Three ETFs Supported By US Economic Growth

The US economy grew by 2 percent in the third quarter of this year and business activity accelerated in October, signs that corporate and consumer spending are holding up providing positive price support for the iShares Dow Jones US Industrials (IYJ), the Vanguard Materials ETF (VAW) and the PowerShares DB Base Metals (DBB).

According to the latest data from the Institute for Supply Management-Chicago Inc., economic expansion is at the forefront illustrated by its business barometer reading of a 60.6.  Furthermore, data suggests that output climbed at the fastest pace in the third quarter as companies are upgrading equipment and boosting output to meet enhanced increased foreign and domestic demand. 

3 Domestic Plays On Emerging Markets

According to projections from the International Monetary Fund, China, India and Brazil are expected to be the economic growth leaders of the year and it is possible to reap the benefits of this international growth domestically.

In addition to being cheaper, domestic stocks that are likely to benefit from international growth tend to be less volatile, have less risk and are more liquid than those of emerging markets. As these nations grow and develop, demand for energy, technology and industrials will likely surge.

3 Domestic Plays On Emerging Markets

According to projections from the International Monetary Fund, China, India and Brazil are expected to be the economic growth leaders of the year and it is possible to reap the benefits of this international growth domestically.

Over the last year, the MSCI Emerging Markets Index has witnessed stellar growth and prices in emerging stock markets, like China, have followed. In fact, China’s main stock market index trades at a price-to-earnings ratio of more than 30, nearly 50% higher than that of the S&P 500.

In addition to being cheaper, domestic stocks that are likely to benefit from international growth tend to be less volatile, have less risk and are more liquid than those of emerging markets. As these nations grow and develop, demand for energy, technology and industrials will likely surge.

Four Ways To Play Boost In Manufacturing

Strong growth overseas and a pickup in U.S. demand have lead to an optimistic future for industrial production and have some insiders suggesting that manufacturing will be at the forefront of the economic recovery.

Recently, reports from the New York and Philadelphia Federal Banks have indicated that manufacturing has accelerated at a faster pace than expected in the month of April.  The Federal Reserve Bank of New York’s general economic index climbed to a 31.9 from a 22.9 in March, marking the ninth consecutive month of growth.  Additionally, the Federal Reserve Bank of Philadelphia’s general economic index rose to a 20.2 in April from an 18.9 in March, marking the eight consecutive month of expansion. 

To further add to the appeal of industrials, factory orders in April increased to 29.5 from 25.4 in March and shipments rose to 32.1 from 25.6 during the same time period.  Additionally, the Federal Reserve stated that overall factory production rose 0.9% after increasing 0.2% in February, as the production of consumer goods rose 2%, primarily driven by gains in automobiles, furniture and electronics. 

On the manufacturing side, the Institute for Supply Chain Management’s manufacturing gauge rose to its highest level since July 2004, to a 59.6 in March, indicating that manufacturing is expanding.  

An indicator suggesting that manufacturing and industrials will likely continue to shine can be found in supply and demand variances seen in the metals markets.  According to the London Metal Exchange, stockpiles of copper, aluminum, nickel, zinc and tin continue to decline.  Global demand for these metals has been increasing and slowly eating away at supply.  In fact, according to Sumitomo Metal Mining Co., one of the world’s largest producers of nickel, world demand for nickel will exceed supply in 2010, the first time this has occurred since 2006.

ETFs To Play The Job Bill

By Kevin Grewal

 In an attempt to ignite the labor markets, Congress passed a $17.6 billion measure and sent it over to President Obama to sign into law, paving the path of opportunity in some sectors.

With unemployment lingering around 9.7%, spring break right around the corner and Congressional elections looming at the end of the year, the clock was ticking and policymakers decided to agree on the Job Bill. This Job Bill is expected to exempt businesses from paying the 6.2% payroll tax on newly hired employees who have been jobless for at least 60 days and offers a $1,000 tax credit to businesses who keep the newly hired workers employed for at least a full year. 

In addition, the bill provides an extra $19.5 billion, through subsidized state and local construction bonds, to shore up road and bridge construction and extend the federal highway program through the end of the year.  This extra funding could potentially lead to an increase in domestic demand for raw materials, such as steel, industrials and transportation services related to getting these materials to desired destinations.

Playing Emerging Market Growth Domestically

By Kevin Grewal

According to projections from the International Monetary Fund (IMF), China, India and Brazil are expected to be the economic growth leaders of the year and it is possible to reap the benefits of this international growth domestically.

Over the last year, the MSCI Emerging Markets Index has gained more than 65% and prices in emerging stock markets like China have followed.  In fact, China’s main stock market index trades at a price-to-earnings ratio of more than 30, nearly 50% higher than that of the S&P 500. 

In addition to being cheaper, domestic stocks that are likely to benefit from international growth tend to be less volatile, have less risk and are more liquid than those of emerging markets.  As these nations grow and develop, demand for energy, technology, and industrials will likely surge.