Posts Tagged 'BRICs'

China’s Economy: Chart of the Day

source

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

Daily “Ways-to-Play” The News Before the Moves 3/17/2010

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No, it’s true – everyone is shorting the euro

We cautioned a few weeks ago that a little perspective was probably needed when discussing the “everyone is shorting the euro” story.
sell Rydex Euro Currency Trust (FXE)

buy ProShares UltraShort Euro (EUO);

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

Cities, States Tell Big Banks They’ll Go Elsewhere

Fed up with the tight supply of credit, state and local governments across the U.S. are starting to punish big banks.

sell KBW Bank ETF (KBE)

buy KBW Regional Banking ETF (KRE)

sell SPDR-Financial (XLF);

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

China in ‘Greatest Bubble in History,’ Rickards Says

March 17 (Bloomberg) — China is in the midst of “the greatest bubble in history,” said James Rickards, former general counsel of hedge fund Long-Term Capital Management LP.

sell PowerShares Golden Dragon Halter USX China Portfolio (PGJ)

sell iShares FTSE/Xinhua China 25 (FXI)

sellSPDR S&P China ETF (GXC)

sell Claymore/AlphaShares China Small Cap Index ETF (HAO);

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

Daily “Ways-to-Play” The News Before the Moves 3/12/2010

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India Aims To Become World’s Fastest Growing Economy, Overtake China

MUMBAI, India — Just how fast can India grow? Ask Manal Farooq, who can’t make gloves quickly enough.

buy iPath MSCI India Index ETN (INP)

buy India Fund (IFN)

buy iShares S&P India Nifty 50 Index Fund (INDY);

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

China Inflation Quickens as Industrial Output Climbs

March 11 (Bloomberg) — China’s inflation reached a 16- month high, industrial output climbed and new loans exceeded forecasts, adding to the case for the government to pare back stimulus measures.

sell PowerShares Golden Dragon Halter USX China Portfolio (PGJ)

sell iShares FTSE/Xinhua China 25 (FXI)

sellSPDR S&P China ETF (GXC)

sell Claymore/AlphaShares China Small Cap Index ETF (HAO)

sell Global X China Technology ETF (CHIB)

sell China Materials ETF (CHIM);

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

The Big Energy Trade: The WidowMaker

A bold trade is unfolding in the energy markets, dubbed the “Widowmaker.” Traders play the spread between gasoline and heating oil, as seasonal demand shifts with the warming weather in the Northern Hermisphere.

buy United States Gasoline Fund, LP (UGA)

sell United States Heating Oil Fund, LP (UHN);
Check out how others are using ETFs to capitalize on this news or add your own opinion

Daily “Ways-to-Play” The News Before the Moves 2/16/2010

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Cracks in the BRICs?

“Brazil enjoys more favorable demographics than China. If the latter hopes to transition to a broad consumer economy, it had better get a move on: China’s fertility rate is already below the replacement rate for the population and the prime 15 to 64-years-old age group will peak in 2015, according to World Bank projections. Brazil’s is set to keep rising until 2045. Such resources trump anything lying beneath Brazilian soil.”

buy iShares MSCI-Brazil (EWZ);

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

Collapse of the euro is ‘inevitable’: Bailing out the Greek economy futile, says FRENCH banking chief

The European single currency is facing an ‘inevitable break-up’ a leading French bank claimed yesterday. Strategists at Paris-based Société Générale said that any bailout of the stricken Greek economy would only provide ‘sticking plasters’ to cover the deep- seated flaws in the eurozone bloc.

buy ProShares UltraShort Euro (EUO);

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

The Yuan Is About To Surge Beyond Your Wildest Dreams

The Chinese Yuan is just begging for a home run. Any doubts that it is a huge screaming buy should have been dispelled last week when news came out that China had displaced Germany as the world’s largest exporter.

buy WisdomTree Dreyfus Chinese Yuan Fund (CYB)

buy Market Vectors Chinese Renminbi USD ETNs (CNY);

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

Bangladesh: Asia’s hottest frontier?

Emerging market investors are weighing increasing their exposure to a tiny market: Bangladesh.
Check out how others are using ETFs to capitalize on this news or add your own opinion

Chart of the Day: 2010 Forecast GDP for G-7 vs BRICs

Hedging PIIGS Risk

Acronyms for blocs of countries are all the rage these days: BRIC, MAVENS, now PIIGS (Portugal, Italy, Ireland, Greece, and Spain).  As the BRICs and MAVENS were created to group strong growth countries into an investable group, the PIIGS are the polar opposite: countries on the brink of disaster. We didn’t coin the acronym “PIIGS”, but we are the first out with a comprehensive way to “play” it.  Europe’s woes, particuarly those in Greece have been well documented, as debt ratios and budget deficits are climbing.  Sovereign risk is rising. Portugal just yesterday announced a budget deficit that was 9.3% of GDP vs. previous estimatesof 8%.  S&P and Moody’s have downgraded or slapped negative watches on Spain, Greece, Portugal debt in recent weeks with Moody’s going so far as to warn that Greece and Portugal’s economies may suffer a “slow death.”  The IMF is estimating that Italian public debt will reach 120% of GDP next year.  Ireland was forced to raise taxes and slash $3.6 billion government spending to help contain their annual budget deficit. In addition to a large budget decifit, Spain is battling the highest unemployment rate in Developed Europe and a Real Estate implosion worse than that of the United States.

The question now remains, how can investors hedge or speculate on PIIGS risk?  For those of you with contacts at Sovereign Debt CDS trading desks can easily buy protection on any of the PIIGS debt.  As the charts below show, this has been a profitable trade of late.  Simply amazing to us that PIIGS trade at wider spreads than BRICS.  Great charts from Credit Derivative Research

 

 source: Economist

 source: Credit Derivatives Research, Y-axis in basis points

The next best way to hedge/speculate on PIIGS risk other than the actual sovereign debt it probably the Euro.  Of course you can invest directly in the currency of use exchange traded products such as FXE – Rydex Euro Currency Trust or its two times leveraged sibling EUO  ProShares UltraShort Euro.  While a weak Euro should follow the fiscal troubles of its member countries, its likely not the most precise vehicle.  There are two broad based funds, IGOV iShares S&P/Citigroup International Treasury Fund and the iShares MSCI-EMU index, EZU.  However, IGOV contains only moderate exposure to PIIGS (23% of PIIGS Sovereign Debt).  However, this fund is invested in about 25% of Japanese Gov. bonds as well as over 15% in France and Germany.  If you are a worried about Sovereign Debt risk, in general, this might be a good short vehicle if you can borrow the shares.  EZU might be another broad-based PIIGS proxy, but companies based in France, Germany, and the Netherlands make up ~60% of the fund, with only about 25% in Spain and Italy and fractional amounts in Greece, Portugal and Ireland.  While Europe, in general, looks to be in trouble,  recovery in the Eurozone seems to exibiting two tracks.  As France and Germany, in particular, seem to be staging a moderate recovery, this may not be the best vehicle. 

There are country specific PIIGS ETFs, but shorting maybe prive difficult as shares are difficult to borrow. If you can find the shares these might be good opportunites to hedge or speculate on PIIGS risk:

Italy:

EWI  iShares MSCI-Italy

Ireland:

IRL  The New Ireland Fund

Greece:

There is currently no US ETF for Greece, however, there is an MSCI Greece index ETF: LYX0BF that trades on the Xetra exchange that many with online brokers can access. Keep in mind this fund trades in Euros. 

Spain:

SNF  Spain Fund

EWP  iShares MSCI-Spain

At ETFDESK, we endeavor to create an open forum for ETF investing, so other ideas are certainly welcomed.


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