Run On Food Prices, Agriculture ETFs, Leads to a Tiff

The rising cost of food that has benefited agriculture exchange traded funds (ETFs) seems to have led to a squabble between India and the United States over who's to blame.

Indian politicians, economists and academics are upset that top U.S. officials have said India's growing prosperity is the reason for food inflation, reports Heather Timmons for the New York Times.

India countered that Americans should rethink their energy policy and go on a diet.

Zing!

One official said that if Americans slimmed down to the weight of middle-class Indians, many people in sub-Saharan Africa would find food on their plates.

India isn't the only country being blamed for the rising cost of food. China has been fingered as a source of greenhouse gases and rising commodity prices, as well. Many emerging markets that have seen a growing middle class in recent years are slowly adopting more Western diets (which is probably just a nicer way of saying "burgers, fries and milkshakes").

India has a point, though: the average American eats 3,770 calories a day. It's the highest caloric intake in the world. India consumes 2,440 a day per capita. It takes 3,500 calories to gain one pound.

The United States and Canada also lead the world in oil consumption per person.

Whatever side you find yourself on, you can at least capitalize on the growing demand by taking a look at some agriculture ETFs and exchange traded notes (ETNs):

• PowerShares DB Commodity Index Tracking Fund (DBC), up 26.5% year-to-date
• PowerShares DB Agriculture (DBA), up 12.7% year-to-date
• Market Vectors Global Agribusiness (MOO), up 7.6% year-to-date
• BS E-TRACS CMCI Agriculture (UAG), launched on April 4

China Plans To Launch Planes of Their Own, Denting Aerospace Stocks And ETFs

The newly-created Commercial Aircraft Corp. of China is planning to assemble jets on their home turf in an attempt to lessen the nation's dependency on Western-made planes - might the move put a dent in the aerospace and defense exchange traded fund (ETF) if it takes flight?

So far, China's track record building planes hasn't gotten any air. The first Chinese-made jet, the Shanghai Y-10, was retired five years after its launch because local airlines refused to purchase it, reports  Chi-Chu Tschang for BusinessWeek. They preferred the more fuel-efficient Boeing (BA) and McDonnell Douglas jets instead.

Twenty years later, China is giving it another go; this time around the demand is stronger with more customers flying than ever, and the country is more motivated to keep profits in their homeland.

PowerShares Aerospace and Defense (PPA) has 7.1% in Boeing and is down 5.8% year-to-date. If the Chinese can get their plan off the ground, could it wind up in the fund?

Will China's Inflation Halt Bull Run of ETFs?

China wasn't just rattled by a major quake today: inflation is also shaking up the country and its exchange traded funds (ETFs).

Trade in the shares of 45 listed Chinese companies will be suspended tomorrow. They're in the Sichuan province, where the earthquake that has killed thousands hit, reports Scott Tong for Marketplace.

Within hours of the quake, the central bank also announced steps to tighten liquidity in the banking system, and numbers continue to show that inflation is near a 12-year high. Consumer prices in April shot up 8.5% in April over last year. The Chinese currency is up 15% against the U.S. dollar.

There's a new exchange traded note (ETN) on the market for investors looking to hedge the dollar if the Chinese Renminbi continues to rise in value: Market Vectors Chinese Renminbi (CNY).

Many economists believe that the days of low-cost goods coming out of China are coming to a close as China passes on the rising cost of material and energy.

China's ETFs were down slightly in trading today.

• iShares FTSE/Xinhua China 25 Index (FXI), down 10.9% year-to-date
• SPDR S&P China (GXC), down 12.6% year-to-date

For full disclosure, some of Tom Lydon's clients own shares of FXI.

BRIC ETFs Were Anything But In April

BRIC exchange traded funds (ETFs) showed themselves to be solid in April. Investor interest and enthusiasm for the funds has peaked over the past several years, with outstanding sector-leading performances in 2007.

Richard Widows for The Street researched the BRIC ETFs for the month of April, some of which posted impressive performance numbers.

SPDR S&P China (GXC) was up 17.97% in April, and was the top performer for the month. iShares FTSE/Xinhua China 25 Index (FXI) advanced 17.5% with a net $6 billion in assets.

Brazil fared well with a pair of ETFs: iShares MSCI Brazil Index (EWZ)  up 17.3% and HOLDRs TeleBras (TBH) up 14.2% in April.

First Trust ISE Chindia (FNI) was up 16.6%, as a blend of China and India, and Claymore/BNY BRIC (EEB) was up 11.1%. An honorable mention was given to iPath MSCI India Index (INP), as the ETN gives a hard-to-access passage to India. The fund rose 7.1% in April.

There's still more BRIC exposure to be had, though, both in single-country and broad-based form.

• Market Vectors Russia (RSX), up 3% in April
• SPDR S&P BRIC 40 (BIK), up 9.7% in April
• iShares MSCI BRIC Index (BKF), up 9.8% in April

For full disclosure, Tom Lydon's clients own shares of INP.

Steel ETF Is Getting Hot to the Touch

Describing something as "steely" is usually a synonym for "coldness," but not when it comes to the steel exchange traded fund (ETF).

Market Vectors Steel (SLX), which launched in October 2006, is at record highs thanks primarily to booming global demand for the metal. Year-to-date, it's up 19.6%.

In the Middle East, the steel industry is said to be undergoing a transformation. It currently accounts for only 2% of the global steel trade, AME Info reports. In 2006, the region produced 21.1 million tons of raw steel and consumed 41.6 million tons of finished goods. Those numbers are respectively forecast to rise to 35 million and 60 million tons by 2010.

In China, the number of steel factories has doubled in the last few years. Even on our home turf, steel demand is up about 30% ahead of its supply.

Think You're Diversified Enough With ETFs?

How diversified is your exchange traded fund (ETF) portfolio? No matter how well you think you have your bases covered, every portfolio is vulnerable to something, cautions Roger Nusbaum for The Street.

Many investors who invest in broad-based ETFs or actively managed mutual funds end up too heavy in the financials. Individual stocks and sector funds also tend to have the same problems. An example of the correlation between two broad-based funds can be seen in two market segments that tout increased growth and unstoppable demand.

iShares S&P Global Materials Index Fund (MXI) and the BLDRs Emerging Market 50 ADR Index (ADRE) have a tight correlation, especially in times of stressful corrections. The increased demand for natural resources in places like China and India have also triggered demand from countries with the natural resources like Brazil and Chile, according to Nusbaum.

The infrastructure buildup is still in its infancy, and needs more time and dollars to take off. Right now China is off its peak 40%, so think about what this could do for related sectors, ETFs and countries. Think about the China decline, and how easy emerging markets, and materials could go down, too. Also, remind yourself of the true total exposure to these sectors and how a decline would affect your portfolio.

The time to come up with your exit strategy is now. It's wise to know your plan and stick to it, regardless of emotion. When a fund drops below its 200-day moving average or 8% off its high, sell it. Once you begin rationalizing your movies or hoping for a turnaround is when you get into trouble.

Does The China ETF Rally Signal Things To Come?

So far in 2008, it seemed as though China and its related exchange traded funds (ETFs) were yesterday's news.

After all, the iShares FTSE Xinhua/China 25 Index (FXI) is down 7% this year, while the SPDR S&P China (GXC) is down 9.6%. 

But with a recent burst of activity that began last week, many investors are wondering if China's recent corporate gains are going to start growing again. Since April 21, FXI is up 6.3%, while GXC is up 7.2%.

Since Dec. 31, the Shanghai index has corrected 45%, says Joanne Von Alroth for Investor's Business Daily.

China's economy is enjoying a multi-year boom with huge economic growth. Some thought the good times would continue this year as the country plays host to the Beijing Summer Olympics.

But political unrest over China's actions in Tibet, inflation, bad weather and China's poor environmental record threw the ETFs into reverse.

Chinese government officials refuse to accept a slowdown for long. Officials cut the stamp tax rate - tax on the purchase or sale of stocks - from 0.3% to 0.1%. Institutional investors buying or selling 100,000 or more shares are now required to do it privately to reduce volume moves.

These moves kicked off the rally that has lasted into this week. Whether it will stick is open to debate, but if China begins to head lower, have your exit strategy in place.

For full disclosure, Tom Lydon's clients own shares of FXI.

ETF Holdings' Fundamentals Go Under the Microscope

Michael Krause has ESP for ETFs (exchange traded funds).

Instead of using a crystal ball, though, the president of AltaVista Independent Research looks at the fundamentals of every one of an ETF's constituents.

BRIC ETFs Have Many Access Points for Investors

A reader wrote in recently wanting to know more about BRIC and the related exchange traded funds (ETFs). We're here to help!

BRIC stands for four of the fastest-growing emerging markets out here: Brazil, Russia, India and China. In 2007, these countries delivered some of the biggest returns of any ETFs or exchange traded notes (ETNs) around. So far for 2008, BRIC ETFs and some of the single country funds have been fairly quiet.

But make no mistake: these countries are still growing, and could have plenty to offer down the line.

Foreign Currency ETF Offerings to Pour In Next Month

Exchange traded fund (ETF) providers Dreyfus and WisdomTree are teaming up to offer five actively managed foreign currency ETFs next month.

They will include the WisdomTree Dreyfus Euro Fund, Japanese Yen Fund, Indian Rupee Fund, Chinese Yuan Fund and the Brazilian Real Fund. These will be the first of 12 to be launched under the WisdomTree Dreyfus banner. Two others include two U.S. current income funds, reports Mariana Lemann for Ignites.

Later this year, more funds will launch and cover the Australian dollar, British Pound sterling, Canadian dollar, New Zealand dollar, South African rand and South Korean won. Several of these funds will be a first in currency ETFs.

When they launch, they'll join a growing lineup of both currency ETFs and exchange traded notes (ETNs), including:

• CurrencyShares Euro Trust (FXE)
• CurrencyShares Japanese Yen Trust (FXY)
• Market Vectors Indian Rupee (INR)
• Market Vectors Chinese Renminbi (CNY)
• PowerShares DB G10 Currency Harvest (DBV)

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Gold ETFs Are the Squeaky Wheels, But Other Metals Might Deserve Some Grease

Gold and its exchange traded funds (ETFs) are real attention hogs. Sure, the metal is pretty to look at. It's shiny. But it's also being outperformed by other decidedly less sexy metals.

streetTRACKS Gold Trust (GLD) and iShares COMEX Gold (IAU) are not too shabby: they're up year-to-date by 6.3% and 5.7%, respectively.

That's all well and good, but consider:

• Market Vectors Steel (SLX) is up 14% year-to-date
• iShares Silver Trust (SLV) is up 12.7% year-to-date
• PowerShares DB Base Metals (DBB) is up 17.2% year-to-date

So, why does gold get the lion's share of the headlines, even as it's retreated from record prices? It dipped below $900 on Thursday, falling almost 15% off those records, reports Atul Prakash for Reuters. The metal rose slightly today but it's expected that more downward pressure lies ahead, as some concerns about the credit crisis have eased.

Growth in emerging markets is fueling much of the demand for steel and other metals with industrial applications, such as silver and copper (futures for which are held in DBB, along with aluminum and zinc).

Yesterday, we noted that China has doubled its number of steel factories in the last few years. Silver is scarce, as well, with dealers paying a premium over the spot price. A strike at a Chilean copper mine run by the world's largest copper producer also raised concern that prices will increase as supplies fall, reports Claudia Carpenter for Bloomberg.

For full disclosure, some of Tom Lydon's clients own shares of GLD.

Rationing Leads to Hoarding of Rice and Possibly ETFs, Too

The commodities craze spread to exchange traded funds (ETFs) awhile ago - now it's reached Sam's Club.

A worldwide rice shortage has led the warehouse unit of Wal-Mart (WMT) to start rationing some types of it, reports Cotten Timberlake for Bloomberg. Where allowed by law, customers are going to be restricted to four bags a visit.

Shrinking supply and rising prices have led to hoarding. Rice is a food staple for half the world, including in China, Vietnam, India and Egypt, countries that have also started restricting sales. Thailand is also considering restricting shipments.

Some of Costco's (COST) stores are putting limits on sales of flour, in addition to those of rice.

The good news is that both stores have extensive distribution systems, enabling them to redistribute supplies.

The rice shortage is just the latest in a long line of commodities that have become more scarce and expensive recently. Rice futures have risen 26% this month. Wheat, corn and soybeans are also at record prices, which has led to riots in Haiti and Egypt.

A spokesman for the USA Rice Federation says the rice shortage should ease up with the June harvest, and may be resolved by the end of 2009.

But if you were mulling a low-carb diet, now might be the time.

Agriculture ETFs are becoming a popular way to hedge those rising prices. Some of them include:

• MLCX Grains Index ETN (GRU): The fund has 46.7% wheat, 35.4% corn, 10.1% soy meal and 7.9% soybeans.  
• Market Vectors Global Agribusiness (MOO): Tracks an index of global companies primarily engaged in agriculture.
• PowerShares DB Agriculture (DBA): Tracks corn, wheat, soybean and sugar futures.
• iPath Dow Jones Agriculture (JJA): Composed of seven futures contracts, including wheat, cotton, soybean oil, coffee and sugar.

Deutsche Bank also issued a line of long/short agriculture exchange traded notes (ETNs) last week:

• DB Agriculture Double Short (AGA)
• DB Agriculture Double Long (DAG)
• DB Agriculture Short (ADZ)
• DB Agriculture Long (AGF)

Oil Prices May Get Worse; Steel and Natural Gas ETFs Are Keeping Pace

The price of oil has slipped some over the last few days, but it's projected to soar even higher - what will it mean for its exchange traded funds (ETFs)?

The reports on fuel got more dismal this morning, as many wonder just how much worse it's going to get. According to an energy report from the Canadian Imperial Bank of Commerce today, oil could hit $225 a barrel by 2012.

Cars are blamed for the continually rising prices: 90% of the demand growth in the last few years has gone to transportation. Car sales globally soared last year, growing 60% in Russia, 30% in Brazil, 20% in China. Sales were flat in Europe and dropped in the United States.

Meanwhile, the oil ETF isn't the only one performing. Steel and natural gas are nothing to turn up one's nose at, either. Gary Gordon for ETF Expert reports that funds for both of the commodities have at least kept pace with United States Oil (USO), if not leaving it in the dust.

In the last month, USO is up 18.6%. Year-to-date, it's up 25.6%. Not too shabby.

United States Natural Gas (UNG) is blowing right past oil, though: it's up 20% in the last month, and 45.2% year-to-date. Market Vectors Steel (SLX) is keeping up: it's up 17.9% in the last month and 17.6% year-to-date.

The question on everyone's minds is whether the U.S. slowdown will eventually catch up to the global markets and put the brakes on demand for these commodities. Gordon says it's possible for some commodities, but he doesn't see steel demand slowing. In China, the number of steel factories has doubled in the last five years.

Global demand for natural gas is also high, but the supplies are plentiful. That begs the question: why has the price been rising? It all traces back to the price of crude oil; it's so expensive that natural gas is one of the alternatives under consideration. It's the cleanest burning carbon-based fuel (unlike coal), and cars powered by natural gas are getting attention from major car makers such as Honda.

Do you find it daunting to focus on a single commodity? Another option is picking a fund diversified over several commodities, such as the Dow Jones Total Commodity Index ETN (DJP) or the iShares S&P GSCI Commodity-Indexed Trust (GSG), which is allocated about 67% in energy, 16% in agriculture, 7% in industrial metals, 7% in livestock, and 3% in precious metals.

Government Tax Cuts on Stocks Make China ETFs Soar

China's exchange traded funds (ETFs) are making a big rally today after the government lowered taxes on stock transactions.

The share-trading stamp tax was cut by the government from 0.1% from 0.3%, reports John Spence for Market Watch. The move is viewed as an effort to give the Chinese stock market a shot in the arm. After the cut was made, some of the Chinese ETFs shot up by as much as 6.8% midday.

China's exchange traded funds (ETFs) have had a rocky year, but could the economy have turned a corner?

Tony Sagami for Money and Markets reports that the country's gross domestic product for 2007 rose 11.9%, ahead of the 11.4% projections. It's the fastest growth in 13 years.

China definitely has some political and social obstacles to overcome: its poor environmental and human rights records, the PR disaster of the Beijing Olympic Games and riots in Tibet. But Sagami says that when it comes to the Chinese economy, things are looking up.

Retail sales rose by 20.2% in the first two months of this year. There has also been a 33.8% increase in auto sales, and demand for luxury vehicles is expected to grow between 40%-45% this year. The trade surplus grew by $41 billion in the first quarter, as well, so China isn't hurting from any U.S. slowdown yet.

Foreign investment seems to be pouring into China, as well: in the first quarter, it increased 61.3%.

Retail sales are up, foreign investment is flowing, and the Chinese trade surplus seems to be unaffected by a U.S. economic slowdown. China is actually the second largest economy when measured by purchasing power.

Sagami suggests that buying China on the dips can be a profitable move for an investor to make. We would wait until this fund crosses above its trend line (200-day moving average) before diving in.

It's been a rough few months for these funds. Will the tax rate cut help sustain today's momentum?

• iShares FTSE/Xinhua China 25 Index (FXI), down 12.9% year-to-date
• PowerShares Golden Dragon Halter USX China (PGJ), down 20.2% year-to-date
• SPDR S&P China (GXC), down 15.5% year-to-date

Could Spreading Wealth Make China's ETFs Go 'Vroom'?

Could China's economy and exchange traded funds (ETFs) be faltering like some think? Perhaps not. One sign: sport utility vehicle sales are taking off.

Two of the fastest growing segments in the Chinese market, in fact, are luxury cars and SUVs, reports GM China's vice president for sales and marketing. Analysts are expecting auto sales growth between 15% and 20% this year, reports Joe Mcdonald for the Associated Press.

Demand for the behemoths of the road and luxury vehicles is expected to grow by 40%-45%. China's economic growth has topped 10% for five consecutive years, and a spike in real estate and stock prices has created some freshly minted billionaires looking to spend.

The Chinese don't have to worry about the price of gas, either: pump prices have been frozen, and they're among the world's lowest.

While wealth is spreading in China, the country needs to remain vigilant about inflation, Reuters reports. Prices for food and other products are rising, and consumer inflation is running near 12-year highs. Food prices alone rose 21.4% from January to March this year.

China's ETFs have lost much of their huge gains from 2007. A turnaround for this country is eagerly awaited.

• iShares FTSE/Xinhua China 25 Index (FXI), down 13.7% year-to-date
• PowerShares Golden Dragon Halter USX China (PGJ), down 22.1% year-to-date
• SPDR S&P China (GXC), down 16.7% year-to-date

The Asian Tiger ETFs Aren't Roaring As Loud

Many Asian-country focused exchange traded funds (ETFs) are giving back their 2007 gains. Are the Asian tigers of 2007 going to become the sleeping tigers of 2008?

A standout such as iShares MSCI Singapore (EWS) has given back much of  2007 gains all during the first quarter of 2008, says Gary Gordon for ETFExpert.

iShares Xinhua China 25 Index (FXI) finished 35% off its highs last Friday, giving back 50% of its 2008 gains, within 14 days, and Gordon reminds us that a 35% loss requires a 50% gain to get back to your starting gate.

One tiger remains standing, however: The iShares MSCI Taiwan Index (EWT) is still up 14% over the same time period. It's quite a turnaround for the fund. In 2007, it gained only 3.8%. So far this year, it's up 11.5%, leaving other Asian countries in the dust.

If you believe that the Asian markets are merely in a slump and will eventually make a turnaround, Gordon suggests getting a little more diversification across Asia with funds such as iShares S&P Asia 50 Index (AIA), which invests in the top 50 companies from the leading tigers: Taiwan, Singapore, South Korea and Hong Kong. Taiwan is the only single Asian country outperforming the fund at the moment, which is down 6.2% year-to-date.

Another diversified fund is the BLDRS Asia 50 ADR Index (ADRA), which is down 9.3% year-to-date.

For full disclosure, Tom Lydon's clients own shares of EWS.

If Investment Remains Solid, Infrastructure ETFs Could Gather Strength

An exchange traded fund (ETF) can be a better proxy for a sector than a single stock. It takes the guesswork right out of investing.

Diversification is another element that is added when using ETFs instead of a single stock within a portfolio. An example is the GE (GE) stock that missed its numbers by a long shot late last week. While media has been a weak performer so far this year - PowerShares Dynamic Media (PBS) is down 10.4% year-to-date - and the financials are tough, there could be other reasons to own GE. The company, after all, wears many hats.

How about infrastructure?, asks Roger Nusbaum for Seeking Alpha. The infrastructure sector can cover a wide range of things, including roads, airports, utilities, information technology and other channels of communication. Breakdowns in some of these areas can lead to major disruptions in a country, as seen when China experienced a record snowfall this winter.

Globally, billion upon billions will be spent on infrastructure over the next decade or two. It is reasonable to assume that stocks in this sector will do well, wait until these funds move back above their trend lines before diving in. Countries and regions such as South Africa, Latin America and China are making infrastructure improvements a particular focus in the coming years.

Build up your portfolio's inner strength with:

• iShares S&P Global Infrastructure Index (IGF), year-to-date down 10.1%
• SPDR FTSE/Macquarie Global Infrastructure 100 (GII), year-to-date down 5.8%

Telecommunications ETFs on Line One

Few sectors have taken as much of a beating as telecommunications and its related exchange traded funds (ETFs). But is a turnaround in the offing?

Some analysts seem to think so. One for Citigroup upgraded telecom to "overweight," since analysts appear to be done slashing their estimates.

Telecoms have a history of underperforming the markets, reports Dan Burrows for Smart Money. If we are, in fact, at the bottom, says one analyst, telecom could be poised to outperform.

Global telecommunications is undergoing a transformation. India is the fourth largest telecom market in Asia, after China, Japan and South Korea, reports the Centre for Telecom Policy Studies. The quality of service is improving, as well as the overall accessibility.

Telecom ETFs that might be worth a look:

• iShares Dow Jones US Telecom (IYZ), down 19.2% year-to-date
• iShares S&P Global Telecommunications (IXP), down 10.5% year-to-date
• Vanguard Telecom Services (VOX), down 17.1% year-to-date

iShares Seeks to Continue Its World Travel With New ETFs In Registration

Two weeks ago, iShares launched more single-country exchange traded funds (ETFs), but they're not done traveling around the world just yet.

According to Matt Hougan for Index Universe, the provider filed with the Securities and Exchange Commission (SEC) for yet more funds, including:

• iShares MSCI Emerging Markets Eastern Europe
• iShares MSCI All Country Asia ex-Japan
• iShares FTSE China (HK Listed)

The Eastern Europe fund will join the similar SPDR Emerging Europe (GUR) as funds for the region. iShares already has one China fund, the FTSE/Xinhua China 25 (FXI). The new fund will be broader, with about 80 components.

Meanwhile, Claymore has filed with the SEC to create an ETF tracking frontier markets. There is no frontier market ETF available on U.S. exchanges at the moment, but Europe recently launched some, so the heat is on. The Claymore/BNY Frontier Select DR Index Fund would track an index with 26 companies from a universe of 40 frontier markets.

Such a fund would allow investors to access the farthest corners of the world, such as Vietnam and Cambodia.

China's Inflation Creates More Opportunity For Other Emerging Market ETFs

China is facing an inflationary trend, and exchange traded funds (ETFs) from competing countries might be able to gain an edge against one of their biggest competitors. Thus far, Chinese growth has relied upon low prices with high top-line sales growth. Low-cost Chinese imports allowed a way to keep inflation at bay.

Carl Delfed for Forbes says the deflationary impact of China on world markets is now becoming an inflationary red flag with implications for global investors. Wages have begun an upward climb, energy is expensive and food prices and demand are exploding. The Chinese Consumer Price Index (CPI) was up 8.7% in just one year.

Delfeld recommends a lean toward countries that are net exporters of commodities instead of net importers like China. iShares MSCI Brazil (EWZ) or the iShares MSCI Hong Kong (EWH) present better opportunities than the iShares FTSE/Xinhua China 25 Index (FXI) ETF.

China's inflationary pressures will create opportunities for other emerging market countries to pick up the slack, such as India. India has two ETFs right now: the PowerShares India (PIN) and Wisdom Tree India Earnings (EPI).

This is an ever-evolving situation, so keep an eye on it. Once these areas head above their trend lines, they could be worth a look.

Commodities and Short ETFs Tell the First-Quarter Tale

The challenging first quarter has come to a close, and by taking a look at the top performing exchange traded funds (ETFs) for the period, one can get a sense of what the story was. Short ETFs and commodities were the strongest performers, signaling that the markets were tough for investors and they turned to shorts to capitalize, or commodities to hedge rising costs. Meanwhile, many investors shied away from stock ETFs as the market continued its attempt to right itself.

United States Natural Gas (UNG): It's up 33.8% year-to-date, no surprise given that the cost of energy has skyrocketed. It settled at $10.101 per 1,000 cubic feet. Natural gas isn't the same as gasoline used to power cars; it's used residentially, commercially and industrially to heat homes, heat boilers and generate electricity.

Energy is getting more expensive all across the board: the price of a barrel of oil and a gallon of gas hit all-time highs in the first quarter, and relief doesn't appear to be anywhere in sight. Gas prices are expected to continue to rise through the summer, and oil finished the quarter 5.8% higher than it was when it started, reports Adam Schreck for the Associated Press. The direction of oil in the coming months is a matter of debate: some think it will go up, others think it's on a bubble that's bound to burst.

iShares Silver Trust (SLV): Silver has stumbled in the last couple of weeks, but it was one of the brightest spots of the first quarter and is up 16.4% year-to-date. Its rise was part of a broader metals rally (gold was up 9.9%, and base metals were up 15.3%).

Silver benefits from its wide range of applications: it's a major component in developing film, it's an excellent conductor of heat and electricity. It's used in batteries, fuses and contacts. It's a water purifier, and it's used in plenty of jewelry. As the developing world continues to build and grow, demand for silver should continue as it has been.

There's not a lot of silver lying around: the price of it bottomed out in 1980, and much of the existing stockpile was melted down and mining for more slowed.

UltraShort QQQ ProShares (QID): The Nasdaq fell 14.6% in the first quarter, so this fund doubled the inverse and ended up 31.6%. The "UltraShort" in the name means this fund is designed to do twice the opposite of whatever its underlying index does.

Bear market funds were especially popular the first three months of this year, as the markets proved to be finicky and volatile - up high one day, down low the next. For investors with the stomach for the risk, funds like QID kept the returns coming in. At least, as long as the index it was designed to track kept heading south. The potential for gains in these kinds of funds are as great as the potential for losses, and they should be used with caution.

UltraShort FTSE/Xinhua China 25 ProShares (FXP): China was last year's darling, finishing up 2007 up by about 55%. In the first quarter of 2008, it has stumbled. The iShares FTSE/Xinhua China 25 (FXI) is down 20.6% year-to-date, sending the UltraShort fund up 21.6%.

Many believe that China still has room to grow and that it will pick up steam, albeit at a slower pace, this year. One portfolio manager predicts 10% growth in 2008, despite the slowdown. China is sinking money into improving its infrastructure under a five-year plan that's currently in its third year.

The trade surplus in China is set to grow by 22.2% in 2008 while the country's dependence on exports shrinks. Capital investment is rising, as well.

With Olympics Looming, China and ETFs Are Under the Microscope

China and its exchange traded funds (ETFs) have been getting a lot of attention as it has grown over the last few years. But now, with the summer Olympics looming large, the country could be the subject of even more scrutiny.

Growth in the country is undeniable. Last year, the gross domestic product increased 11%, reports Andrew Leckey for the Chicago Tribune. The streets are clogged with late-model cars and the noise of construction is inescapable.

But aside from booming growth, China has another, less positive, reputation: it's known as one of the world's worst polluters, it has a poor human rights record and freedom of speech isn't a right enjoyed by many.

As China tries to make changes to its economy, many there fear that they're going to get dragged down the with United States. The iShares FTSE/Xinhua China 25 (FXI) is down 19.8% this year, compared to being up 53.3% last year. The Golden Dragon USX China (PGJ) is down 25.8% year-to-date; last year, it ended up 62.8%.

Many believe a turnaround is inevitable, though. One portfolio manager expects growth of 10% in 2008. China is also sinking money into improving its infrastructure, including some facilities that are environmental-related, under its five-year plan, currently in its third year.

Barclays Throws Hat Into Foreign Currency ETN Ring

Barclays Global Investors is set to roll out three new exchange traded notes (ETNs) that will track currencies in Asia, the Middle East and emerging markets. The ETNs have already acquired $150 million during the month ahead of their launch.

Jesse Emspak for Investor's Business Daily says the new ETNs are:

• Asian and Gulf Revaluation: This tracks an index Middle Eastern and Asian currencies tied to the U.S. dollar. Included are the yuan, Hong Kong dollar, Saudi Arabian riyal, Singapore dollar, and United Arab Emirates dirham.
• Global Emerging Markets Strategy: Tracks 15 emerging markets countries' currencies, including Asia, Latin America and Eastern Europe, through money markets.
• Intelligent Carry Index ETN: Follows the 10 most liquid currencies in the world, designed to give market-neutral returns.

These ETNs are just in time to join two other currency ETNs that have recently launched: Market Vectors Indian Rupee (INR) and Market Vectors Chinese Renminbi (CNY). CurrencyShares by Rydex was the first to cover currency through exchange traded products.

Bear in mind, the IRS has done away with the tax breaks on foreign currency ETNs. A ruling on other types of ETNs is awaited sometime this year.

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Chinese ETFs - Yin Yang For The Market

The China bubble is continuing to correct itself if its exchange traded funds (ETFs) are any indication. With the Olympics just around the corner, many felt that the growing country's performance would stay solid through the summer.

But the iShares FTSE/Xinhua China 25 Index (FXI) is down 25.7% year-to-date, the PowerShares Golden Dragon Halter USX China (PGJ) is down 31.9% year-to date and the SPDR S&P China (GXC) is down 29.3% this year.

The Tibetan Youth Congress is seeking independence from China, reports Peter Wonacott for the Wall Street Journal, which has given rise to protests throughout the region. They've staged a march to Tibet, supported hunger strikes and are now calling for an Olympics boycott.

On the flip side, the ProShares Ultrashort FTSE/Xinhua China 25 Index (FXP)  reached a new high on Thursday before retreating on Friday.

In the short term, no bottom for the market is in sight, if past indicators are to be believed. In the short term, the China funds may show rallies, but wait until they officially head back above their trend lines.

Coal Has a Smudged Reputation, But Can KOL ETF Rise Above It?

Coal is hardly glamorous - it's got a bad reputation as a dirty pollutant, but it can be a smoking bet in an exchange traded fund (ETF).

Gold is taking the limelight at the moment, but Steve Halpern for Blogging Stocks notes that investing expert Nick Vardy is making his bet on coal. Market Vectors Coal ETF (KOL) launched earlier this year and though it's had a lot of ups and downs, the demand for coal around the world is undeniable.

Coal supplies 25% of the world's energy and generates 40% of the world's electricity. Coal also plays a key role in steel production. South Africa, China and Eastern European countries are in developing mode and will continue to demand coal to fuel their growth.

Richard Gibbs, head of the economics unit at Australia's Macquarie Bank, expects the price of thermal coal (used for heating and power) to rise more than 50% in the next year. He expects metallurgical coal (used in steel manufacturing) to hit $150 per metric ton this year.

New ETNs Track Chinese and Indian Currency

Two new exchange traded notes (ETNs) will give access to the Chinese and Indian currency, the first of their kind.

The funds, Market Vectors Indian Rupee (INR) and Market Vectors Chinese Renminbi (CNY), are issued by Morgan Stanley, reports Business Wire.

Both funds track the performance of rolling investments in short-term forward contracts for their respective currencies.

Up until now, the main path for investors who wanted currency exposure was through Rydex's line of CurrencyShares. The advent of these new ETNs are adding to the convenience of currency investing.

Read the disclosure, as Tom Lydon is a board member of Rydex funds.

Presidential Elections in Taiwan Could Lift ETF and Economy

Changes are afoot in Taiwan that could impact its exchange traded fund (ETF) in a postive way.

A presidential election is going to take place on March 22, and the odds-on favorite to win is Ying-jeou Ma, a candidate from the pro-business and less China-averse political party, reports Michael Zhuang for Guru Focus.

China and Taiwan's relationship has been tense. China wants to reconcile on its own terms, while Taiwan is divided over whether to stay separated or leave the door open to patch things up.

The outgoing president favored total separation, and the government has been blamed for hampering economic interactions with China and causing the Taiwanese economy to suffer while China was growing by leaps and bounds.

Now that a new leadership is going to come in, investors are liking the looks of Taiwan a little more these days, says Andrew Batson for the Wall Street Journal. In February, the iShares MSCI Taiwan (EWT) went up 10.4%. Its currency has been rising in value, as well, and is seen as evidence that more money is coming into the country.

Better days could lie ahead for this country if they play their cards right.

For disclosure, some of Tom Lydon's clients own shares of EWT.

China's ETFs Take a Hit After CPI Numbers Released

China's rising inflation is waving a red flag at the country's exchange traded funds (ETFs).

Wages have been running high, energy prices are high, and food costs and demand are exploding. Sounds a lot like the United States.

Carl Delfeld for ETF Folio adds that fresh evidence of inflation has emerged from China's National Bureau of Statistics: from 6.5% to 7.1% last December.

The Chinese stock market was jittery about Tuesday's Chinese February Consumer Price Index report, and with good reason: when it finally came out, the numbers were even worse than expected. It was up 8.7% year over year in February, its biggest gain since May 1996. The forecasts were for a 7.9% increase.

The iShares FTSE/Xinhua China 25 Index (FXI), PowerShares Golden Dragon Halter USX China (PGJ) and SPDR S&P China (GXC) were all down in intraday trading.

Even In These Markets, You Can Still Find ETF Movers and Shakers

Yesterday, the markets delivered outstanding performance and some exchange traded funds (ETFs) finished up in the double digits.

But one good day doesn't mean we're out of the slump yet. It's still time to take a defensive stance with your portfolio and make sure you've got that exit strategy firmly in place. But while it seems as though everything is in a downward spiral, but there are still some buying opportunities, believe it or not.

At our asset management firm, we track a list of about 100 ETFs and review it daily to see how things are performing and if there are any trends emerging. Of particular interest to us is which funds are above their 200-day moving averages. We never buy something sitting below that line.

Once we own an ETF, we keep an eye on it to make sure it's still above that line and continuing to perform. Once it dips below the trend line or falls 8% off its high, we sell. No ifs, ands or buts. A sell strategy from which emotions are entirely removed is the only kind that will benefit any investor.

It can be hard to let go of a little mover and shaker you've always had that soft spot for, but if you want to protect your money, you have to. It's like your parents always said when they were grounding you every other week: "This hurts me more than it hurts you." But sometimes it has to be done for everyone's good.

There are no guarantees that when you let a fund go, it's not going to turn around and deliver the numbers again. But that doesn't mean it won't, either. It's exactly why you have to remain as stoic as possible and stick to the plan and rationalize nothing.

There are a number of ETFs sitting well above their trend lines. Take a look at them, keep an eye on them and if they fit into your overall portfolio and are moving in an overall upward direction, they could be well worth considering:

• iShares MSCI Taiwan Index (EWT), 6.2% above
• Claymore/BNY BRIC (EEB), 5.9% above
• iShares S&P Latin America 40 Index (ILF), 10.1% above
• iShares MSCI Brazil Index (EWZ), 13.7% above
• Market Vectors Russia (RSX), 8.1% above
• iShares S&P GSSI Natural Resources (IGE), 6.8% above
• PowerShares DB Commodity Index Tracking Fund (DBC), 27.7% above
• iShares S&P GSCI Commodity-Indexed Trust (GSG), 23.9% above
• United States Oil Fund (USO), 28.3% above
• iShares Dow Jones US Oil & Gas Exploration Index (IEO), 14.4% above
• Energy Select Sector SPDR (XLE), 6.7% above
• iShares Dow Jones US Energy (IYE), 6% above
• Market Vectors Steel (SLX), 14.4% above
• iShares COMEX Gold Trust (IAU), 21.2% above
• streetTRACKS Gold Shares (GLD), 21.1% above
• Market Vectors Gold Miners (GDX), 16.5% above
• iShares Silver Trust (SLV), 30.3% above
• SPDR S&P Metals & Mining (XME), 11.5% above
• PowerShares DB Base Metals (DBB), 8.5% above
• PowerShares DB Agriculture (DBA), 30.8% above
• Market Vectors Global Agribusiness (MOO), 11.4% above
• CurrencyShares Euro Trust (FXE), 6.9% above
• CurrencyShares Swiss Franc Trust (FXF), 10.2% above
• CurrencyShares Japanese Yen Trust (FXY), 8.5% above

For full disclosure, some of Tom Lydon's clients own shares of EWT, IEO, DBB and DBA.
Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

There's Plenty of Blame to Go Around for Run-Up In Commodity ETFs

Since August 2007, the most commonly traded commodity-centric exchange traded funds (ETFs) are up about 50%. The spiking commodity prices are shouldering much of the blame for the inflationary threat to the economy.

But those price jumps can't be blamed on the supply factors, says Mike for HedgeFolios. That leaves demand, but the type of demand is up for debate. There's consumption demand taking place in China. It couldn't be entirely the result of natural demand - the prices are rising much more sharply than the natural demand.

Many politicians and investors point the finger at commodity traders for the run-up in prices. Hedge funds do not have the power to make prices rise so fast. The combination of monetary and fiscal policy of the U.S. government mixed with investment demand can be blamed, as the failure of the policies, too. If the Treasury and The Fed continues to devalue the dollar, the trend will continue.

The only way commodities will start dropping in value is if: the economy stabilizes, the dollar appreciates, the stock market bottoms out or the credit crisis clears. Until then, they are adding to the growing inflation problem.

Which ETFs Are On First Today?

After a big day for the markets, you can't help but wonder which exchange traded funds (ETFs) stood out head and shoulders above the rest.

If you scroll through ETF Screen's breakdown of fund performance, you'll see that most ETFs ended higher in trading today.

Coming out way ahead are:

• ProShares Ultra Short Financials (UYG), up 14.4%
• ProShares Ultra Real Estate (URE), up 12.6%
• ProShares Ultra Basic Materials (UYM), up 11.6%
• iShares FTSE NAREIT Mortgage REITs Index Fund (REM), up 10.7%
• Claymore/AlphaShares China Real Estate (TAO), up 10.3%
• iPath MSCI India ETN (INP), up 10.2%
• iShares FTSE-Xinhua China 25 Fund (FXI), up 9.6%

The Ultras didn't do anything special to come out on top today, but instead, they benefited from the big jump financial ETFs experienced today. They illustrate the potential to do that much better when the market is faring well - and today, they did.

ETFs and Your Wallet Feel Those Grocery Store Prices

 

Have you ever wondered what the drought in Australia has to do with your dinner table and your exchange traded funds (ETFs)?

In every aisle, prices at the grocery store are higher. From chicken (up 10% retail) and milk (up 20%) to eggs (up 30%) and tomatoes (up 25%), according to the Bureau of Labor s