Tag Archives: stocks

Are PC Sales Really Tanking?

Research firm IDC released its latest report that shows worldwide PC shipments declined by 10.6% in the fourth quarter of 2015 on a year over year basis. In 2015, 276.2 million personal computers were shipped,

ECB To Be More Dovish? Watch These ETFs

The European Central Bank (ECB) president Mario Draghi surprised the global market yesterday by giving cues of further policy easing in its March meeting. This came on the heels of Draghi’s repeated assurance of a more intensified and protracted policy easing, if need be. With the Euro zone growth picture still dull and the inflationary environment slackening considerably, prospects of further rate cuts and a likely raise in ECB’s ongoing QE measure have high chances of manifestation. Draghi reaffirmed that the ECB will evaluate and ‘possibly reconsider’ the monetary policy in the March meeting. The reason behind this dovish stance was a 12-year low Brent crude which ruined the possibility of any improvement in inflation in 2016. The ECB economists had projected the annual inflation rate to inch up ‘from 0.2% recorded in December 2015 and average 1% this year, rising further in 2017’. But with oil prices sliding 40% more than the time when the projections were made, Draghi is now skeptical of inflation in 2016, as per the Wall Street Journal. At present, ECB expects 2016 inflation to be 0.7% (down from 1% projected earlier) while inflation for 2017 is expected to be 1.4% (down from 1.5% guided previously) (read: Dovish Draghi Drives Up These European ETFs ). The ECB took several meaningful steps in last two years to bolster the common currency bloc. It launched an asset buying program at the start of 2015 and extended the program by six more months to March 2017 at the end of the year. The bank also cut its deposit rate by 10 bps, shoving it deeper into the negative territory to -0.3% (read: 4 European ETFs to Buy on Cheaper Valuations, QE Launch ). While the markets did not appreciate ECB’s year-end stimulus measure as they expected an outsized expansion in the QE policy and steeper cuts in interest rates, global stocks liked ECB’s statement this time around. Market Impact Several Euro zone ETFs rallied on January 21 post Draghi’s comment. Among the toppers were the iShares MSCI Italy Capped ETF (NYSEARCA: EWI ) , the Barclays ETN + FI Enhanced Europe 50 ETN (NYSEARCA: FEEU ) , the Credit Suisse FI Enhanced Europe 50 ETN (NYSEARCA: FIEU ) , the iShares MSCI United Kingdom ETF (NYSEARCA: EWU ) and the iShares Currency Hedged MSCI EMU ETF (NYSEARCA: HEZU ) with gains of about 2.9%, 1.8%, 1.5%, 1.4% and 1.3%, respectively. Euro also shed gains as evident by 0.03% losses incurred by the CurrencyShares Euro Trust ETF (NYSEARCA: FXE ) . The fund shed more gains of about 0.1% after hours. ETFs to Play Investors may take advantage of this euphoria in the European market. The first option is to bet on our top-ranked European ETFs. Below we highlight two options. Deutsche X-trackers MSCI Germany Hedged Equity ETF (NYSEARCA: DBGR ) DBGR is a hedged German equity ETF providing exposure to 56 firms. The fund focuses on Consumer Discretionary, Financials and Health Care sectors. Expense ratio comes in at 0.45%. DBGR has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook. DRGR was up 1.3% on January 21, 2016. Deutsche X-trackers MSCI United Kingdom Hedged Equity ETF (NYSEARCA: DBUK ) This hedged UK ETF has amassed about $4 million in assets. The fund holds114 stocks presently and charges 45 bps in fees. Financials, Consumer Staples, Energy, Consumer Discretionary and Health Care have a double-digit weight in the fund. The fund was up 1.4% on January 21 and carries a Zacks ETF Rank #2 (Buy). Investors can also play this move by shorting the euro ETFs. Below, we highlight a few choices in the inverse euro ETF space. These ETFs profit when the euro declines and may be suitable for hedging purposes against the fall in the currency. ProShares Ultra Short Euro ETF (NYSEARCA: EUO ) This leveraged ETF looks to provide twice the inverse exposure to the performance of euro versus the U.S. dollar on a daily basis. The ETF charges a hefty annual expense ratio of 95 basis points. The product was up 0.04% on January 21. Investors could book more profits off this fund, should the euro continue to struggle. Market Vectors Double Short Euro ETN (NYSEARCA: DRR ) This is an exchange-traded note issued by Morgan Stanley. The product seeks to track the performance of the Double Short Euro Index. For every 1% weakening of the euro relative to the greenback, the index normally gains 2%. The product charges an expense ratio of 0.65% a year and advanced about 1% (as of January 21, 2016). Link to the original on Zacks.com

Industrial ETFs In Focus On GE Mixed Q4 Results

On Friday, General Electric (NYSE: GE ), the industrial conglomerate giant, reported better-than-expected fourth-quarter 2015 earnings but missed on the top line. Earnings per share came in 52 cents, a couple of cents ahead of the Zacks Consensus Estimate and up 27% from the year-ago quarter. Revenues rose 1.4% year over year to $33.89 billion but were well below our estimated $35.92 billion. The revenue miss were credited to a weak global economy and an oil price slide that hurt revenues in the renewable, and oil and gas segments (read: Oil Hits 12-Year Low: Short Energy Stocks with ETFs ). In order to withstand the fall oil prices and slow global growth, General Electric doubled its restructuring spending for this year to $3.4 billion and increased its cost-cutting target by two times for the struggling oil and gas business to as much as $800 million. Further, the company is transforming itself into a digital-industrial company and plans to shift its headquarters from Connecticut to Boston by 2018. Notably, digital business revenue climbed 22% to $5 billion last year and is on track to reach $20 billion by 2020. For fiscal 2016, the company reaffirmed its earnings per share guidance of $1.45-$1.55, the midpoint of which is a penny below the Zacks Consensus Estimate. Organic revenue is expected to grow 2-4% while cash generation is estimated at $30-$32 billion. General Electric also intends to return $26 billion to its shareholders this year, including $8 billion in dividends and $18 billion in share repurchases. Market Impact Following mixed Q4 results, shares of GE dropped as much as 3.1% in Friday’s trading session and the industrial ETFs having double-digit allocation to this industrial conglomerate giant are in focus for the days ahead. All the funds stated below have a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook. Fidelity MSCI Industrials Index ETF (NYSEARCA: FIDU ) This fund tracks the MSCI USA IMI Industrials Index, holding 345 stocks in its basket. General Electric takes the top spot at 13.3% share with the aerospace and defense industry making up for one-fourth of the portfolio, followed by industrial conglomerates at 21.3%. The product has amassed $100.5 million in its asset base while trades in moderate volume of nearly 102,000 share a day on average. It is one of the low cost choices in the space charging 12 bps in annual fees from investors. The fund gained 0.8% following GE results. Industrial Select Sector SPDR ETF (NYSEARCA: XLI ) This is the largest and most popular ETF in the space with AUM of $5.3 billion and average daily volume of 13.7 million shares. It follows the Industrial Select Sector Index and charges 14 bps in fees per year. Holding a small basket of 68 securities, GE takes the top spot with 11.9% allocation. Form a sector look, aerospace and defense occupy the top position at 28.3% followed by industrial conglomerates (21.5%), and machinery (12.8%). The fund added 0.9% on the day. Vanguard Industrials ETF (NYSEARCA: VIS ) This fund follows the MSCI US IMI Industrials 25/50 index and holds about 346 securities in its basket. Of these firms, GE occupies the top position with 12.6% allocation. Here again, aerospace and defense takes the top spot at 23.8% followed by industrial conglomerates at 20.2%. The fund manages $1.8 billion in its asset base and charges 10 bps in annual fees. Volume is moderate as it exchanges 121,000 shares a day on average. The product gained 1.1% on the day (read: Beat U.S. Manufacturing Woes with These Industrial ETFs ). iShares U.S. Industrials ETF (NYSEARCA: IYJ ) This product provides exposure to 212 industrial stocks by tracking the Dow Jones U.S. Industrials Index. It is heavily concentrated on GE – the top firm – with 11.5% of assets while others make up for less than 4% share. Further, the ETF is tilted toward capital goods’ companies at 59.4% while transportation and software services round off the next two spots with double-digit exposure. The fund has an AUM of $507 million and average daily volume of 68,000 shares. Expense ratio came in at 0.44%. The product has gained nearly 1.2% following GE results. Bottom Line Investors should note that the decline in the GE share price has not affected these ETFs despite its largest allocation to the company. This is because the funds have a spread out exposure to a number of firms in various types of industries suggesting that the space can easily counter small declines from some of the industry’s biggest components. Further, the gains in these industrial ETFs are the result of a broad stock market rally buoyed by the sudden spike in oil price, and stimulus hopes in Europe and Japan. Link to the original post on Zacks.com