As if the recent rise in home prices wasn’t enough evidence of a revival in the housing market, the increase of investors’ willingness to snap up mortgage-backed securities goes a long way to make the case.

CNBC.com recently reported that as home prices rise, so, too, is the demand for jumbo mortgages, loans that are above traditional conforming loan limits.¹ During the financial crisis, banks were making these loans, but continuing to hold them on their books. That state of affairs wasn’t optimal, since being able to sell off jumbo mortgages lessens the risk for lenders.

But now that’s starting to change. According to CNBC.com, the number of jumbo loans originated in the first quarter of this year rose 15% from a year earlier. But the number of those loans that were securitized and sold by lenders jumped 400%. In the first quarter alone, $4 billion worth of jumbo loans were sold to investors – that’s more than the $3.5 billion of jumbos originated in all of 2013.

Still, the market is still relatively tiny. As the Wall Street Journal reported, even a projected $16 billion in securitized loans in 2013 would still represent just 7% of the expected overall $220 billion volume for jumbo loans.²

Indeed, it was only in 2010 that Redwood Trust was the first player to re-enter the secondary market. In the wake of their success came other players, including Credit Suisse and JPMorgan Chase, the latter of whom announced last month that it would sell bonds backed by $443 million of jumbo mortgages.³

JPMorgan also happens to be a top component (14.3% by weight) of the portfolio of stocks in the Too Big To Fail motif, which has posted gains this year and in the past month, as large banks and other financial services companies continue to exhibit stronger operational performances.

The motif is up 18.0% so far in 2013, and has increased 48.5% in the past 12 months.

With several banks having now re-entered a market (cautiously, this time) that once signified their downfall, optimism for increasing bank revenue appears to be trending just as high.

¹Diana Olick, “As Investors Return to Jumbo Mortgages, Big Banks Sell,” CNBC.com, June 10, 2013, http://www.cnbc.com/id/100802833.

³Jody Shenn, “JPMorgan to Sell Bonds Backed by $443 Million of Mortgages,” Bloomberg.com, May 23, 2013, http://www.bloomberg.com/news/2013-05-23/jpmorgan-to-sell-bonds-backed-by-443-million-of-mortgages-1-.html, (accessed June 11, 2013).

With the 10-year Treasury note yield now at 14-month highs, many investors seem to be in two camps: those who believe it portends bad things and those that aren’t yet finding reason to fret.

What anybody’s perceived impact of higher rates is seems to depend on one’s take on both the health of equities and the overall economy. Zane Brown, fixed-income strategist for Lord Abbett, takes the sanguine view. He told CNBC.com that he doesn’t expect rates to increase much more from here, and he said he believes many more investors have begun ignoring comments from the Federal Reserve that it needs to see self-sustaining economic growth before it begins tapering its actions to keep rates low.¹

What’s more, Brown believes it’s likely the Fed will do – or say – something to stop the rise in yields if it continues, possibly as early as the Federal Open Market Committee (“FOMC”) meeting next week.

For now, Brown said the selling in fixed-income is overdone, and that equities still look favorable, especially if investors expect the economy to improve.

Contrast those beliefs with those of Barry Knapp, head of US equity portfolio strategy at Barclay’s, who declared in the same article that the relentless rise in rates is “clearly negative news” for equities. He contends that we’re “well beyond” the benign 30-basis-point increase in rates.

Knapp says that if history is any guide, interest-rate-sensitive stocks will sell off, which, he says, has happened, followed by a selloff in cyclical stocks. If the Fed moves to pare back easing and the economy isn’t improving, Knapp adds, earnings won’t improve. “You’re sort of in a lose-lose in terms of buying the cyclicals,” Knapp said.

However, rising interest rates are certainly not negative for all stocks – that’s the investment thesis behind the Rising Interest Rates motif, a portfolio of 10 stocks that could find favor in an environment where rates continue to rise. The companies represent sectors such as custodian banks, brokerage firms, and payroll processors that generate cash flows by charging interest on customer assets they hold.

It’s worth noting that since the beginning of May, when the 10-year Treasury yield rose from less than 1.7% to its current level of 2.2%, the Rising Interest Rate motif has increased 10.2%. It’s up 21.1% so far in 2013, and has climbed 40.6% in the past 12 months.

For investors, the trick may be deciding at what point the impact of higher interest rates may pose bigger risks for the companies that have been thriving on the upturn.

¹Patti Domm, “Rising Rates Have the Attention of the Stock Market,” CNBC.com, June 10, 2013, http://www.cnbc.com/id/100804680.

After an extended rough patch for the stocks of for-profit education providers, it’s now investors betting against those equities that are on the defensive.

The For-Profit Colleges motif, a portfolio of 13 stocks, has risen 10.7% in the past month, which has lifted its year-to-date performance to a gain of 7.2%. The motif is up 9.6% since its creation in August 2012.

Why the new love for the sector? It seems to be both a measure of some investors digging for beaten-down bargains, and others forced to cover their short bets.

Consider, for example, the surge a few weeks ago in two motif components, Apollo Group and ITT Educational Services. As Bloomberg reported on May 17, the short interest in Apollo’s stock had reached 15% of its shares available for trading in April, its highest level since 2006.¹ As the broader market rallied that week, Apollo’s stock rose 14%.

Similarly, ITT Educational jumped 24% the same week, after its short interest had climbed as high as 30.5%.

Then there have been the obligatory contentions that investors now have a key opportunity to find value in these long-struggling names, something not easily dismissed in lieu of the sector’s recent performance.

Last month, blogger Vladimir Zernov called ITT Educational a “cheap buy,” citing its continued profitability and its low price-to-earnings ratio (8.32 on a forward 12-months basis).²

On the other hand, it’s perhaps instructive for investors to remember why these stocks became beaten-down in the first place. As Dee Gill recounted last week in an article on Forbes.com, both enrollments and revenue have cratered at many for-profit colleges, following intense criticism that schools were encouraging students to accumulate massive debt for training in careers that couldn’t realistically fund repayment.

As Gill succinctly put it: “If you’re a value investor doing some company research and looking for money to be made, you may be lured by cheap-looking shares, like Apollo’s 7.3 forward price-to-sales ratio. But these valuations aren’t very useful at the moment, while the schools continue to shed students at unpredictable rates.”

It remains to be seen whether the rally in for-profit educators is anything more than momentary short-covering.

¹Inyoung Hwang, “US Stocks Rally for Fourth Week Amid Economic Optimism, Bloomberg.com, May 17, 2013, http://www.bloomberg.com/news/2013-05-17/u-s-stocks-rally-for-fourth-week-amid-economic-optimism.html, (accessed June 11, 2013).

³Dee Gill, “Tempted By For-Profit Ed Stocks? Read This,” Forbes.com, June 6, 2013, http://www.forbes.com/sites/ycharts/2013/06/06/tempted-by-for-profit-ed-stocks-read-this/?partner=yahootix, (accessed June 11, 2013).

Just in time for the summer roller-coaster season, we bring you an even more intriguing ride: Chinese solar stocks.

Consider the plight of the Chinese Solar motif since its inception in January 2012. Following an enticing jump of nearly 50% in its first two months, the portfolio of its stocks proceeded to swoon, falling as much as a 65% from that intial peak. Since late November, however, the motif, which contains a portfolio of stocks within this volatile industry, has more than doubled, climbing 11.9% in the past 30 days alone.

All told, the motif has declined 23% since its inception, while also offing plenty of opportunities to make or lose large amounts of money for those with an appetite to ride a risk rollercoaster with their investment.

In effect, most Chinese solar stocks are still above their recent April 2013 floor, when the whole sector began rallying in part due to a rumor that a division of Warren Buffett’s Berkshire Hathaway was interested in buying the assets of Suntech Power, a Chinese company facing bankruptcy.

However, as Ben Levinsohn pointed out last Monday in a blog for Barrons.com, the sector has had several things generating optimism in investors, including some better-than-expected earnings, promises of continued Chinese stimulus and low valuations.¹ And for the past couple of months, those positive have outweighed the pesky negatives of European tariffs and a general lack of profitability in Chinese solar providers.

All of which has tended to result in a continued extreme volatility for the sector. For example, when Jinko Solar soared on a better-than-expected profit report this past Monday, the impact to the broader Chinese Solar motif jumped more than 10%. A day later, after a disappointing report by LDK Solar, the motif’s performance fell nearly 8% based on the impact of that news to the stocks in Chinese Solar motif.

As Levinsohn noted, this sort of increase in both prices and volatility goes somewhat against the usual grain – and could be a reminder to long-term investors to avoid being complacent about recent gains.

¹Ben Levinsohn, “As Chinese Solar Stocks Rise, Shares Get Riskier,” Barrons.com, June 10, 2013, http://blogs.barrons.com/emergingmarketsdaily/2013/06/10/as-chinese-solar-stocks-rise-shares-get-riskier/?mod=yahoobarrons.

Throw the recent chatter from the Federal Reserve that it may be close to ending its bond-buying program¹ on top of the fact that 10-year Treasury yields have recently spiked to 14-month highs, and it’s enough to make fixed-income investors fret about how they’ll navigate what appears to be rising interest-rate environment.

Here’s one alternative: Our new Floating-Rate Bonds motif, a portfolio of ETFs with an investment strategy of holding shorter-maturity, floating-rate notes that seek to lower an investors’ interest-rate risk.

Think of floating-rate bonds as the fixed-income cousin to an adjustable rate mortgage. Their coupon rates adjust as short-term interest rates change. And, for investment-grade “floaters” that tends to mean monthly or quarterly adjustments to the portfolios of the ETFs. The shorter the time between resets, of course, the greater advantage that these bonds, and related ETFs, can offer in a rising interest-rate environment.

The question that follows, naturally, is are we in a rising-interest rate environment, or rather, are we in one to the extent that will function as a boon to investors in floating-rate bonds?

Certainly, the rise of the 10-year note yield to its highest level since April 2012 – above its 200-day average – suggests that rates may be putting a near-term floor behind them. Similarly, one could understand investors taking the recent comments from the Fed as evidence that their willingness to keep the hammer on interest rates until 2015 is somewhat less than all-out enthusiastic.

That said, it’s perhaps worth wondering how much the spike in Treasuries had to do with last month’s headlines trumpeting historical stock index highs. It’s worth noting that the 3% dip in stocks since May 28, has coincided with a stall in the 10-year’s recent rise.

In addition, Schwab analyst Collin Martin recently noted that floating-rate issuance surged in the first two months of this year vs. a year earlier, a sign that corporations (who, this just in, are seeking terms in their best interest) don’t anticipate an immediate uptick in rates.²

If you do, this new motif might be worth a look.

¹Johan Carlstrom & Aki Ito, “Fed’s Williams Sees Potential QE Taper This Summer,” Bloomberg.com, June 3, 2013, http://www.bloomberg.com/news/2013-06-03/fed-s-williams-says-sees-potential-qe-taper-by-summer-.html.

²Collin Martin, “The Time Is Not Yet Right For Floating-Rate Bonds,” schwab.com, April 4, 2013, http://www.schwab.com/public/schwab/resource_center/expert_insight/schwab_investing_brief/fed_and_bonds/times_not_yet_right_for_floating_rate_bonds.html, (accessed June 5, 2013).

The Exchange Traded Funds prospectus contains its investment objectives, risks, charges, expenses and other important information you should read and consider carefully prior to making an investment decision. Please review the current prospectus, available from the Prospectus link.

ETFs have unique features that you should be aware of, which can include distribution of any gains, risks related to securities within the portfolio, and tax consequences. The data quoted herein represents past performance and is not indicative of future results. The investment return and principal value of an investment will fluctuate so that your investment, when redeemed, may be worth more or less than their original value. Current performance may be lower or higher than the performance data provided. Please review the prospectus or other research tools provided on this site for more recent performance information.

A funny thing happened earlier this year amid the calls for continued stability in the technology merger and acquisition market in 2013: deal activity and value amount fell off a cliff.

A recent study by Pricewaterhouse Coopers recently put the drop in first-quarter M&A activity at 38% compared with a year earlier.

However, after months of relative tumbleweeds blowing through the tech merger fields, signs of life have appeared:

• Yahoo announced last month that it would throw down $1.1 billion in cash on popular blogging service Tumblr

• IBM said early last week that it was acquiring cloud-computing storage provider SoftLayer Technologies in a deal valued at $2 billion. The move was seen as part of IBM’s strategy to better compete with Amazon.com

• Customer-management software behemoth Salesforce.com announced last week its plan to spend $2.5 billion on online marketing firm Exact Target

That last deal gave a decent boost to the Tech Takeout Targets motif, which includes Exact Target as its largest (5.6% weight) component within its portfolio of stocks. The motif is up 3.2% in the past month, and is up 12.8% this year, and 1.9% since its August 31, 2013 inception.

So, following this recent spurt of deals, is it back to tumbleweeds or can we expect a steadier flow of M&A activity for the rest of this year?

According to a recent study by PricewaterhouseCoopers, it’s more of the latter. PWC analyst Rob Fisher, who admittedly called the paucity of tech mergers in the year’s first quarter “somewhat of a surprise”, said his firm’s clients see the dearth of early-year deals an “aberration,” and he expects that the continuing strength in corporate balance sheets and fundamentals to ultimately help a pick-up in second-half tech mergers.¹

And, though, it was a lean first-quarter, it may be instructive that more than half of the tech deal volume came from the software sector. According to PwC, deals in that sector were driven by firms across industries investing in software-driven functionality and automation in products and services.²

If the trend really is turning up for merger activity, high-growth software companies may be a good place for investors to be looking.

¹“Will Tech See Better M&A In Second Half?,” Bloomberg.com, May 20, 2013, http://www.bloomberg.com/video/will-tech-see-better-m-a-in-second-half-Wetm0GWFRISIhBRtMCphFQ.html, (accessed June 5, 2013).

²“Technology M&A decline 38% in first quarter of 2013: PwC,” Computer Business Review, May 1, 2013, http://www.cbronline.com/news/technology-ma-decline-38-in-first-quarter-of-2013-pwc-010513, (accessed June 5, 2013).

In general, a surge in the price of any asset tends to bring a smile to the face of most investors.

But because among the currently surging is the U.S. housing stock – and we saw where that brought us not even five years ago – it seems entirely plausible to consider whether too much of a good thing can be, with apologies to Mae West, something less than wonderful.

As Marketplace recently noted, housing is continuing on a tear.¹ The latest 20-city S&P/Case-Shiller Index from March showed prices up more than 10% from a year ago, continuing a recent trend in the past few months in the all of this country’s major cities.

As you’d expect, this has provided a lift for stocks leveraged to both the perception and reality of a sustainable housing recovery. The Housing Recovery motif, a portfolio of stocks in housing industry, is up 10.5% so far in 2013, and has increased 30.9% in the past 12 months.

According to Marketplace, most economists aren’t fretting (or saying the b-word [bubble]) at these rates of price increases. For the most part, everyone benefits: homeowners get an increasingly better chance at selling at a profit, homebuyers can still get into a rising market while interest rates are still relatively low, and state and local governments can benefit from property taxes and real-estate transaction fees.

Supporting that this-is-no-bubble talk is the contention that what we’re seeing here is simply supply and demand: housing construction is still depressed in all but one US state (way to go, North Dakota!), and that, as economist Patrick Newport told Marketplace, is why you’re getting a surge in home prices.

In addition, it appears as though the biggest gains in housing prices are occurring in markets that suffered the most pain during the last recession – places like Phoenix, San Francisco, Las Vegas and Miami.

That, however, is what worries economist Dean Baker, who told Marketplace that he worries that as mortgage rates rise, housing prices could once again stagnate or fall, in order to keep housing affordable for consumers who are seeing essentially no real rise in their incomes.

That concern dovetails unpleasantly with a recent New York Times story that housing prices in many of the most depressed markets may have seen the spike in demand in large part because large investment firms have spent billions of dollars in the past year buying homes there – a trend that will not likely continue. As a result, regular consumers are being squeezed out – and wondering if prices will roll over if the big money stops coming in (one eye-opening statistic revealed that asset-management firm Blackstone has bought 26,000 homes in nine states).

Still, it’s worth mentioning that US housing prices as a whole, which ended up falling about 35% in the last housing bust, are still only up about 11% from the trough.

However, it may be instructive for investors to weigh how much of that 11% rise has come from legitimate sustainable demand for homes – and how much is an attempt by Wall Street to time another round of house-flipping.

¹Mitchell Hartman, “Home prices are rising fast. Should we be worried?,” marketplace.org, May 28, 2013, http://www.marketplace.org/topics/economy/home-prices-are-rising-fast-should-we-be-worried, (accessed June 5, 2013).

²Nathaniel Popper, “Behind the Rise in Home Prices, Wall Street Buyers,” The New York Times, June 4, 2013, http://www.cnbc.com/id/100786803.

Wherever you come down on the shale gas/fracking debate, one thing seems clear: It’s done wonders for the US auto industry.

As the sector heads into its best overall year for sales since 2007, the latest data from American car manufacturers has revealed that Detroit’s Big Three have gained 1.2 points of market share this year – the first time all three have gained share in the January-May period in at least 18 years.¹

Helping that performance, if not driving it completely, has been the surge in pickup sales, resulting from contractors and small business owners updating their fleets, as well as the increased practice of fracking that has driven demand in the Northern Plains and Pennsylvania.

Consider: Ford’s F-Series pickups saw sales growth of 31% last month, General Motors’ Chevrolet Silverado posted growth of 25%, while Chrysler’s Ram truck had a sales rise of 22%.

This performance is no small matter, beginning with the stocks of US carmakers and related suppliers. The That New Car Smell motif, which comprises a portfolio of stocks from those industries, is up 14.9% to date in 2013, and has gained 45.1% since its inception on June 20, 2012.

But truck performance looms just as large within these corporations’ operations. According to Bloomberg, pickup profits of as much as $10,000 a truck are funding the overhaul of the Big Three’s entire lineups.

And remember that Ford’s F-Series accounted for 90% of its overall global profits last year.

Despite the chest-thumping performance by US pickups, the picture for the overall global market doesn’t appear to be quite as stellar. Total U.S. auto sales did rise 8.2% last month, but that’s a slowdown from double-digit rates of the last three years, prompting CNBC automotive reporter Phil LeBeau to remind us that expected overall US vehicle sales of 15.5 million this year is shy of prior estimates by some analysts expecting sales to hit 16 million.²

Unfortunately, the power of the pickup can only do so much.

¹Keith Naughton, Craig Trudell & Tim Higgins, “American Pickup Sales Leading Best Sales Year Since 2007, Bloomberg.com, June 4, 2013, http://www.bloomberg.com/news/2013-06-04/american-pickup-sales-leading-best-sales-year-since-07.html.

²Althea Chang, “US Auto Sales Keep ‘Trucking’ Higher, Yahoo Finance, June 3, 2013, http://finance.yahoo.com/blogs/big-data-download/us-auto-sales-keep-trucking-higher-185507360.html.

Is it a sign of a healthy economy that the US citizenry has mostly returned to pre-recession levels of donating their hard-earned cash to casino operators?

According to the American Gaming Association industry trade group, casino gaming revenue rose 4.8% in 2012, the industry’s biggest advance since the onset of the Great Recession four years ago.¹ Consumers spent $37.3 billion in casinos last year, just below the record haul of $37.5 billion in 2007.

The trade group cited the strengthening US economy and said that growth was strongest in states with new casinos.

This newfound health has likely contributed to the rebound in casino gambling stocks. The Casino Gambling motif is up 15.7% for the past month. It has increased 27.4% in 2013, and has risen 45.7% in the last 12 months.

A significant part of the motif’s investment thesis is that the expansion into new markets is key to the growth for casino operators.

Take New Jersey, for instance, the opposite of a new casino market. While the state lost its No. 2 standing in total state gaming revenue to neighboring Pennsylvania in 2012, hope was offered in late February in the form of New Jersey Gov. Chris Christie approving an online gaming bill. Shares of companies with casino operations in Atlantic City, such as Caesar’s Entertainment and Boyd Gaming, were boosted on the news.²

However, while states continually risk cannibalizing each other’s operations, major casino operators have realized for some time now that China is essentially the only growth market that matters.

In late March, RBC analyst John Kempf raised his earnings expectations on four stocks – Las Vegas Sands, Wynn Resorts, Melco Crown and MGM Resorts – due to higher projections for their performance in Macau, the coastal Chinese city that functions as the Mecca of Asian gambling.³

“The Chinese middle class continues to grow and continues to use their leisure dollars to go to Macau,” Kempf explained to CNBC. “The infrastructure in Macau is improving, and the city has added hotels rooms, making it easier for gamblers to stay the night.”

Kempf noted that Las Vegas Sands and Melco Crown derive nearly all of their pretax profit from Macau casino operators.

Sounding a note of caution against continued Macau hyper-growth, money manager Harold Vogel told CNBC that China is “running on empty” and that Macau is vulnerable to competition from nearby Asian countries such as the Philippines and Singapore.

However, competition doesn’t necessarily mean less money for major casino operators, just that it may start coming in more currencies.

¹Christopher Palmeri, “Casino Gambling Surges Most Since Crisis,” Bloomberg.com, May 6, 2013, http://www.bloomberg.com/news/2013-05-06/casino-gambling-surges-most-since-crisis-to-approach-peak.html, (accessed May 16, 2013).

³Alex Rosenberg, “The Big Bet that Could Propel Casino Stocks,” cnbc.com, March 27, 2013, http://www.cnbc.com/id/100596898, (accessed May 16, 2013).

Following a prolonged period of unfulfilled promise for hopeful investors, a recent flurry of activity has appeared to breathe some life into the Chinese Internet sector.

The China Internet motif is up 17.8% for the past month alone. It has now increased 13.7% in 2013, and 8.1% in the last 12 months.

The tried-and-true bullish indicators of earnings outperformances and big acquisitions have contributed to the sector’s recent rally.

For starters, Ctrip.com got investors’ attention by announcing on May 9 that its first-quarter revenue and profit would be better than expected – then saying sales would jump 20% in this year’s second quarter.¹ The news sparked several analyst upgrades, and seemed to lift other Chinese web stocks, as investors were buoyed that the entire sector was beginning an upswing. E-Commerce China Dang Dang, for example, surged 19% in a week.

But also driving sentiment has been the recent spate of buyouts. According to Bloomberg, 19 mergers and acquisitions have been announced this year among US-traded Chinese companies with a total value of $3.1 billion, compared with 23 deals worth $1.9 billion a year earlier. Data showed that Internet content companies were the targets with the most value among five sectors.

Front and center have been two recent moves by China’s biggest e-commerce company, Alibaba, which lifted the sector after agreeing on May 10 to buy a stake in digital map provider AutoNavi just two weeks after buying into Sina Corp’s Twitter-like Weibo service.

Then, toss in two more developments from this month: Chinese search-engine operator Baidu buying PPS Net TV’s Internet video business last week, and news that Sohu’s Sogou search tool may be seeking a strategic partnership.

But back to Alibaba for a moment: Not to be underestimated was its May 8 regulatory filing which disclosed that it doubled its profit in its December quarter, while sales rose 80%. This, in turn, has likely done a lot to fuel even more anticipation about a possible Alibaba public offering this year or next. Data compiled by Bloomberg suggested the offer’s valuation could reach $62.5 billion.

While many Chinese Internet stocks have delivered the opposite of reliable performance over the past several years, investors could be excused for expecting that sudden news of an Alibaba offering could lift the sector even higher.

¹Belinda Cao, “Alibaba M&A Fuels Gains as Sohu Jumps: China Overnight,” Bloomberg.com, May 12, 2013, http://www.bloomberg.com/news/2013-05-12/alibaba-m-a-fuels-gains-as-sohu-jumps-china-overnight.html, (accessed May 16, 2013).