Direxion managing director Sylvia Jablonski is regarded as a recognized expert in the ETF industry.
Since joining Direxion in 2009, Jablonski has led the company’s sales team while focusing on global product implementation within the institutional and tactical client segment as well as promoting ETF education and strategy throughout the financial industry.
Prior to joining Direxion, Sylvia held a Delta One Sales Trading role which included ETF Asset Manager, and Institutional and Hedge Fund coverage at Societe Generale.
Before Societe Generale, Sylvia had six years of financial markets experience at Deutsche Bank where she covered Hedge Fund, Asset Management, Institutional and ETF Managers as a Swaps Flow Sales Trader/Equity Derivative Product Specialist.
She’s a graduate of Boston College where she holds a B.S. in Finance, Management and a Minor in Spanish, and a graduate of Fordham University where she holds a Masters in Finance and an MBA in Economics and Strategy.
ETF Trends spoke to Jablonski about the markets, leveraged and inverse ETFs and the current focus and direction of Direxion, the second-largest issuer of inverse and leveraged ETFs.
Can you describe Direxion’s view of the current markets and what opportunities exist for investors and traders?
In the short and medium term we anticipate a trader’s environment. The U.K. vote to leave the European Union has added to uncertainty in the markets, leading to a return to higher volatility and another drop in bond yields in a flight to perceived safety. The Brexit aftermath is a drag on the process of global economic stabilization.
An expectation of monetary easing by the world’s central banks has pushed trillions of dollars of government bonds into negative-yield territory.
An overall more steady global economy contributed to a commodities bounce back during Q2, and most assets posted decent gains for the first half of 2016.
We maintain an expectation of elevated market volatility. This uncertain environment is a risky time to be complacent, and presents opportunities for tactical investors.
How are U.S. stocks reacting post-Brexit?
Investors and traders are realizing that the consequences of the Brexit will unfold over a two to four year perios. SoU.S. equity indices have recovered and finally broken through to new record highs. But investors are still skeptical.
The U.S. economy has been improving, albeit slowly. Earnings season has been better than expected, boosting U.S. stocks. After falling during the initial news of the Brexit, the fed funds futures market shows the chances of a Fed hike at some point this year have gone up again.
Improving expectations for earnings along with better-than-expected economic data has supported stocks even as negative geopolitical events persist.
The upturn in earnings forecasts is taking place across a number of sectors.
However, growth is still very slow. Without acceleration, earnings may remain stable but are unlikely to support a more powerful rebound.
What asset classes and sectors are currently hot for trading leveraged and/or inverse ETFs?
The lackluster U.S. economy and the speculation that the Fed will postpone another interest rate hike have contributed to a depreciating U.S. dollar. Consequently, a weaker dollar makes alternative assets like gold more attractive.
Mining stocks, which are a natural leveraged play on the metal, have been some of 2016’s best-performing securities. Their rapid rise has some market observers questioning whether near-term pullbacks are likely.
Throughout the entire first half of the year, we’ve seen increasing interest in our 3x leveraged and inverse Gold Miners and Jr Gold Miners ETFs.
As economic and geopolitical events ebb and flow, so do the bets on miners.
The surprise of the year may be the energy sector. Some of the large energy companies have experienced double digit returns, even in the face of continued low oil prices.
Oil prices have moved considerably in the past two years, from over $100/barrel, to below $30, before hovering around $50 currently. Prices seem to be in balance. The question is where do prices go from here?
As we’ve already experienced, there are lots of exogenous events that could greatly affect the price of oil quickly and severely.
Some investors think that the third quarter is historically bad for the energy sector, but others still think there’s gains to be had. It’s going to be an interesting market for traders as we head into the end of the year.
Are leveraged ETFs for everyone? What are the benefits and who should be considering them?
We’ve always maintained that leveraged ETFs aren’t for all types of investors.
The nuances of intraday movement in these ETFs and the impact of seeking daily objectives are phenomena of leveraged ETF trading that have to be understood. These funds reset their asset to index exposure ratio every day, so returns for periods of greater that one trading day will not necessarily align with cumulative returns of the benchmark index they track.