Latest news with #consumerdiscretionary
Bloomberg
4 hours ago
- Business
- Bloomberg
Credit Markets Very Attractive: HSBC's Altongy
HSBC Americas Head of Debt Capital Markets Patrice Altongy sees a very attractive credit market. Barings High Yield Portfolio Manager Michael Best say consumer discretionary sector is a concern. They speak with Sonali Basak on 'Real Yield.' (Source: Bloomberg)
Globe and Mail
2 days ago
- Business
- Globe and Mail
1 ETF to Buy Hand Over Fist to Follow the TACO Trade
In recent weeks, the phrase 'TACO' has been circulating in financial circles. No, investors are not talking about the Mexican delicacy. 'TACO' is actually an acronym for 'Trump Always Chickens Out,' a phrase coined by Financial Times columnist Robert Armstrong. According to Armstrong, many investors are using 'TACO' as a strategy. With the assumption that Trump will reverse course on tariffs (or 'chicken out'), they buy into the market each time new tariffs are announced. They are betting that stocks will rally if he later changes his stance on a particular levy. Utilizing this strategy, analysts at Sevens Report have made the case for a number of ETFs that can be an attractive trade for investors. One among them is the Consumer Discretionary Select Sector SPDR Fund (XLY). About the Consumer Discretionary Select Sector SPDR Fund Managed by State Street Global Advisors, the Consumer Discretionary Select Sector SPDR Fund (XLY) is an exchange-traded fund that offers investors exposure to U.S. consumer discretionary companies. These encompass industries such as retail, automobiles, media, hotels, restaurants, and leisure. The ETF is up 6.9% on a monthly basis while offering a dividend yield of 1.01% and charging an expense ratio of 0.08%, or $8 on an initial $10,000 investment. With assets under management (AUM) of $21.6 billion, XLY is the largest U.S.-listed ETF focused on the consumer discretionary sector. Its top five holdings are Amazon (AMZN), Tesla (TSLA), Home Depot (HD), Booking Holdings (BKNG), and McDonald's (MCD). Why the XLY ETF Fits in the TACO Trade But why are analysts at Sevens Report bullish about XLY? For starters, XLY stands out due to its significantly higher trading activity compared to peer ETFs like the Consumer Discretionary MSCI ETF (FDIS) and Vanguard's Consumer Discretionary ETF (VCR). This liquidity advantage makes XLY a more attractive option for traders. In general, the consumer discretionary sector has also shown strong momentum, recovering in late May after the U.S. and China announced a 90-day pause on most reciprocal tariffs. Finally, despite ongoing macroeconomic challenges, the latest reading of the U.S. Consumer Confidence Index from The Conference Board reached 98, a sharp increase from April's 85.7. This 12.3-point rise represents the largest monthly improvement since 2009 and ends a streak of five consecutive monthly declines. Moreover, the Present Situation Index advanced by 4.8 points to 135.9, signaling better evaluations of current business and labor market conditions. Such improvements are positive indicators for the consumer discretionary sector, as confident consumers are more likely to increase spending on non-essential items like retail goods, entertainment, travel, and dining experiences.
