2. Retail Stocks Continue To Sing The Blues. Retailers logged their weakest showing in six months. In the absence of wage growth, is it any surprise that consumers are holding back? What’s more, ETFs like SPDR Retail (XRT) have posted negative returns year-to-date, while the slope of its 200-day recently traveled into negative territory.
3. European Economy Needs Another Central Bank Infusion. Germany was once the powerhouse that kept the European economy out of harm’s way. France could often be counted on to contribute as well. But lately? Both of the euro-zone’s stalwarts are decelerating. Meanwhile, Portugal’s banks are under fire and Italy has ushered in another official period of recession. The number of European country ETFs struggling with a technical downtrend is worrisome, including iShares MSCI Germany (EWG), iShares MSCI France (EWQ), iShares MSCI Italy (EWI), Global X FTSE Greece (GREK), iShares MSCI Switzerland (EWL), iShares MSCI Poland (EPOL), iShares MSCI Sweden (EWD) and iShares MSCI Austria (EWO).
4. Wither the Banks? One of the primary goals of quantitative easing and zero-percent interest rates was to give banks an opportunity to borrow on the ultra-cheap and lend out the money profitably. There’s been some of that, of course. However, banks have been far more stringent with consumers than with businesses. And in many cases, banks have chosen to park the Fed’s electronic credits/dollars in reserves for an exceptionally modest, albeit guaranteed, rate of return. So if borrowing from the Fed for next-to-nothing did not encourage banks to supply loans because of perceived risk-return concerns or insufficient demand, why would the end of those policies be a net positive for the big banks? There may be an economic theory to suggest that it would be, but faith in the SPDR Bank Index Fund (KBE) tells a different story.
5. Commodities Are Showing Little Faith In The Global Economy. Commodities as an asset class suffered alongside emerging markets for the same three-year period (i.e. 2011-2013). The thinking? The BRIC (Brazil, Russia, India, China) engine that had been powering the global economy had slowed dramatically, dampening demand for “stuff.” In 2014, though, emergers have rallied back with a vengeance. China, India and even Brazil have been showing signs of turnaround. Yet commodities are still thrashing about aimlessly. Is it deflation in Europe? Is it underlying weakness clear across the West? Whatever it is, it is not pretty.
