Which is the best buy?

There’s an exchange-traded fund (ETF) for just about everything these days, including the gambling and sports betting industry.

The gambling industry in the U.S. has grown exponentially since the Supreme Court ruled in 2018 to allow states to permit sports betting. That coincided with the advancement of mobile technology, making betting easier and more accessible than ever through mobile apps.

Online sports betting alone is a $14 billion industry and it is expected to increase to $24 billion in five years – and that’s not counting casino gambling and other forms of betting.

While it is a growth industry, it is in many ways just in the fledgling stage. So, there are only three major ETFs that focus on sports betting, iGaming, and gambling.

Pacer Bluestar Digital Entertainment ETF

The Pacer Bluestar Digital Entertainment ETF (NASDAQ: ODDS) is one of the newcomers in this space, and it has been the top performer this year, up 29% year-to-date and 34% over the past one year.

This ETF tracks its own BlueStar Global Online Gambling, Video Gaming and eSports Index, which includes companies that generate at least 50% of their revenue from online gambling, video game development, or eSports. The rules-based strategy also requires stocks to meet certain market cap and trading volume screens. Stocks in the portfolio are split into two categories – online gambling companies and video gaming/esports companies.

It currently holds about 48 stocks, with Flutter Entertainment (NYSE:FLUT), which owns FanDuel, the largest holding, followed by DraftKings (NASDAQ: DKNG), and Tencent Holdings, which is listed on the HKSE.

It was launched in April of 2022, so it does not yet have a three-year track record, but its annualized return since inception is roughly 10.2%.

Roundhill Sports Betting & iGaming ETF

The Roundhill Sports Betting & iGaming ETF (NYSEARCA: BETZ) is another relative newcomer, having been launched in June of 2020. It has also had a good year, up roughly 17% YTD and 22% over the past 12 months. It is also the largest of the three, with about $80 million in assets under management.

This ETF is passively managed, tracking the Morningstar Sports Betting & iGaming Select Index. The index is designed to provide pure exposure to sports and online betting companies, as long as they meet certain screens. The sports betting companies must be engaged in analyzing sports events and wagering on the outcome. The iGaming companies must be engaged in betting online in games of chance, such as poker, slots, blackjack, or the lottery.

The portfolio currently holds 32 stocks, including the three largest holdings, Flutter Entertainment, DraftKings, and Sportradar Group AG (NASDAQ:SRAD).

The stock does have a three-year track record, during which has posted a -14% annualized return. Since inception it has returned 5.1% annually.

VanEck Gaming ETF

The VanEck Gaming ETF (NASDAQ: BJK) is the most established of the group, launching in 2008 as the first global gaming ETF. It has returned about 4% YTD and 11% over the past 12 months, as of November 22.

This ETF tracks the performance of the MVIS Global Gaming Index, which features companies involved in casinos and casino hotels, sports betting, lottery services, gaming services, gaming technology and gaming equipment. It has about $34 million in AUM.

It holds about 35 stocks with Flutter Entertainment, once again, the largest position. However, its second largest holding is Aristocrat Leisure, a gambling machine manufacturer based in Australia that trades on the Australian Securities Exchange. The third largest stock is VICI Properties (NYSE: VICI), a real estate investment trust that invests in casino and gaming properties.

Over the past five years, the ETF has recorded an annualized return of 3.1% and its 10-year annualized return is just 1.9%.

Which is the better buy?

If you are looking for exposure in the gambling industry, these three fit the bill, but all cover the industry differently.

Pacer has a major focus on sports betting but is diversified in tangential areas of eSports and video gaming. Roundhill is the most “pure play” of them all in sports betting and gambling, while Van Eck casts a wider net, including casinos, gaming manufacturers, lottery, and technology companies.

Where you invest depends on what you are looking for, as each has its benefits. The Pacer ETF has obviously been the top performer of the three but has a limited track record. Roundhill is the best option for investors that want the most direct exposure to online sports betting and gambling stocks, while VanEck is the most broadly diversified, but its returns have been lackluster.

When investing in industry-specific ETFs like these, it is important to keep in mind that they should only make up a small fraction of a larger portfolio

Source: FXSTREET

United States: Uncertainty in the Fed’s Next Steps

Eurozone: Balancing on the Edge of Further Easing

Japan: A Policy Mix Favouring Stability

Emerging Markets: Central and Eastern Europe in Focus

When geopolitical crises occurred, major oil price shocks used to inevitably follow, with the sudden price spikes often affecting economies and industries around the world. Surprisingly, that effect has been lessening in recent years.

Instead, market dynamics, supply and demand and economic indicators are playing a more significant role in shaping the price of oil, analysts have said.

This is one of the most geopolitically turbulent periods in decades. Two wars, attacks on commercial vessels in the Red Sea and a production halt by Libya, a major crude producer, have had a surprisingly limited impact on oil markets this year, despite millions of barrels of supply being at stake.

The Ukraine war briefly pushed oil prices to multiyear highs in 2022 as traders feared that western sanctions on Russia’s energy industry would disrupt exports of roughly eight million barrels per day. However, oil futures quickly stabilised as the market adapted by finding alternative buyers and shipping routes.

Brent crude oil, the global benchmark, declined to around $78 per barrel at the end of 2022, despite earlier predictions of reaching $200 per barrel, after peaking near $140 in March that year.

In recent months, the risk of an all-out regional war in the Middle East – a region responsible for about a third of the world's oil production – has dramatically increased, with Israel’s war in Gaza escalating into Lebanon.

Israel and Iran – one of the world’s largest oil producers – have engaged in a series of “tit for tat” strikes since April, raising concerns about vital energy infrastructure being targeted.

Despite the geopolitical upheavals, Brent has fallen by 18 per cent since reaching a six-month high of $91.17 a barrel on April 5. It is down just more than 4 per cent since the beginning of the year.

A month-long disruption to Libyan oil production, caused by a political crisis, halved the country's output but had minimal impact on oil prices, with Brent crude dropping 3 per cent during the shutdown from late August to early October.

Demand uncertainty

Analysts and economists attribute the lack of market reaction to two main factors: weakening Chinese demand and ample spare capacity among Opec+ nations, who are responsible for roughly 40 per cent of the world's crude production.

“Strong supply levels and weakening demand, particularly from China, have kept prices in check, amid shifting market assessments of the risk to oil infrastructure in the Middle East,” the World Bank said in a report this month.

China, the main engine of global crude demand over the past two decades, is facing an economic slowdown, driven by a property market downturn, weak consumer spending and a decline in manufacturing.

China's crude oil imports in October totalled 44.7 million tonnes, marking a 2 per cent decline from September and a 9 per cent decrease year-over-year, according to Chinese customs data.

The International Energy Agency expects China's oil demand growth to slow to 140,000 barrels per day this year, a tenth of last year's 1.4 million bpd increase, contributing to a 1 million bpd global supply surplus in 2025.

The agency has said that China's petrol demand will peak this year, followed by diesel demand peaking next year, as electric vehicle adoption grows at a rapid pace in the world’s second-largest economy.

In the first nine months of 2024, new energy vehicles (NEVs), comprising electric, plug-in hybrid, and fuel cell vehicles, represented nearly 39 per cent of new car sales, up from 31.6 per cent in the entire previous year, the South China Morning Post reported.

“The slowdown ahead has implications for the oil market and oil prices,” academics from the Centre on Global Energy Policy at Columbia University said in a report last week.

“For world oil consumption to continue to grow at the historical one-plus million bpd per year rate, other countries/regions such as Africa, India, and South-east Asia will have to achieve nearly all these gains,” they said.

Spare capacity

The Opec+ alliance, which includes Saudi Arabia and Russia, has about 6 million bpd of spare capacity to offset any potential supply disruptions, preventing oil prices from surging.

The downside risks to oil prices have built this year as demand growth has disappointed, non-Opec+ supply has gained, and the alliance has relied on Saudi Arabia-led “voluntary cuts” to keep the market in-check, Ehsan Khoman, MUFG's head of commodities, ESG and emerging markets research, said in a research note.

“Beyond the tepid cyclical nature of the market, the build-up in substantial Opec+ spare capacity is reinforcing the ceiling for sustainable price gains,” Mr Khoman said.

“This creates conditions where prices are likely to soften into next year, particularly with Opec+ looking set to lift production in a bid to regain market share.”

The group, which currently has supply curbs of 5.86 million bpd in place, plans to unwind voluntary output cuts of 2.2 million bpd starting from January next year.

Opec's spare oil production capacity will increase to 8 million bpd by 2030 on planned capacity additions by member countries, according to the IEA.

Major oil price shocks

Arab oil embargo

During the 1973 Arab Israeli War, Opec’s Arab members imposed an oil embargo on the US and other nations that supported Israel in response to American resupply of the Israeli military. The resulting production cuts nearly quadrupled the price of oil from $2.90 a barrel before the embargo to $11.65 a barrel in January 1974.

Iran-Iraq war

The 1979 Iranian Revolution and the 1980 Iran-Iraq War significantly increased global oil prices, rising from $14.95 in 1978 to $37.42 per barrel two years later.

Gulf war

In August 1990, Iraq's invasion of Kuwait caused a sharp increase in oil prices, pushing them from around $65 to over $90 per barrel. However, after a US-led coalition's victory in early 1991, oil prices dropped to around $44 per barrel.

Asian financial crisis

The crisis, which began in Thailand in 1997 and spread across the region, led to severe economic downturns in affected countries. These countries experienced high unemployment rates, poverty, and social unrest. Oil prices plummeted from an average of $17 per barrel in late 1997 to a low of more than $10 per barrel.

9/11 attacks

Following the terrorist attack on US business and military centres on September 11, 2001, Brent prices rose by 5 per cent. However, within two weeks, prices fell by about 25 per cent due to concerns over declining oil demand.

Great recession

The 2008 financial crisis and the subsequent Great Recession severely impacted the oil and gas industry, leading to a sharp drop in oil and gas prices and a credit crunch. Oil prices fell from a high of $133.88 in June 2008 to a low of $39.09 in February 2009.

Oil glut

Oil prices plummeted by more than 70 per cent between mid-2014 and early 2016, largely driven by increased US shale oil production and improved efficiency within the sector. This resulted in the US becoming a major player in the global oil market.

Covid-19 pandemic

The Covid-19 pandemic caused oil prices to plummet due to decreased global demand from lockdowns and economic restrictions, leading to a surplus of oil in the market. In April 2020, West Texas Intermediate futures, the US crude benchmark, fell below zero for the first time since trading began in 1983.

Source: THENATIONALNEWS

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HONG KONG - Asian markets fell and the US dollar rallied on Nov 26 after Donald Trump warned he would impose huge new tariffs on China, Mexico and Canada on his first day in office, dealing a blow to hopes of a more moderate approach to trade policy.

The former and next president said on his Truth Social account that he would hammer the United States’ largest trading partners in response to the illegal drug trade and immigration.

The news dampened optimism that his pick to lead the Treasury, Scott Bessent, could temper the Trump’s assertiveness, with fears now of another trade war with China and warnings that the move – along with promised tax cuts – will reignite US inflation.

“On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25 per cent tariff on ALL products coming into the United States, and its ridiculous Open Borders,” he wrote.

In another post, he added that he would hit China with a 10 per cent tariff “above any additional Tariffs” on all of its products entering the US, citing Beijing’s failure to tackle fentanyl smuggling.

The announcement fuelled a sell-off across most Asian markets, though Hong Kong and Shanghai advanced in early exchanges.

Japan’s Nikkei Index slid 1.3 per cent while South Korea’s Kospi index fell 0.7 per cent and Australia’s ASX 200 dropped 0.3 per cent.

Singapore’s Straits Times Index was down 0.3 per cent at 11am local time.

The dollar surged more than 1 per cent against its Canadian equivalent and Mexico’s peso as well as the Chinese yuan. However, the yen strengthened thanks to its safe haven status.

“In a striking return to hardline policies, President-elect Trump has dramatically escalated tensions with a brash promise to impose a sweeping 25 per cent tariff on all imports from Canada and Mexico the moment he reassumes office,” said SPI Asset Management’s Stephen Innes.

He said the declaration “shatters any lingering hopes that... Scott Bessent might usher in an era of moderation”.

“Initially hailed as a beacon of stability, Bessent’s influence now seems overshadowed by a resurgence of Trump’s uncompromising ‘America First’ doctrine, which starkly excludes even the closest of allies from its protective embrace.”

Asia’s struggles came after another up day on Wall Street, where the Dow ended at a second successive record, helped by the choice of Bessent, though US futures were down on Nov 26.

Bitcoin struggled below US$95,000 after dropping to a six-day low of around US$92,600 on Nov 25 as the Trump-fuelled rally that had seen it surge around 50 per cent to within a whisker of US$100,000 ran out of steam.

Oil prices extended Nov 25’s losses of around 3 per cent that came after an official said Israel’s security cabinet was to decide on Nov 26 on whether to accept a ceasefire in its war with Hezbollah in Lebanon. The stronger dollar was also depressing the commodity.

The US, European Union and United Nations have all pushed in recent days for a truce in the long-running hostilities between Israel and Hezbollah, which flared into all-out war in late September. 

Source: Straitstimes

The Japanese Yen (JPY) edges higher against its American counterpart during the Asian session on Tuesday, albeit lacking bullish conviction and remains confined in a familiar range held over the past week or so. A slight deterioration in the risk sentiment – as depicted by a weaker tone around the equity markets – offers some support to the safe-haven JPY. That said, the heightened uncertainty over the timing of the next rate hike by the Bank of Japan (BoJ) might continue to cap any meaningful appreciating move for the JPY. 

Meanwhile, Scott Bessent's nomination as the US Treasury secretary provided a short-lived respite to US bond investors amid expectations for a less dovish Federal Reserve (Fed). In fact, market players now seem convinced that US President-elect Donald Trump’s expansionary policies will reignite inflation and force the Fed to cut interest rates slowly. This, in turn, triggers a fresh leg up in the US Treasury bond yields, which assist the US Dollar (USD) in filling the weekly bearish gap and should cap the lower-yielding JPY. 

Japanese Yen struggles to lure buyers amid doubts over BoJ’s ability to hike rates further

Data published by the Bank of Japan this Tuesday showed that the Services Producer Price Index (PPI) rose 2.9% YoY in October as compared to 2.6% in the previous month.

This comes after last week's stronger consumer inflation figures from Japan and BoJ Governor Kazuo Ueda's hawkish remarks and keeps the door open for a December rate hike.

BoJ Governor Kazuo Ueda has stressed the bank's readiness to raise interest rates again if inflation becomes driven more by robust domestic demand and higher wages.

Meanwhile, investors have been scaling back their bets for another 25-basis-points rate by the BoJ in December in the wake of increased domestic political uncertainty. 

US President-elect Donald Trump said that he will charge Mexico and Canada a 25% tariff on all products coming into the US and will charge China an additional 10% tariff.

Concerns about the economic impact of increased duties temper investors' appetite for riskier assets and drive some haven flows towards the Japanese Yen on Tuesday.

The yield on the benchmark 10-year US government bond fell by the most since early August on Monday in response to Scott Bessent's nomination as the US Treasury secretary.

Chicago Fed President Austan Goolsbee said on Monday that barring some convincing evidence of overheating, he foresees the central bank continuing to lower rates. 

Separately, Minneapolis Fed President Neel Kashkari said that it is still appropriate to consider another interest-rate reduction at the December FOMC policy meeting.

Traders have been paring back their expectations for an interest-rate cut by the Federal Reserve in December amid concerns that Trump's policies could boost inflation.

The US Dollar regains positive traction following the previous day's slide amid a fresh leg up in the US bond yields, which, in turn, should cap the lower-yielding JPY. 

Traders now look forward to the release of the FOMC meeting minutes for cues about the future rate-cut path and determining the near-term trajectory for the Greenback. 

This week's US economic docket also features the first revision of the US Q3 GDP print and the US Personal Consumption and Expenditure (PCE) price Index. 

USD/JPY bears need to wait for some follow-through selling below 153.30-153.25 support

The USD/JPY pair has been consolidating near the 100-period Simple Moving Average (SMA) on the 4-hour chart. Moreover, mixed oscillators on daily and hourly charts make it prudent to wait for some follow-through selling below last week's swing low, around the 153.30-153.25 region, before positioning for any further losses. Spot prices might then weaken further below the 153.00 mark, towards the next relevant support near mid-152.00s en route to the very important 200-day SMA, currently around the 152.00 mark.

On the flip side, the 154.75-154.80 area now seems to have emerged as an immediate strong barrier. A sustained move beyond, leading to a subsequent strength above the 155.00 psychological mark, could lift the USD/JPY pair to the 155.40-155.50 supply zone. The momentum could extend further towards reclaiming the 156.00 mark before spot prices aim to retest the multi-month top, around the 156.75 region touched on November 15.

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

Source: FXSTREET