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Opinions John O'Connell, CFA
Financial Select Sector SPDR FundXLFCOMMENTJul 13, 2015
John O'Connell, CFAUnknown
$24.59
Stock price when the opinion was issued
$53.62
As of Jun 18, 2026. Market Open.
E.T.F.'s
It's the ideal tool to help you make quicker, more informed decisions for managing and tracking your investments.
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BUY
Financials will be resilient during a recession. Prefers this ETF than an individual bank stock. In every recession, there's always one industry whose balance sheet is hurt the most. In 2000-1, it was tech. They cleaned up their balance sheet so they could endure the next recession. In 2008, it was financials. Therefore, financials are set up for this year.
Joe TerranovaOwned
E.T.F.'s
BUY
The VIX at 30 is a signal. She's also watching S&P levels. We're near a bottom. She took off some hedges today. She bought back XLF.
Karen FinermanOwned
E.T.F.'s
DON'T BUY
The most broadly diversified financials ETF. Bumping along. US bank sector only last year broke above the highs of 2007, a positive backdrop. Instead, look at the KCE, a capital markets ETF with MS, GS and so on. KCE has twice the dividend yield, with a higher growth rate, and outperforming nicely since April. Either go with KCE, or pick an individual name like MS.
E.T.F.'s
COMMENT
Today's hot inflation data triggering a sell-off There's a lot of put-buying today. There was a buyer of 11,000 of the August 31 puts in XLF, for example. Buyers are looking for more downside or get a little protection to the downside. The key market influencer is not oil, but rather it continues to be the 10-year yield: above 3% the markets start selling, and below 3%, they buy. Certainly, energy and food are major contributors to inflation.
E.T.F.'s
BUY
USD ETF for a new investor. You won't find good yield in the US banks, as they're about 1.75%. Try XLF, as it's done well and he'd be buying. If you want to be in USD, this is the place to be.
John HoodOwned
E.T.F.'s
BUY
We're just starting to see the seasonality for US financials, which usually runs from mid-December to mid-April, though it can start in January. US financials have recently pulled back compared to the S&P 500. They're much more sensitive to interest rates than Canadian banks, because the Canadian banks have much higher dividends. US financials react strongly to inflation and interest rate movement. At the beginning of the year, inflation and interest rates tend to pick up. He's bullish on both US and Canadian banks. In the States, he uses the XLF, which should do well coming up in the new year, especially if interest rates and strength in the economy start to pick up. If investors can look ahead to when Omicron numbers decline, which they will, they'll see this sector do quite well seasonally from now till mid-April.
E.T.F.'s
BUY
XLF vs. VFH vs. ZWK Likes US banks. ZWK is an equal weighted basket of large and regional banks. It will benefit when you see the economy recover, 6-12 months out, with lower loan losses, steepening yield curve. Yield about 6.9%, a combination of dividends and covered call options. Makes sense if you're in it for the income. XLF and VFH don't have the covered call, do have a lower expense ratio, and let you capture the upside from the underlying securities.
E.T.F.'s
BUY
Top 2 or 3 ETFs until 2022. He likes SMH-N - semiconductors. XLF-N still has upside as the financials have underperformed. Canadian banks stick out as well. They are sitting on a whack of cash and have not been able to raise dividends. They will probably take some loan loss provisions back into earnings soon.
E.T.F.'s
HOLD
There is a view that the US could potentially further lower rates, but if the US follows the trade agreement, it is possible they could even raise rates. If you have not been in the US financials up until now, then you have probably missed the best of the run. Canadian banks are probably fairly fully valued. The biggest opportunities in the banking sector are currently in Europe.
E.T.F.'s
PAST TOP PICK
(A Top Pick Dec 26/17, Down 13%) He will continue to like holding US bank stocks. Rising interest rates will help this ETF. He would not buy this for the yield, which is near 1.8%.
John HoodOwned
E.T.F.'s
Some people argue that an interest rate increase is going to be bullish for American banks, because they should see steepness in the yield curve, which is positive for the banks. He is not all that certain. In this case you could actually see the yield curve flatten, which would be a major negative. The real driver of the banks is going to be increased loan demand growth and investment banking fees from M&A. The space is a good one to be in, but he thinks the market is vulnerable to a pullback here. He would prefer to own one good bank, such as Wells Fargo (WFC-N), over a basket of average investments.