Posts Tagged 'yield curve'

Daily “Ways-to-Play” The News Before the Moves 3/31/2010

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4 Reasons to Consider Utility ETFs

There are a gazillion ways to play the energy sector with exchange traded funds, but you’re not just limited to oil, natural gas or solar power. Utilities might be an off-the-beaten path way to invest in the nation’s changing energy picture.

ETFDesk users see this as a potential opportunity to: buy Rydex S&P Equal Weight Utilities ETF (RYU)

buy Vanguard Utilities ETF (VPU)

buy iShares S&P Global Utilities Sector Index Fund (JXI)

buy iShares DJ US Utilities (IDU);

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

Are Home Prices Cheap?

Analysts at Deutsche Bank attempt to answer the question “Rent of Buy?” in a new research piece out today. While falling home prices and declining interest rates have narrowed the rent-buy gap, home affordability is not high by historical standards.

ETFDesk users see this as a potential opportunity to: sell iShares DJ US Real Estate (IYR);

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

Long-Term Rates Finally on Verge of Breaking Out

ALTHOUGH THE FED HAS reaffirmed its low short-term interest rate policy, it cannot control long-term interest rates. In fact, the yield on the benchmark 10-year Treasury note has risen from a low of 3.23% at Thanksgiving of last year to its current level 3.87%.

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)

sell iShares Lehman 10-20 Year Treasury Bond Fund (TLH)

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

buy UltraShort Lehman 20+ Year Treasury ProShares (TBT)

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

M&A surges in Asia while US and Europe suffer

Mergers and acquisitions boomed in Asia in the first quarter in sharp contrast to a slump in deal volume in Europe and the US, underlining a global shift in activity in the wake of the credit crisis.

ETFDesk users see this as a potential opportunity to: buy Gabelli Global Deal Fund (GDL)

buy IQ ARB Merger Arbitrage ETF (MNA);

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

Oil in Big Macs: Chart of the Day

The idea for this comparison of Oil to Big Macs, is that a Big Mac is representative of a basket of agricultural goods and thus compares the relative advantage of trading food for oil. Whats interesting about this is that theoretically, it should be a somewhat inflation-adjusted measure of oil prices. As of now it appears agricultural goods is undervalued relative to Oil.

ETFDesk users see this as a potential opportunity to: sell United States Oil Fund LP (USO)

buy ELEMENTS – Rogers International Commodity Index Agriculture Total Return (RJA);

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

Interesting Market Thoughts from Dave Rosenberg

 Interesting thoughts from Dave Rosenberg: 

MARKET THOUGHTS  

A good friend, and long-time reader, was kind enough to pass along these thoughts yesterday. Basically, the stars are starting to align for something really big to happen. 

First, the Shanghai index peaked in August 2009 and had a secondary top in December 2009 (global demand slowing?). Many emerging markets are all negative year to date. 

Second, gold peaked in the first week of December 2009 (and now breaking down) while the U.S. dollar index (the DXY) is breaking higher (Greece has not been resolved). 

Third, TIPs (ETF) peaked the first week of December 2009 (and just broke to a new four month low). 

Bottom line: Stronger U.S. dollar. Rising bond yields. Lower commodity prices. Slower growth. And the stock market is flirting at post-crisis highs. Bond yields are rising temporarily and this will very likely prove to be a good buying opportunity; however, over the near-term, higher yield activity may well persist and the question is how the equity market is going to handle this backup in market rates. Recall that the 10-year yield had a March to June 2007 spike of 90bps before the rate and credit collapse took hold in the back half of 2007! Could it be that history is rhyming again? The March-June period has been seasonally weak for the Treasury market in five of the past six years. 

 

Fourth, commodity prices peaked in the first week of January and appear to be rolling over. Head-and-shoulders top from October 2009 peak? 

Fifth, could we be in for a March peak in equities? The NYSE new high list peaked six trading days ago. Recall that a market correction followed in October of last year and January of 2010 following similar peak in new highs. 

Sixth, despite signs of economic cooling in Q1 (around 2.5% growth and half the Q4 pace) and lower inflation expectations, the 10-year Treasury note yield is ratcheting up (in a destabilizing fashion) and devoid of any bearish economic data (for a range of technical/fund flow reasons as was the case in the summer of 2007 — we never said at the Grant’s conference in New York that it was going to be a straight line down). But in technical lingo, it does look as though the yield is breaking out from a triangle since the December 31, 2009 yield peak —go back to that period in December and January, 3.85% on the 10-year Treasury-note served at least three times to be major technical support — a break of that this time around would mean some serious near-term trouble (the nearby high closing level was 3.98% back on June 10, 2009). 

Rates may be rising because: 

  1. Of added supply concerns from Obamacare;
  2. Sovereign credit quality;
  3. Heightened fears over a looming trade spat with China (if the Treasury accuses China of being a ‘currency manipulator’ next month);
  4. Hedging related to the most recent huge wave of corporate bond issuance;
  5. Swap rates have also become unhinged (they traded at an unprecedented 8bp discount to 10-year Treasuries yesterday) ….

… but yields are NOT rising from inflation (in fact deflation signs are re-appearing again). Hence, real yields are on the rise … not typically what an equity bull would like to see with real growth now softening. Rising real rates as real growth slows means it is time to get more defensive, not more cyclical (especially with small-cap stocks up nearly 10% year-to-date, doubling the performance of the large-caps. This will not be sustained as the global and domestic economies cool off through the balance of the year.) 

Bond Rebound

So far in 2010, U.S. corporations have issued $195.2 billion of debt, excluding government-guaranteed bonds, according to data provider Dealogic, up from $166.8 billion during the same period in 2009.

long LQD ?

Daily “Ways-to-Play” The News Before the Moves 3/10/2010

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Morgan Stanley’s ROACH: THERE IS A 40% CHANCE OF A DOUBLE DIP

Stephen Roach, head of Morgan Stanley Asia, discusses the state of the consumer and the real unemployment rate at 11.5%. He discusses many of the items we highlighted in our headline article this morning. Roach is still very concerned about a double dip recession led by consumers and caused by an end to the government stimulus.

sell DJIA DIAMONDS (DIA)

buy iShares Lehman 20+ Year Treasury Bond Fund (TLT)

sell S&P 500 SPDR (SPY)

sell Nasdaq-100 Index Tracking Stock (QQQQ)

buy 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

Shorting US Treasuries could be a mistake

over the medium term – say the next several quarters, a reasonable investment horizon – there are reasons to expect the Treasury market to hold its own, and perhaps even surprise with lower yields.

buy iShares Lehman 20+ Year Treasury Bond Fund (TLT)

buy iShares Lehman 10-20 Year Treasury Bond Fund (TLH)

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

buy Long-Term Govmt Bond ETF (VGLT)

buy Inter-Term Govmt Bond ETF (VGIT);

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Public Pension Funds Are Adding Risk to Raise Returns

Government pension plans cannot beef up their bonds that mature many, many years from now without dashing their business models. They use long-range estimates that presume high investment returns will cover most of the cost of the benefits they must pay. And that, they say, allows them to make smaller contributions along the way.
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South Africa: back of the net – not

Hosting the 2010 FIFA Soccer World Cup probably will bring tangible but small economic benefits to the SA economy. While stadium and transportation infrastructure construction provided the main boost prior to 2010, we expect World Cup-related tourism inflows to boost this year’s real GDP by up to 0.5%.

sell iShares MSCI-South Africa (EZA);

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Emerging-Market Stocks May Retreat 15%, Aberdeen’s Kaloo Says

March 10 (Bloomberg) — Emerging-market stocks will drop as much as 15 percent this year as earnings miss estimates and global growth slows, said Devan Kaloo, who oversees $22 billion at Aberdeen Asset Management Plc.

sell Vanguard Emerging Markets ETF (VWO)

sell iShares MSCI-Emerging Markets (EEM)

buy Short MSCI Emerging Markets ProShares (EUM)

sell SPDR S&P Emerging Markets ETF (GMM)

buy Direxion Daily Emrg Mkts Bear 3X Shares (EDZ);

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Oil Can Top $100 a Barrel Soon Enough

THE FUNDAMENTALS IN THE crude oil market got a boost in recent weeks with renewed hopes of a swift recovery in the global economy (demand increases) and ethnic violence in oil rich Nigeria (supply disruptions). This pushed crude prices above $82 a barrel.

buy PowerShares DB Oil Fund (DBO)

buy United States Oil Fund LP (USO)

buy iPath S&P GSCI Crude Oil Total Return Index ETN (OIL)

buy United States 12 Month Oil Fund, LP (USL)

buy PowerShares DB Crude Oil Long ETN (OLO);

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Pound Slide to Help U.K. Outpace Europe, Goldman Says

March 9 (Bloomberg) — The pound’s drop last week to a 10- month low may help the U.K. economy grow faster than the region sharing the euro, which is hobbled by budget deficits and aging populations, according to Goldman Sachs Group Inc.

sell iShares MSCI-France (EWQ)

sell iShares MSCI-Germany (EWG)

sell iShares MSCI-Spain (EWP)

buy iShares MSCI-U.K. (EWU)

sell streetTRACKS Dow Jones EURO STOXX 50 Fund (FEZ)

sell Rydex British Pound Sterling Trust (FXB)

sell Rydex Euro Currency Trust (FXE);

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Sector Appeal: Funds That Beat Indexes

Active Portfolio Managers Have Outperformed Many Exchange-Traded Funds, Thanks to Surging Small-Cap Stocks
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Build America Pays Off on Wall Street

Brokerage Firms Net $1 Billion-Plus for Selling the New Bonds, but Say It Can Be Hard Work

sell PowerShares Build America Bond Portfolio (BAB);

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Eaton Vance Dumps Dirt Bonds as Florida Land Districts Default

Thomas Metzold, Eaton Vance Corp.’s co-head of municipals, sold all his defaulted bonds of Tison’s Landing, an unfinished housing development in Jacksonville, Florida, as the debt fell to a third of face value last year.

sell Market Vectors High Yield Muni (HYD);

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The Fundamental Flaw of Europe’s Common Currency

The euro is under attack like never before, as the promises on which it was based turn out to be lies. Hedge funds are speculating against Greek debt, while euro-zone politicians work behind the scenes to cobble together rescue packages. But fundamental flaws in the monetary union need to be fixed if Europe’s common currency is to survive. By SPIEGEL staff.

sell Rydex Euro Currency Trust (FXE)

buy ProShares UltraShort Euro (EUO);

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Daily “Ways-to-Play” The News Before the Moves 2/17/2010

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Housing Reports: Another Wave of Distressed Sales – Calculated Risk

James Hagerty at the WSJ reports on two studies, one from John Burns Real Estate Consulting Inc., and another from Standard & Poor’s Financial Services LLC that both forecast most modification efforts will eventually fail – and that mods have just delayed foreclosures.

buy UltraShort Real Estate ProShares (SRS)

sell iShares DJ US Real Estate (IYR);

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

Inflation Protected Bonds Murdered As PIMCO And BlackRock’s Hyperinflation Fears Flounder

investors are increasingly giving up on hyperinflation bets. For example, investors are willing to buy standard U.S. treasury bonds that pay just 3.69% yield. That doesn’t leave room for much inflation.

sell iShares Lehman TIPS Bond Fund (TIP)

sell PIMCO Broad U.S. TIPS Index Fund (TIPZ);

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GOLDMAN SACHS: 5 TRENDS THAT WILL RESULT IN A WEAK RECOVERY

The latest from Goldman’s Chief Economist, Jan Hatzius, is not exactly a ringing endorsement of the stock market (see their 2010 outlook here & their top trades for 2010 here).

buy UltraShort S&P 500 ProShares (SDS)

sell S&P 500 SPDR (SPY)

sell iShares S&P 500 (IVV)

buy Ultra ProShort S&P500 ProShares (SPXU);

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

Britain and the PIGS

As of today, the British government must pay a higher interest rate to borrow money for ten years than either the Italian or the Spanish governments, despite the extraordinary ructions going on within the eurozone.

sell Rydex British Pound Sterling Trust (FXB);

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Aberdeen Asia Pacific Income Fund Announces record date and payment date for monthly distribution

Aberdeen Asia Pacific Income Fund Announces record date and payment date for monthly distribution

buy Aberdeen Asia-Pacific Income Fund (FAX);

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Aberdeen Global Income Fund Announces record date and payment date for monthly distribution

Aberdeen Global Income Fund Announces record date and payment date for monthly distribution

buy Aberdeen Global Income Fund (FCO);

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Taiwan Greater China Fund Monthly Update Jan 2010

Taiwan Greater China Fund Monthly Update Jan 2010
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Aberdeen Global Income Fund Announces Payment of Monthly Distribution

Aberdeen Global Income Fund Announces Payment of Monthly Distribution

buy Aberdeen Global Income Fund (FCO);

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Aberdeen Asia Pacific Income Fund Announces Payment of Monthly Distribution

Aberdeen Asia Pacific Income Fund Announces Payment of Monthly Distribution

buy Aberdeen Asia-Pacific Income Fund (FAX);

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BlackRock Announces Investment Strategy and Portfolio Manager Changes to Certain Closed-End Funds

In connection with the investment strategy changes, Robert Shearer and Kathleen Anderson from BlackRock’s Equity Dividend team (the “Team”) assumed primary responsibility of the equity portfolio of each Fund.

buy BlackRock Dividend Achievers Trust (BDV);

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Foreigners cut Treasury stakes; rates could rise

A record drop in foreign holdings of U.S. Treasury bills in December sent a reminder that the government might have to pay higher interest rates on its debt to continue to attract investors.

buy UltraShort Lehman 20+ Year Treasury ProShares (TBT);

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Obama ups nuclear investment for climate fight

WASHINGTON (Reuters) – President Barack Obama announced $8.3 billion in loan guarantees Tuesday to build the first U.S. nuclear power plant in nearly three decades, a move designed to help advance climate legislation in Congress.

buy Market Vectors-Nuclear Energy ETF (NLR)

buy iShares S&P Global Nuclear Energy Index Fund (NUCL);

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Strong growth doesn’t equal strong stocks

Selling investments is about telling stories. If you can weave a convincing yarn about how an investment will pay off in future, it is much easier to persuade people to buy into it.
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South Korea edges closer to interest rate increase

South Korea is roaring out of the financial crisis so fast that economists at foreign banks see prompt interest rate hikes as merited, fearing eventual overheating and asset bubbles.

buy iShares MSCI-South Korea (EWY);

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Asia Pacific Fund Monthly Factsheet – Jan 2010

Asia Pacific Fund Monthly Factsheet – Jan 2010

buy Asia Pacific Fund (APB);

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The Greater China Fund Monthly Factsheet-Jan 2010

The Greater China Fund Monthly Factsheet-Jan 2010

buy Greater China Fund, Inc. (GCH);

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Euro firms in Asia as Greece worries ease – inSing.com

Euro firms in Asia as Greece worries ease – inSing.com

buy Asia Pacific Fund (APB);

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Credit markets flash hottest warning signal since crisis

Jitters over Chinese credit tightening and default risks in Greece and Dubai are causing bond vigilantes to batten down the hatches across the world, bringing the most dramatic credit rally for a century to a shuddering halt.

sell Vanguard European ETF (VGK)

sell iShares MSCI-Germany (EWG)

sell iShares MSCI-U.K. (EWU)

selliShares S&P Europe 350 Index (IEV);

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

Chart of the Day: Feb 11 2010 – 10yr Hasnt Declined 2 Consecutive Years Since 1950s

Daily “Ways-to-Play” The News Before the Moves 2/5/2010

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Aberdeen Global Income Fund Announces Performance Data Portfolio Composition

Aberdeen Global Income Fund Announces Performance Data Portfolio Composition

buy Aberdeen Global Income Fund (FCO);

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

Aberdeen Australia Equity Fund Announces Performance Data and Portfolio Composition

Aberdeen Australia Equity Fund Announces Performance Data and Portfolio Composition

buy Aberdeen Australia Equity Fund (IAF);

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

Aberdeen Asia Pacific Income Fund Announces Performance Data Portfolio Composition

Aberdeen Asia Pacific Income Fund Announces Performance Data Portfolio Composition

buy Aberdeen Asia-Pacific Income Fund (FAX);

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Taleb Says ‘Every Human’ Should Short U.S. Treasuries

Feb. 4 (Bloomberg) — Nassim Nicholas Taleb, author of “The Black Swan,” said “every single human being” should bet U.S. Treasury bonds will decline, citing the policies of Federal Reserve Chairman Ben S. Bernanke and the Obama administration.

sell iShares Lehman 20+ Year Treasury Bond Fund (TLT)

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

sell iShares Lehman 10-20 Year Treasury Bond Fund (TLH)

buy UltraShort Lehman 20+ Year Treasury ProShares (TBT)

buy Direxion Daily 10-Yr Treasury Bear 3x Shares (TYO)

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

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

End of TALF Means Bond Spreads Fivefold Wider: Credit Markets

The expiration of the Fed’s Term Asset-Backed Securities Loan Facility is driving companies to sell bonds tied to loans that would otherwise require higher yields. Borrowers are offering bonds backed by subprime auto loans, mortgage-servicing payments and assets that have proved hard to sell after the worst credit seizure since the Great Depression.

buy iShares Dow Jones U.S. Broker-Dealers Index Fund (IAI);

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


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