Mid-Day Report: Market Remains Steady after US Q4 GDP Downward Revision
February 28, 2007 on 2:48 pm | In Currency | No Comments
Action Insight | Written by ActionForex.com | Feb 28 07 14:16 GMT |
Forex Mid-Day Technical Report Market Remains Steady after US Q4 GDP Downward Revision
Markets remain steady in tight range after US Q4 GDP prelim estimate which showed downward revision from advance estimate’s 3.5% to 2.2%. The downward revision was primarily led by smaller inventory accumulation, weaker growth in personal consumption expenditures and higher imports. But still, that was slightly better than Q3’s 2.0% growth and just missed expectation of 2.3%. After all, this should be factored in by the market and thus, doesn’t trigger further dollar selling. Chicago PMI and new home sales will be featured next.
Data from Eurozone are pretty upbeat. Unemployment in both Eurozone and Germany both fell slightly in the month of Feb, with German unemployment dropping from 9.5% to 9.3%, Eurozone unemployment dropping from 7.5% to 7.4%. Business climate improved from 1.4 to 1.56 in Feb. Economic sentiment also improved from 109.2 to 109.7. Though, Jan HICP was confirmed to be 1.8% yoy, lower than prior estimates of 1.9%. One of the surprises was Swiss KOF leading indicator which ended its run of deterioration in Feb by rising from an upwardly revised 1.74 to 1.79. This could be an indication that Swiss economy will improve in second half of this year after a modest easing in the first half. UK Gfk consumer confidence came in as expected at -8.
Technically speaking, even thought the current USD/JPY and USD/CHF sharp decline was supported at an important fibo retracement level, further weakness is still expected to resume with the consideration that important tops are already formed in EUR/JPY and EUR/CHF cross. Risk aversion and carry trade unwinding themes will likely continue to dominate in near term. Dollar will continue to be mixed as it could continue to weaken against yen and swissy, and to a lesser extend euro as euro is also pressured in crosses. Meanwhile, dollar may remain firm against high yield currencies including Aussie and Kiwi as they should be more severely hurt by carry trade unwinding. EUR/USD
Daily Pivots: (S1) 1.3182; (P) 1.3219; (R1) 1.3279; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
EUR/USD consolidation continues today after rally from 1.3078 was limited at 1.3258. As discussed before, as a short term top is already formed at 1.3258, further consolidation will likely follow as long as EUR/USD stays below 1.3258 high. However, the rise from 1.3078 should be in force as long as downside is contained by 1.3149 support. Break of 1.3258 will indicate rise has resumed for 1.3296 resistance. On the downside, below 1.3149 will indicate the rally from 1.2911 has possibly completed and risk further pull back towards 1.3078 support.
In the bigger picture, the corrective fall from 1.3364 has completed with three waves down to 1.2865. With EUR/USD staying within medium term rising channel (lower channel line at 1.2822 now), medium term up trend from 1.1639 is still in progress. Current rally is being treated as resumption of this up trend. Break of 1.3296 resistance will add more credence to this view and should push EUR/USD to a new high above 1.3364.
However, with bearish divergence condition in weekly MACD and RSI, a medium term top could be around the corner. Upside of this medium term rally could be limited by resistance zone of 1.3668 (04 high) and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822. But clear reversal pattern or a break of the lower channel line is needed to indicate a medium term top is formed, otherwise, further rise is still in favor.
GBP/USD
Daily Pivots: (S1) 1.9584; (P) 1.9628; (R1) 1.9664; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
Cable has been volatile today, dipping to as low as 1.9516 but rebounding strongly in early US session. But after all, it’s still bounded in established range of 1.9429 to 1.9679. With 4 hours MACD dragged below signal line, the corrective rise from 1.9429 should have completed at 1.9672 already and hence, further decline should be seen to retest 1.9429 support. Above 1.9672 is needed to indicate this rebound from 1.9429 has resumed for 1.9731 resistance.
Also, previous break of rising trend line support (1.8517 to 1.8834, now at 1.9743) indicates the rally from 1.8517 should have already completed at 1.9913. Hence, further correction cannot be ruled out as long as cable stays below 1.9731 resistance. Below 1.9429 will indicate corrective fall from 1.9913 has resumed for 1.9237/61 cluster support (23.6% retracement of 1.7047 to 1.9913 at 1.9237).
In the bigger picture, bearish divergence conditions are being displayed in weekly RSI, daily MACD and RSI already, suggesting that the whole up trend from 1.7047 might have completed before reaching mentioned 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067). Focus is still on 1.9237/61 cluster support. Decisive break of 1.9237/61 cluster support will add much weight to the case that whole medium term up trend from 1.7047 has already completed much deeper decline should be seen towards next cluster support at 1.8834 (38.2% retracement of 1.7047 to 1.9913 at 1.8818) first.
Strong rebound from 1.9237/61 cluster support or break of 1.9731 resistance will indicate that the corrective fall from 1.9913 is merely correction to the rise from 1.8517 only and cable could make another high above 1.9913 and attempt to meeting 2.0106 cluster resistance before having a medium term reversal.
USD/CHF
Daily Pivots: (S1) 1.2107; (P) 1.2205; (R1) 1.2270; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/.
USD/CHF recovers mildly after sharp fall from 1.2436 was just contained by 61.8% retracement of 1.1878 to 1.2571 at 1.2143 and reached 1.2142 only. However, as upside of the current recovery is still limited by mentioned 1.2257 cluster resistance (38.2% retracement from 1.2436 to 1.2142 at 1.2254), such consolidation is still expected to be brief and fall from 1.2436 should resume sooner rather than later.
On the downside, sustained break of 1.2143 support will encourage further fall towards next fibo support of 78.6% retracement of 1.1878 to 1.2571 at 1.2211) first. On the upside, touching of 1.2257 will indicate a short term low is formed and bring lengthier consolidation. But a break above 1.2231 resistance is needed to turn short term outlook back to neutral, otherwise, further decline is still expected to follow after consolidation.
In the bigger picture, previous break of 1.2374 support should have completed a head and shoulder top formation (with ls: 1.2547, h: 1.2571, rs: 1.2550) and should be an important indication of reversal. Firm break of 1.2268 resistance turned support confirms that the whole rally from 1.1878 has completed after failing to break through mentioned medium term falling trend line (1.3283 to 1.2760). Also, weekly MACD will still be kept negative with daily MACD staying below signal line. This suggest that whole down trend from 1.3283 is still in force. In such case, break of 1.2143 fibo resistance should bring deeper decline towards 1.1878 (06 low).
USD/JPY
Daily Pivots: (S1) 116.67; (P) 118.70; (R1) 119.95; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
USD/JPY recovers mildly after sharp fall from 121.61 was contained slightly above 61.8% retracement of 114.41 to 122.17 at 117.37 and reached 117.47. At this point, since recovery is still limited below mentioned 119.17 resistance, consolidation should still be brief and fall is expected to resume sooner rather than later towards next downside target of medium term rising channel support (now at 116.72).
On the upside, touching of 119.17 will indicate a short term low is already formed and should bring lengthier consolidation. But still, a break above 120.32 resistance. is needed to turn short term outlook back to upside, otherwise, further decline is still in favor.
In the bigger picture, much focus will be on the mentioned medium term rising channel (108.99, 114.41, 117.87, lower channel at 116.70 now). Sustained break of this channel will indicate that the whole medium term up trend form 108.99 has already completed at 122.17. This will swing favors back to the case that such medium term rally is merely part of a large scale consolidation that started at 121.38. And deeper decline should at least be seen to below 114.41 support with possibility of further fall to retest 108.99 low. However, strong rebound from this medium term rising channel will save the case that this rally from 108.99 is still in force and USD/JPY could still make a new high above 122.17 as such rally goes.
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Wed, 28 Feb 2007 11:15:00 GMT from Smart Money
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Wed, 28 Feb 2007 10:11:00 GMT from Reuters
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http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:30 JPY Japan Manufacturing PMI Feb 53 N/A 53.4
23:50 JPY Japan Industrial production M/M Jan -1.50% -1.90% 0.90%
23:50 JPY Japan Retail sales Y/Y Jan -0.80% 0.10% -0.30% -0.20%
07:00 GBP U.K. Nationwide house price M/M Feb 0.70% 0.50% 0.30%
09:00 EUR Germany ILO Unemployment rate Feb 9.30% 9.40% 9.50%
09:00 EUR Germany Unemployment change Feb -79K -40K -106K
09:00 EUR Eurozone HICP final M/M Jan 0.40% -0.50% 0.40%
09:00 EUR Eurozone HICP final Y/Y Jan 1.80% 1.90% 1.90%
10:00 EUR Eurozone Services Confidence Feb 19.8 20 20
10:00 EUR Eurozone Economic Confidence Feb 109.2 109.1 109.2
10:00 EUR Eurozone Industrial Confidence Feb 5.4 5 5.4
10:00 EUR Eurozone Business climate Feb 1.56 1.41 1.4
10:00 EUR Eurozone Unemployment rate Jan 7.40% 7.40% 7.50%
10:30 GBP U.K. Gfk Consumer Confidence survey Feb -8 -8 -7
10:30 CHF Swiss KOF Leading Indicator Feb 1.79 1.7 1.71 1.74
13:30 USD U.S. GDP annualised Q4 Prelim 2.20% 2.30% 3.50%
13:30 USD U.S. GDP Price Index Q4 Prelim 1.70% 1.50% 1.50%
13:30 USD USD Personal consumption 4.20% 4.20% 4.40%
13:30 USD U.S. PCE Q4 Prelim 1.90% 2.10% -0.80%
13:30 USD U.S. Core PCE Q4 Prelim -0.90% -0.30% 2.10%
14:45 USD U.S. Chicago PMI Feb 50 48.8
15:00 USD U.S. New home sales Jan 1.08 M 1.12 M
15:00 USD U.S. New home salesM/M Jan -3.40% 4.80%
http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/
Daily Report: Yen & Swissy Retreat after Meeting Fibo Resistance
February 28, 2007 on 10:28 am | In Currency | No Comments
Action Insight | Written by ActionForex.com | Feb 28 07 07:33 GMT |
Forex Daily Technical Report Yen & Swissy Retreat after Meeting Fibo Resistance
Both Japanese Yen and Swiss Franc retreats mildly today after yesterday’s sharp rally against dollar was temporarily limited by 61.8% retracement resistance. China’s main stock index, which crashed yesterday and is part of the reasons on risk aversion buying in Yen and Franc, opened lower today but recovered quickly and moved into positive territory. Also, the short term overbought yen was limited partly by poor Jan industrial production which dropped 1.5% mom and retail sales which dropped 0.8% yoy.
But still, technically speaking, important tops are there in particular in EUR/JPY and EUR/CHF. EUR/JPY should have completed a diagonal triangle after false breakout to 159.63 and now with lower trend line taken out. EUR/CHF has completed a double top formation with the short term trend line broken too. Today’s consolidation will likely be temporary and further strength should still be seen in yen and franc, at least in near term. And this could just be a start of medium term strength as carry trades continue to unwind.
Also, note that while dollar is pressured against Euro, Yen and Franc, it’s still relatively stable against Sterling. Besides, dollar has also gained against Loonie and Aussie, both pressured by carry trade unwinding and commodity prices. While there are risks of downside surprise in Q4 GDP revision and new home sales today, the market could still be dominated by yen and franc. And, Euro’s upside could be relatively limited by cross selling pressure. EUR/USD
Daily Pivots: (S1) 1.3182; (P) 1.3219; (R1) 1.3279; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
EUR/USD’s rally from 1.3078 extended to as high as 1.3258. Subsequent retreat has pushed EUR/USD to below 1.3200 support, indicating that a short term top is formed there at 1.3258 already. Further consolidation will likely follow as long as EUR/USD stays below 1.3258 high. But still, the rise from 1.3078 should be in force as long as downside is contained by 1.3149 support. Break of 1.3258 will indicate rise has resumed for 1.3296 resistance. On the downside, below 1.3149 will indicate the rally from 1.2911 has possibly completed and risk further pull back towards 1.3078 support.
In the bigger picture, the corrective fall from 1.3364 has completed with three waves down to 1.2865. With EUR/USD staying within medium term rising channel (lower channel line at 1.2822 now), medium term up trend from 1.1639 is still in progress. Current rally is being treated as resumption of this up trend. Break of 1.3296 resistance will add more credence to this view and should push EUR/USD to a new high above 1.3364.
However, with bearish divergence condition in weekly MACD and RSI, a medium term top could be around the corner. Upside of this medium term rally could be limited by resistance zone of 1.3668 (04 high) and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822. But clear reversal pattern or a break of the lower channel line is needed to indicate a medium term top is formed, otherwise, further rise is still in favor.
GBP/USD
Daily Pivots: (S1) 1.9584; (P) 1.9628; (R1) 1.9664; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
At this point, cable remains the weaker one among European majors as upside is still limited at 1.9672, well below mentioned 1.9731 resistance. Subsequent retreat from 1.9672 has now pushed cable through 1.9593 resistance with 4 hours MACD dragged below signal line, indicating that the rebound from 1.9429 has likely completed. At this point, intraday bias is turned back to the downside and further decline should be seen to retest 1.9429 support. Above 1.9672 is needed to indicate this rebound from 1.9429 has resumed for 1.9731 resistance.
Also, previous break of rising trend line support (1.8517 to 1.8834, now at 1.9732) indicates the rally from 1.8517 should have already completed at 1.9913. Hence, further correction cannot be ruled out as long as cable stays below 1.9731 resistance. Below 1.9429 will indicate corrective fall from 1.9913 has resumed for 1.9237/61 cluster support (23.6% retracement of 1.7047 to 1.9913 at 1.9237).
In the bigger picture, bearish divergence conditions are being displayed in weekly RSI, daily MACD and RSI already, suggesting that the whole up trend from 1.7047 might have completed before reaching mentioned 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067). Focus is still on 1.9237/61 cluster support. Decisive break of 1.9237/61 cluster support will add much weight to the case that whole medium term up trend from 1.7047 has already completed much deeper decline should be seen towards next cluster support at 1.8834 (38.2% retracement of 1.7047 to 1.9913 at 1.8818) first.
Strong rebound from 1.9237/61 cluster support or break of 1.9731 resistance will indicate that the corrective fall from 1.9913 is merely correction to the rise from 1.8517 only and cable could make another high above 1.9913 and attempt to meeting 2.0106 cluster resistance before having a medium term reversal.
USD/CHF
Daily Pivots: (S1) 1.2107; (P) 1.2205; (R1) 1.2270; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/.
USD/CHF’s sharp decline from 1.2436 has extended to as low as 1.2142, meeting mentioned 61.8% retracement of 1.1878 to 1.2571 at 1.2143 as expected, before recovering mildly. At this point, short term risk remains on the downside and consolidation should be brief as long as upside of recovery is limited below 1.2257 cluster resistance (38.2% retracement from 1.2436 to 1.2142 at 1.2254).
On the downside, sustained break of 1.2143 support will encourage further fall towards next fibo support of 78.6% retracement of 1.1878 to 1.2571 at 1.2211) first. On the upside, touching of 1.2257 will indicate a short term low is formed and bring lengthier consolidation. But a break above 1.2231 resistance is needed to turn short term outlook back to neutral, otherwise, further decline is still expected to follow after consolidation.
In the bigger picture, previous break of 1.2374 support should have completed a head and shoulder top formation (with ls: 1.2547, h: 1.2571, rs: 1.2550) and should be an important indication of reversal. Firm break of 1.2268 resistance turned support confirms that the whole rally from 1.1878 has completed after failing to break through mentioned medium term falling trend line (1.3283 to 1.2760). Also, weekly MACD will still be kept negative with daily MACD staying below signal line. This suggest that whole down trend from 1.3283 is still in force. In such case, break of 1.2143 fibo resistance should bring deeper decline towards 1.1878 (06 low).
USD/JPY
Daily Pivots: (S1) 116.67; (P) 118.70; (R1) 119.95; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
USD/JPY’s sharp fall from 121.61 extends further to as low as 117.47, just inches above mentioned downside target of 61.8% retracement of 114.41 to 122.17 at 117.37. Subsequent recovery indicates an intraday low is formed at 117.47 already and further consolidation might follow. However, as long as recovery is limited by 119.17 resistance, consolidation should still be brief and fall is expected to resume sooner rather than later towards next downside target of medium term rising channel support (now at 116.70).
On the upside, touching of 119.17 will indicate a short term low is already formed and should bring lengthier consolidation. But still, a break above 120.32 resistance. is needed to turn short term outlook back to upside, otherwise, further decline is still in favor.
In the bigger picture, much focus will be on the mentioned medium term rising channel (108.99, 114.41, 117.87, lower channel at 116.70 now). Sustained break of this channel will indicate that the whole medium term up trend form 108.99 has already completed at 122.17. This will swing favors back to the case that such medium term rally is merely part of a large scale consolidation that started at 121.38. And deeper decline should at least be seen to below 114.41 support with possibility of further fall to retest 108.99 low. However, strong rebound from this medium term rising channel will save the case that this rally from 108.99 is still in force and USD/JPY could still make a new high above 122.17 as such rally goes.
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Wed, 28 Feb 2007 03:05:00 GMT from Herald Sun
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http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:30 JPY Japan Manufacturing PMI Feb 53 N/A 53.4
23:50 JPY Japan Industrial production M/M Jan -1.50% -1.90% 0.90%
23:50 JPY Japan Retail sales Y/Y Jan -0.80% 0.10% -0.30% -0.20%
7:00 GBP U.K. Nationwide house price M/M Feb 0.7% 0.50% 0.30%
9:00 EUR Germany ILO Unemployment rate Feb 9.40% 9.50%
9:00 EUR Germany Unemployment change Feb -40K -106K
10:00 EUR Eurozone Services Confidence Feb 20 20
10:00 EUR Eurozone Economic Confidence Feb 109.1 109.2
10:00 EUR Eurozone Industrial Confidence Feb 5 5
10:00 EUR Eurozone Business climate Feb 1.41 1.4
10:00 EUR Eurozone HICP final M/M Jan -0.50% 0.40%
10:00 EUR Eurozone HICP final Y/Y Jan 1.90% 1.90%
10:00 EUR Eurozone Unemployment rate Jan 7.40% 7.50%
10:30 GBP U.K. Gfk Consumer Confidence survey Feb -8 -7
10:30 CHF Swiss KOF Leading Indicator Feb 1.7 1.71
13:30 USD U.S. GDP annualised Q4 Prelim 2.30% 3.50%
13:30 USD U.S. GDP Price Index Q4 Prelim 1.50% 1.50%
13:30 USD U.S. PCE Q4 Prelim 4.20% 4.40%
13:30 USD U.S. Core PCE Q4 Prelim N/A 2.10%
14:45 USD U.S. Chicago PMI Feb 50 48.8
15:00 USD U.S. New home sales Jan 1.08 M 1.12 M
15:00 USD U.S. New home salesM/M Jan -3.40% 4.80%
http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/
Football: Ferguson forced to eject agent from training ground
February 28, 2007 on 10:28 am | In Money | No Comments
Sir Alex Ferguson today revealed he has banned one agent from Manchester United’s Carrington training complex for tapping up young academy prospects.
At a time when the role of agents within the game has been brought into question by his captain Gary Neville, Ferguson went public on his fears that talented youngsters are being preyed upon by unscrupulous agents aiming to make a fast buck. The evidence comes from within, Ferguson claiming he caught the unnamed agent trying to make contact with young United players at academy games - when the attendance of parents at matches forces a relaxation of the normally ultra-tight security at Carrington.
“We had a situation recently with an agent coming to the academy and tapping up young players from 12 years of age,” recalled Ferguson. “We barred him - so he started to wait outside the academy picking out the cars of the parents, stopping them and tapping them up.”
Ferguson, whose son Jason used to be a licensed agent, has spoken out against the influence of that profession in the past. However, even though he does his best to protect his young players, he realises there is virtually no chance of stopping agents making contact with parents - particularly on away grounds.
Most of the elder members of United’s academy have agents - and while the Scot agrees with Neville that football would be better off without them, he accepts it is an unrealistic hope. Instead, he wants more scrutiny of the amount of money being paid when deals are done.
United remain alone among the Premiership in publishing details of sums handed to agents in transfer and contract negotiations. Last year, the figure was 1.8m - and the suspicion is many of United’s rivals are shelling out much more, with some players now apparently being controlled by the agents themselves.
“Providing agents are professional and responsible, there is nothing wrong with players going to them for advice,” said Ferguson. “The thing that should be investigated is the payments that are made. It is obvious they are taking a lot of money out of football, so much so that they are now able to ‘buy’ players. That is a really dangerous area to go into, because then the agents can control the markets. But if they are paid the same rates as lawyers and accountants and have a responsible attitude towards the industry, there is nothing wrong with that.”
Top 10 Search-Marketing Resolutions for 2007
February 28, 2007 on 7:28 am | In Finance | No Comments
Ever since exchange-traded funds entered the financial scene in the early ’90s, they have been been viewed as a rival and even a threat to the mutual fund industry. ETFs have many advantages over mutual funds in terms of tax efficiency, diversification and asset allocation. So instead of trying to beat ETFs, some mutual funds are joining them.
According to fund tracker Mornginstar.com, there are 39 funds that invest at least 80% in ETFs — baskets of securities that trade on an exchange the way stocks do. More of these products are expected to roll out this year and in the future as awareness of ETFs and their benefits grows.
The Huntington Rotating Markets Fund, geared toward retail investors, has been investing solely in ETFs since it rolled out about five years ago. Paul Koscik, portfolio manager of the fund, says he uses ETFs mainly because of the flexibility they provide.
For instance, he says, a large-cap manager is limited to large-cap stocks. If that group goes out of favor, the manager is stuck. A portfolio of ETFs however, he says, lets you rotate into different segments of the market in an easy and cost-effective way.
The fund, which has $50 million in assets, rotates between four segments: U.S. large-cap stocks, U.S. mid-cap stocks, U.S. small-cap stocks and global. Currently the fund is in the global segment and has 54% allocated to U.S. stocks.
The Huntington Rotating Markets Fund, which currently invests in 22 ETFs and carries an expense ratio of 1.17%, uses a combination of quantitative and qualitative measures to identify which areas of the market to be in.
Jeff Tjornehoj, a senior research analyst with fund tracker Lipper, says those costs are reasonable, particularly compared with those of most active mutual funds, which have an average cost of about 1.5%. And while they are more expensive than just purchasing an ETF (the average ETF fee is somewhere in the 0.40% range), these funds factor in the costs of managers who have some discretion over the fund.
AdvisorOne’s five mutual funds also invest almost entirely in ETFs. Two of the funds, the $587 million AdvisorOne Amerigo and the $130 million AdvisorOne Clermont, were launched in 2002 but didn’t fully transition into funds of ETFs until 2003. Prior to that, they were funds-of-funds.
The rest of the family is made up of the $99 million AdvisorOne Berolina, which launched in January 2006, and the $106 million AdvisorOne Descartes and the $30 million AdvisorOne Liahona, both of which launched in April 2006.
Robert Jergovic, one of the portfolio managers of the funds, says being able to use ETFs has been a gift. “When we looked at where performance came from in our strategy, it had less to do with security selection and more to do with asset allocation,” he says. “And ETFs were made for that.”
Jergovic adds that the ETFs also provide lower costs, liquidity and precision, because ETFs are transparent — you know what you’re buying. “It gives you a better perspective of how the pieces of the portfolio fit together,” he says, adding that using ETFs also provides scalability to the business, because it is easy to trade large amounts in and out of ETFs, and the transaction costs are minimal.
Another fund also aimed at retail investors is Flex-funds Aggressive Growth , which invests about 90% in ETFs of various styles, sectors and market capitalizations on the basis of their relative strength to that of the overall stock market. The fund, which has been around since 2000, has about $21 million in assets.
There are also several funds that are structured as target-date funds and are designed for inclusion in 401(k) plans. Target-date funds, which have surged in popularity in recent years, adjust asset allocations from more aggressive to more conservative as the investor approaches retirement.
Seligman offers a variety of these funds: Seligman TargETFund 2015 , which has $31 million in assets, Seligman TargETFund 2025 , which has $25 million, and Seligman TargETFund Core , which has $60 million.
Federated Investors has three target-date funds of ETFs, which it launched in April: Federated Target ETF 2015, which has $1 million in assets, and Federated Target ETF 2025 and Federated Target ETF 2035 , which have assets of $2 million each.
There are also a few companies that have target-date mutual funds of ETFs in registration, including AIM Investments, a unit of Amvescap PLC, and XTF Advisors. AIM has registered six mutual funds that will invest in PowerShares ETFs. XTF Advisors has four target-date mutual funds of ETFs.
Detroit’s Perception Problem
February 28, 2007 on 7:28 am | In Money | No Comments
Honda Motor (http://host.businessweek.com/businessweek/Corporate_Snapshot.html?Symbol=HMC) should have a warm spot in its heart for the Ayatollah Khomeini. If his followers had not overthrown the Shah of Iran in 1979, the company might still be best known for making motorcycles.
By the time of the Iranian Revolution, the small Japanese automaker had won critical acclaim for both its 1973 Civic and 1976 Accord, but when the Shah’s fall led to a subsequent energy crisis, suddenly its small cars were in demand. Sales of its four-door version of the Accord and its pseudo-sports coupe, the Prelude, took off. Soon, the company demanded that its dealers build separate facilities for the sale of its products. (Before that, Honda products were often the secondary line for many of the nation’s General Motors (http://host.businessweek.com/businessweek/Corporate_Snapshot.html?Symbol=GM) and Ford (http://host.businessweek.com/businessweek/Corporate_Snapshot.html?Symbol=F) dealers, much as Buick dealers once sold German-made Opels, Pontiac dealers handled British-made Vauxhalls, and Chrysler dealers apologized for distributing French-made Simca vehicles.) The Japanese had finally arrived.
Even though these early Hondas and Toyotas were not without flaws—Hondas had a nasty reputation for fenders that rusted from inside and engines that could stutter from time to time—they delivered exceptional mileage. But the final act that put the Japanese on top came not from their design engineers or marketing departments, but from Washington: In an attempt to help save Detroit, the Reagan White House forced voluntary import quotas on Japanese cars.
What followed was a prime illustration of the Law of Unintended Consequences. Reagan’s Halo Blunder
Instead of giving Detroit time to get back on its feet, the new quotas kept Japanese cars in short supply. Car buyers often had to wait for six months or more to move to the top of their dealer’s allocation list for new Accords or similar Toyota (http://host.businessweek.com/businessweek/Corporate_Snapshot.html?Symbol=TM) or Nissan (http://host.businessweek.com/businessweek/Corporate_Snapshot.html?Symbol=NSANY) products. And waiting created anticipation, which lent a halo effect of mythic proportions to all Japanese products, helping even import cars that weren’t as wonderful as our short memories insist.
Reagan’s import quotas also led the Japanese to develop whole new lines of vehicles. Because the proposed new divisions weren’t named on the quota list, they could be brought to America exempt from Washington’s import quotas, returning even greater profits to their corporations. You know those firms today as Lexus, Infiniti, and Acura.
What great irony. Washington’s good intentions to save Detroit 26 years ago put Japan’s automakers on the map permanently with the American public. Moreover, it happened at a critical juncture: Just five years earlier, the 84 million baby boomers had started turning 30.
In that period, the boomers left behind their ’60s idealism; they began to bow to the need for caution and security as they settled down and started families of their own. The only passion from the ’60s that this generation never lost was for automobiles. Even today, according to Art Spinella of CNW Marketing Research, the baby boomer generation (those born roughly between 1945 and 1965) outspends the 18-to-49 age demographic on automobiles and automotive services by 3 to 1. That’s just more bad news for Detroit, because this generation’s final likes and prejudices were formed on its personal chariots during the oil and financial crises of 1979 to 1982. Changing A Bad Perception
For Tom LaSorda at Chrysler, Rick Wagoner at GM, and Ford’s Alan Mulally, the mission of saving their firms is far more complicated than just delivering exceptional products at reasonable prices. The real task at hand is to undo the effects of three decades, in which the Baby Boom generation came to believe that only Japan offered real value while delivering exceptional quality.
Think of the rare runaway successes that Detroit has had in the past 30 years: All support the hypothesis that once the baby boomers passed 30 and had their own families, they increasingly tended toward safety and security. That maturation fully explains the popularity of the 1984 Chrysler minivans and the sport-utility craze of the ’90s. An exception has been the success of retro sporty cars brought to market, from the current Mustang (see BusinessWeek.com, 8/15/06, ) to the upcoming Dodge Challenger and Chevrolet Camaro, but it’s misleading. What their popularity represents is the baby boomers’ love of what Detroit once meant to them—not their wholesale or widespread approval of the Big Three’s offerings today.
That’s a shame. Detroit can no longer just bring great new products to market and sell them. Instead it faces the far more difficult task of changing a perception that this generation has held for 30 years. And when Detroit pulls out its six-shooter to take its best shot, half of the bullets inevitably hit its own feet—when U.S. manufacturers do bring out exceptional vehicles, they often seem incapable of convincing a skeptical public of their real value.
One case in point might be the new Saturn Aura (see BusinessWeek.com, 10/4/06, ). With a five-star safety rating, a more than competitive price and strong styling both inside and out, it also has the most remarkable ride and drive of any midsize sedan in GM’s history. In a direct comparison against the newest generation of the Toyota Camry, the Saturn is the superior car for those who truly appreciate a fine automobile. But it’s not the automotive reality that matters to the car-buying public these days, it’s the perception. A Star Becomes a Crown Vic
In this case, the public believes that Toyota usually has the superior resale value and quality (an accurate assessment). And your neighbors will understand if you park a new Toyota in your driveway, but might question your logic if there is a new Saturn on the block: It’s considered the “safe” decision to get a new Camry, even if it means you walked away from the superior Aura. The proof is that Saturn sold just over 5,800 of its new Auras in December; Toyota sold almost 40,000 Camrys.
Chrysler had a different situation when it introduced its outstanding 300 sedan, for it had managed to do the impossible. Suddenly the car-buying public became enthralled with this new sedan out of Detroit. Many Chrysler dealers quickly found more than a few high-end, imported, luxury sedans being traded in for a 300. And it wasn’t just the car’s sharp looks that attracted the public’s attention; the 300’s superior ride and handling characteristics won over some of the most jaded buyers in the marketplace. The rush of impulse buyers didn’t echo as strongly when the platform-sharing Dodge Charger debuted, but that’s irrelevant now; Chrysler has managed to start killing both cars in the market without realizing what it has done.
That’s because in many areas of the country we are now seeing police departments and taxi companies purchasing fleets of Dodge Chargers. There is no surer way to destroy a car’s image or its retail value than to sell it for taxis and squad cars. Looks like Chrysler has taken its halo automobiles and turned them into another Crown Victoria. Delusions At Ford
One never knows which Ford Motor Co. is coming to play in the big game. Is it the Ford that can create some of the most remarkable and value-laden products in its history, such as the