In a recent speech, Federal Reserve Board Governor Janet Yellen stated that, "The scope remains to provide additional accommodation." Overly anxious markets are interpreting this to mean that a third round of quantitative easing -- a long-awaited QE3 -- is imminent.
In fact, a JP Morgan survey of fixed-income managers found that 80% expect a third round of Fed bond-buying in 2012. Still, it should not be forgotten is the fact that QE 2 did not commence until after the November 2010 elections and next year will be an election year of historic proportions.
The Federal Reserve attempts to remain above politics. Will it be able to do so next year?
Even with a nominally commodity-positive policy environment, the Santa rally had yet to produce more than a bag of coal for shipping stocks until recently. Guggenheim Shipping ( SEA , quote ), the exchange-traded fund for the industry, is up 7% so far this the week -- lagging the S&P 500 slightly despite what should be a slam dunk for the commodity-driven sector.
As detailed on www.emergingmoney.com in the article, " American Airlines and General Maritime Shipping bankruptcies create short opportunities for shipping, airlines, " this is an ideal chance to profit from the woes of the shipping industry.
For the year, the Guggenheim Shipping exchange-traded fund (SEA) is down over 45%. There is a short float of 8.84%. Shorting the ETF has proved preferable to shorting individual stocks as it has a higher price with many of its constituents in the low single digits.
The shipping stocks that are in double digits will probably survive, and the broad portfolio prevents losses from a merger or acquisition of an individual company.