While the market declined modestly on the week, the outlook continues to be positive. Earnings were generally favorable, with Apple (AAPL), Visa (V), Amazon (AMZN) and Boeing (BA) delivering strong reports. Apple reported the largest single quarter profit of any public company in history. Additionally, Visa announced a 4-for-1 stock split after beating revenue and earnings estimates. Caterpillar (CAT) missed, but that was not surprising since the slowdown in China and tumbling resource prices have curbed demand for its products.

According to Factset Research, as of last Friday, 79 percent of companies have beaten their earnings estimates and more than half have beaten sales estimates. Earnings growth was only 0.25 percent though, hurt by lower energy prices. Aside from the energy hit, one theme in the market this week was the stronger U.S. dollar’s impact on multinational earnings. Several firms lowered guidance due to the impact of weaker foreign currencies. In most cases, these reductions were small and already factored into estimates for 2015, so the impact on stocks was muted.

We’ve been talking about the stronger U.S. dollar for months and positioned for it using funds that hedge currency exposure such as Vanguard Global Minimum Volatility (VMVFX) and WisdomTree Europe Hedged Equity (HEDJ). Although the euro did rebound against the U.S. dollar this week, the dollar bull rally continues in other currencies. The Singapore dollar tumbled and Denmark cut interest rates to negative 0.5 percent to defend its euro peg. Even more, the offshore Chinese yuan (traded in Hong Kong), Russian ruble, Mexican peso and Brazilian real all slid sharply versus the U.S. dollar.

While investors were focused on multinationals cutting their earnings estimates by a few pennies this week, attention will soon turn to the $9 trillion in U.S. dollar denominated debt held in non-dollar countries. Much of that debt has been borrowed by emerging market companies such as real estate developers in China. Ignoring any new borrowing, the value of this debt is rising sharply for overseas borrowers due to the U.S. dollar rally. In the past, this situation has led to banking crises, but much of this debt was borrowed from bond investors after 2008. In short, the U.S. dollar and interest rates on dollar debt could rise even faster in 2015 if these borrowers begin to default.

Moving beyond private debt, Greece is making waves in Europe as its new government demands to renegotiate the bailout, saying more loans won’t solve anything since the country can’t repay the existing debt. No matter what Europe decides to do, the situation will not be contained to Greece because it will set a precedent. If the Greeks get a better deal, Spanish voters will take note when they head to the polls later this year.

On Friday, the Bureau of Economic Analysis released the first estimate of fourth quarter GDP growth. It fell a little short of estimates, coming in at 2.6 percent versus estimates of around 3.2 percent, due in part to higher imports. Imports tend to rise when the dollar strengthens and this will likely be a headwind for headline GDP going forward. GDP growth for the full year in 2014 was 2.4 percent (based on this first estimate of Q4 growth), which is up from 2012 and 2013. The second estimate of 2014 Q4 GDP comes out in late February.

The Best Gold Fund To Own

A Seeking Alpha Contribution

Investors have flocked to index funds and ETFs due to their low cost, tax efficiency and transparency. The general rise of indexing has helped ETFs grow rapidly, taking market share from mutual funds, particularly actively managed funds. However, there are clear-cut cases of active managers outperforming their indexed competition. One example is the gold mining sector.

Gold Funds

Since the inception of the Market Vectors Gold Miners ETF (NYSEARCA:GDX) in 2006, the fund has seen an incredible inflow of funds, to $7.1 billion as of January 23. The small cap edition, Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) has amassed $2 billion in assets since its inception in late 2009. The actively managed the Tocqueville Gold Fund No Load (MUTF:TGLDX), which was created back in 1998, has attracted only $1.3 billion in assets… continue reading.

*Please note, this article was written and published as a contribution for Seeking Alpha. To finish reading the article you will be redirected to their site.

PowerShares U.S. Dollar Index Bullish Fund (UUP)
CurrencyShares Euro Trust (FXE)
CurrencyShares Canadian Dollar (FXC)

The U.S. dollar pulled back slightly last week thanks to a rebound in the euro. The common currency recovered following the European Central Bank’s announcement of quantitative easing last week. Although the U.S. dollar weakened, ironically the big story of the week for financial media was the strong dollar, due to its impact on the earnings of multinationals. If the greenback goes on to suffer an extended correction, this will be another example of the media acting as a contrarian indicator.

The Canadian dollar may bounce as well after it tumbled when the Bank of Canada announced a surprise interest rate cut. Further cuts will come as the Canadian economy slows due to falling oil prices, with housing bubbles in some areas also at risk of popping. In the short-term, however, a rebound is likely in the wake of the past week’s sharp drop.

Working in favor of the U.S. dollar was the Singapore dollar. Overnight, the currency saw its largest one-day devaluation in nearly 3 years. The Singapore dollar doesn’t play a large role in the overall currency market, but it has a lot of influence in the Asia region, especially because the Singapore government is known for its successful economic management.

Global X FTSE Greece 20 (GREK)

Greek stocks held up for a day following the election of the anti-austerity Syriza party because investors weren’t sure what to expect from the new government. Now they know: Syriza is serious about ending austerity, and the “coalition of radical leftists” (the name of the party in Greek) which includes more than a dozen parties, including those based on Maoism and Trotskyism, will not be good for business. Greek bank stocks have fallen about 40 percent over the past two days.

The stock of National Bank of Greece shows how far the Greek banking sector has fallen. Shares were worth hundreds of dollars in the recent past, but today fell to $1.

The situation in Greece is unlikely to deescalate. Russia has reached out to Greece and the Syriza government opposed an EU statement calling for new sanctions on Russia. Since the EU requires unanimous consent on many issues, opposition from Greece could have a major impact on European policy, vis-à-vis Russia.

SPDR Energy (XLE)
United States Natural Gas (UNG)
First Trust ISE Revere Natural Gas (FCG)
Market Vectors Russia (RSX)

Oil prices are still in a short-term bottoming process, but equity investors are becoming slightly more optimistic. News that crude inventories climbed to a new three-decade high weighed on prices Wednesday morning, pushing West Texas Intermediate Crude prices back to their lows before bouncing. Prices seem to want to stay close to the $45 level.

Over the past week, oil prices rebounded with news of the Saudi king’s passing, but the gains evaporated when it was clear the new ruler will not change energy policy. Yesterday, oil prices rallied on comments made by OPEC’s chief. He said oil could reach $200 a barrel if there are no investments in extraction, but he gave no timetable. The gains evaporated once people realized it will be years before the effect of low investment kicks in.

SPDR Utilities (XLU)
SPDR Consumer Staples (XLP)
SPDR Healthcare (XLV)
SPDR Technology (XLK)
iShares Cohen & Steers Realty Majors (ICF)
SPDR Dow Jones International Real Estate (RWX)
SPDR S&P Dividend (SDY)
iShares Nasdaq Biotechnology (IBB)

Defensive sectors continue to dominate in 2015. The sector ETF chart below shows the relative gains for each sector versus the S&P 500 Index, which is down 1.4 percent to date. Utilities, healthcare and consumer staples are all up for the year, while the materials sector is down for the year, but still outperforming the market. Although the technology sector has lagged, it is closing the gap sharply today following the rise in Apple (AAPL) shares. Apple is the largest holding in the S&P 500 Index at 3.6 percent of assets, but it is 16.5 percent of XLK’s assets. The firm reported the largest quarterly profit in history, a whopping $18 billion, and shares climbed 7 percent in early trading on Wednesday.

Dividend shares continue to lead the market higher, thanks in part to lower interest rates. The sector benefiting the most from lower interest rates around the globe is real estate. Shares of ICF and other REIT ETFs have been on an almost non-stop rise in 2015. RWX, an ETF which holds foreign REIT shares, has moved almost in lockstep with ICF.

Biotechnology, still the leading sector in this market, has been stable in the past week. The sector is still in an uptrend this year, helped by the strength in the healthcare sector.

iShares Barclays 20+ Year Treasury (TLT)

Last week we said bonds are overdue for a pullback, and that’s still the case this week even as bonds climbed back near their 52-week highs. The 10-year treasury yield is at 1.83 percent, lower than the yield on the S&P 500 Index. The 30-year treasury is only 2.4 percent, lower than most dividend ETF yields. These yields became even more attractive in the past week as Swiss bond yields collapsed, with negative interest rates out past a decade.

SPDR Gold Shares (GLD)

Gold prices consolidated after crossing $1300 last week. There’s a lot of space for the metal to move in either direction as a slide to $1200 would still leave the metal in an uptrend and there’s no further bullish breakout until it crosses $1400. Over the near term, watch how gold performs relative to the U.S. dollar. Since November, it has rallied along with the U.S. dollar as foreign currency holders search for safe haven assets.

Best High-Yield Bond Funds For 2015 – Part 3

A Seeking Alpha Contribution

In part one, we compared the two largest high-yield bond funds: iShares iBoxx $ High Yield Corporate Bond (NYSEARCA:HYG) and SPDR Barclays Capital High Yield Bond (NYSEARCA:JNK).

In part two, we compared two short-term high-yield bond funds: PIMCO 0-5 Year High Yield Corporate Bond (NYSEARCA:HYS) and SPDR Barclays Short Term High Yield Bond (NYSEARCA:SJNK).

In part three, we will look at the offerings in the high-yield municipal bond space: SPDR Nuveen S&P High Yield Municipal Bond (NYSEARCA:HYMB), Market Vectors High-Yield Municipal Index (NYSEARCA:HYD) and the much newer Market Vectors Short High-Yield Municipal Index (NYSEARCA:SHYD)…. To Continue Reading Please, Click Here.

*Please note, this article was written and published as a contribution for Seeking Alpha. To finish reading the article you will be redirected to their site.

Greece elected the anti-austerity Syriza party on Sunday and immediately found a coalition partner in the right-wing Independent Greeks party, which also opposes austerity. This could generate volatility for the markets in the days and weeks ahead, but the immediate result of the election was the covering of short positions. The euro rebounded versus the U.S. dollar on Monday and European shares traded higher, although Greek shares did decline.

Beyond the currency markets, there were rebounds in copper, oil and other commodities. High-yield bonds, currencies and emerging markets, along with commodities, have been in downtrends stretching back to the summer of 2014 in many cases. Emerging markets have rebounded in 2015, and commodities, foreign currencies and high-yield debt are all overdue for a bounce. The U.S. dollar is also long overdue for a pullback. Markets such as oil and the euro remain in clear bear markets though, so a rebound may not last long.

If the euro and European politics takes a back seat for a while, investors may finally turn back to the U.S. market and earnings season. Apple (AAPL), Facebook (FB), Amazon (AMZN), Microsoft (MSFT), Yahoo (YHOO), Google (GOOG), Boeing (BA), Chevron (CVX), Ford (F), Pfizer (PFE), Proctor & Gamble (PG), Alibaba (BABA), Visa (V), Mastercard (MA) and AT&T (T) report over this big week. Technology, pharmaceutical and financial services funds will be most affected by the results. Growth funds will also be impacted; for example, five of the above companies are top positions found in Fidelity Blue Chip Growth (FBGRX).

The Federal Reserve meets this week and will make a policy statement on Wednesday. The Fed isn’t expected to hike rates until June, so no change is expected. The minutes from the meeting will be interesting to read because the European Central Bank launched quantitative easing last week.

At the end of the week, the Bureau of Economic Analysis will release the initial estimate of fourth quarter GDP. The average of analyst estimates is 3.2 percent growth for the quarter.