Self Directed Investor Inc
SDI: "Empowering investors with ideas and education"
Symbol Lookup »  
Topics:ChinaETFsEarningsEconomyEnergyForexGoldIncomeLessonsIdeasTrading

  • Other news: News from PR Newswire
| More

Three Long/Short Ideas For Euro Zone Debt Drama

Tue, Nov 8, 7:14 AM ET, by Michael Johnston

Since the downgrade of U.S. credit quality in August, investors have turned their attention to the debt drama taking place overseas. Several Euro zone member nations have fallen victim to mounting government deficits, which has inevitably contributed to investor worries over the health of the financially fragile currency bloc. Economic growth has also been lackluster in the region, further contributing to the growing cloud of uncertainty looming over the debt burdened Euro zone [ETFdb Pro members can see the Ex-Europe ETFdb Portfolio]. Ongoing debt woes have taken center stage, fueling volatile trading across equity markets, and likewise putting pressure on investors’ confidence in the global economic recovery.

Greece has been the center of attention lately as EU leaders have taken the first steps to negotiating on a viable rescue plan to restore stability in the debt stricken country. Likewise, all of the ongoing debt negotiations have paved the way for increased volatility across markets, seeing as how investors have been forced to digest new pieces of information day after day. While EU policymakers are undoubtedly moving in the right direction, the day to day news headlines stemming from overseas have been contributing to wild swings in the market, with investor sentiment swaying from euphoric to fearful over the course of a trading session.

Despite talks of a three-pronged “bailout plan”, EU policymakers are still faced with serious challenges that must be addressed going forward as the economic health of the region is far from stable. Considering all of the chaos that has resulted from Greece’s debt woes, it’s hard to imagine just how the markets will react if (and when) other member nations, like Italy and Portugal, come forth with their own set of issues. Amidst the volatility, several opportunities have presented themselves as a means for investors to establish tangential exposure to developments in the Euro zone. Below we highlight three long/short ideas that may prove profitable as EU leaders continue to work on a comprehensive plan and uncertainty remains high:

  • Long CurrencyShares British Pound Sterling Trust (FXB) / Short CurrencyShares Euro Trust (FXE): This trade recommendation is essentially a bet on the outperformance of the British pound over the euro, since FXB and FXE both track the performance of the respective currency versus the U.S. dollar. The British pound has taken a beating as weakness in the euro has put considerable pressure on the economic outlook for the region as a whole. Depending on how the ongoing debt negotiations progress, the British pound may be well positioned to appreciate if EU leaders undertake an approach that further devalues the euro. Also, persistent weakness in the euro could encourage investors who still wish to maintain tangential exposure to the Euro zone to reallocate capital into pound-denominated assets.
  • Long MSCI Germany Index Fund (EWG) / Short MSCI Italy Fund (EWI): The thesis behind this trade recommendation is quite simple; it pits the strongest Euro zone member, Germany, versus one of the most heavily indebted nations: Italy. Germany is the economic backbone of Europe and this exporting powerhouse stands to potentially benefit from a weakened euro and increased interest as investors flock to “safer” investments that are still relatively undervalued. Likewise, if Italy comes under pressure as Greece has, investors who still wish to maintain tangential exposure to the Euro zone will likely be encouraged to snap up safe havens like Germany. Italy, meanwhile, seems to be headed towards the edge of a cliff; political uncertainty, record highs for financing costs, and a stubbornly high unemployment rate loom as substantial short-term and long-term obstacles.
  • Long FTSE Nordic 30 ETF (GXF) / Short MSCI EMU Index Fund (EZU): This trade recommendation pits the Scandinavian region, as represented by GXF, versus the member nations of the Euro zone, as represented by EZU. The fundamental thesis behind this trade is that the northern region of Europe offers a more favorable risk/reward profile than the Euro zone as a whole, given the fiscally conservative nature and historically stable financial systems of Sweden, Denmark, Norway, and Finland. GXF’s underlying holdings are well positioned to hold their ground in case the debt drama intensifies, while also being able to benefit from improved economic conditions as stability is restored. While the Scandinavian nations are economically tied to all of EZU’s constituents, they are not under direct stress from the potential collapse of the euro, since every country in the region (except Finland) maintains currency independence.

Disclosure. No positions at time of writing.

Click here to read the original article on ETFdb.com.


SDI Glossary: "Short" Definition
This Article's Word Cloud:   British   ETFdb   Euro   Europe   Fund   Germany   Greece   Italy   Long   MSCI   Short   Trust   been   currency   debt   economic   euro   exposure   from   have   health   investors   leaders   maintain   markets   member   nations   ongoing   over   plan   policymakers   pound   pressure   recommendation   region   stability   still   taken   tangential   that   their   thesis   this   trade   uncertainty   versus   volatility   will   with   zone

| More

Red Hat Moves Up In Analyst Rankings, Passing Invesco
Fri, Apr 29, 11:54 AM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

QQQ, QCOM, TXN, AVGO: ETF Outflow Alert
Fri, Apr 29, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: QQQ, QCOM, TXN, AVGO Exchange traded funds (ETFs) trade just ...

IWD, CSCO, MDT, UTX: ETF Outflow Alert
Fri, Apr 29, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IWD, CSCO, MDT, UTX Exchange traded funds (ETFs) trade just ...

iShares Asia 50 (AIA) Shares Cross Below 200 DMA
Fri, Apr 29, 11:14 AM ET, by ETF Channel

In trading on Friday, shares of the iShares Asia 50 ETF (AIA) crossed below their ...

XLK Crosses Below Key Moving Average Level
Fri, Apr 29, 11:14 AM ET, by ETF Channel

In trading on Friday, shares of the Technology Select Sector SPDR Fund ETF (XLK) crossed ...

EZU: Large Outflows Detected at ETF
Fri, Apr 29, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: EZU Exchange traded funds (ETFs) trade just like stocks, but ...

MLP and Energy Infrastructure ETF -- Insider Buying Index Registering 24.5%
Fri, Apr 29, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the MLP and Energy Infrastructure ETF (MLPX) ...

DUST Crosses Critical Technical Indicator
Thu, Apr 28, 3:54 PM ET, by ETF Channel

In trading on Thursday, shares of the Daily Gold Miners Index Bear 3x Shares ETF ...

Nielsen Holdings Takes Over #15 Spot From Facebook
Thu, Apr 28, 11:54 AM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

IGE, OXY, COP, SU: ETF Outflow Alert
Thu, Apr 28, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IGE, OXY, COP, SU Exchange traded funds (ETFs) trade just ...

SUB: Large Outflows Detected at ETF
Thu, Apr 28, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: SUB Exchange traded funds (ETFs) trade just like stocks, but ...

TLO: ETF Outflow Alert
Thu, Apr 28, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: TLO Exchange traded funds (ETFs) trade just like stocks, but ...

XLY, CMCSA, NKE, LOW: ETF Outflow Alert
Thu, Apr 28, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: XLY, CMCSA, NKE, LOW Exchange traded funds (ETFs) trade just ...

VDE, PAGP, EEQ, TEP: Large Outflows Detected at ETF
Thu, Apr 28, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VDE, PAGP, EEQ, TEP Exchange traded funds (ETFs) trade just ...

IWV, GOOGL, GOOG, V: ETF Outflow Alert
Thu, Apr 28, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IWV, GOOGL, GOOG, V Exchange traded funds (ETFs) trade just ...

iShares MSCI Brazil Capped ETF Experiences Big Inflow
Thu, Apr 28, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: EWZ Exchange traded funds (ETFs) trade just like stocks, but ...

VB, NCT, RUSHB: ETF Inflow Alert
Thu, Apr 28, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: VB, NCT, RUSHB Exchange traded funds (ETFs) trade just like ...

REM's Holdings Imply 11% Gain Potential
Thu, Apr 28, 8:44 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

SPDR Barclays Short Term High Yield Bond Breaks Above 200-Day Moving Average - Bullish for SJNK
Wed, Apr 27, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the SPDR Barclays Short Term High Yield Bond ETF ...

ProShares Short VIX Short-Term Futures Breaks Above 200-Day Moving Average - Bullish for SVXY
Wed, Apr 27, 4:14 PM ET, by ETF Channel

In trading on Wednesday, shares of the ProShares Short VIX Short-Term Futures ETF (SVXY) crossed ...

iShares Russell 2000 Growth (IWO) Shares Cross Above 200 DMA
Wed, Apr 27, 3:54 PM ET, by ETF Channel

In trading on Wednesday, shares of the iShares Russell 2000 Growth ETF (IWO) crossed above ...

VOE: ETF Outflow Alert
Wed, Apr 27, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VOE Exchange traded funds (ETFs) trade just like stocks, but ...

iShares U.S. Pharmaceuticals ETF Experiences Big Outflow
Wed, Apr 27, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IHE, BMY, LLY, AGN Exchange traded funds (ETFs) trade just ...

TLH: Large Outflows Detected at ETF
Wed, Apr 27, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: TLH Exchange traded funds (ETFs) trade just like stocks, but ...

iShares Morningstar Large-Cap Growth (JKE) Shares Cross Below 200 DMA
Wed, Apr 27, 10:54 AM ET, by ETF Channel

In trading on Wednesday, shares of the iShares Morningstar Large-Cap Growth ETF (JKE) crossed below ...

JNK: Large Outflows Detected at ETF
Wed, Apr 27, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: JNK Exchange traded funds (ETFs) trade just like stocks, but ...

SPDR Barclays High Yield Bond (JNK) Shares Cross Above 200 DMA
Wed, Apr 27, 10:54 AM ET, by ETF Channel

In trading on Wednesday, shares of the SPDR Barclays High Yield Bond ETF (JNK) crossed ...

WisdomTree SmallCap Dividend Fund -- Insider Buying Index Registering 18.0%
Wed, Apr 27, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the WisdomTree SmallCap Dividend Fund (DES) shows ...

17.9% of FYT Holdings Seeing Recent Insider Buys
Wed, Apr 27, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the First Trust Small Cap Value AlphaDEX ...

FPX's Holdings Could Mean 14% Gain Potential
Wed, Apr 27, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Implied RZG Analyst Target Price: $91
Wed, Apr 27, 8:14 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

FAZ Crowded With Sellers
Tue, Apr 26, 4:19 PM ET, by ETF Channel

In trading on Tuesday, shares of the Daily Financial Bear 3x Shares ETF (FAZ) entered ...

See How Boeing Ranks Among Analysts' Top Dow 30 Picks
Tue, Apr 26, 11:54 AM ET, by ETF Channel

A study of analyst recommendations at the major brokerages shows that Boeing Co. (BA) is ...

PG&E Takes Over #62 Spot From Constellation Brands
Tue, Apr 26, 11:54 AM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

XHB, WHR, FBHS, OC: Large Outflows Detected at ETF
Tue, Apr 26, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: XHB, WHR, FBHS, OC Exchange traded funds (ETFs) trade just ...

XME, CLF, CDE, HL: Large Outflows Detected at ETF
Tue, Apr 26, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: XME, CLF, CDE, HL Exchange traded funds (ETFs) trade just ...

Analysts See 52% Gains Ahead For XBI
Tue, Apr 26, 8:54 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

FXL's Holdings Could Mean 11% Gain Potential
Tue, Apr 26, 8:54 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

We Did The Math RZV Can Go To $65
Tue, Apr 26, 8:54 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Implied ADRA Analyst Target Price: $32
Tue, Apr 26, 8:54 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Genuine Parts a Top Socially Responsible Dividend Stock With 2.7% Yield (GPC)
Tue, Apr 26, 8:34 AM ET, by ETF Channel

Genuine Parts Co. (GPC) has been named a Top Socially Responsible Dividend Stock by Dividend ...

McKesson Achieves #90 Analyst Rank, Surpassing Marathon Petroleum
Mon, Apr 25, 12:14 PM ET, by ETF Channel

In a study of analyst recommendations at the major brokerages, for the underlying components of ...

GDX, ABX, NEM, GG: ETF Outflow Alert
Mon, Apr 25, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: GDX, ABX, NEM, GG Exchange traded funds (ETFs) trade just ...

IWR, LUV, AON, ICE: Large Outflows Detected at ETF
Mon, Apr 25, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: IWR, LUV, AON, ICE Exchange traded funds (ETFs) trade just ...

EUM: Large Outflows Detected at ETF
Mon, Apr 25, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: EUM Exchange traded funds (ETFs) trade just like stocks, but ...

MDY, ALK, GPN, RE: Large Inflows Detected at ETF
Mon, Apr 25, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: MDY, ALK, GPN, RE Exchange traded funds (ETFs) trade just ...

HYG: Large Outflows Detected at ETF
Mon, Apr 25, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: HYG Exchange traded funds (ETFs) trade just like stocks, but ...

This ETF Holds Companies With Heavy Insider Buying - VONE
Mon, Apr 25, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the Vanguard Russell 1000 ETF (VONE) shows ...

Add Up The Parts: PTF Could Be Worth $40
Mon, Apr 25, 8:24 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

Implied PEZ Analyst Target Price: $47
Mon, Apr 25, 8:24 AM ET, by ETF Channel

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, ...

  More articles:  1 2 3 4 5 6 7 next »

ABOUT US »   ADVERTISE »   CONTACT US »   TERMS OF USE & PRIVACY POLICY »

Three Long/Short Ideas For Euro Zone Debt Drama | Self Directed Investor | Copyright © 2008 - 2016, All Rights Reserved

Any ideas and opinions presented in Self Directed Investor content are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All site visitors agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.

SDI is associated with: ValueForum.com -- a subscription-based online social networking forum of serious individual investors. | MarketNewsVideo.com -- videos appearing on SDI are produced by Market News Video. | TickerTech.com -- stock quote content appearing on SDI is at least 20 minutes delayed and is powered by Ticker Technologies. | GoldStockStrategist.com -- Edited by Scott V. Nystrom, PhD, Gold Stock Strategist provides analysis on gold mining companies.