Wednesday night reading

Today I found a great post by MH. In the article titled "Yield" Stocks Continue to be Punished,
Mark says,

After a huge run earlier this year these stocks were positioned to "revert to mean" but the action still catches your breath when you see major rotations.  I mentioned yesterday morning that the REITs and utilities had taken it on the chin from the moment Bernanke answered in a Q&A that we'd potentially slow QE sometime in our lifetimes and this week has not been any more kind to them.  They are of course incredibly oversold at this point and prone for dead cat bounces as the entire candle is below the lower bollinger band in these type of ETFs, but of course knife catching is an art for those who enjoy it.

I also believe it is time to think about the impact on FED's exit strategy. Don't get me wrong here. I am not calling for the end of Quantitative Easing, I am not fighting the Fed, and I don’t care what Ben Bernanke says or doesn’t say. I’m only looking at price. That’s the only thing that matters to me.

If FED exits,

• Bonds will take a hit, because of less buying (Bond Yield will go up);
• US Dollar will be bullish, because of less money printing;
• Interest Rate products will have a twist in yield curve to reflect the market condition;
• Dividend stocks will be bearish, because of the comparison factor of bond yields going up;

 

The above two charts showed a clear turning point for 30 Year and USD on May 1, 2013. I guess some big guys knew it a little earlier.


 
The above 2 charts are more interesting. IYR, the ETF for Real Estate made a new high on Wednesday and dropped over 6% since then. XLU, the ETF for Utilities peaked on May 1 with Bonds and made a lower high on Wednesday with over 7% loss for the month.

At this point I am still not sure if end of QE is good or bad. It is good sign of economy, but since bad econ is driving us to all time high already, what's next?

Here are other readings I just did.

Is the U.S. the next hot 'emerging market'? [WSJ]

Margin debt hits a record [WSJ]

The bull case on Hertz Global (HTZ) [Barron's]

Goldman Sachs says AIG shares still most loved by hedge funds [Marketwatch]

If you only know 5 things about investing, make it these [Motley Fool]

Bid on lunch with Warren Buffett [eBay]

Activist investors: let's do it my way [The Economist]

House flipping back in style [WSJ]