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Commentary and Opinion

By The Numbers: November 2014

November saw an encore feature of the running of the bulls with the S&P 500 posting a 2.75% gain for the month which brought the year to date total return of 13.75%.

Economic and market stories driving the markets continues to be the falling prices of oil and treasury yields returning to the lows of mid October with a closing yield of 2.19%.

BIA November 2014 ETF:Funds Sheet1 

Oil (West Texas Intermediary- WTI) continued its plummet from over $101 at the end of June to $66.15 to end November. As noted last month the plunge in oil prices is a significant geopolitical story, and while an obvious boon to consumers as whole, is certainly wreaking havoc in oil-producing countries and regions.

One such casualty is The Market Vectors Russia ETF which was down 10.97% for the month is now down 32.25% on the year. Meanwhile the SPDR Energy Select Sector ETF (RSX), whose largest holdings consist of Exxon Mobil and Chevron, was down 8.69% for the month which brings the year to date return to -8.48%.

Bad news for oil dependent economies and industries however is good news for consumers and other companies who will see a decline in input costs. The Consumer Staples Sector ETF (XLP) was up 5.54% for November bringing the year to date return to 16.8%.

The Nasdaq QQQ is now up 21.91% for the year which is actually just below the Twenty Year Treasury ETF coming in at 23.29% for the year.

In addition to a big month for U.S. Stock Markets, the November Payroll headline number released on Friday crushed all expectations.

Going forward more attention will be paid to Federal Reserve Chairman Janet Yellen’s intentions. While consumer price inflation is non-existent (which will only be re-enforced with falling oil prices) the Fed has been conducting extraordinary policy measures for five years, and it will be increasing more difficult to justify zero-bound interest rate policy.

The $64,000 question will be whether or not the economy is truly healthy enough to absorb a rising interest rate environment.


DISCLAIMER: Nothing in this article should be construed as a personal recommendation or investment advice. Nor should anything in this article be construed as an offer, or a solicitation of an offer, to sell or buy any particular investment security. Investors should conduct their own due diligence and seek the advice of a financial and/or investment professional before making any investment decisions.



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