Time To Move To Safe Haven ETFs? [Utilities SPDR (ETF), SPDR Gold Trust (ETF), iPath US Treasury 10 Yr Bull ETN]

new etfsMoe Zulfiqar: We see there’s a significant amount of economic news mounting against the argument that key stock indices will go higher this year. We see major companies on the key stock indices reporting corporate earnings that are dismal to say the very least. We see indicators of prosperity suggesting the opposite is likely going to be true for the U.S. economy. Lastly, we also see troubles developing very quickly in the global economy.

First on the line are the corporate earnings of companies on the key stock indices—which is hands down one of the main factors that drive these indices higher. We see companies showing signs of stress.

Consider General Motors Company (NYSE:GM), for example; the company’s corporate earnings declined 22% in 2013 from the previous year. (Source: “GM reports lower-than-expected 4Q earnings,” Yahoo! Finance, February 6, 2014.)

Some might call this a story of the past; we need to look at what the future looks like instead. Sadly, going forward, companies on the key stock indices and analysts look worried as well. Consider this: so far, 57 S&P 500 companies have issued negative corporate earnings guidance, while only 14 have issued positive guidance.

At the same time, analysts’ expectations are coming down as well. On December 31, the consensus estimate expected S&P 500 earnings to grow by 4.3%; now, these expectations have come down to 1.5%. (Source: “S&P 500 Earnings Insight,” FactSet, February 7, 2014.)

Looking at the broader U.S. economy, it’s not moving in favor of the key stock indices, either—the economic data isn’t looking very promising.

Industrial production in the U.S. economy declined in January from the previous month. This was the first decline since August of 2013, and this shouldn’t go unnoticed. The index tracking the industrial production in the U.S. economy declined from 101.4 in December to 101 in January. (Source: “Industrial Production and Capacity Utilization,” Federal Reserve, February, 14, 2014.)

What industrial production declining essentially means is that companies aren’t producing, and this tells us that consumer spending is declining.

Looking at the global economy, troubles are growing very quickly.

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