Welcome back to Wall Street run by Capitol Hill. For traders
and investors that are often frustrated by the intersection of
Capitol Hill and Wall Street, the last two weeks of 2012 could
offer up frustration in heaping doses.
Traditionally, this is a sluggish time of the year, but with
the fiscal still far from being resolved, volatility could rise
and quell any hopes for a Santa Claus rally in the process.
President Obama and House Speaker Boehner have been diligently
meeting, trying to find a solution for the fiscal cliff. Boehner
has shown some willingness to support tax increases...if those
increases apply to those earning more than $1 million year.
The White House wants taxes to rise for households with more
than $250,000 in annual income. That is to say the two sides are
still far apart and that it is hard to envision a cliff
resolution being reached anytime in the next day or two. With all
that in mind, here are some of the
that will be in play this week.
PowerShares QQQ (NASDAQ:
An obvious play to be sure, but even when the market is closed,
) has a find way of making headlines. That is relevant because
the iPad maker accounts for 16 percent of QQQ's weight. Over the
weekend, Apple was the subject of some positive and negative
headlines. Citigroup downgraded its rating on the stock to
Neutral from Buy and lowered its price target to $575 from
Then there was news that Apple sold more than 2 million
iPhone 5 units this weekend
in the smartphone's China debut. Which one of these headlines is
more important will be decided today. This much is clear, Apple
and by virtue, QQQ, need all the help they can get. The stock is
down more than 26 percent in the past 90 days.
ProShares UltraShort Yen (NYSE:
Currency traders, at least those that are short the yen, got the
result they were looking for out of Japan's elections. Shizno Abe
will again become the country's prime minister and his Liberal
Democratic Party took a large majority of the seats in Japan's
lower house of parliament.
Abe's campaign rhetoric regarding a weaker yen
puts the spotlight on YCS as a good short-term
. Just remember that Japan's upper house of parliament holds
elections in seven months so Abe must act fast to weaken the yen,
meaning YCS is a trade, not an investment.
SPDR Barclays High Yield Bond ETF (NYSE:
It seems the chorus singing about a junk bond bubble is growing a
bit louder with each passing week and there are some nascent
that there could be trouble ahead of JNK and
other junk bond ETFs
Then there has been incessant talk about outflows from JNK and
rival funds. That does not explain how
JNK had $11.8 billion in assets under management
and now has over $12.6 billion.
Heading into 2013, there are competing outlooks on
higher-yield bonds. On one hand, Citibank
say high-yield bonds as a group could return
seven percent next year
. On the other hand, FridsonVision notes the average junk bond
spread over Treasuries should measure 682 basis points, far above
its actual current level of 527 basis points,
What that says is investors are not being adequately
compensated for the risk of investing in the likes of JNK in the
first place. How long those investors are willing to deal with
that scenario will determine for how much longer JNK remains
For more on ETFs, click
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.