David Fry's Daily Market Outlook

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 |  Includes: AA, GLD, IYR, IYT, MSFT, SPY, TLT, XHB, XLB, XLE, XLF
by: David Fry

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Today was a big news day, perhaps not in the way you're thinking. There was the usual news about earnings, the release of Fed minutes, North Korea and so forth, but all this was really pedestrian compared to the news earlier this week from upstart Zecco.com who launched their "commission free" online trading website and brokerage. This was followed today by Banc of America Securities who matched that move.

What does this mean?

Aside from the obvious, commission-free trading:

  • Places the broker/financial advisor as a fee merchant
  • Consigns the traditional commission broker to a museum
  • Puts significant pressure on existing discount online firms
  • Makes traditional wire house firms, who had been promoting free trades for a hefty annual fee, squirm
  • And, absolutely destroys the anti-ETF crowd's argument that ETFs are too expensive to deal with versus conventional mutual funds

Wow! This is a tsunami for the financial services industry as big as the start of discount commissions in 1975.

Now let's come back to earth and discuss more mundane things like market action today.

Yesterday's poor earnings from Alcoa Inc. (NYSE:AA) undid equity markets today as most indexes gapped open lower. A recovery ensued, stocks turned positive briefly only to fall later as confusion and selling ensued with the release of Fed meeting minutes from August. (Didn't seem like a big deal did it?) Then a light plane flew into a building in NYC which didn't help matters, and a sharper sell-off followed. But, the bulls charged back to mitigate the damage—I mean, after all, they've still got the ball.

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We still just want to focus what we perceive as the important markets despite intrigue from other sectors.

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From the St Elsewhere department, a tech friend told me that he has heard gossip from his peers that the new Microsoft Windows Vista program will contain its own anti-virus software. If true, it will make Symantec and McAfee as obsolete as our broker in the museum.

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The news from Zecco.com and Bank of America Securities is truly a watershed event that will keep the lights on late tonight at many securities firms. Is everyone going to move their account now? Once the news gets embedded in investors psyche why wouldn't they?

See you folks tomorrow. Have a pleasant evening.

Disclaimer: The ETF Digest maintains positions in S&P 500 Index (NYSEARCA:SPY), iShares Lehman 20+ Year Treasury Bond ETF (NYSEARCA:TLT), iShares Dow Jones U.S. Real Estate ETF (NYSEARCA:IYR), Market Vectors Gold Miners ETF (NYSEARCA:GDX) and streetTRACKS Gold Trust ETF (NYSEARCA:GLD).