ETFs

Selling Pro Shares Short Treasury ETF out of my Volatility Portfolio

I bought this position in the Pro Shares Short 7-10 Year Treasury ETF (TBX) in my Volatility Portfolio on February 2, 2018, back in the days when it looked like the Federal Reserve was firmly locked into a policy of interest rate increases. An interest rate increase pushes down the prices of existing bonds with lower coupon yields–which would produce gains for an ETF like this short Treasury bonds. With the Fed’s reversal of policy course at the end of 2018 and with an interest rate cut almost certain at the Fed’s July 31 meeting, being short Treasuries no longer makes sense. I’ve been adding long Treasury ETFs since the beginning of June while looking for a time to exit this short ETF.

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Adding Vanguard Short Term Treasury ETF to Picks Portfolio

Despite the challenging words from Fed chair Jerome Powell pledging that that he will serve his full term, I think it’s likely that the Trump White House sees the continued shift of the Federal Reserve from raising interest rates to neutral to a bias toward interest rate cuts in 2019 as a sign that the Federal Reserve is yielding to political pressure from President Donald Trump. My observation of this administration leads me to conclude that when Trump thinks he sees a weakness in his opponent, he ramps up the pressure. Winning re-election in 2020 depends to a large extent on the health of the U.S. economy, which increases the President’s motivation to press the Federal Reserve to cut interest rates in 2019.

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Trying to separate day-to-day volatility from signs of a market breakdown? Watch the XLF and XLK

Here’s one set of ETFs I’m watching right now for signs that the market is headed for a breakdown–and reassurance that it’s just trapped in one of those rotation things. On Monday, May 20, the Technology Select Sector SPDR ETF (XLK) fell like a stone, dropping 1.74% as technology companies in the United States moved to cut off sales to China’s Huawei Technologies after the White House imposed sanction on that company. The Financial Select Sector ETF (XLF), however, moved ahead slightly

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Buying this yen ETF for Jubak Picks to hedge market risk–and maybe gain 5% or so

Yesterday in a post “One consequence of change in Fed policy likely to be a weaker dollar” I noted that a number of Wall Street and big international banks have forecast a drop in the dollar as a result of the Fed’s decision to back off on raising interest rates in 2019. Morgan Stanley, for example, says that the dollar has peaked and has forecast the yen climbing to 102 to the dollar and the euro to $1.31 by the end of 2019. Japan’s Nomura is projecting foreign selling of dollars. Today I’m adding the Invesco CurrencyShares Japanese Yen ETF (FXY) to my Jubak Picks portfolio. (The ETF is already part of my Perfect 5 ETF Portfolio.)

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Even as deal is struck to end shutdown, gold soars

Gold hit a seven month high on Friday, gaining more than 1%. Spot gold briefly broke above $1300 an ounce. Gold futures climbed 1.5% to $1,298.30 an ounce. The SPDR Gold Shares ETF (GLD) climbed 1.46% to $122.86 on volume 10% above the daily average. The 52-week high for this ETF is $129.47. The SPDR Gold Shares ETF is a member of my Perfect 5 ETF Portfolio. I increased the allocation to GLD to 25% of this 5-ETF portfolio on December 26.

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European markets sink into bear today; I switching back to yen and selling the euro in my ETF Portfolio

Back on October 3 I switched from the ┬áInvesco Currency Shares Japanese Yen ETF (FXY) to the Vanguard FTSE Developed Markets ETF (VEA) in an effort to get a little more performance out of this slot in my Perfect 5 ETF Portfolio. (This ETF invest in both Japan and Europe.) And for a little while it worked–about a month I’d say–as the euro picked up strength against the U.S. dollar. But for the last month as European stocks have slipped into a bear, this positioning in my ETF Portfolio has just not worked. Japanese stocks themselves moved into a bear market on Christmas but the yen looks like it will again gain from its role as a safe haven currency in times of turmoil. (And especially in times of turmoil for the U.S. dollar.)

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Adding to gold position in my Perfect 5 ETF Portfolio today

Don’t know whether or not you’ve noticed, but stocks have been sinking like a stone. (Actually I sure you’ve noticed that.) And that gold has been climbing. (This you may have overlooked in all the other excitement.) The Federal Reserve signal that it is backing off on its schedule to raise interest rates three times in 2019 to a more likely pace of two increases (and quite possibly one or none) has removed the worry about a quick boost in interest rates that has been weighing on gold prices. The SPDR Gold Shares ETF (GLD) is up 5.6% since closing at $113.66 on November 12, 2018. The ETF closed today, December 24, at $120.02.

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