This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Power Struggle in France Alters ETF Landscape

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage. NEW YORK ( ETF Expert) -- Last year, world equity markets obsessed over the movement of sovereign debt yields in Portugal and Greece. Here in 2012, Spanish and Italian bond yields have risen enough to scare investors back into the perceived safety of U.S. Treasuries. In fact, iShares Barclays 7-10 Year Treasury Bond Fund (IEF) is near 52-week highs.

IEF 200

Unfortunately, concerns about the third- and fourth-largest European economies aren’t the only issues weighing on sentiment. Now there are geopolitical battles, from the upcoming French election to a breakdown in party talks in the Netherlands. Predictably, both iShares MSCI France (EWQ) and iShares MSCI Netherlands (EWN) have surrendered all of their double-digit, year-to-date price gains.

Follow TheStreet on Twitter and become a fan on Facebook.

EWQ 2012

How worried should you be? Well, if you haven’t been bottom fishing in the European stock ETF tank, you’re probably fine; that is, you’re probably fine for now. Yet Europe’s quagmire is still an enormous drag on emerging stock assets as well as U.S. stock assets.

Most commentators in the mainstream media have been cheerleading the notion that the European debt crisis was fairly well contained. What’s more, armed with this knowledge, investors could be more confident in wading back into the stock pool. Yet a tenuous alliance between Germany’s Merkel and France’s Sarkozy (”Merkozy”) is likely to fall by the wayside, creating more drama in Europe’s ongoing saga.

Keep in mind, the likely winner in France, Hollande, is pushing for a 75% income tax on the top marginal bracket. Indeed, it’s difficult to see how capitalistic financial markets could embrace the demands of the Socialist Party's candidate. For that matter, it’s difficult to imagine an economy thriving on the backs of fewer and fewer high-income producers, as many would have very little incentive to increase their earning power.

In March, I suggested that aggressive investors consider shorting iShares MSCI Spain( EWP ). Aggressive investors may even wish to take a look at adding iShares MSCI France to the list as well.

Of course, most of my clients and readers are more moderate and/or conservative in their pursuits. It makes more sense for most folks to avoid exposure to the region, increase cash as an asset class, employ hedges or stop-limit loss orders, as well as embrace your high-income yielding ETFs like Guggenheim Multi-Asset Income (CVY) and PowerShares High Yield Corporate Bond (PHB). After all, it could be yet another bumpy ride into the summer.

You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

Gary Gordon reads:

Real Clear Markets
Jeff Miller
Charles Kirk
On Twitter, Gary Gordon follows:

Jonathan Hoenig
Doug Kass
Hard Assets Investor

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $112.12 0.00%
FB $93.24 0.00%
GOOG $643.61 0.00%
TSLA $220.69 0.00%
YHOO $32.52 0.00%


Chart of I:DJI
DOW 17,084.49 +33.74 0.20%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,830.47 +19.6820 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs