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Is There Too Much Optimism in U.S. Equities?

This article was originally published on ETFTrends.com.

Too much of anything can be detrimental to one’s health, but is there such as thing as too much optimism when it comes to U.S. equities? According to Jack Manley, global market strategist for JP Morgan Asset Management, there could be too much optimism fueling the markets after a U.S.-China “phase one” trade deal.

“I think it is safe to say that the worse is probably behind us, but these are one steps in a large, multi-step process. There’s a whole lot more to do out there, and I do think markets are at risk of being a little too optimistic,” Manley said.

Treasury Secretary Steve Mnuchin reiterated confidence that a “phase one” deal would be signed as soon as January 2020.

“It’s just going through what I would consider to be a technical, legal scrub, and we’ll be releasing the document and signing it in the beginning of January,” said Mnuchin.

The major indexes have been riding high from the U.S.-China trade news with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite hitting record levels.

“I think this is really good news because for the first time in a long time we’re actually seeing concrete evidence of progress being made,” Manley said.

The major U.S. indexes are feeling the good vibrations in the markets with third-quarter earnings coming out better-than-expected for the most part and now, a U.S.-China trade deal that is close to finalizing. All this creates an opportunity for investors to capitalize on the Direxion FTSE Russell US Over International ETF (RWUI) .

RWUI features:

  • 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 fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in securities that comprise the Long Component of the index or shares of ETFs on the Long Component of 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”).

Investors looking to play the other side can use the Direxion FTSE International Over US ETF (RWIU) to capitalize on international equities will outdoing U.S. equities. RWIU seeks investment results, before fees and expenses, that track the FTSE All-World ex US/Russell 1000 150/50 Net Spread Index, which measures the performance of a portfolio that has 150 percent long exposure to the FTSE All-World ex US Index and 50 percent short exposure to the Russell 1000® Index.

For more market trends, visit ETF Trends.

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