The big news Friday came from a higher than expected GDP report (4.1% vs 3.6% exp & prior 3.6%) which pushed stocks higher and (surprisingly) bond interest rates lower. This lower interest rate phenomenon is most likely due to the Fed’s “Operation Twist” which will cause the yield curve to flatten.
It’s important to study the details of the GDP report like our friends at Consumer Metrics have done. The full report goes heavily into the details but the summary is below:
Another interesting report that was little noticed was released by RealtyTrac showing 42% of residential home sales in November were by cash buyers. This came on the heels of a Bloomberg report that Blackstone Group had acquired 41,000 homes in the past two years. These have been put in a rental pool with a bond offering backed by these propertie
With algos just buying GDP headlines stocks moved sharply higher early. As the day wore on, those traders getting out of Dodge early to begin their holiday vacations allowed for some late day selling. Leading the charge higher was Tech (QQQ), Small Caps (IWM), Homebuilders (ITB), Biotech (IBB), Australia (EWA) and India (EPI) to name a few. Laggards included China (FXI), Brazil (EWZ), Turkey (TUR), Solar (TAN), International REITs (RWX), International Small Caps (GWX) and Emerging Markets (EEM). The poor performance of laggards highlights what we’ve pointed out over the last month; U.S. markets, and others dominated by central bank money printing, are taking a lonely walk away from the rest of the world.
We featured a short video today on a popular China ETF (GXC) which highlights the separation noted above.
Our staff puts together the daily top 20 ETF market movers by percentage change in volume for gainers, decliners and emerging volume.
Volume Friday was higher given mechanical quadwitching action. Breadth per the WSJ was positive.
A bullish week as now bulls seized the tape and rescued it from previous uncertainty. We must acknowledge it is the season for a Santa rally and it’s hard to expect much more as trading will turn light beginning next week.
Next week will feature 3.5 days of trading. Economic data will include Personal Income & Outlays and Consumer Sentiment (Monday); Durable Goods Orders, FHFA House Price Index, New Home Sales (Tuesday) and Jobless Claims (Thursday).
Let’s see what happens.
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