Making Money Alert: The Fed Tapers and the Growth SLOWS

If you’ve ever been caught up in a case of really bad timing, then you probably know what the Fed is feeling right about now.

This morning, we received a dismal Gross Domestic Product (GDP) print that showed economic growth SLOWED to an adjusted annual rate of just 0.1% since the beginning of the year. That’s very, very poor, especially when you consider what the Fed just announced.

As expected, the Federal Open Market Committee (FOMC) opted to continue the “taper” of its current bond-buying program, announcing via the FOMC statement that it would reduce its monthly bond purchases to $45 billion from $55 billion. The decision was widely anticipated and the vote within the Fed was unanimous.

Now, the Fed did somewhat acknowledge the slow economic growth in a statement, acknowledging that recent data “indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions.”

Yes, when all else fails, blame the weather.

Of much more importance than the Fed’s statement today was the reaction, or virtual lack thereof, in the equity markets. After 30 minutes of post-FOMC announcement trade, the S&P 500 index was up only fractionally.

The broad-based measure of the domestic market continues to trade well above its 50-day moving average and decisively above its 200-day moving average. Although this bull market may be tired, the technicals certainly suggest the bull is intact.

As for bonds, well, we saw more of what we’ve seen all year, i.e., we have seen bond yields fall and bond prices rise.

The benchmark 10-Year Treasury Note yield was down 1.4% after the first 30 minutes of post-FOMC statement trade, proving once again that the rising interest rates that most so-called experts thought would dominate the markets have failed to materialize this year.

If you want to find out how to take advantage of what has been the biggest surprise in the market so far in 2014 — i.e., a stable interest rate environment — then I invite you to check out my Successful ETF Investing advisory service, today!

ETF Talk: Global X Could be the X-Factor for Your Portfolio

Global X is a fast-growing, multi-faceted alternative exchange-traded fund (ETF) provider. The company’s focus solely on ETFs sets it apart from many of the other providers we’ve profiled in this series, since a number of them began as mutual fund providers or are part of a large banking conglomerate. But with 40 available ETFs and more than $3 billion in assets under management, Global X has an interesting variety of strategies it can offer investors.

As its name suggests, a large proportion — roughly half — of Global X’s ETFs are international, with China and the rest of Asia having the greatest presence in the provider’s portfolio. Roughly a quarter of Global X’s ETFs are based in the commodities sector, and one-fifth are focused on income generation. While “income” is sometimes read as “corporate dividends,” Global X also has three master limited partnership (MLP) ETFs.

MLPs are a popular structure for doing business in the energy sector, since they avoid corporate taxes. Unfortunately, they also generate tax-related complexities for investors. Global X MLP & Energy Infrastructure ETF (MLPX) seeks to avoid these drawbacks, while still allowing for the transparency and ease of ownership that an ETF structure allows. Since the fund’s inception date of August 7, 2013, MLPX has gained 17.74%. In 2014 alone, it has gained 8.58%. MLPX also began paying quarterly dividends in November.

Global X is a fast-growing ETF provider that offers a diverse array of investment strategies. As you look to expand your portfolio, you may want to consider Global X funds that match your objectives and risk tolerance.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

ETF Sector Spotlight: Emerging Markets

After last year’s marked underperformance, March brought with it happier times for the emerging markets. The Vanguard FTSE Emerging Market ETF (VWO), the largest equity emerging markets ETF by total assets, handily outperformed the S&P 500 (SPY) by almost 4%.

Moreover, for the week ended April 4, emerging markets funds actually saw net inflows, a big change from the record net outflows during the first quarter.

It remains to be seen whether these factors are just anomalies in a down market, or if they are harbingers of further gains to come. Either way, the emerging markets deserve your attention.

In this month’s ETF Sector Spotlight, we have compiled the 10 largest equity-focused Emerging Market ETFs that you should know about. This list shows you the many ways to play the emerging markets through ETFs. An investor could choose to invest in all emerging markets, select regions, select countries, and even select sectors within regions or countries.

To see which funds made our Top 10 Emerging Market ETFs list, get your ETF Sector Spotlight today!

NOTE: Fabian Wealth Strategies is a Securities and Exchange Commission-registered investment adviser, and is not affiliated with Eagle Financial Publications.

Sounding an Uplifting Alarm

I will never give in, until the day that I die
I’ll get myself some independence
Carve out a future with these two bare hands…

–Mike Peters, The Alarm

The lyrics here are from Mike Peters, singer/songwriter and founder of the United Kingdom-based alternative rock band The Alarm. Here the masterful Peters gives advice suited to all of us, and that is to always keep fighting for your values and to pursue the virtue of independence.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Making Money Alert readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

In case you missed it, I encourage you to read my e-letter article from last week on Eagle Daily Investor about what the market’s comeback rally means for investors. I also invite you to comment in the space provided below my column at Eagle Daily Investor.

All the best,

Doug Fabian

Upcoming Appearance

Las Vegas Money Show, May 12-15

Join me for the Las Vegas Money Show, May 12-15, at Caesars Palace. Register free as my guest. My U.S. and Canadian subscribers should call 1-800-970-4355 and mention priority code 035178.