(New York)

The reality is that the Fed has been hiking steadily, and investors should expect 2-3 more hikes in 2019. That means that adjusting one’s portfolio is a must. One thing to remember is that there are now plenty of ETFs that are designed to not lose from rates rising and still give an easy 2-3% yield. This is a big change from the post-Crisis paradigm, where safety meant negligible yields. One conservative way to play the environment is the SPDR Barclays 1-3 Treasury Bill ETF (BIL). Another is the iShares Floating Rate Bond ETF (FLOT), which only yields 2.5%, but with very little rate risk. One much more intriguing option is the WisdomTree Barclays U.S. Aggregate Bond Negative Duration ETF (AGDN). This fund holds a long bond position coupled with a short Treasury position with a target duration of -5 years, meaning it is designed to gain when rates rise.

FINSUM: This is a good selection of ETFs, and that Wisdomtree option looks quite interesting. It truly seems a way to profit as rates rise.

(New York)

The market is not doing well this month. That is probably a serious understatement, in fact. Yet, that leaves room for opportunity, both in aggregate, but also in specific shares that might lead in these tougher times. Retail is an interesting choice right now, as the economy is still doing well and we are headed into the busy holiday shopping period. With that in mind, take a look at Gap, Foot Locker, and Michael Kors Holdings, all of which look cheap “relative to their respective sectors” and have “identifiable catalysts between now and year-end”, according to analysts at Jefferies.

FINSUM: Retail is interesting to us at present because it is not overly rate sensitive and is heading into its strongest period of the year right when the economy is looking best. That said, we are worried about consumer spending falling on the back of these equity losses.

(Houston)

The oil market has been in an interesting period since at least 2014. In the years prior, many had been worried about the concept of peak oil, or the idea that the world was past its peak output of oil and that supply would grow ever tighter. Then the shale boom happened and the world was suddenly floating in the stuff, causing prices to plummet. Now we are somewhere back in the middle as there are genuine concerns about supply at the same time as growing demand. Shale growth is slowing in the face of capital constraints and pipeline issues, and “The Saudis are just about out of spare capacity”, according to a top energy adviser.

FINSUM: We think the concerns over supply are legitimate enough that they will be supportive of prices even if we are slowly headed towards recession. That said, we think more supply will come to market to meet demand than many anticipate.

(New York)

Value investing has been dead for a long time. So long in fact that many of its strongest disciples are even starting to wonder if it will ever return. Well, something interesting has happened this month. The broader market was down 8.9%, but the S&P Value Index only fell 5%, showing that value stocks have actually been outperforming the market during the recent turmoil. BlackRock is sticking to value stocks, with the head of factor-based investment strategy commenting that “We find the economic rationale still holds … We’re comforted by 90 years of long-run data, where value time and time again outperforms growth”. One of the issues for investors is that there is no clear way to define value, as each index uses its own metrics.

FINSUM: Value stocks do seem interesting right now, as this is the kind of environment where they would thrive. But do you determine value based on price to book, P/E ratio, returns, or something else?

(New York)

If one thing is apparent about the Fed, it is that Jerome Powell and his team are much more hawkish than Yellen or Bernanke. Therefore, it looks like rates are going to continue to rise (even in the face of a market protest, such as is occurring). With that in mind, investors need to find ways to hedge their portfolios or profit from rising rates. One area to look is at bank ETFs. Banks tend to do well as interest rates rise as the lift in rates boosts their net interest margins, a key source of revenue for the sector. Accordingly, take a look at the Financial Select Sector SPDR Fund (XLF) and the SPDR S&P Regional Banking ETF (KRE), both of which had been attracting capital. Additionally, see the First Trust Nasdaq Bank ETF (FTXO), Invesco KBW Bank ETF (KBWB), and the SPDR S&P Bank ETF (KBE).

FINSUM: Banks stocks seem to be a good buy so long as we don’t get an inverted yield curve.