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Implications Of ECB's Draghi Negative Deposit Rate ...

|Includes: BND, BWX, DVY, EEM, FXE, FXI, FXY, GDX, GLD, IWM, IYR, LQD, RSX, SPDR S&P 500 Trust ETF (SPY), TIP, TLT, UUP, VNQ, VWO

1. given the Euro rate cut was heavily anticipated, it was already shorted considerably in the month leading to the June 5th, 2014 cut, so on the rate cut day it in fact went up - thus confusing the traders.

2. with the softening of the US equity [June 11th 2014] markets the demand for the Euro could see signs of strengthening ( relevant ETF is FXE)...not sure how a FXY -- FXE -- UUP trade would play out, though the Euro seems to be the one to gain likely.

3. Gold, GLD and gold stocks, GDX have been pounded heavily last 18 months - with a negative deposit rate in Europe, it should see strength, and all the more so if US equity { SPY } keeps softening.

4. Money started flowing back to Emerging EEM, VWO since last February... the Russian and Chinese markets { RSX, FXI, PGJ } are still way below their all time highs...their correlations with US { IWM } are also low.

All in all over the next couple of months, it seems valuations will get restored in the major asset classes - equity [SPY, IWM, EFA, EZU, EWJ, EEM], bonds [TLT, TIP, EMB, BND, LQD, MBB, MUB, TFI, CWB], commodities [GLD, DJP, USO], currencies [UUP, FXE, FXY] and Real Estate [IYR, VNQ].

Just my two cents based on the aggressive June 12th market action and a possible inflection point.

Cheers!

* while assessing the comparative returns on theses ETFs I use iOS apps like the ReturnFinder which give the total return and not just the price return, since some of these ETFs have significant income/dividend flows [DVY, SDY].

** I am not short any of these and am occasionally long a few of the above mentioned ETF's