The Federal Open Market Committee concluded its two-day
meeting, releasing minutes that held precious little in the way
of surprises. Interest rates will remain at 0.25%, the Fed
anticipates keeping rates low through late 2014 and Richmond Fed
President Jeffrey Lacker was again the lone FOMC member to
dissent, once again expressing his view that rates will need to
rise before 2014.
"Information received since the Federal Open Market Committee
met in March suggests that the economy has been expanding
moderately. Labor market conditions have improved in recent
months; the unemployment rate has declined but remains elevated.
Household spending and business fixed investment have continued
to advance. Despite some signs of improvement, the housing sector
remains depressed. Inflation has picked up somewhat, mainly
reflecting higher prices of crude oil and gasoline. However,
longer-term inflation expectations have remained stable."
Maybe there are some ETF trades in there after all, starting
PowerShares DB Gold Double Short ETN (NYSE:
Leading up to the conclusion of the FOMC meeting, there was
plenty of chatter that, at the very least, gold bugs needed the
Fed to reiterate that rates would remain low through late 2014.
The Fed did that, but the reality was, gold bugs needed more than
that because the yellow metal has been a risk asset this year,
not a safe haven.
In fact, losses in the SPDR Gold Shares (NYSE:
) and iShares Gold Trust (NYSE:
) accelerated after the FOMC minutes were released. For now, gold
may need QE3 and it definitely needs a resolution to the European
sovereign debt crisis. And that leads us to the...
ProShares UltraShort Silver (NYSE:
If you want to see an ugly chart that is bound to get uglier real
quick, check out the iShares Silver Trust (NYSE:
). Silver had a few days in the sun earlier this year when the
risk on trade was on and investors liked what they were hearing
on the economic data front. Those positive catalysts are out the
window, and anyone thinks SLV looks like a steal because it's
flirting with $29, should be careful. The $24-$25 area is a
legitimate possibly in the near-term.
Market Vectors Oil Services ETF (NYSE:
Unlike gold and silver, oil really doesn't need another round of
quantitative easing to move higher. Sure, it would help, but QE3
or a lack thereof will not be the sole determinant of oil's price
action over the next few months. Remember this line from the FOMC
statement: "Inflation has picked up somewhat, mainly reflecting
higher prices of crude oil and gasoline."
Save for National Oilwell Varco (NYSE:
) today, OIH's other big constituents, namely Schlumberger (NYSE:
) and Halliburton (NYSE:
), have not disappointed on the earnings front and that has
helped OIH's chart firm a bit. Oil services stocks are intimately
correlated oil futures and if there was one sector fund to nibble
at now ahead of the inevitable inflation caused by the Fed's easy
money policy, OIH might just be the one.
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