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Founder and Editor of Invest Chief Blog. Invest Chief is a blog dedicated to bringing unique investment ideas and with hard analysis. Invest Chief is for a wide range of viewers ranging from beginners to seasoned traders. We like to give a unique perspective on issues that are influencing the... More
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  • Playing the European Crisis
    Ireland, Spain, Portugal, Greece and possibly Italy are at the forefront of the financial crisis in Europe.  Overwhelming debts combined with already weak economies are creating serious issues.  The EU is now contemplating whether to make the bailout fund larger to suit the current position that Europe is facing.  However, Germany, largest contributor to the bailout fund, is hesitant to make the bailout fund larger because Germany is risking a large sum of capital in countries that are on the brink of defaulting. 

     I do believe that at the end of the day, Germany and the rest of the EU will have to compromise to allow a bigger rescue fund.  If they decide not to, the consequences could be devastating to markets around the world. 

    All the while these events are happening, the Euro is being hit hard against the dollar.  Similar events occurred earlier this year when Greece was the main problem. 

    Now it seems those days have returned and that sets up a few good trades as far as currency goes.  I recommend Powershares Bullish Dollar Index (NYSEARCA:UUP), and Proshares Ultrashort Euro (NYSEARCA:EUO).  These trades made great returns during the first European incidents at the beginning of the year, and they are sure to make good returns the second time around until Europe can stabilize the ailing economies.

    There are other options at your disposal if you don't want exposure to currency.  We can use put options or short the individual countries that are having a hard time cutting down debt and stabilizing their economies.  A few trades that would be ideal are: iShares MSCI Ireland Index (NYSEARCA:EIRL), iShares MSCI Spain Index (NYSEARCA:EWP), iShares MSCI Italy Index (NYSEARCA:EWI).

    Another route you can go (if you want a higher risk, higher return situation) is shorting Europe as a whole or shorting financials, which are the hardest hit sector in Europe.  If you want that higher risk a few plays that would suit that screen are: Proshares Ultrashort MSCI Europe Index (NYSEARCA:EPV), MSCI Europe Financials Sector Index (NASDAQ:EUFN).  Be sure that if you play one of these trades that for EPV is already a short fund so you would simply just buy the ETF.  However with EUFN you would need to short it or buy put options.

    No matter what way you plan to play the European crisis, I urge you to do your own research before you invest money, to understand if the risk is suitable for your financial situation.

    Disclosure: no positions
    Nov 27 12:26 PM | Link | Comment!
  • Black Friday Update and European Debt Crisis
    Markets opened lower today on European debt worries.  The Dow is down 83.36 or .75%, Nasdaq down 7 or .3% and the S&P 500 is down 8.05 or .67%. 

    The main focus today should be retail, its Black Friday.  Earlier this week a surprising consumer report came out that showed us that consumers are starting to spend their income again.  A surprising lower number of people are applying for unemployment benefits went along with the consumer report earlier this week.  Retailers are also cutting prices a record rates to make it even more affordable for consumers to splurge on holiday gifts.  This could point towards a good holiday retail numbers.  Now to be clear, we are in no way out of the woods.  Yes, the consumer is showing signs of recover, as is employment, very slightly.  However, keep in mind we still have an unemployment number around 10%.  That being said, the economy is, no doubt, much stronger than is has been in the last few years.  Please refer back to my "Playing The Cautious Consumer This Holiday Season" article from Monday to see how to play retail this holiday season.

    Back to the European debt crisis.  Ireland was recently bailed out by the EU and they have issued a 4 year plan to get their economy back on target and stabilized.  However, many people are skeptical that Ireland will be able to hit that target because of its insistence not to raise the corporate tax rate, which the EU has been pressing Ireland to raise.

     The problems don't stop there.  I was reading the Wall Street Journal on Wednesday and an article entitled "Fears of Domino Effect Pervade Europe" caught my eye.  Essentially, the article says that because of Ireland's bailout and unstable economy, other EU nations such as Spain and Portugal, and Greece.  Spain's economy is on the brink, as is Portugal.  Greece's debt securities are at risk to default.  Lots of unrest is occurring in Europe right now which could prove to have worse outcomes than earlier this year when these problems were last in the spotlight.  A safe trade to be in right now is Powershares Bullish Dollar Index (NYSEARCA:UUP).  The Euro is not safe right now due to all the uncertainty in Europe.  The Pound fell against the Dollar based on risk adversion.  Lastly, the Dollar rallies against the Yen based on a higher inflation number in October.  We are in an uncertain time right now with Europe's economic woes, potential second Korean war, TSA full body scans at airports.  A safe place to be is UUP.

    Disclosure: No positions
    Tags: UUP
    Nov 26 1:41 PM | Link | Comment!
  • Playing The Cautious Consumer This Holiday Season
    Tomorrow's GDP report will be key to give us an idea to whether we could be expecting a good or not so good Black Friday.  Economists are expecting the GDP to be reported at 2.4%. 

    Regardless, there are a few plays that will be winners this holiday season for consumers that are spending less.  I do expect these companies to outperform in the retail sector this holiday season.  Here are your possible plays this holiday season:

    • Best Buy (NYSE:BBY): Best Buy is a top electronics retail play that does expect a huge holiday season.  The company was upgraded today by Barclays, who share the same opinion, that Best Buy will outperform this holiday season.  The rose their target to $51 and remained their outlook at overweight.  Best Buy was up 3% today on the news.
    • Nordstrom (NYSE:JWN): Nordstrom is a higher end retail play that is currently pretty cheap with a P/E of 18, ROE of 33% and a dividend yield of 1.9%.  Nordstrom has done a pretty good job of staying ahead of the pack in the higher end retail.  Look for JWN to capitalize on its sales momentum.
    • Wal-Mart (NYSE:WMT):  WMT is a great low cost retailer especially in this economic climate. Wal-Mart has great deals and savings that should be very attractive for the frugal consumer.  Wal-Mart is the largest offline retailer and they should easily post great numbers this holiday season.  The stock is very cheap at the moment with a P/E of 13, ROE of 22%, P/S of .47.  I like WMT.
    • Amazon (NASDAQ:AMZN): With a growing number of consumers looking for better deals online and skipping the crowds at the malls, Amazon, the largest online retailer, will be an obvious choice for consumers.  Amazon and Wal-Mart are in a huge price war this holiday season but I don't see it being a big deal because there will not be a big enough price difference to determine a clear "winner".  They will both be winners in their right.  Amazon will be the winner of online retail.
    These companies are the top of the retail sector and will outperform this holiday season.  These companies manufacture success and know their market.  Marketing and deals have been very successful in the past and should have continued success this season.  Consumers are looking for the best deal this holiday season and I think these companies will give them those deals they are looking for.  Stick will Best Buy (BBY), Nordstrom (JWN), Wal-Mart (WMT), and Amazon (AMZN).

    Disclosure: Long BBY
    Tags: BBY, JWN, WMT, AMZN, BCS
    Nov 22 10:40 PM | Link | Comment!
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