|Bid||17.21 x 3200|
|Ask||17.30 x 3000|
|Day's Range||17.15 - 18.47|
|52 Week Range||13.74 - 77.64|
|PE Ratio (TTM)||N/A|
|YTD Daily Total Return||-37.90%|
|Beta (5Y Monthly)||-2.44|
|Expense Ratio (net)||1.07%|
On June 25, the Federal Reserve will release the results of the Comprehensive Capital Analysis and Review (CCAR), also known as the stress test. In advance of that release, some market observers are getting jittery about the fate of bank dividends.What HappenedThe CCAR is many things, but the primary view of it in the investment community is that it's the Federal Reserve's permission slip for the largest banks to pay dividends and repurchase shares. Using the Direxion Daily Financial Bull 3X Shares (NYSE: FAS), the dominant name among leveraged financial services exchange traded funds, as the guide, it appears traders are betting the Fed won't force banks to cut dividends.Over the past week, FAS, which attempts to deliver triple the daily returns Russell 1000 Financial Services Index, is higher by 13.45%. That's not the type of performance one would expect out of a leveraged ETF addressing a sector that could soon deliver bad news.Why It's Important FAS's bearish counterpart - the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) - is still worth considering. In fact, options market data confirm as much. There, traders are wagering JPMorgan Chase (NYSE: JPM), among other components in the Rusell 1000 financial benchmark, will cut payouts.Several, including JPMorgan, have already eliminated buybacks. Some analysts are speculating that if the Fed requires banks to boost loan loss reserves, JPM, Citigroup (NYSE: C), Goldman Sachs (NYSE: GS) and more will be forced to reduce dividends. That's bad news for common stock investors, but potentially great news for the bearish FAZ. Plus, FAZ has some history on its side."Ahead of the 2008 financial crisis, options traders accurately bet that Citigroup would be forced to cut its dividend, which it eventually did, slashing it to a penny in 2009," according to CNBC.What's NextAssuming the Fed does what options markets are expecting and mandates banks lower payouts, FAZ could be for quite a run. With dividend growth off the table, there's almost no reason to own a value sector that needs higher interest rates to flourish.That is to say why bet on banks or FAS when growth stocks are in favor and interest rates are low. Traders have added $260.25 million to the bearish FAZ just this quarter and that could be a tell unto itself.See more from Benzinga * Left For Dead Bank Stocks Perk Up, Lifting Volatile ETF Along The Way(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Entering June, the only sector performing worse than financial services was energy, though both have plenty of excuses for 2020 struggles.What HappenedThe combination of low interest rates - a boon for some sectors - rising loan loss reserves at the hands of the sagging economy and speculation that banks will be forced to cut dividends weighed on the group earlier this year.Fast-forward to late May/early June and things are looking up again for financials. Up 23.19% over the past week, the Direxion Daily Financial Bull 3X Shares (NYSE: FAS) embodies traders' renewed affinity for bank stocks.FAS, which looks to deliver triple the daily returns of the Russell 1000 Financial Services Index, is higher by 47.30% over the past month.Why It's ImportantGains like that in short time frames could imply upside from here is limited, but some analysts still see banking equities as undervalued."They're still priced like the global financial crisis, and that's a complete disconnect to the stock market as a whole, and frankly it's a disconnect to what the bond market says about banks," said Wells Fargo bank analyst Mike Mayo in a recent CNBC interview.Adding to the case for FAS is bank stocks appear to be getting the reopening treatment. Probably not on par with airlines or energy stocks, but the reopening theme is beneficial to cyclical sectors of which financial services is one. Should the economy continue clawing back jobs lost during the coronavirus pandemic, consumers can get back to paying their bills on time and banks could loosen lending reins."In a note released Monday, Mayo wrote that investor feedback to Wells Fargo since last week's call to raise price targets indicated a willingness by clients to take larger positions in bank stocks," according to CNBC.What's NextKeeping in mind that FAS nearly tripled off its March lows, that low interest continue crimping net interest margins and that the Federal Reserve could force banks to keep more capital on hand, potentially imperiling dividends in the process, the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) could command some attention.FAZ attempts to deliver triple the daily returns of the aforementioned Russell 1000 Financial Services Index and is lower by almost 21% over the past week.See more from Benzinga * Gold Isn't The Only Reason This Miners ETF Is Soaring * 3 Gilead-Heavy ETFs To Watch Amid The AstraZeneca-Gilead Rumor(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
As with most sectors, 2019 saw the financial sector manage strong gains amid the U.S.-China trade war, but with a murky outlook to start 2020, it could mean looking into niche areas for investors. ETF investors, in particular, they can look to financial technology (fintech) funds that can capitalize on innovation in the sector. “Last year saw the sector pushed and pulled by factors including three Federal Reserve rate cuts, waffling on the U.S.-China trade deal and weak but eventually improving economic data from some of the world's largest economies,” wrote Maya Sasson in Kiplinger.
Value plays like the financial sector are leading the markets to highs in the S&P 500 and Dow Jones Industrial Average. It could translate to more strength in the coming months, which can give traders the opportunity to play the long and short side of the financial sector with a pair of Direxion Investments ETFs. “As 2019 seems to be coming to an end quickly, value is outperforming growth again, and this might be sustainable into 2020,” wrote registered investment advisor David Templeton on Seeking Alpha.
The Financial Select Sector SPDR (NYSEArca: XLF), the largest financial services ETF, has traded slightly higher this month and there is a slew of looming events that could make an XLF an interesting, ...
When it comes to the United Kingdom, the financial sector leads the way when it comes to using artificial intelligence (AI), according to new research from Microsoft. For traders looking to leverage up in the financial sector, this could be a trading opportunity for Direxion Daily Financial Bull 3X ETF (FAS) and Direxion Daily Financial Bear 3X ETF (FAZ) , depending on where their intuitions are. Microsoft’s report showed that nearly three-quarters (72%) of banks, insurance firms and other financial institutions are incorporating the use of AI technology.
Various firms like VanEck have tried to push through a Bitcoin ETF, but the SEC cited issues, such as price manipulation as a primary obstacle in getting a cryptocurrency-related fund approved. Clayton’s comments come ahead of two possible approvals or rejections for Bitcoin ETFs—one from Bitwise Asset Management and the other a joint effort from VanEck and Solid X. Both proposals were submitted late last year, but subsequent postponements have pushed the decision back. Are we any closer to seeing a Bitcoin ETF some day?
The Financial Select Sector SPDR (XLF) , the largest financial services ETF, and rival funds are under pressure, but that could also mean the S&P 500's third-largest sector is worth a look for tactical traders. Market observers have previously warned that Wall Street banks could face pressure as tepid market volatility could have contributed to more muted trading desk activity. Furthermore, the Federal Reserve has signaled its intentions to cut interest rates, which would further hurt the banking industry’s ability to generate profits from lending.
In response, the Financial Select Sector SPDR (NYSE: XLF), the largest ETF dedicated to the sector, finished August lower by about 5%. It's possible that the time to consider the Direxion Daily Financial Bull 3X Shares (NYSE: FAS) or the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) is drawing near.
Given the massive outflow and the bearish outlook, the appeal for financial ETFs, especially banks, has dulled. As a result, investors who are bearish on the sector right now may want to consider a near-term short.
As big banks continue to report their second-quarter earnings this week, some are already expressing concern with respect to the possibility of rate cuts by the Federal Reserve through 2019. In particular, profits could shrink as a result of lower interest rates, which could put the Direxion Daily Financial Bear 3X ETF (FAZ) in play. FAZ seeks daily investment results that equate to 300% of the inverse (or opposite) of the daily performance of the Russell 1000® Financial Services Index.
Citigroup (NYSE: C ) got the party started on Monday while JPMorgan Chase (NYSE: JPM ), Goldman Sachs (NYSE: GS ) and others in the financial space, continued the earnings parade yesterday. In other words, ...