U.S. equities got the Christmas gift that may keep on giving heading into 2020 with a U.S.-China trade deal–at least a “phase one” deal–in place. The deal comes amid the backdrop of a strong economy and the Federal Reserve on a path that leans towards easing.
Combined with the markets essentially muting the effects from an impeachment of U.S. President Donald Trump by the House of Representatives, the market should keep rallying through to the new year.
“The market is going to go up into the end of the year,” said Alicia Levine, chief strategist at BNY Mellon Investment Management. “There’s not a lot of pressure for selling because so few people had losses.” This year, investors who sell could face large capital gains taxes. That contrasts sharply with this time last year, when the stock market was plummeting and reached a selling crescendo in the half day Christmas Eve session.
“You don’t have the pressure to get rid of losing positions this year. Sentiment’s gotten pretty bullish in the last few weeks,” she said. “Now that the market is bullish, there is a real concern, I think that we are borrowing some of next year’s returns.”
The major U.S. indexes are feeling the good vibrations in the markets with third-quarter earnings coming out better-than-expected for the most part and now, a U.S.-China trade deal that is close to finalizing. All this creates an opportunity for investors to capitalize on the Direxion FTSE Russell US Over International ETF (NYSEArca: RWUI).
RWUI features:
- Seeks investment results, before fees and expenses, that track the Russell 1000®/FTSE All-World ex-US 150/50 Net Spread Index (the “index”).
- The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in securities that comprise the Long Component of the index or shares of ETFs on the Long Component of the index.
- The index measures the performance of a portfolio that has 150% long exposure to the Russell 1000® Index (the “Long Component”) and 50% short exposure to the FTSE All-World ex-US Index (the “Short Component”).
Investors looking to play the other side can use the Direxion FTSE International Over US ETF (NYSEArca: RWIU) to capitalize on international equities will outdoing U.S. equities. RWIU seeks investment results, before fees and expenses, that track the FTSE All-World ex US/Russell 1000 150/50 Net Spread Index, which measures the performance of a portfolio that has 150 percent long exposure to the FTSE All-World ex US Index and 50 percent short exposure to the Russell 1000® Index.
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