Wednesday, July 6, 2016

Elazar Expects Interest Rate Risk For Financials And Consumers

*We already see monetary tools tightening in the US.
*Consumer and financial stocks perform worse deeper into the economic cycle as rates rise.
*Expect market interest rates rising led by inflation and Fed monetary tools.
*Late cycle groups to underperform our bearish market call.
Consumer discretionary and financial stocks are extremely sensitive to market interest rate changes. That's why these groups tend to underperform later in an economic cycle when rates rise. Even though we don't expect growth we are starting to expect higher rates.
In this report we will take you through why we see rates moving up and how that has effected these companies and their stocks in past cycles.
We see the most risk in the related companies and the large ETFs that represent interest rate sensitive segments such as retail, auto, home and financials.
We put sell ratings on the following ETFs:
Consumer Discretionary Select (NYSEARCA:XLY)
S&P Homebuilders (NYSEARCA:XHB)
VanEck Vectors Retail (NYSEARCA:RTH)
Financial Select Sector (NYSEARCA:XLF)
First Trust Exchange (Auto Sector) (NASDAQ:CARZ)
S&P 500 (NYSEARCA:SPY)
There are many more companies and ETFs that have exposure to this thesis. The above list is some of the bigger more well known ETFs that represent the sectors well.
See Full Report



Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS

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