ETF Trends CEO Tom Lydon joined the CNBC ETF Edge panel on Wednesday along with Astoria Portfolio’s CIO and founder John Davi, CEO of Innovator Capital Management Bruce Bond, and CEO of ProcureAM Andrew Chanin to go over, among other things, ETFs such as the VanEck Vectors Semiconductors ETF (SMH) tracking semiconductors stocks, Japanese equities, and other global markets.
Lydon explained how investors are coming from all sides of the trade. A lot of bullish folks are attempting to get in on the upside. However, a lot of people are worried, based on news coming out of China. Apple (APPL), for example, downgraded what they believed their earnings may be.
Given all the shifts in volume, Lydon states how “It translates into uncertainty. You look at Japan, again, not good economic numbers and higher taxes in the last quarter for sure. Plus, the Olympics are coming up, and at one point in time, the Olympic committee is going to have to come forward and say if they are going to move forward anyway, based on the Coronavirus.”
Global Economic Linkage
Davi joins in the conversation here, noting how companies with a lot of economic linkage towards China are all down 6-8%. Meanwhile, places such as the U.S. and Europe have market indices down significantly less. However, it is important to watch single-name stocks that now have supply chains in China, because they’re going to start more guidance lower and hint to the earnings.
Also important is the focus on ESG and thematic type ETFs focusing on clean energy, water, and lithium, which all have volume currently. The Global X Lithium And Battery Tech ETF (LIT), for example, Davi notes, is up 20%, which is great for the electric car industry, with Tesla (TSLA) serving as the biggest weight. Some investors actually use LIT as a way to play to the Tesla story in an ETF diversified wrapper, as Davi also states.
As Pisani notes, there’s been enormous investor interest in Tesla. When asked if ETFs are a safe way to approach, Davi states how it is. He encourages investors to have a more globally diversified way to play thematics, as opposed to individual stocks.
“It’s a risk management issue. Putting all your eggs in Tesla vs. a diversified basket,” Davi adds.
Watch This Semiconductor Discussion Featuring Tom Lydon:
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