Those who prefer investing with exchange traded funds (ETFs) may
have bountiful choices to pick from, as there are several areas worth
watching for the latter half of 2008. Can you believe we’re already
just about halfway through the year?
Billy Fisher for the Street sorts out the three to watch for 2008, Part Two:
1) The Federal Reserve has said it will keep interest rates stagnant
for now in an effort to keep the economy in recovery mode. But analysts
expect rising rates later in the year to help boost the value of the
U.S. dollar.
For today, the dollar finished lower after another round of weak U.S. economic data was released, report Myra P.Saefong and Nick Godt for MarketWatch.
An ETF to capitalize if the greenback turns it around? PowerShares DB US Dollar Index Bullish (UUP), which is down 3.7% year-to-date.
The dollar against the euro and the Japanese yen:
2) On the housing front, sales are still down, and inventory is
rising, all the while home prices continue to fall. For the first
quarter of this year, they were down 14.1%.
Lowered prices are causing buyers to come out of the woodwork, as
bargain hunters have sent home sales up 6.3% in April from March. In
bad news, housing starts fell to their 1991 lows, down 3.3% in May, Patrick Rucker for Reuters reports.
There have been mixed signals about the health of the sector across the
country: in the Northeast, for example, housing starts jumped 61.5%.
But starts in the Midwest were down 25%.
When the housing market is once again on solid footing, some of the funds investors can use to take part: SPDR S&P Homebuilders (XHB) and DJ Wilshire REIT (RWR). The funds are respectively down 9.4% and 2.2% year-to-date.
3) China may be full of surprises for the last part of 2008, as they are still a growing nation despite recent hiccups.
Deutsche Bank’s economist raised his 2008 and 2009 GDP forecasts to
0.7% and 0.4%, respectively. Moreover, the recent quake should deliver
a boost as reconstruction begins.
As for the Olympics, plenty of countries have suffered a post-Olympics hangover, but that’s not likely in China, say Alan Wheatley and Chris Buckley for Reuters.
That’s because Beijing accounts for just 3.7% of Chinese GDP, and
Olympics-related capital spending was only 1% of nationwide investment
from 2003-2007.
Funds to watch if China mounts a firm turnaround in the second half of this year: iShares FTSE/Xinhua China 25 (FXI) and SPDR S&P China (GXC), which are down 20.4% and 23.3% year-to-date, respectively.
