Update June 19.. 3:10 p EDT
Ten Yr 2.62%, U.S.equities flat,biotech mixed, jobless claims down. Japanese and European equities up. Iraq on front page.
GOLD Up $41 Breaks Through Resistance at $1300
Gold futures rose on technicals, Middle East turmoil, a weak dollar and a dovish FED. Silver is also strong.In this week’s Barron’s three market “gurus” were bullish on gold and gold miners: Fred Hickey, Marc Faber and Brian Rogers.
In a 5/26/14 Barron’s interview, Stephanie Pomboy, President of MacroMavens was also bullish on gold and Treasuries because of a weak dollar. Stephanie believes monetary accommodation from the FED with QE has given us slow growth with little upside to Treasury yields which will be stuck in a range of 2-3%. Thus tapering may be hard to do because there is little self sustaining momentum in the economy without stimulus. Pomboy also recommends overweighting large cap multinationals and emerging economies because of faster growth and less debt than the U.S..
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Don’t Fight the FED -S&P Up 0.77% To Record High
Market indices rallied after the FED testimony as investors inferred more of the same easy money policies. Economic growth was cut to a range of 2.1-2.3% from an earlier forecast of 2.9%. The “taper”was cut $10B to $35B a month as widely expected. Janet Yellen cautioned on making interest rate projections but FED officials are expecting 1.125% by the end of 2015. Despite a slight increase in the CPI compared to forecast, wage growth remains lower minimizing risk of inflation.
Materials and Utilities were the strongest sectors up 1.34% and 1.77% respectively. The market expects low interest rates near term with the TSY ten year yield down slightly to 2.60%. The dollar was a tad weaker against the Euro and the Yen. The iShares 20+ Year Tsy Bond ETF (TLT)was up 0.77% today and 10.35% YTD.
The energy sector remained strong up 11.8% YTD beating the S&P up 6.48% YTD. Gold spot was up $5.44 to $1276.
Healthcare stocks also rallied up 0.76% and the biotech sector was stronger with the IBB up 0.84% and the more speculative XBI up 1.3%.
Rayno Life Science stocks rallied with these notable winners: Achillion (ACHN) up 1.45%, Biogen (BIIB) up 1.65%, CardioVascular Systems (CSII) up 2.21% and Qiagen (QGEN) up 2.89%.
Our new picks have had a nice 5 day run: Pacific Bioscience (PACB) up 13.85% and Fibrocell Science (FCSC) up 23.35%.
Biotech stocks have been sluggish lately but our large cap portfolio of 8 stocks is up 9.9% YTD and the FBT is up 17% YTD.
Although the indices seem sluggish over the past month NASDAQ is actually up 6.66% and trading opportunities abound.