Thursday Newsletter
The last of the major central bank meetings wrapped up today with the US Fed deciding to hold its benchmark rate to 0.25% and lower the path of future rate hikes. The lower path or delay in rate hikes is due to risks to global growth. Equities rallied on the announcement as the SPX +0.6%, NDX +0.9%, RTY +0.7%, but there were greater moves in currencies and sectors. The major two effects of less rate hikes that I noticed were:
- The US Dollar weakened:
- Commodities surged:
- GLD (Gold) +2.2%, GDX (Gold Miners) +6.8%, XME (Metals&Mining)+5.3%, SLV (Silver) +2.3%, SIL (Silver Miners( +6.1%
- Emerging Markets surged:
- EEM (EM) +2%, RSX (Russia) +4%, ASHR (China) +2.5%
2.Higher Yielding Equities Rallied (due to Bonds not offering yield)
- XLU (Utilities) +1.5%, AMLP (MLPs) +4.9%, HYG (High Yld Bonds) +0.7%
- Banks sold off: KRE -1.1%
Option activity confirmed these themes today:
Miners:
>> 27,945 ABX Mar-16 14.5 C
>> 19,503 ABX Thu 3/24 15.0 C
>> 8,819 EGO Jul-16 5.0 C
>> 3,349 EGO Apr-16 3.5 C
>> 5,170 NEM Apr-16 25.0 C
>> 3,256 SLW Jun-16 18.0 C
Emerging Markets:
>> 34,469 EEM Apr-16 35.0 C
>> 22,875 EWZ Mar-16 24.5 C
>> 15,692 ASHR Apr-16 23.9 C
>> 7,099 RSX May-16 16.0 C
See today’s video recap link for a summary:
https://youtu.be/EGy1yJ0AZCo