ETFs For Jackson Hole
Federal Reserve Chairman Ben Bernanke is slated to speak from Jackson Hole, Wyoming on Friday in what is usually supposed to be a benign affair, but as was the case at the time of last year's get-together in the Cowboy State, global equity markets are teetering on the brink thanks to Europe's sovereign debt woes, slack employment growth in the U.S. and concerns over emerging markets GDP growth and inflation.
With the 2010 and 2011 situation sharing so many similarities, many are speculating (though hoping might be the better word) that the Fed will save the world with a third round of quantitative easing. While that would be good news for riskier assets, at least in the near-term, there has been no shortage of predictions noting that we will NOT be blessed with QE3.
A legitimate case can be made for more QE and sound arguments can be made against, so we'll just have to wait and see what Bernanke says on Friday. In the meantime, these will be some of the ETFs worth keeping an eye on after the speech and heading into next week.
Teucrium Corn ETF (NYSE: CORN): CORN is an ETF that is just looking for an excuse to really breakout if it hasn't done so already. The ETF has displayed exceptional relative strength in a market environment that should have been tricky for an ETF of this nature. Another round of quantitative easing would light a fire under plenty of commodities ETFs and probably send CORN soaring into the 50s.
SPDR Gold Shares (NYSE: GLD): We'll just go with the big kahuna, but the reality is, Bernanke's comments will impact GLD and rivals such as the iShares COMEX Gold Trust (NYSE: IAU) one way or another. The gold slide will likely continue if we get QE3. If that scenario doesn't materialize, investors could easily view gold's recent pullback as the buying opportunity they've been eagerly waiting for.
U.S. Oil Fund (NYSE: USO): Another commodities play that stands to benefit immensely if QE3 comes to shore, USO was trading in the low 30s around the time QE2 was announced and soared higher from there. That said, history may not repeat itself as it is clear economic indicators are weak at this point and another round of quantitative easing may be too little too late to help oil prices in the near-term. The other side of the coin is bears haven't been able to force West Texas Intermediate Crude below $80.
PowerShares DB US Dollar Index Bearish (NYSE: UDN): More quantitative easing means the Fed will be running the printing presses even hotter than they have been and that would not be good news for the already imperiled U.S. dollar. UDN is facing some resistance at $29, but what is good news for stocks could also be good news for UDN and carry it above that key technical level.
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