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Daily “Ways-to-Play” The News Before the Moves 3/30/2010

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The equity market rally is nearing its end

That’s the view of Morgan Stanley’s Teun Draaisma, who reckons the much feared tightening is about to begin in earnest.

ETFDesk users see this as a potential opportunity to: sell DJIA DIAMONDS (DIA)

sell S&P 500 SPDR (SPY)

sell iShares Russell 2000 (IWM);

Check out how others are using ETFs to capitalize on this news or add your own opinion

Must Be A Bull Market: The Dumbest Job Ever, Day Trading, Is Cool Again

Apparently, day trading is back. The New York Times says so. So it must be.

Check out how others are using ETFs to capitalize on this news or add your own opinion

Actively Managed Mutual Funds Are Obsolete

With index funds and ETFs offering diversification at lower cost, actively managed funds have lost their original purpose.

Check out how others are using ETFs to capitalize on this news or add your own opinion

Why Fund Managers’ Hot Performance Isn’t So Hot

Where have all the geniuses been hiding, and why have they suddenly been popping up everywhere?
Check out how others are using ETFs to capitalize on this news or add your own opinion

Euro Trashed

THE European Monetary Union, the basis of the euro, began with a grand illusion. On one side were countries — Austria, Finland, Germany and the Netherlands — whose currencies had persistently appreciated, both within Europe and worldwide; the countries on the other side — Belgium, France, Greece, Italy, Portugal and Spain — had persistently depreciating currencies. Yet the union was devised as a one-size-fits-all structure. As a result, some countries had to use creative accountin

ETFDesk users see this as a potential opportunity to: buy iShares MSCI-Germany (EWG);

Check out how others are using ETFs to capitalize on this news or add your own opinion

Strong Earnings May Already Be Baked In

For investors, the thrill of earnings season may be over before it’s even begun. The first quarter ends on Wednesday, and earnings season gets into full swing with aluminum giant Alcoa’s results due out on April 12.

ETFDesk users see this as a potential opportunity to: sell DJIA DIAMONDS (DIA)

sell S&P 500 SPDR (SPY)

sell Nasdaq-100 Index Tracking Stock (QQQQ)

sell iShares Russell 2000 (IWM);

Check out how others are using ETFs to capitalize on this news or add your own opinion

China becomes world’s new diabetes capital

China now has more people with diabetes than any other country, a new report shows, making it clear that the nation’s soaring economic growth is taking a toll on public health.

ETFDesk users see this as a potential opportunity to: buy Biotech HOLDRS (BBH);

buy iShares Dow Jones U.S. Medical Devices Index Fund (IHI);

Check out how others are using ETFs to capitalize on this news or add your own opinion

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Be Careful What You Wish For: 4 Reasons Yuan Revaluation Could Backfire

William Pesek of Bloomberg has an intriguing article on the revaluation of the Chinese Yuan.  While many government officials, economists, etc are clamoring for the Chinese to lift the peg keeping its currency in a tight range with the dollar.

Pesek lists 4 reasons why such a move may backfire:

1) Inflation: According to Pesek, a stronger Yuan could devestate the “Walmart Economy.”  Evidenced by a large trade surplus with China, the US consumer buys a lot of cheap products from China.  A sudden increase in prices would be a “shock to the bargain.”  U.S. inflation data, which has been muted in recent months could see a sudden surge.

2) Market Turmoil: Tensions between the US and China have been increasing.  There are growing calls with in the US to label China as a “currency manipulator.”  As tensions mount, markets around the world will be volitile which each press statement and every remark by government officials as the world’s largest economic powers square off.

3) A Chinese Slowdown:  The Chinese economy has been an engine of growth for the economic recovery.  Pesek notes that the economic consequences of say a 10% revaluation of the Yuan vs. the dollar is unknown.  The Chinese Government’s legitamicy is largely premised on rapid growth.  Underestimating China’s fragilities could be a major problem; less GDP growth means less toleratnce for government policies, which could lead to greater unrest.  Can a worldwide economic recovery continue with a slower growing China?

4) Increasing China’s sphere of influence: Pesek mentions China has been pumping billions of dollars into emerging markets in Asia, Latin America, and Africa, often at the expense of US strategic interests.  Each increase in the Yuan grows its worldwide influence.

The Weakest Post-Recession Recovery on Record (in graphs)

 

Charts (from Dave Rosenberg) show that this is the weakest post-recession recovery on record. Anyone starting to question this 70% run up since March ’09?

 

China’s GDP: Long Term Mean Reversion

Cool chart from NYtimes’s Economix.  You can play with more of the features on the NYTimes post itself.

Interesting to note here that the US’s share of World GDP has only been higher than China’s peak in the early-mid 1800’s during the short peak following World War II.

Look Into FED’s Balance Sheet

Daily “Ways-to-Play” The News Before the Moves 3/29/2010

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Are Water Utilities Ready to Rise With the Economic Tide?

Since March 9th of last year, the Standard & Poor’s Composite 1500 index, a broad-based, capitalization-weighted benchmark of 1,500 U.S. companies, has rallied 75%. As it happens, all but one industry group in the index, which is comprised of the S&P 500, the S&P 400 (mid cap), and the S&P 600 (small cap), has seen a double-digit percentage rally over the span

ETFDesk users see this as a potential opportunity to: buy PowerShares Water Resource Portfolio (PHO)

buy Claymore S&P Global Water Index ETF (CGW)

buy First Trust ISE Water Index Fund (FIW)

buy PowerShares Global Water Portfolio (PIO);

Check out how others are using ETFs to capitalize on this news or add your own opinion

A euro exit is the only way out for Greece

Greece faces the threat of state bankruptcy. No longer is there any illusion that membership of Europe’s economic and monetary union provides protection from harsh realities. Since it entered the euro area in 2001, Greece has sacrificed competitiveness and amassed enormous trade deficits. Theoretically, to make up the economic ground lost in less than a decade, the Greeks would need to devalue by 40 per cent. But in a monetary union, that is impossible.

ETFDesk users see this as a potential opportunity to: buy iShares MSCI-Germany (EWG)

buy Rydex Euro Currency Trust (FXE);

Check out how others are using ETFs to capitalize on this news or add your own opinion

Brazil yields up on interest rate hike bets

SAO PAULO, March 25 (Reuters) – Yields on Brazilian interest rate future contracts for shorter maturities jumped on Thursday over expectations the central bank would hike borrowing costs in April for the first time in two years.

ETFDesk users see this as a potential opportunity to: buy WisdomTree Dreyfus Brazilian Real Fund (BZF);

Check out how others are using ETFs to capitalize on this news or add your own opinion

Greenspan Calls Treasury Yields ‘Canary in the Mine’

March 26 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said the recent rise in Treasury yields represents a “canary in the mine” that may signal further gains in interest rates.

ETFDesk users see this as a potential opportunity to: sell iShares Lehman 20+ Year Treasury Bond Fund (TLT)

sell iShares Lehman 7-10 Year Treasury Bond Fund (IEF)

buy UltraShort Lehman 7-10 Year Treasury ProShares (PST)

buy UltraShort Lehman 20+ Year Treasury ProShares (TBT)

buy Direxion Daily 30-Yr Treasury Bear 3x Shares (TMV)

sell PIMCO 7-15 Year U.S. Treasury Index Fund (TENZ);

Check out how others are using ETFs to capitalize on this news or add your own opinion

Junk Bonds in ‘Goldilocks’ Market Reach Record: Credit Markets

March 29 (Bloomberg) — Junk bond sales reached a record this month as rising profits and record low Federal Reserve interest rates foster lending and investment to the lowest-rated borrowers.

ETFDesk users see this as a potential opportunity to: buy iShares iBoxx $ High Yield Corporate Bond Fund (HYG)

buy SPDR Lehman High Yield Bond ETF (JNK);

Check out how others are using ETFs to capitalize on this news or add your own opinion

Stocks Soar, but Many Analysts Ask Why

The unemployment rate remains locked in a range that recalls the economic doldrums of the early 1980s. Housing is stuck in a ditch, with foreclosures rising. And consumers are still reluctant to part with the little cash they do have.

ETFDesk users see this as a potential opportunity to: sell S&P 500 SPDR (SPY);

Check out how others are using ETFs to capitalize on this news or add your own opinion

Greece May Need More Support Than You Think


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