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   This   been   currency   debt   economic   euro   exposure   from   further   have   high   investors   leaders   long   markets   member   nations   over   plan   policymakers   pound   pressure   recommendation   region   since   stability   still   taken   tangential   that   their   this   trade   uncertainty   versus   well   will   with   zone

| More

China Industrials (CHII) Shares Cross Below 200 DMA
Thu, Apr 24, 4:14 PM ET, by ETF Channel

In trading on Thursday, shares of the China Industrials ETF (CHII) crossed below their 200 ...

FTSE Colombia 20 Breaks Below 200-Day Moving Average - Notable for GXG
Thu, Apr 24, 4:14 PM ET, by ETF Channel

In trading on Thursday, shares of the FTSE Colombia 20 ETF (GXG) crossed below their ...

Google Inc Achieves #41 Analyst Rank, Surpassing Honeywell International, Inc.
Thu, Apr 24, 12:14 PM ET, by ETF Channel

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

iShares MSCI EMU ETF Experiences Big Inflow
Thu, Apr 24, 11:54 AM ET, by ETF Channel

Symbols mentioned in this story: EZU, SAN, MC, SU Exchange traded funds (ETFs) trade just ...

PFF: ETF Inflow Alert
Thu, Apr 24, 11:44 AM ET, by ETF Channel

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

iShares S&P 500 Value ETF Experiences Big Inflow
Thu, Apr 24, 11:44 AM ET, by ETF Channel

Symbols mentioned in this story: IVE, GE, BAC, COP Exchange traded funds (ETFs) trade just ...

IBB, CELG, VRTX, BMRN: Large Inflows Detected at ETF
Thu, Apr 24, 11:44 AM ET, by ETF Channel

Symbols mentioned in this story: IBB, CELG, VRTX, BMRN Exchange traded funds (ETFs) trade just ...

VEA, TM, RDS.A, TOT: Large Inflows Detected at ETF
Thu, Apr 24, 11:44 AM ET, by ETF Channel

Symbols mentioned in this story: VEA, TM, RDS.A, TOT Exchange traded funds (ETFs) trade just ...

10.6% of DGRS Holdings Seeing Recent Insider Buys
Thu, Apr 24, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the WisdomTree U.S. SmallCap Dividend Growth Fund ...

Insiders Pile Into Holdings of QABA ETF
Thu, Apr 24, 9:44 AM ET, by ETF Channel

A look at the weighted underlying holdings of the First Trust NASDAQ ABA Community Bank ...

Danaher Corp. Achieves #20 Analyst Rank, Surpassing Covidien plc
Wed, Apr 23, 11:54 AM ET, by ETF Channel

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

SQQQ: Large Inflows Detected at ETF
Wed, Apr 23, 11:24 AM ET, by ETF Channel

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

PCEF, PCI, EXG, ACG: ETF Inflow Alert
Wed, Apr 23, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: PCEF, PCI, EXG, ACG Exchange traded funds (ETFs) trade just ...

UVXY: Large Inflows Detected at ETF
Wed, Apr 23, 11:24 AM ET, by ETF Channel

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

First Trust Value Line Dividend Index Fund Experiences Big Inflow
Wed, Apr 23, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: FVD, BAX, TE, ATO Exchange traded funds (ETFs) trade just ...

FCG, GDP, CRK, SGY: ETF Inflow Alert
Wed, Apr 23, 11:24 AM ET, by ETF Channel

Symbols mentioned in this story: FCG, GDP, CRK, SGY Exchange traded funds (ETFs) trade just ...

Daily Energy Bear 3x Shares Getting Very Oversold
Wed, Apr 23, 10:54 AM ET, by ETF Channel

In trading on Wednesday, shares of the Daily Energy Bear 3x Shares ETF (ERY) entered ...

PIE Makes Notable Cross Below Critical Moving Average
Wed, Apr 23, 10:54 AM ET, by ETF Channel

In trading on Wednesday, shares of the PowerShares DWA Emerging Markets Momentum Portfolio ETF (PIE) ...

VNQ, PSA, PLD, EQR: ETF Inflow Alert
Tue, Apr 22, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: VNQ, PSA, PLD, EQR Exchange traded funds (ETFs) trade just ...

First Trust US IPO Index Fund Experiences Big Outflow
Tue, Apr 22, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: FPX, GM, KMI, KRFT Exchange traded funds (ETFs) trade just ...

GSY, BSCE, BSJH, BSJG: Large Inflows Detected at ETF
Tue, Apr 22, 11:14 AM ET, by ETF Channel

Symbols mentioned in this story: GSY, BSCE, BSJH, BSJG Exchange traded funds (ETFs) trade just ...

Kraft Foods Group Inc a Top Socially Responsible Dividend Stock With 3.7% Yield (KRFT)
Tue, Apr 22, 8:14 AM ET, by ETF Channel

Kraft Foods Group Inc (KRFT) has been named a Top 25 Socially Responsible Dividend Stock ...

GLDX Crowded With Sellers
Mon, Apr 21, 4:14 PM ET, by ETF Channel

In trading on Monday, shares of the Gold Explorers ETF (GLDX) entered into oversold territory, ...

Twenty-First Century Fox Inc Takes Over #12 Spot From Delta Air Lines, Inc.
Mon, Apr 21, 12:24 PM ET, by ETF Channel

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

XLB, DD, MON, DOW: Large Inflows Detected at ETF
Mon, Apr 21, 11:34 AM ET, by ETF Channel

Symbols mentioned in this story: XLB, DD, MON, DOW Exchange traded funds (ETFs) trade just ...

SPXL: ETF Inflow Alert
Mon, Apr 21, 11:34 AM ET, by ETF Channel

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

VTV, JPM, BRK.B, CVX: ETF Inflow Alert
Mon, Apr 21, 11:34 AM ET, by ETF Channel

Symbols mentioned in this story: VTV, JPM, BRK.B, CVX Exchange traded funds (ETFs) trade just ...

VGK, NSRGY, NVS, BP: ETF Outflow Alert
Mon, Apr 21, 11:34 AM ET, by ETF Channel

Symbols mentioned in this story: VGK, NSRGY, NVS, BP Exchange traded funds (ETFs) trade just ...

TXN a Top 25 Dividend Giant With $2.7B Held By ETFs
Mon, Apr 21, 8:14 AM ET, by ETF Channel

Texas Instruments Inc. (TXN) has been named as a Top 25 ''Dividend Giant'' by ETF ...

ED Named Top 25 Socially Responsible Dividend Stock
Mon, Apr 21, 8:14 AM ET, by ETF Channel

Consolidated Edison, Inc. (ED) has been named a Top 25 Socially Responsible Dividend Stock by ...

See How Caterpillar Inc. Ranks Among Analysts' Top Dow 30 Picks
Sun, Apr 20, 12:54 PM ET, by ETF Channel

A study of analyst recommendations at the major brokerages shows that Caterpillar Inc. (CAT) is ...

RUSS Crosses Below Key Moving Average Level
Thu, Apr 17, 4:14 PM ET, by ETF Channel

In trading on Thursday, shares of the Daily Russia Bear 3x Shares ETF (RUSS) crossed ...

Red Hat Inc Moves Up In Analyst Rankings, Passing Eastman Chemical Co.
Thu, Apr 17, 11:54 AM ET, by ETF Channel

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

Biotech ETF Experiences Big Outflow
Thu, Apr 17, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: BBH, REGN, ALKS, ILMN Exchange traded funds (ETFs) trade just ...

XBI, MNKD, UTHR, ARNA: Large Inflows Detected at ETF
Thu, Apr 17, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: XBI, MNKD, UTHR, ARNA Exchange traded funds (ETFs) trade just ...

XME, ATI, ACI, SLCA: Large Outflows Detected at ETF
Thu, Apr 17, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: XME, ATI, ACI, SLCA Exchange traded funds (ETFs) trade just ...

RWO, BXP, VNO, AVB: Large Inflows Detected at ETF
Thu, Apr 17, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: RWO, BXP, VNO, AVB Exchange traded funds (ETFs) trade just ...

CSD, WWAV, PSX, STRZA: Large Outflows Detected at ETF
Thu, Apr 17, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: CSD, WWAV, PSX, STRZA Exchange traded funds (ETFs) trade just ...

PGX: ETF Inflow Alert
Thu, Apr 17, 10:54 AM ET, by ETF Channel

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

PowerShares KBW Capital Markets Portfolio Breaks Above 200-Day Moving Average - Bullish for KBWC
Wed, Apr 16, 4:15 PM ET, by ETF Channel

In trading on Wednesday, shares of the PowerShares KBW Capital Markets Portfolio ETF (KBWC) crossed ...

Qualcomm, Inc. Moves Up In Analyst Rankings, Passing Monsanto Co.
Wed, Apr 16, 1:14 PM ET, by ETF Channel

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

EEMV: Large Outflows Detected at ETF
Wed, Apr 16, 10:54 AM ET, by ETF Channel

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

ITOT, QCOM, MCD, ABBV: Large Outflows Detected at ETF
Wed, Apr 16, 10:54 AM ET, by ETF Channel

Symbols mentioned in this story: ITOT, QCOM, MCD, ABBV Exchange traded funds (ETFs) trade just ...

HEDJ: ETF Inflow Alert
Wed, Apr 16, 10:54 AM ET, by ETF Channel

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

Chevron Corporation a Top Ranked SAFE Dividend Stock With 3.3% Yield (CVX)
Wed, Apr 16, 8:14 AM ET, by ETF Channel

Chevron Corporation (CVX) has been named to the Dividend Channel ''S.A.F.E. 25'' list, signifying a ...

XTL Crosses Below Key Moving Average Level
Tue, Apr 15, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the SPDR S&P Telecom ETF (XTL) crossed below their ...

PowerShares S&P SmallCap Consumer Discretionary Portfolio (PSCD) Shares Cross Below 200 DMA
Tue, Apr 15, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the PowerShares S&P SmallCap Consumer Discretionary Portfolio ETF (PSCD) ...

PowerShares WilderHill Clean Energy Portfolio Breaks Below 200-Day Moving Average - Notable for PBW
Tue, Apr 15, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the PowerShares WilderHill Clean Energy Portfolio ETF (PBW) crossed ...

IYZ Makes Notable Cross Below Critical Moving Average
Tue, Apr 15, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the iShares U.S. Telecommunications ETF (IYZ) crossed below their ...

ITE Makes Notable Cross Below Critical Moving Average
Tue, Apr 15, 4:14 PM ET, by ETF Channel

In trading on Tuesday, shares of the SPDR Barclays Intermediate Term Treasury ETF (ITE) crossed ...

Related videos | all videos »
  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 - 2014, 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 over 1000 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.