ETF Trends
ETF Trends

President-elect Barack Obama plans for a grand entrance into the Oval Office with an economic recovery effort that will touch upon many different sectors and exchange traded funds (ETFs).

Obama has directed his economic team to create a two-year stimulus plan that he hopes to sign into law soon after taking office on Jan. 20, reports Jackie Calmes and Jeff Zeleny for The New York Times.

There will be a tax cut for lower- and middle-class workers and Obama is reconsidering his proposal to repeal the Bush tax cuts for the wealthy. The wealthy can breath a sigh of relief, knowing tax hikes are counterproductive in a recession.

The proposal is said to be beyond the projected $175 billion last proposed in October, which included a $3,000 tax credit to employers for each new hire above their current work force and billions in aid to states and cities. The Democrats in Congress have called for a minimum contribution of $300 billion to goad the economy onward.

The stimulus plan has the ultimate goal of providing 2.5 million jobs. It will address the neglected public infrastructure projects such as roads and schools. Which may prove beneficial to infrastructure ETFs such as:

  • iShares S&P Global Infrastructure Index (IGF): down 48.1% year-to-date
  • SPDR FTSE/Macquarie Global Infra 100 (GII): down 37.8% year-to-date

The creation of “green jobs” could boost green sectors and their ETFs such as dimming solar energy, waning wind power, or other under appreciated green ETFs, which include:

  • Claymore/MAC Global Solar Energy (TAN): down 77.1% since its April 15 inception
  • Market Vectors Solar Energy ETF (KWT): down 75.3% since its April 23 inception
  • PowerShares WilderHill Clean Energy (PBW): down 76.2% year-to-date
  • Market Vectors Global Alternative Energy ETF (GEX): down 71.3% year-to-date
  • Market Vectors Environmental Services ETF (EVX): down 44% year-to-date

It is reassuring to know that most of the spending programs and tax cuts Obama has proposed will end up in the stimulus package. Only time will tell if it will work, but so far today, optimism appears to be spreading through the markets.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.