The answer is threefold. Families have less purchasing power than they did in 2009, financial institutions are making mortgages difficult to obtain and the year-over-year increase in mortgage rates is making it challenging for many would-be buyers to qualify.

The implication for equities is not necessarily straightforward. Granted, consumer stocks in SPDR Select Consumer Discretionary (XLY) are weaker than the broader U.S. stock pool. What’s more, the limited contribution of mortgage servicing dollars as well as the volume of market-based trading is adversely impacting banks in the SPDR KBW Bank Index (KBE). This exchange-traded tracker is down 2.1% this year and has been flirting with a technical downtrend.

Nevertheless, U.S. stock ETFs that have maintained momentum over broader stock benchmarks this year have refused to give up without a fight. Institutional money managers have be regular “buyers on weakness” of funds like iShares DJ Energy (IYE) and SPDR Select Basic Materials (XLB). Whether the interest in energy and basic materials is a function of a pick-up in emerging market growth or tied to late-stage business cycle investing may be less important than the fact that the sector winds remain favorable.

5 ETF Chart

Considering the plethora of diverse economic data points, expect the U.S. Federal Reserve to talk out of both ends of its collective mouth. Yellen will emphasize that the recovery remains on track to warrant the cessation of quantitative easing in October. In the same breath, they will acknowledge a variety of trouble spots that require the seemingly endless policy of zero percent interest rates. Raise rates sooner? Not going to happen – the housing market’s sales woes provides enough cover there. I would sooner anticipate rates remaining at 0% for the entirety of 2015 than join the camp that believes a rate hike will come in the 2nd quarter of next year.

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