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More Reverse Splits, or Just Closure, Possible or Needed in ETFs (FAS, FAZ, UYG, BAC, BHH, ARBA, IIH, AKAM, VRSN, UNG, USO, GLD, SDS, SPY, NYX, NDAQ)

We have been large fans of exchange-traded funds, exchange-traded notes, and other exchange-traded instruments which are open for trade throughout the day that are allowed to be invested in just like a stock.  But with all new and growing markets, there are risks that need to be kept in check.  There are some leveraged ETF’s and their inverse counterparts which might need to see reverse share splits in the near future.  The notion of so many low-priced shares being so active may wreak havoc as the funds managing each ETF try to keep up with appropriate derivatives and in buying and selling shares of the components that are supposed to be the underlying securities.  There are even a few ETF’s which should probably just be closed down entirely and liquidated to holders.  Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and The Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) are both prime examples of ETFs which skew total daily exchange trading volume numbers because of low share prices today and massive trading volume.  This is not meant to pick on the fund groups because they created trading vehicles which they did not expect to see some of these moves.  There are many more ETFs and ETNs to consider here. FULL STORY
ETF BASIC NEWS June 23, 2009 2:45pm

Brazil real shows signs of revival: Ashish Advani

FLORIDA: Major signs of recovery are visible for specific exotic currencies including the Brazilian Real, according to World Currency Watch editor, Ashish Advani. The Central Bank of Brazil (BACEN) just reported net FX flows into Brazil through June 12. In the first half of June, commercial surplus was driving the net FX flows. That surplus amounted to $866 million, which was four times larger than the net financial outflow right now (or $205 million). FULL STORY
ETF BASIC NEWS June 23, 2009 2:44pm

Regulators Finally Urge Caution on Leveraged Funds

So FINRA has finally decided to warn brokers to warn their customers about leveraged ETFs. I covered this subject a long time ago. Back then, I noted that the math will never add up. It can’t. For these funds to work as people expect them beyond a day, the leverage would have to be some multiple of the logarithm of the price change, not a multiple of the percent price change. It’s a subtle difference, but over a period of more than a day, it makes a gigantic impact. FULL STORY
ETF BASIC NEWS June 23, 2009 2:43pm

Too Much Sun and Not Enough Green

Wall Street is the place to find all sorts of investments you never knew you needed. If a segment of the stock market can be sliced, diced, or julienned, you can count on the professionals to come up with a way to do it FULL STORY
ETF BASIC NEWS June 23, 2009 2:41pm

Stockhouse posters share thoughts on natural gas price

What effect will a heatwave have on nat gas?

The price of natural gas for July delivery fell seven cents to $3.87 per million British thermal units Tuesday, as several Stockhouse posters weighed in on factors that may affect the commodity’s price, including the weather. FULL STORY
ETF BASIC NEWS June 23, 2009 2:40pm

BlackRock’s Trillions

While most sectors of the stock market have rallied sharply from their lows in March, one sector stands out: the people who manage other people’s money. Mutual fund companies such as T. Rowe Price ( TROW - news - people ), private equity managers such as Blackstone ( BX - news - people ) and index shops like State Street ( STT - news - people ) have all bounced by more than 35% in the last three months. Capping that whiplash performance is BlackRock’s merger with Barclays Global Investors, which will create the world’s largest asset-management company. FULL STORY
ETF BASIC NEWS June 23, 2009 2:37pm

iShares iBoxx High Yield ETF to Be Managed in Accordance With Index Changes

SAN FRANCISCO, CA -- 06/23/09 -- Barclays Global Investors, N.A. (BGI), the world's largest Exchange Traded Funds (ETFs) provider(1), announced today that Markit Group has announced changes to the iBoxx® $ Liquid High Yield Index. Barclays Global Fund Advisors (BGFA) intends to continue to manage the iShares iBoxx $ High Yield Corporate Bond Fund (NYSE Arca: HYG) so as to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of the U.S. dollar denominated high yield corporate bond market as defined by the iBoxx® $ Liquid High Yield Index. BGFA also intends to manage the Fund in a manner designed to minimize turnover and maximize cost- and tax-efficiencies. FULL STORY
ETF BASIC NEWS June 23, 2009 2:36pm

This Town’s Big Enough for Two Infra ETFs

The iShares S&P Emerging Markets Infrastructure Index Fund (EMIF - commentary - Trade Now) began trading Friday on the New York Stock Exchange. EMIF represents iShares' recent grab at the bullish infrastructure market, specifically focusing on larger emerging markets. In fact, about 90% of the fund is contained within a core cluster of seven countries. China represents one-third of EMIF's assets, while Brazil, Argentina and South Korea collectively make up another third. Malaysia, Chile and the Czech Republic account for a majority of the remaining shares, with the last 10% representing a wide variety of smaller emerging countries. FULL STORY
ETF BASIC NEWS June 23, 2009 2:34pm

Dual ETF listing

The Taiwan Stock Exchange said it will allow the first dual listing of an exchange-traded fund from Hong Kong by next month. CSI 300 China Tracker, a Hong Kong ETF, may be listed in Taiwan "around July 20," Schive Chi, chairman of the Taiwan bourse, told reporters in Taipei yesterday. The fund is managed by BOCI-Prudential Asset Management Ltd. FULL STORY
ETF BASIC NEWS June 23, 2009 2:33pm

Jefferies bearish on U.S. natural gas stocks

NEW YORK, June 23 (Reuters) - Jefferies & Co on Tuesday recommended that investors reduce their exposure to natural gas companies, arguing that the market was overly optimistic about the potential for higher gas prices. FULL STORY
ETF BASIC NEWS June 23, 2009 2:32pm

Will A Strong Dollar Crush Stocks, Silver, and Gold?

The recent drop in stock, gold, and silver prices has largely been credited to a stronger US dollar. Is there a relationship between the Greenback and other asset classes? Will the US dollar continue to surge? If so, are new lows next for US stocks? FULL STORY
ETF BASIC NEWS June 23, 2009 2:30pm

Large ‘ratio spread’ in Brazil ETF

Brazil has emerged as the most widely traded emerging market from an options standpoint, and it continues in that vein today. FULL STORY
ETF BASIC NEWS June 23, 2009 2:29pm

Yes! We Have No Bananas. Or, Do We?

Six-week lows were on tap for gold prices during the overnight hours as investors kept up the selling pressure following Monday's intra-day slide. The $915 support was briefly breached before the market regained some composure and clawed back to the $920s early on Tuesday. The gold ETF reported a small decline in balances as of the 22nd - a first change in positions since June 5th FULL STORY
ETF BASIC NEWS June 23, 2009 2:28pm

Examining the pros and cons of a strangle position

Welcome to another in a series of articles that examines the thought process behind a variety of strategies using stock, index, and/or exchange-trade fund (ETF) options. This column will examine a strangle, the pros and cons of putting on a strangle, and the profit and loss potential of this position. So, let's jump into this interesting strategy. FULL STORY
ETF BASIC NEWS June 23, 2009 2:27pm

Leveraged ETF Boom Goes Global

Just as leveraged ETFs are prompting warnings from regulatory agencies and drawing criticisms from U.S. investors, these controversial funds are enjoying tremendous popularity in Europe, where ETF Securities has launched the first complete platform of 2x leveraged and 2x inverse leveraged funds tracking Europe's most popular equity indexes. The funds offer both leveraged bull and bear market exposure to the following indexes: FULL STORY
ETF BASIC NEWS June 23, 2009 2:26pm

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