Upcoming US Events for Today:
- Personal Income for February will be released at 8:30am. The market expects a month-over-month increase of 0.2% versus an increase of 0.3% previous. Consumer Spending is expected to increase by 0.3% versus an increase of 0.4% previous.
- Consumer Sentiment for March will be released at 9:55am. The market expects 80.5 versus 79.9 previous.
Upcoming International Events for Today:
- Great Britain GDP for the Fourth Quarter will be released at 5:30am EST. The market expects a quarter-over-quarter increase of 2.7%, consistent with the previous report.
- Euro-Zone Economic Sentiment for March will be released at 6:00am EST. The market expects 101.5 versus 101.2 previous. Industrial Sentiment is expected to show –3.5 versus –3.4 previous. Consumer Sentiment is expected to show –9.3 versus –12.7 previous.
- German CPI for March will be released at 9:00am EST. The market expects a year-over-year increase of 1.1% versus an increase of 1.2% previous.
The Markets
Stocks continued to slide on Thursday, weighed down by the ongoing weakness in momentum names. The rotation away from these riskier, high-flying assets has pushed the relative performance of the iShares MSCI USA Momentum ETF (MTUM) to the lowest levels since November. Conversely, risk-averse and less volatile plays, such as the Dow Jones Select Dividend Index (ARCA:DVY), have seen their relative performance climb to the highest level since November as investors reallocate portfolio positions ahead of the end of the quarter. The outperformance of defensive equity plays is a warning sign of a market peak as higher beta positions are replaced with lower beta alternatives to protect recent gains and prepare to weather a potential storm ahead. The Dow Jones Dividend Select Index (ARCA:DVY) remains in a period of seasonal strength that stretches through to June.
There are a number of reasons investors could be rotating away from risk at the present market peak. One reason was mentioned previously, which is that investors are rotating portfolios ahead of the end of the quarter, booking profits in positions that have recorded year-to-date gains within a flat market tape. Concerns over the escalation of geopolitical risks is certainly another reason for the recent downfall in stocks. As well, another reason is the lack of upbeat economic data. Economic reports have largely missed analyst estimates since the year began as a result of the impact that weather has played in the US Northeast. This has pushed the Citigroup Economic Surprise Index to the lowest level since 2012 as analysts attempt to get a grasp of the true extent of the strength of the economy. Seasonally, economic activity expands at this time of year, rebounding from the winter months. However, even though there has been an uptick in a few data points following the winter doldrums, such as in the Philadelphia Fed Index, economic beats have yet to become ubiquitous to warrant optimism pertaining to future growth estimates. Clarification to each of these issues should be provided in the weeks ahead.
Seasonal charts of companies reporting earnings today:
Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.84.
S&P 500 Index
TSE Composite
Horizons Seasonal Rotation ETF (TSX:HAC)
- Closing Market Value: $14.32 (down 0.35%)
- Closing NAV/Unit: $14.34 (down 0.41%)
Performance*
| 2014 Year-to-Date | Since Inception (Nov 19, 2009) | |
| HAC.TO | 0.28% | 43.4% |
* performance calculated on Closing NAV/Unit as provided by custodian
