The Dollar & Rates Move Higher

What an interesting week for the market. As usual, we obsessed about whether or not we would or wouldn’t see a strong unemployment report. Well, the number came in hot which implies almost a guarantee of a rate hike in December.  Lets keep in mind though, that we still have another # in December which happens before the Fed’s next meeting.
After a hard selloff in the first thirty minutes of trading the market managed to process the information and traded much better as all indexes pretty much closed slightly in the green.
Does this mean that the market has finally digested and accepted the notion of a quarter point increase? So far it looks that way, but next week will be interesting.
Most of the earnings for the third quarter are behind us, but we will still see some more reports filter in over the coming week.
The U.S. Dollar has been surging lately and the 2 year note its its highest yield in five years.
Now is NOT the time to be holding stocks that will be hurt by higher rates. ETF’s that are to be avoided include utilities (XLU), high yield ( HYG & JNK), and certain real estate plays like (IYR).
The strong dollar could also weigh on crude oil and energy stocks. Gold and gold miners have been falling apart as a result.
What will continue to work in this environment are banks, (XLF).  Banks like and need higher rates.
As usual, the landscape continues to change in this market and sector rotation is key to outperforming and making money.
More tomorrow.  Enjoy the weekend.
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