Global exchange traded funds broke a four-day winning streak
Monday as the U.S. and foreign markets pulled back from
overbought conditions and the Federal Reserve's quantitative
easing-induced euphoria waned.
IShares MSCI EAFE Index (
), tracking developed foreign markets, slipped 0.56%.
IShares MSCI Emerging Markets Index (
) lost 1.14%.
"The biggest driver for financial assets in the past month has
been central bank intervention," Waverly Advisors wrote in a
client note Monday. "It is often the case that anticipation has a
stronger impact on market sentiment than realization, and the
risk to investors now would be the impact of further
deterioration of economic fundamentals on risk assets now that
all the bullets have been fired."
Waverly believes the U.S. market is on track to outperform
foreign markets. The European Union remains full of risk and
global bond markets are over valued, Waverly wrote. China's new
stimulus efforts will have less impact on the global economy in
the near term than in prior market cycles.
"Put simply, China can't save the world, the EU can't fix what
is broken without feeling much more pain, the U.S. looks like the
least dysfunctional of the primary wealthy economies," Waverly
IShares FTSE China 25
Index Fund (
) fell 1.28%. It's struggling to break above overhead price
resistance at its 200-day moving average. Its 50-day line still
trades below the 200-day, which is bearish.
IShares MSCI Brazil ETF (
) slipped down 1.05%. Its chart is similar to FXI's and trades
below its 200-day line.
Commodity goods and producer ETFs -- including precious metals
-- all sold off across the board as traders booked profits, the
dollar found support and better-than-expected crop yields were
reported in the Midwest.
"Investors should not lose sight of a worldwide economy that
is showing continued signs of a slowdown," Wasif Latif, vice
president of equity investments at USAA Investments wrote on a
market commentary released Monday. "Europe appears to be in a
recession, China's economy is decelerating, and while the U.S.
looks to be avoiding recession, our anemic growth rate should be
cause for concern."
"Soft economic conditions are affecting corporate profits,"
Latif added. "Earnings for companies in the S&P 500 stock
index grew by only 2% on a year-over-year basis in the second
quarter, and are forecast to decline slightly (around 1%) in the
Market Vectors Egypt Index ETF (
), up 1.91%, defied the global sell-off, climbing to a new
Global Mutual Fund Flows
Stock funds absorbed $65 billion in inflow the second week in
September -- the most in 65 weeks -- according to EPFR Global.
Inflow into European stock, emerging market bond and global stock
funds reached 18-, 31- and 41-week highs, respectively. But
retail investors pulled money out of Europe, U.S., Japan, Asia
and global stock funds. China stock funds saw their
second-highest rate of inflow since mid-February.
Gold and precious metals funds took in $924 million, or nearly
half of the $1.8 billion of inflow into commodity-sector
On the home front,
SPDR S&P 500
(SPY) fell 0.34%.
PowerShares QQQ (QQQ), tracking the 100 largest nonfinancial
stocks on the Nasdaq rose 0.03%.
SPDR Dow Jones Industrial Average (DIA) fell 0.24%.
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