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Thursday, May 16, 2013


This is in the what will they think of next department.  I just ran across these ETNs and I thought I would pass them along.  Here is ONN first.

This is ETRACs risk on ETN.  I guess this is supposed to tell us whether global risk assets are going up or down.  Here is the chart for OFF which is the risk off version.

I guess there are not many investment themes left that don't have an ETF or ETN for them.  I guess they work ok.  I have been using EEM for this purpose.  Lets see how it compares.

It appears they track pretty closely.  EEM topped a little before ONN both last spring and this year.  In today's global markets I think it is important to know what is going on around the world.  I am not really sure the new ETN is much better then EEM though.  Here is a comparison of ONN to SPX.

They generally tracked up and down very well together until this year.  I noted in the blog the break down in the industrial metals.  That could be part of why this ETN is lagging.  We clearly have had some divergence over the last few months.  However, there is more to it then that.  If EEM is a reasonable proxy for global risk on then lets look at it with SPX over a longer time period.

Going back several years we can see that SPX and EEM trended together very well.  That is until 2011.  That is when global growth rates in this recovery peaked.  This seems to be out of whack historically.  Are we headed for a period of convergence sometime down the road?  If that is the case will EEM start playing catch up or will SPX play catch down?  I think something is going to give this year.  Either the global economy is going to start picking up or the U.S. is going to slow down significantly.  I think we will find out which way it goes in the months ahead.


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