Once again, Wall Street finds itself walking on eggshells, unwilling and unable to jump in full force into the markets. Last week, the Federal Reserve released the minutes from the last FOMC meeting, sending yet another strong signal that it is preparing to take action to boost the nation’s lackluster recovery. The issue that many have, however, is that the central bank seems reluctant in taking off the “training wheels” so to speak. By placing conditions on whether or not the Fed will jump in to boost the economy, investors will, understandably, continue to have mounting doubts about the prospect of more stimulus. Meanwhile, Europe’s central bankers are reportedly making headway in their debt debacle, as the ECB continues to hammer out the details on measures meant to bolster the region’s rather anemic economic growth. This week, investors will see a number of economic reports from around the globe, which will hopefully restore some confidence in the markets. Below, we outline three ETFs that should see a fair amount of activity during the week ahead [see also The Ultimate Commodity Survival Kit: 5 Must-Haves].
1. S&P 500 VIX Short-Term Futures ETN (VXX)
Why VXX Will Be in Focus: When it comes to measuring the level of uncertainty in the United States, no fund is as prolific as VXX, which exchanges hands over 48 million times per day. Its focus will come in the middle of the week as the U.S. GDP is released. Analysts are expecting a slight uptick in economic growth; the forecast is at 1.7% versus the previous reading of 1.5%. Should this result disappoint, VXX may see an increased level of activity, since a sign of a weakening economy will likely spark a rise in volatility. However if GDP comes in better than expected, market volatility may cool off [see also Low Volatility ETFdb Portfolio].2. Market Vectors Germany Small-Cap ETF (GERJ)
Why GERJ Will Be In Focus: This ETF offers exposure to the small capitalization sector of the German equities market, giving investors more of a “pure play” on the local economy. Investors should keep a close eye on GERJ this week as Germany’s unemployment data is reported on Thursday. Thus far, the powerhouse nation has held up relatively well amidsts the eurozone’s turmoils, and thus the strength of the nation’s labor market will be a good measure of the health of the local economy.
3. Barclays 20 Year Treasury Bond Fund (TLT)
Why TLT Will Be in Focus: One of the most liquid fixed income funds on the market, TLT tracks long-term U.S. Treasuries that have a remaining maturity of at least 20 years. Last week, this fund surged higher after the Fed minutes sent another strong signal to the markets that the central bank will step in to boost the economy. On Friday, investors should keep a close eye on TLT as Bernanke makes his annual speech at Jackson Hole. Any comments concerning a new bond-buying program will likely set this fund into action [see also 17 ETFs For Day Traders].
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Disclosure: No positions at time of writing.