crucial 50 level. Now, both the price and the market turned south.
The target for the CD segment equal to AB is located at $2.05 where the large red leg 2 is equal to the large red leg 1 in the first chart above. It is an amazing coincidence. Should the Fed throw the economy into recession, the price could fall into the abyss of 2008’s Great Recession’s valley at $1.25.
The closest volume profile support is located at $3.6. The bigger one is located lower at $2.9 and the largest volume profile sits at $2.6.
The nearest resistance level is the moving average and the 50% Fibonacci retracement level at $4-$4.1. A harder barrier sits at volume profile and 61.8% Fibonacci retracement level at $4.3.
There is another chart that I didn’t show you long ago. A strong distortion was spotted this time, so I want you to see it below.
Source: TradingView
Copper futures (orange) have a strong correlation with the AUDUSD currency pair (green). These two were in amazing sync for more than a decade from 2001 to 2016. The chain was then broken as copper futures showed a terrific gain while the Australian dollar continued to sink.
The divergence reached its peak last summer and is closing now, even as Ozzy dives further down. These days, the corresponding level for copper futures is at $1.75, less than half of the current price of $3.76. The distortion might be solved in the opposite direction as well with the price of AUDUSD reversing to the upside.
However, the chances are low as the real interest rate differential is in favor of the US dollar by a wide margin. Possibly we will see a repeat of 1989-2001 when the Ozzy dropped drastically to catch up with copper’s low price. Copper may collapse this time to match a weak Australian dollar.
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Intelligent trades!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
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Inflation cooled again last month after starting to decline in October.
The Labor Department reported that the Consumer Price Index (CPI) in November rose 7.1% increase year-over-year and was just 0.1% from the previous month.
Economists surveyed by Dow Jones expected prices to grow at an annual 7.3% and 0.3% over the prior month.
The favorable November inflation report kept the Fed on track to increase interest rates by a relatively smaller amount after four consecutive hikes of 75-basis-point magnitude.
In addition to the optimism surrounding the decline in the Fed rate hikes, December has proven to be a strong month for the stock market over the past 70 years. However, many experts still expect a mild recession next year.
Given the backdrop, it could be wise to take advantage of the uptrend in JPMorgan Ultra-Short Income ETF (JPST), IQ MacKay Municipal Intermediate ETF (MMIT), and VanEck Long Muni ETF (MLN) to diversify your portfolio this month.
JPMorgan Ultra-Short Income ETF (JPST)
JPST is an actively managed, ultra-short-term, broad-market bond fund that aims to maximize income and preserve capital.
The fund makes investments in fixed-rate, variable-rate, and floating-rate debt, including corporate issues, asset-backed securities, and debt pertaining to mortgages, as well as U.S. government and agency debt, including treasury securities.
JPST has $22.76 billion in assets under management. The fund has a total of 467 holdings. Its top holdings include U.S. Dollar with a 44.64% weighting, Fixed Income (unclassified) at 1.73%, BNP Paribas S.A. 3.5% at 0.94%, and Nordea Bank AB (New York) FRN at 0.81%.
JPST has an expense ratio of 0.18%, lower than the category average of 0.60%. Over the past six months, JPST’s fund inflows came in at $4.14 billion. Also, it has a beta of 0.04, indicating extremely low volatility compared to the broader market.
JPST pays an annual dividend of $1.04, which yields 2.08% on prevailing prices. Its dividend payments have grown at a 16.9% CAGR over the past five years. The fund has a record of dividend payments for five consecutive years.
JPST has gained marginally over the past month to close the last trading session at $50.19. It has a NAV of $50.19 as of December 12, 2022.
MarketClub’s Trade Triangles show that JPST has been trending UP for two of the three time horizons. The long-term trend for JPST has been UP since November 22, 2022, while its intermediate-term trend has been UP since November 15, 2022. The short-term trend has been DOWN since December 15, 2022.
Source: MarketClub
The Trade Triangles are our proprietary indicators, comprised of weighted factors that include (but are not necessarily limited to) price change, percentage change, moving averages, and new highs/lows. The Trade Triangles point in the direction of short-term, intermediate, and long-term trends, looking for periods of alignment and, therefore, intense swings in price.
In terms of the Chart Analysis Score, another MarketClub proprietary tool, JPST scored +65 on a scale from -100 (strong downtrend) to +100 (strong uptrend), indicating signs of weakening momentum to the upside. Monitor JPST as it may be in the beginning stages of a reversal.
The Chart Analysis Score measures trend strength and direction based on five different timing thresholds. This tool takes into account intraday price action, new daily, weekly, and monthly highs and lows, and moving averages.
Click here to see the latest Score and Signals for JPST.
IQ MacKay Municipal Intermediate ETF (MMIT)
MMIT is actively managed to provide current income exempt from federal income tax.
The ETF seeks to enhance total return potential through its subadvisor’s active management approach by investing primarily in investment-grade municipal bonds with a duration between 3-10 years.
MMIT has $338 million in assets under management. The fund has a total of 397 holdings. Its top holdings include Miami-Dade Cnty Fla Tran Sys Sales Surtax Rev 5.0% with a 1.47% weighting, Alamito Pub Facs Corp Tex Multifamily Hsg Rev VAR at 1.18%, New Jersey St Hsg & Mtg Fin Agy Multifamily Conduit Rev at 1.17%, and Jackson Cnty Mo Sch Dist Hickman Mls C-1 5.75% with a 1.13% weighting.
MMIT has an expense ratio of 0.31%, compared to the category average of 0.30%. Over the past six months, its fund inflows came in at $69.23 million.
Also, it has a beta of 0.03. The fund pays a $0.61 per share dividend annually, which translates to a 2.51% yield on the current price.
MMIT has gained 2.7% over the past month to close the last trading session at $24.33. It has a NAV of $24.31 as of December 12, 2022.
MarketClub’s Trade Triangles show that MMIT has been trending UP for all the three-time horizons. The long-term trend for MMIT has been UP since December 1, 2022, while its intermediate-term and short-term trends have been UP since November 10, 2022, and November 1, 2022, respectively.
Source: MarketClub
In terms of the Chart Analysis Score, MMIT scored +100 on a scale from -100 (strong downtrend) to +100 (strong uptrend), indicating that the uptrend is likely to continue. Traders should protect gains and look for a change in score to suggest a slowdown in momentum.
Click here to see the latest Score and Signals for MMIT.
VanEck Long Muni ETF (MLN)
MLN tracks a market value-weighted index of investment grade, tax-exempt US municipal bonds.
Municipal bonds are used by local entities to pay for various services or to make improvements to infrastructure, paying for everything from new sewer systems to bridge construction.
This fund targets bonds with nominal maturities of at least 17 years, giving the fund a higher-risk profit and greater current income potential.
MLN tracks ICE Long AMT-Free Broad National Municipal Index. With $251.30 million in assets under management, the fund’s top holdings include U.S. Dollar with a 4.59% weighting, followed by Massachusetts St Dev Fin Agy Rev 5.0% at 0.76%, and Triborough Brdg & Tunl Auth Ny Revs 5.0% and Austin Tex Elec Util Sys Rev 5.0%, at 0.63% and 0.57%, respectively.
It currently has 482 holdings in total.
Over the past three months, the ETF’s net inflows were $29.65 million. In addition, its 0.24% expense ratio compares favorably to the 0.30% category average. Also, it has a beta of 0.05.
MLN pays a $0.53 annual dividend yielding 3.01% at the current share price. The fund has gained 4.3% over the past month and 3.4% over the past six months to close the last trading session at $17.76. Its NAV was $17.74 as of December 12, 2022.
According to MarketClub’s Trade Triangles, MLN has been trending UP for two of the three time horizons. The long-term trend for MLN has been UP since December 1, 2022, while its intermediate-term trend has been UP since November 10, 2022. The short-term trend for MLN has been DOWN since December 15, 2022.
Source: MarketClub
In terms of the Chart Analysis Score, MLN scored +85 on a scale from -100 (strong downtrend) to +100 (strong uptrend), and is showing short-term weakness. However, look for the longer-term bullish trend to resume. As always, continue to monitor the trend score and utilize a stop order.
Click here to see the latest Score and Signals for MLN.
What’s Next for These ETFs?
Remember, the markets move fast and things may quickly change for these ETFs. Our MarketClub members have access to entry and exit signals so they’ll know when the trend starts to reverse.
Join MarketClub now to see the latest signals and scores, get alerts, and read member-exclusive analysis for over 350K stocks, futures, ETFs, forex pairs and mutual funds.
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Best,The MarketClub Team[email protected]
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A recent Wall Street Journal article stated that Americans missed out on $42 billion of interest income because of where they keep their money.
The culprits are the low-yielding savings accounts offered by America’s big banks.
As luck would have it, there are much better places to put your money. Places that will generate much more yield, without much added risk.
Let me show you where I put my savings to earn more…
Before I discuss how to earn more from your cash holdings, let’s look at an excerpt from the article:
The $42 Billion Question: Why Aren’t Americans Ditching Big Banks?
Americans are missing out on billions of dollars in interest by keeping their savings at the biggest U.S. banks… In theory, savers could have earned $42 billion more in interest in the third quarter if they moved their money out of the five largest U.S. banks by deposits to the five highest-yield savings accounts—none of which are offered by the big banks—according to a Wall Street Journal analysis of S&P Global Market Intelligence data.
The five banks—Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., U.S. Bancorp and Wells Fargo & Co.—paid an average of 0.4% interest on consumer deposits in savings and money-market accounts during the quarter, according to S&P Global.
The Journal highlighted the $42 billion number for its shock value. The five listed banks didn’t have that much profit for the quarter. The article points out that in this new era of higher interest rates, you can earn much more on your savings.
The article also discusses how banks can set rates at whatever they think they can get away with. The listed banks have billions of dollars of customer deposits earning very little. Going to another bank account that offers a higher rate may not be the solution. The new bank could lower the rates it pays as soon as it has enough deposits.
I suggest looking at money market mutual funds to earn higher yields on your cash savings. These funds hold a stable $1.00 share value and pay interest based on the yields of short-term securities like Treasury bills. For example, I am using the Schwab Treasury Obligations Money Fund, which currently yields 3.52%. That means on $100,000, the fund would pay almost $300 per month in earnings. That same amount at a 0.40% yield would pay just $33.33 per month.
If you have funds you don’t want to comingle with your investments, it is easy to set up a new brokerage account. I have four accounts with Schwab, so I can see in dollars the results of the different investment strategies I recommend to my subscribers.
For my next Dividend Hunter newsletter, out January 1, I will show subscribers how to earn even higher yields with investments that secure the principal invested. This strategy lets investors earn 6% to 7% annual yields.
Forget the Tech Crash – Make Money “Every Day”The S&P 500 is down 13% for the year. The Nasdaq is even worse, down 19%. But my 30+ vetted, high-yield income plays are comfortably in the green… And are still paying great dividends to boot.To get access to the full list and “kiss your money worries goodbye,” click here.
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The pharmaceutical industry flourished during the COVID-19 pandemic. Amid surging medical needs worldwide, the pharmaceutical industry is expected to witness continued growth. For October 2022, pharmaceuticals and medicines manufacturing shipments came in at $22.52 billion, up from $22.48 billion in September 2022. Moreover, overwhelming drug demand is expected to bode well for the pharmaceutical industry.
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