This article was originally published on ETFTrends.com.
At the Delivering Alpha conference, Billionaire investor Leon Cooperman said the latest central bank move is “screwing the savers” as the Federal Reserve followed up their July rate cut with another quarter-point rate cut on Wednesday.
“I side with the two Fed governors that were against cutting rates. Rates were already low,” Cooperman said. “Just think about it this way: You have a 35-40% marginal tax rate, you’re getting 2% on your cash if you’re lucky. You keep 60% of the 2%, that’s 1.2%. The inflation rate is running 2%: You have a negative on savings.”
The central bank didn’t give the capital markets a clear-cut direction on whether more forthcoming rate cuts were ahead. They did, however, cite the U.S.-China trade war as continued cause for concern.
“The weakness in the economy, in my opinion, is directly attributable to the president’s dialogue on tariffs,” Cooperman, who founded Omega Advisors in 1991, said from the conference. “What we do with China, I understand makes sense. But threatening Mexico, threatening Canada, threatening Europe makes no sense.”
“This has created great uncertainty in the business community,” he added. “They don’t know where to put the supply lines, they don’t know where to build their plants. So their cutting back on” capital expenditures.
Relative Value ETF Plays
That being said, investors may want to look at relative value exchange-traded fund opportunities in U.S. and international equities. For investors looking for continued upside in U.S. equities over international equities, the Direxion FTSE Russell US Over International ETF (RWUI) offers them the ability to benefit not only from domestic U.S. markets potentially performing well, but from their outperformance compared to international markets.
RWUI seeks investment results, before fees and expenses, that track the Russell 1000®/FTSE All-World ex US 150/50 Net Spread Index (the "index"). The index measures the performance of a portfolio that has 150% long exposure to the Russell 1000® Index (the "Long Component") and 50% short exposure to the FTSE All-World ex US Index (the "Short Component").
Conversely, if investors believe that international markets will outperform U.S. domestic markets, the Direxion FTSE International Over US ETF (RWIU) provides a means to not only see international markets perform well, but a way to capitalize on their outperformance compared to the U.S. markets. RWIU seeks investment results, before fees and expenses, that track the FTSE All-World ex US/Russell 1000® 150/50 Net Spread Index (the "index"). The index measures the performance of a portfolio that has 150% long exposure to the FTSE All-World ex US Index (the "Long Component") and 50% short exposure to the Russell 1000® Index (the "Short Component").
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