Tag Archives: zacks research

Investors Brace For Bumpy Ride As Airline ETFs Hit A Rough Patch

After a hot take off for the ETF, JETS, MarketsMuse blog update profiles the plunge airline stocks and ETFs have seen in the recent weeks ahead the summer season, which will then hopefully bring another boost to the stocks and ETFs. This blog update is courtesy of Zacks Research article, “Air Stocks and ETF Plunge: Warming Up for Summer?”, with an excerpt below. 

The airline stocks that were hot and soaring over the past few years suddenly lost their altitude in Wednesday trading session as the shares of major carriers nosedived as much as 10% on concerns that growth might outpace travel demand. This could result in lower fares and thinner profit margins.

This is because cheap fuel is encouraging carriers to increase the number of seats at the current fares, breaking the competitive discipline that helped the industry to earn record profits in the past.

Bright Summer Outlook

Despite the brutal plunge, airline stocks and the ETF are anticipating sunnier days in summer. This is especially true given the optimistic view from the Washington-based trade group Airlines for America.

The group expects airlines to see the busiest summer ever this year buoyed by an improving economy, accelerating job market and rising consumer confidence. The demand for U.S. air travel would hit a fresh high as 222 million travelers (or 2.4 million a day) are expected to fly from June 1 through August 31, up 4.5% year over year and much higher than a record of 217.6 million travelers seen in 2007.

To continue reading about the airline stocks and ETFs that are bracing the bumpy ride, click here


One Gold ETF Looks To Be Worthy Of A First Place Finish

After a few rough years for gold as investors shifted other asset equities, things are starting to look up, especially for one ETF in particular. MarketsMuse blog update profiles Gartman Gold/Yen ETF (GYEN)  as one of the best ETFs to invest in for gold options. This update is courtesy of Zacks’ Equity Research article, “Is This the Safest Gold ETF for 2015?“, with an excerpt below explaining why GYEN could be the best gold ETF. 

Gold had one of its worst nightmares in the last two years as investors shifted to more risky asset classes like equities. This is especially true in the backdrop of the strengthening dollar and continued bullishness in the stock market, two conditions that spoilt the safe haven appeal of the yellow metal. The bleeding stretch led the metal to languish below the $1,200 an ounce level – almost near its lowest level since April 2010.

The start to 2015 was no different from the last two years as rising rate worries intensified at the beginning of the year. But the metal started to buck the trend since April. Weakness in the greenback in the wake of soft U.S. GDP in Q1 was the major driving force behind this uptrend.

What Are the Best Gold ETF Bets if Dollar Rises?

In most cases, gold investments are made via the U.S. dollar (which is presently at a roller coaster ride). So, it would be wise to look at the gold ETFs which are not linked to the greenback. Two such lucrative options are Gartman Gold/Yen ETF (GYEN) and Gartman Gold/Euro ETF (GEUR). While GYEN provides positive returns by using the yen for investing its assets in the gold market, GEUR does so with the euro.

Is GYEN the Best Option? 

After a nice show in 2013, the Japanese economy has been struggling since the second half of 2014. Japan’s growth in Q1 of 2015 has also been restrained by soft consumption. This ensures that the life of Japanese stimulus will be long as the economy is yet to stand on its own feet.

To continue reading about gold ETF option, GYEN, click here

Rookie ETFs Of The Year: Two New ETFs That Are Standouts In 2015

MarketsMuse blog update profiles two ETFs that have become standouts so far this year. The ETFs iShares Exponential Tech ETF (XT) and SPDR DoubleLine Total Return Tactical ETF (TOTL) have been dubbed with the title according to Zacks’ Neena Mishra in her article, “2 New ETFs with Big Potential“, excerpts from the article are below. 

The ETF industry continues to grow exponentially, with a record $96 billion in global inflows during the first quarter, up more than 100% from a year ago. More than 70 ETFs have been launched in the US so far this year, taking the total number of ETFs to 1702 and total assets to over $2.1 trillion.

Below, we highlight two ETFs launched this year that stand out from the rest and in our view hold a lot of potential.

iShares Exponential Tech ETF (XT)

This ETF has attracted almost $647 million in assets since its inception in March, making it one of the most successful ETF launches. Investing in innovative technologies that have the potential to transform our lives is a very exciting concept. Further, this ETF includes not only developers but also users of promising technologies. So the coverage extends beyond the technology sector.

The idea for this ETF came from the famous financial advisor Ric Edelman and it is understood that some of the assets in this ETF came from his clients. Investors should note some of these disruptive technologies stocks have been quite hot lately and so this ETF is not really attractive looking at the valuation but companies focused on cutting edge technologies definitely have the potential to deliver superior return over time and this ETF could be a solid choice for long-term investing.

SPDR DoubleLine Total Return Tactical ETF (TOTL)

Bond markets have confounded most analysts and investors of late. Yields plunged last year when almost everybody was expecting them to go up. Over the past few months, the bond market has seen erratic swings and we have also seen substantial flattening of the yield curve.

As the Fed gets ready to raise interest rates, shorter-term rates have been going up but longer-term rates have actually declined, thanks mainly to massive demand from foreign investors since interest rates in Europe and Japan are so low.

To continue reading about these two standout new ETFs, click here

Twitter’s Weak Q1 Jolts Social ETFs

MarketsMuse blog update profiles the disappointing Q1 for Twitter and the impact it is having on social media ETFs such as Renaissance IPO ETF (IPO), Global X Social Media Index ETF(SOCL) and ARK Web x.0 ETF (ARKW). This MarketsMuse update is courtesy of Zacks Equity Research and their article, “Twitter Tweets a Weak Q1 & Soft View, ETFs in Focus“, with an excerpt below. 

On April 28, Twitter (TWTR) came up with a weak Q1 and a disappointing guidance. The social networking site then saw a freefall in its share price as it failed to live up to many investors’ expectations.

Q1 in Detail

The company’s first-quarter 2015 non-GAAP loss per share (including the stock-based compensation expense) of 20 cents was a penny ahead of the Zacks Consensus Estimate. Excluding the stock-based compensation expense, the company earned 7 cents per share on a pro forma basis.

Revenues of $436 million in the quarter fell shy of the Zacks Consensus Estimate of $455 million. ‘A lower-than-expected contribution from newer direct response marketing products’ was held responsible for lower-than-expected revenues. However, revenues grew about 74% year over year.

Market Impact

This subdued performance dampened investors’ mood as the stock was severely beaten down in recent trading sessions. Following the earnings leak on April 28, about 40 minutes ahead of the closing bell, Twitter shares saw a landslide, plunging over 18% for the key trading session of April 28 on about fourth times the regular volume.

Shares slid about 8.9% on April 29. However, after such a massive sell-off for consecutive two days, Twitter stock recouped 0.94% after hours. Year to date, the stock is still up 8.3%.

Twitter does not have a sizable exposure in the overall ETF world with only three ETFs – Renaissance IPO ETF (IPO), Global X Social Media Index ETF(SOCL) and ARK Web x.0 ETF ((ARKW – ETF report)) – having major exposure of 8.17%, 3.66% and 3.20% respectively, at present. Such a huge fall in one of the major components should impact these ETFs.  Below, we have discussed these three funds in detail:

To continue reading about Twitter’s disappoint Q1’s impact on ETFs, click here

Fortune Cookie Says: China ETFs Slide on Cash Crunch Fear

zacksWhile the global market heaved a sigh of relief last week with the U.S. risks temporarily averted, China has become a flashpoint where events could either promote global stability or push other markets into a crisis.

Fears of a cash crunch have surfaced once again in the world’s second largest economy as the central bank did not inject liquidity into the economy for the third day in a row. This has resulted in rising money market rates across the nation (read: Top Ranked Emerging Asia-Pacific ETF in Focus ).

The seven-day bond repurchase rate, a key gauge of short-term liquidity in China, jumped more than 150 bps in the past two days to nearly 5% after seeing a persistent decline since October 9 th . This marks the biggest increase since July and signals that the bank might start tightening its monetary policy in order to prevent rising property prices and growing inflation.

The latest housing data in China suggests that home prices in some major cities have climbed sharply and is a bit out of control, leading to heightened worries over a property bubble. This could aggravate the inflation rate, which is already at a seven-month high (read: Focus on These China ETFs for Outperformance ).

Market Impact
The sudden move by the People’s Bank of China to suspend weekly auctions of reverse repurchase agreements had caused jitters across the global markets. The bank generally conducts bi-weekly reverse-repurchase operations on Tuesday and Thursday to provide liquidity to the market.

As such, China ETFs saw horrendous trading yesterday, crushing stocks across the board. Below, we have highlighted three most popular ETFs that have seen rough trading and might continue to do so in the coming days (see: all the emerging Asia Pacific ETFs here ).

Read more: http://www.nasdaq.com/article/china-etfs-slide-on-cash-crunch-fear-etf-news-and-commentary-cm291234#ixzz2ig5vKjjQ

Don’t Cry For Me, Argentina…Argh! Re: ARGT

It remains to be seen whether Argentina’s nationalisation of YPF ends up in a military face-off with Spain (wouldn’t that be the black swan that nobody even thought of?!), but this coverage is courtesy of Zacks Research:

“…In order to play the Argentinean economy in basket form, investors have the FTSE Argentina 20 ETF ( ARGT ) from Global X. The fund hasn’t exactly caught on with investors, as the ETF has less than $5 million in assets and sees pretty wide bid ask spreads.

On the nationalization news, the Argentina ETF sank by 3.6%, pushing the ETF pretty close to its 52 week low. While many Argentinean stocks weren’t too heavily impacted by the news, it should be noted that YPF does make up the fourth biggest allocation in the South American ETF and this company plunged by 11% during market hours although it was up about 2.4% after hours.

Beyond this, it is also troubling that the two biggest sectors in ARGT are energy and basic materials. Given that Argentina has proven to be a proponent of nationalization in the energy space and that basic materials could suffer the same ‘national public interest’ fate, it doesn’t look good for the fund going forward.

In fact, these two sectors combine to make up nearly 45% of the total assets including four of the top ten holdings. Additionally, one has to wonder how much other energy companies will want to invest in Argentina after this debacle, possibly signaling a shift in policy by many oil firms that have operations in the nation.

“Going forward, you are going to see a severe retrenchment of external investors in looking at Argentina,” said Enrique Alvarez , head of Latin American research at IDEAglobal, in a Marketwatchinterview. When nationalism and expropriation “come back into the government lexicon, those are terms that have no fit whatsoever in the current, broader scheme of financial markets and of investments around the globe.”

Thanks to this report and the general uncertainty in this South American market, many investors may want to shy away from an Argentina stock purchase. If anything, ARGT could be an intriguing long term short candidate, or part of a pairs trade with other South America ETFs.

Continue reading