Brazilian Meltdown Puts Emerging Market Funds In Focus

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May 18, 2017 11:10am NYSE:EEM

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Analyst/ETF Trader Paul Weisbruch of Street One Financial brings us his daily fund flows update, which today focuses on a major crash in Brazilian stocks that’s hitting emerging market funds, along with some position trimming in major U.S. equity funds after yesterday’s big pullback.


We expect significant activity in EWZ (iShares MSCI Brazil) options, given the huge move downward this morning on political scandal-ridden headlines coming out of the country, and the fact that there exists no “Bear” fund in the space. Put options will likely be very pricey and popular in the very near term here in EWZ.

Likewise, some may choose to trade EEM (iShares MSCI Emerging Markets) options in lieu of trading Brazil singularly, as we have seen some June 40 put action in EEM in early trading for instance (Brazil has a 6% weighting there as the fifth largest country allocation).

Elsewhere, there have been some position trimmers in broad based U.S. equity indices following the carnage that hit global equities yesterday on the “Trump/Comey” headlines, as we have seen redemptions in QQQ (over $1 billion out), IWM (Russell 2000, over $1 billion out), and also more than $500 million out of DIA.

The iShares MSCI Emerging Markets Indx ETF (NYSE:EEM) was trading at $40.38 per share on Thursday morning, down $0.59 (-1.44%). Year-to-date, EEM has gained 15.34%, versus a 5.91% rise in the benchmark S&P 500 index during the same period.

EEM currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #2 of 77 ETFs in the Emerging Markets Equities ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.


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