Source: Motley Fool CAPS, as of June 6, and Morningstar.

• Market Vectors Russia (RSX), up 17.6%
• SPDR S&P Metals & Mining (XME), up 14.9%
• United States Gasoline (UGA), up 14.6%

Click here to review the full ETF performance report.

IYM: US Basic Materials   +20%

iShares GSCI Commodity-Indexed Trust (GSG): natural resources; up 31.8% year-to-date

PHO Water Resources 22.57 0.9% 4.9% 2.7% 24.0%

The recent surge in coal prices is just the beginning of a longer-term cycle uptrend for coal. The global use of coal is rising while coal stockpiles are falling pushing coal prices higher.

As I suggested last week, the fastest way to invest in this price action is through the Market Vectors Coal ETFKOL, a 39-stock fund that invests in the coal industry worldwide.

2) Short Financials.

In every economic cycle downturn, major financial institutions experience significant credit losses and have a capital shortage. Earlier this week, Lehman BrothersLEH was able to raise $6 billion in equity -- but the markets are not always so kind, especially with smaller firms.

The primary ETF for shorting the U.S. financial sector is ProShares Ultra Short FinancialsSKF. (Keep in mind, the "Ultra" in the name means it's leveraged, which adds risk.)

If you think more write-offs are coming or that American International GroupAIG and other financials stocks are headed lower, this is the ETF for you.

3) Maintain Material Investments.

The best-performing holdings in the portfolio last quarter were ProShares Ultra Basic MaterialsUYM and the S&P Metals and Mining ETFXME. These were up 27% for the three-month period. This performance was driven by rising prices for steel and coal. Expect this to continue and drive materials and mining stocks higher over the coming quarters.

My favorite steel stock remains GerdauGGB, which is a top-10 holding in Market Vectors Steel ETFSLX, which did so well last quarter. In addition to being a cyclical materials beneficiary, Gerdau will benefit from last month's creation of the Union of South America Nations.

4) Explore the Oil Patch.

Three ETFs make the grade here.

The first is PowerShares Dynamic Oil & Gas Services PortfolioPXJ, which holds oil-service stocks such as McDermottMDR, HalliburtonHAL and my favorite drill-rig stock, NobleNE. The market has never looked so good for oil-service companies. The second is the S&P Oil and Gas Exploration and Production ETFXOP. The top two holdings are two shale oil stocks, PetroHawkHK and Encore AcquisitionEAC.

The third is the ProShares Oil and GasDIG, which is a concentrated play on traditional big-oil stocks.

5) Reconsider Russia.

Russia's new President Medvedev plans to turn Moscow into a global financial center and to make the ruble a leading regional reserve currency.

Fast-growing companies Gazprom and Rosneft are among the top five holdings in Market Vectors TR Russia ETFRSX. Over the last year this ETF has gained 56%, but looks to have still more upside potential with 36% of the portfolio in oil and gas, and another 26% of its investments in iron and steel products.

6) Short China in the Short-Term.

Be careful with this one.

If you are sour on emerging markets, try ProShares UltraShort FTSE/Xinhua China 25FXP. The recent natural disasters and expectations for slowing growth might make this a good time to place a short-term bet before the Olympics. Slower growth may be good longer-term for the economy but is likely to hurt stock investors expecting fast money near-term.

Things are not so rosy out East in general. The DB X-TRACKERS FTSE VIETNAM ETFXFVT dropped 30% last month, posting a 58% loss since its inception in February. Inflation fears, a currency crisis and IPO delays are scaring foreign investors from this once-buoyant market.

7) Nuclear.

As the world looks to cut its reliance on oil and coal and curb carbon dioxide emissions, some of the best-performing stocks of the next 12 to 18 months may be in the global nuclear sector.

The Market Vectors Nuclear FundNLR is a global fund that invests in the nuclear energy business. Only 29% of this fund is in U.S. stocks, with another 26% from Japan and 24% from Canada. Three leading investments represent 30% of the fund: Electricite de France, British Energy Group and Mitsubishi Heavy Industries.

The regulatory environment for nuclear power is improving. China is planning to build 30 new nuclear reactors over the next 13 years. Last month, Italy lifted a 20-year moratorium on nuclear-power stations. Even in the U.S., several state legislatures are considering bills to lift the ban on nuclear power.

• PowerShares Active Low Duration Fund (PLK)
• PowerShares Active Mega Cap Fund (PMA)
• PowerShares Active Alpha Q Fund (PQY)
• PowerShares Active Alpha Multi-Cap Fund (PQZ)
• WisdomTree Dreyfus Chinese Yuan Fund (CYB)
• WisdomTree Dreyfus Indian Rupee Fund (ICN)
• WisdomTree Dreyfus Brazilian Real Fund (BZF)
• WisdomTree Dreyfus Euro Fund (EU)
• Bear Stearns Current Yield (YYY)

*H=March, M=June, U=Sept, Z=Dec
** CME minimum performance bond margins as of 1/31/02 SUBJECT TO CHANGE

 

What is 1 point of the E-mini S&P 500 worth? [top]

$50 per point per contract

For example: if the S&P 500 Index value is at 1500 and goes up 5 points to 1505 the difference is 5 points which equals $250.

$50 x 5 = $250 profit or loss per contract.

  ==================================

The value of the S&P 500 futures contract can be calculated by multiplying the futures price by $500. For example,
 if the S&P's are trading at 1089.50, the value would then be $500 X 1089.50, or $544,750.
 
 The minimum price fluctuation (tick) for the S&P's are .10, so a tick up or down is worth $25 per contract. A full
 point has 10 ticks in it, which is worth $250 per contract (.10 X $25 = $250).
 
 The E-Mini S&P 500 is on the same price scale as the regular (full) S&P 500, the difference lies in the tick and
 point values. The E-Mini S&P trades in .25 ticks and is worth $12.50 per tick; and a point is worth $50
($12.50 X 4 = $50).

As you can see the E-Mini's are one fifth the size of the full S&P 500 contract.

25% iShares Barclays Aggregate Bond ETF (symbol AGG) Tracks a broad index of high-quality U.S. bonds
25% iShares iBoxx $ Investment Grade Corporate (LQD) Tracks an index of the most liquid, long-term corporate bonds
10% Fidelity Floating Rate High Income (FFRHX) Invests in bank loans that adjust to rising interest rates
10% iShares Barclays MBS Bond (MBB) Tracks a broad index of mortgage-backed securities
7.5% SPDR DB International Govt Inflation-Protected Bond (WIP) Invests in an index of non-U.S., inflation-linked bonds
7.5% PowerShares Emerging Markets Sovereign Debt (PCY)Tracks an index of emerging-markets government debt
7.5% iShares Barclays TIPS Bond (TIP) Tracks an index of inflation-protected, U.S. Treasury securities
7.5% iShares iBoxx $ High Yield Corporate Bond (HYG) Tracks an index of high-yield bonds

Our Picks Stick with one family

In the Kiplinger's portfolio, we use only Vanguard index funds because their costs are low and it's easier for investors to buy funds from a single family. Small-company stocks tend to outpace big-company stocks over time, so we overweight them a bit—but not so much as to add more volatility. Similarly, we include a couple of bond funds to reduce the portfolio's ups and downs. But we don't overdo the bonds because we want the bulk of the package to benefit from the long-term growth potential of stocks. And although property markets look dicey and real estate investment trusts have been battered, we add some REITs because they have delivered good long-term returns and can help tone down the portfolio's overall volatility.

Kiplinger's Portfolio

25% Vanguard 500 Index (symbol VFINX) Tracks Standard & Poor's 500-stock index
15% Vanguard Small-Cap (NAESX) Tracks an index of small-company U.S. stocks
20% Vanguard Total International Stock (VGTSX) Tracks an index of stocks from developed and emerging nations
5% Vanguard REIT (VGSIX) Tracks an index of U.S. real estate investment trusts
25% Vanguard Total Bond Market Index (VBMFX) Tracks a broad index of high-quality U.S. bonds
10% Vanguard Inflation-Protected Securities (VIPSX) Invests most assets in Treasury inflation-indexed bonds

Here is a rundown of the 3X funds that Direxion now offers:

• (BGU) – Large Cap Bull 3X Shares – Russell 1000
• (BGZ) – Large Cap Bear 3X Shares – Russell 1000
• (TNA) – Small Cap Bull 3X Shares – Russell 2000
• (TZA) – Small Cap Bear 3X Shares – Russell 2000
• (ERX) – Energy Bull 3X Shares – Russell 1000 Energy
• (ERY) – Energy Bear 3X Shares – Russell 1000 Energy
• (FAS) – Financial Bull 3X Shares – Russell 1000 Financial Services
• (FAZ) – Financial Bear 3X Shares – Russell 1000 Financial Services

Although trading in these new ETFs is currently light, expect more liquidity in the coming months as more investors and traders become aware of these new funds, much like the launch of the very popular ProShares 2X ETFs. Many of the popular ProShares funds like UYG and SKF were slow at first, but now they turn out a tremendous amount of volume on a daily basis. As for the expense ratios for these new triple return ETFs, they are listed from 94 to 102 basis points, which is fair for 3X leverage. As these funds gain in popularity, I would expect more fund launches in additional sectors.

Mr. Schiff: Because gold was priced in dollars, it's traded in dollars and so we all look at it as the dollar price, and the fact that gold has not made a new high in dollars during this economic crisis has led some to believe that maybe it's lost its luster, it's not a safe haven. But this rise of the dollar is very suspicious to me, I don't think it's justified. But it's been the unlikely beneficiary of all the problems. You've got the problem centered in the US economy; the epicenter of the financial crisis is in America. The reason that the world is in trouble is mainly because of bad loans made to Americans and it's our economy that I think is a complete facade, a house of cards that has now collapsed, so this dollar rally actually makes no sense.

We continue to be fascinated with the saga of the Four Bad Bears. In nominal terms, the March low in the S&P 500 surpassed the Dow Crash of 1929 over the equivalent time frame. In real (inflation adjusted) terms, the decline is even greater.

Its important that you understand what’s going on with these products, namely that you’re getting three times the daily return of the underlying index (the MSCI EM index and the Russell 1000 Energy Index which tracks the large oil companies). These ETFs will give you some proxy of the long term returns from these underlying indices but they’ll be hugely affected by day based volatility.

Any San Diego based hedge funds looking for discretionary or analytical traders with a macro view should feel free to contact him: michael[at]krausecomputer[dot]com.

• The Direxion Daily 10-Year Treasury Bull 3x Shares (NYSE Arca:TYD)
• The Direxion Daily 30-Year Treasury Bull 3x Shares (NYSE Arca:TMF)
• The Direxion Daily 10-Year Treasury Bear 3x Shares (NYSE Arca:TYO)
• The Direxion Daily 30-Year Treasury Bear 3x Shares (NYSE Arca:TMV)

You might think the best way to play this new problem for the big banks would be to short them directly, or to invest in one of a number of bank-shorting ETFs. But there are more direct ways. Here are three commercial real estate ETFs ripe for short plays and their losses for 2009:

• iShares FTSE Industrial/Office Index (NYSE: FIO) down 15.5%

• Vanguard REIT Index (NYSE: VNQ): down 22.2%

• Dow Jones Wilshire REIT (NYSE: RWR ): down 23.6%

Investors might also want to consider going long the ProShares UltraShort Real Estate (NYSE: SRS). This seeks investment results equal to twice the inverse of the daily performance of the Dow Jones U.S. Real Estate Index.

Each of the top 3 ETF sponsors has at least one domestic REIT fund.  International and specialty REIT ETFs are also available

Source(s):

Muni bond ETFs are the new kids on the block; the first ones didn’t appear until last September.

On Feb. 1, the Market Vectors Lehman Brothers AMT-Free Intermediate Municipal Index (ITM) was yielding 3.49%. It targets the 6- to 16-year part of the yield curve, reports David Hoffman for Investment News. Another bonus: the yield paid out by munis is free from federal taxation, making their effective income greater than the taxable yield offered right now by Treasury bonds.

Other comparable muni ETFs tell a similar story: the PowerShares Insured National Muni Bond (PZA) had a yield of 4.2% yield, with a tax equivalent yield of 6.46%.The iShares S&P National Municipal Bond Fund (MUB) had a yield of 3.44%, but the tax equivalent yield was 5.07%. The SPDR Lehman Municipal Bond ETF (TFI) yielded 3.34%, with a tax equivalent of 5.14%.

James Colby, Van Eck’s senior municipal strategist, says muni bond ETFs are a good option for those investors uncertain about what’s going to happen in the Treasury markets. I don’t see anything wrong with this strategy, and the municipal bond ETF environment appears relatively safe.

There’s always risk, though, including with these types of bonds. That’s because the governments behind them pay companies to insure them so that ratings agencies will give them a better rating. However, these companies are at risk of defaulting because they also insured subprime mortgage-backed securities and they’re not as in sound financial shape as investors previously believed.

As a result, ratings agencies have started to downgrade bond insurers. At least one agency lost its AAA rating, reports Martin Z. Braun for Bloomberg. The default rate on municipal bonds in 0.1%, but Moody’s Investors Service says state and local government debt is still tainted. The threat of more downgrades is something to watch out for.

Posted by Larry Doyle on April 7, 2009 2:40 pm | SHARETHIS.addEntry({ title: "Games of Chance: TALF, PPIP, TARP, FDIC, FASB", url: "http://www.senseoncents.com/2009/04/games-of-chance-talf-ppip-tarp-fdic-fasb/" });ShareThis

Because Mr. Market doesn't always do what he should, investors also might consider hedging the VIX position with at-the-money puts on the Standard & Poor's Depositary Receipts (SPY), an exchange-traded fund that tracks the Standard & Poor's 500.

The housing bubble and the financial crisis

http://Seekingalpha.com

http://Zerohedge.com

http://wsj.com

http://gurufocus.com

Some good blogs:

http://thefundamentalview.blogspot.com/

http://market-ticker.denninger.net/

Through Andy Mukherjee of Bloomberg and Dr."Gloom" Marc Faber we got our hands on a transcript of a speech held at a meeting of the Central Economic Commission of the Chinese Communist Party. The speaker is unknown but is believed to be in a very high party position.

"Dear Comrades,

One of the next days we will publish our paper on the "Ruling Capacity of the Party". Let me cite three passages:

We should always put national sovereignty and security in the first place and firmly safeguard state security.
...
Hostile forces are still pursuing their strategic attempts to westernize and separate our country.
...
We will effectively guard against and deal with various risks from the international economic field, so as to safeguard China's political, economic, cultural and information security.

The US cronies at the IMF, the G-7 and the World Bank are putting pressure on us to loosen the peg of our Yuan to the US-Dollar. If we would do so, the US-Dollar could slowly devalue against all Asian currencies and the US economy could move back on a sustainable path. For now we do some cheap talk of planed revaluation to calm them down.

A week US Dollar is NOT in our interest.

The United States have fulfilled their long dream and occupied Iraq to achieve control over Middle Eastern commodities. They are fighting our interests in Sudan and Iran. They are engaged in various Central Asian countries at our north western border. They are even selling German made submarines, offensive weapons with cruise missiles, to the illegal government of our province Taiwan.

We continue actively to buy large amounts of US securities, especially treasuries, to keep the Yuan value bound to the US Dollar. We now have accumulated some US$ 500 billion in such instruments. There are three major positive effects to this:

• We enable the US Federal Reserve to keep the interest rates low in spite of the huge US deficits and we thereby induce the US consumer to buy more of our goods and services.
  
• We make the US manufacturing and service industries uncompetitive and force them to move to Asia, teaching our workers the skills we will need in the future.
  
• We make imports to our country expansive and induce our people to save and to invest their money into our industrial build-up.

There are also negative effects, like some increased inflation here. But for now we are able to control these by central administrative means.

There is no chance that this scheme will work into eternity. But there is a good chance that we, the Party, can determine the point in time where a break will occur. Until then we will use the accumulated dollars to build significant strategic reserves of all commodities and increase the abilities of the People's Liberation Army and especially the People's Liberation Army's naval forces.

At some point, for some reason, the US, in their quest of world domination, will threaten us - either directly through military means or indirectly through the oil lever. That will be the right moment do de-peg the Yuan, devalue the US Dollar and throw the treasuries we own onto the international markets.

US treasury rates will then increase immediately to double digit values, the US economy will falter first into recession and then into a Weimar like hyperinflationary depression.

Then we will pick up what is left over from the US empire paying the cheap price of some paper losses in our US security portfolio.

Comrades, lets work to keep the US dollar strong, very strong, for the glory of the Party and the wellbeing of the people of China.”

http://finance.yahoo.com/q/bc?s=GTU&t=5y&l=on&z=m&q=l&c=

Others don't own physical gold and instead seek gold exposure through derivatives. PowerShares DB Gold, for instance, tracks an index of gold-futures contracts. The risk there is that the fund faces possible counterparty woes. In a major market dislocation, not unlike the credit crisis, if investors on the opposite side of a trade fail to make good on their obligations, "there is risk that the expected price change in some commodity-proxy funds won't be delivered," says QB Partners' Mr. Brodsky.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.

Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.

China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.

Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.

Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.

The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."

Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.

The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.

"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.