iShares MSCI Europe Financials ETF (NASDAQ: EUFN)

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iShares MSCI Europe Financials ETF

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The fund generally will invest at least 90% of its assets in the component securities of the underlying index and in investments that have economic characteristics that are substantially identical to the component securities of the underlying index. The index is a free float-adjusted market capitalization-weighted index designed to measure the combined equity market performance of the financials sector of developed market countries in Europe.

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iShares MSCI Europe Financials Sector Index Fund

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FINE

Trump propone arancel del 50 % a la UE desde junio. El déficit comercial, coches y fármacos, en el centro del nuevo pulso transatlántico.

Trump anuncia arancel del 50 % a importaciones de la UE

What President Donald Trump announced Friday on Truth Social may mark the sharpest escalation yet in transatlantic trade tensions: a sweeping 50% tariff on all European Union imports starting June 1, blaming a record U.S.-EU trade deficit and what he called &#8220;unfair and unjustified&#8221; <a href="https://www.benzinga.com/economics/macro-economic-events/25/05/45585283/trump-tariff-threat-hits-europe-stocks-sink-as-50-duties-loom">barriers to American goods.</a>
Trump said the EU had been "very difficult to deal with," referencing trade deficits of over $250 billion a year and blaming Europe for high corporate penalties, value-added taxes, monetary manipulation and aggressive lawsuits against American companies. 
He indicated that unless goods are produced in the U.S., they should face tariffs of 50%, calling it "totally unacceptable" that such deficits persist.
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<blockquote class="twitter-tweet" data-width="500" data-dnt="true">The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with. Their powerful Trade Barriers, Vat Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations,…
&mdash; Trump Posts on &#120143; (@trump_repost) <a href="https://twitter.com/trump_repost/status/1925880933044912276?ref_src=twsrc%5Etfw">May 23, 2025</a></blockquote>
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<h2 class="wp-block-heading">What The US Buys From Europe</h2>
In 2024, the U.S. imported $687 billion worth of goods from the European Union, according to International Trade Centre data. 
The trade deficit reached $236 billion, the largest on record. In March 2025 alone, U.S. imports from the EU were $91.9 billion, with a single-month deficit of $47 billion, nearly double January's, which was the second largest. 
<h3 class="wp-block-heading">Top 10 US Imports From The EU </h3>
In 2024, the top 10 U.S. imports from the European Union included: 
<ol class="wp-block-list">
<li>Pharmaceutical products – $134.7 billion</li>
<li>Machinery and mechanical appliances – $105.1 billion</li>
<li>Vehicles and parts – $72.9 billion</li>
<li>Electrical machinery – $43.6 billion</li>
<li>Commodities (not specified) – $43.5 billion</li>
<li>Optical and medical instruments – $41.2 billion</li>
<li>Organic chemicals – $36.6 billion</li>
<li>Aircraft and spacecraft – $16.9 billion</li>
<li>Mineral fuels and oils – $15.3 billion</li>
<li>Beverages and spirits – $14.2 billion </li>
</ol>
Pharmaceuticals and cars are among the most exposed sectors, with many U.S. firms depending on EU-made inputs. The rising cost of imported components could erode profit margins across industries.
<h3 class="wp-block-heading">Watch These ETFs</h3>
U.S. ETFs exposed to either European stocks or sectors sensitive to import prices could face pressure:
<ul class="wp-block-list">
<li>SPDR EURO STOXX 50 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FEZ#NYSE">FEZ</a>)</li>
<li>Vanguard Consumer Discretionary ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VCR#NYSE">VCR</a>)</li>
<li>iShares MSCI Europe Financials ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EUFN#NYSE">EUFN</a>)</li>
<li>Themes European Luxury ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FINE#NYSE">FINE</a>)</li>
<li>Select STOXX Europe Aerospace &amp; Defense ETF (CBOE: EUAD)</li>
</ul>
<h3 class="wp-block-heading">Could US Services Be The Next Target?</h3>
While Trump's move covers physical goods, the broader U.S.-EU economic relationship is also affected by services. 
According to the European Commission, in 2023:
<ul class="wp-block-list">
<li>The EU imported €427 billion ($478 billion) in U.S. services</li>
<li>The U.S. imported €318 billion ($356 billion) in EU services</li>
</ul>
In a note last month, Goldman Sachs economist Filippo Taddei said the EU could target U.S. digital and pharma services through tools like the Digital Services Act, Enforcement Regulation, and the Anti-Coercion Instrument.
Last week, Goldman Sachs economist Giovanni Pierdomenico said a U.S.-EU deal might be more likely in the final stretch of negotiations.
The U.S. raised three demands: lower EU tariffs and non-tariff barriers, fairer digital regulations, and increased EU purchases of U.S. goods. The EU has responded with zero-for-zero industrial tariffs and offers to cut the trade imbalance.
Still, Pierdomenico estimated that if the U.S. imposed 20% tariffs, Eurozone GDP could drop by 0.4% to 1% by end-2026. A 50% tariff would have far more severe implications.
Read Next:
<ul class="wp-block-list">
<li><a href="https://www.benzinga.com/25/05/45584696/trump-threatens-tim-cook-to-manufacture-iphones-in-the-us-or-face-at-least-25-tariffs">Trump Threatens Tim Cook To Manufacture iPhones In US Or Face &#8216;At Least 25%&#8217; Tariffs: AAPL Stock Slides Over 3% In Premarket </a></li>
</ul>
Photo: Shutterstock

Trump Sparks New Chapter In Transatlantic Trade War: What The US Buys From Europe

The French stock market is on track to register its worst weekly performance <a href="https://www.benzinga.com/topic/france">since late February 2022</a>.
Following the announcement of <a href="https://www.benzinga.com/markets/equities/24/06/39249718/macrons-snap-election-gamble-shocks-european-markets-euro-eyes-worst-2-day-performance-in-15-mon">snap elections last Sunday</a>, the Paris CAC 40 index — as tracked by the iShares MSCI France Index Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EWQ#NYSE">EWQ</a>) — fell by 2.4% at 8:10 a.m. ET, heading into the final hours of the European session.
On a weekly basis, the decline extends to 6%, marking the worst performance since late February 2022, when Russia&#8217;s invasion of Ukraine triggered a drop of over 10% for the CAC 40.
Chart: France Equities Tumble The Most Since Russian Invasion Of Ukraine
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="500" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081129/image-35-1024x500.png" alt="" class="wp-image-388793" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081129/image-35-1024x500.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081129/image-35-300x147.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081129/image-35-768x375.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081129/image-35-1536x750.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081129/image-35.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h3 class="wp-block-heading">Risks Of Broader Contagion</h3>
The main declines this week are among banking stocks, hit by the wave of sell-offs due to political uncertainties. France&#8217;s largest financial institution, BNP Paribas, fell over 13%, while Societe Generale is down by over 16% this week.
An exchange-traded fund tracking broader European financial institutions – the iShares MSCI Europe Financials ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EUFN#NYSE">EUFN</a>) – is down by 7% for the week, indicating that France&#8217;s political risks are spreading throughout the region. 
The broader iShares MSCI Eurozone ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EZU#NYSE">EZU</a>) fell 4.6% this week, on track for its worst week since September 2022.
The euro fell by 0.5% on Friday and by over 1% for the week, eyeing its worst weekly performance in over two months.
&#8220;The risk premium in European assets could build further,&#8221; Chris Turner, global head of markets at ING analyst, wrote on a note Friday.
<h3 class="wp-block-heading">Why Are French And European Assets Tumbling This Much?</h3>
The decisive victory of Marine Le Pen&#8217;s far-right National Rally party in last Sunday&#8217;s European Parliament elections led President Emmanuel Macron to dissolve the French National Assembly and call for new parliamentary elections. France will vote in the first round in two weeks, followed by a runoff on July 7.
With a budget deficit already particularly high at around 6%, investors fear the risk of French fiscal accounts deteriorating further if Le Pen&#8217;s party secures a majority in the national parliament.
According to ING, "Frexit" is no longer seen as a risk, but markets are jittery ahead of the snap parliamentary election.
In addition to far-right-wing fears, French left-wing parties are forming a coalition to run a single candidate per district, which could further erode support for President Macron&#8217;s party.
The yields on French 10-year government bonds have been trending upward, and the spread with the German Bund has shot up to 83 basis points, the highest level since July 2012.
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="500" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081841/image-36-1024x500.png" alt="" class="wp-image-388808" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081841/image-36-1024x500.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081841/image-36-300x147.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081841/image-36-768x375.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081841/image-36-1536x750.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/06/14081841/image-36.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read Now: <a href="https://www.benzinga.com/news/earnings/24/06/39330313/us-stocks-to-end-record-clinching-week-on-subdued-note-gamestop-slides-adobe-soars-fed-speeches-and">US Stocks To End Record-Clinching Week On Subdued Note, GameStop Slides, Adobe Soars: Fed Speeches And More To Watch Heading Into Friday</a>
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French Stocks Set For Worst Week Since Russia's War In Ukraine, Yields Versus Bund Hit 12-Year Highs On Snap Election Jitters

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Citigroup (C) - The US big bank with its shares down the most amid the concerns with Deutsche Bank (DB). A report early Friday morning suggested the cost of insuring Deutsche Bank from a default suddenly spiked. Citi shares were down about 2%; Deutsche Bank shares were down about 8%.
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<li>
iShares MSCI Europe Financials ETF (EUFN) - An exchange-traded fund (ETF) to gain exposure to Eurobanks. The ETF sees some good volume each trading day, an average of over 1 million shares traded.
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<li>
RH (RH) - A play on upcoming earnings out of this luxury home goods retailer. RH will report quarterly results on Wednesday after market close.
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<li>
Jefferies (JEF) - Despite concerns with the global banking industry over the last several weeks, analysts at Oppenheimer on Friday were optimistic on Jefferies. The analysts highlighted Jefferies as a standout in the investment banking and financial services industry. To hear more about the analyst call, check out Benzinga&#39;s Stocks To Watch podcast on <a href="http://twitter.com/Benzinga">Twitter</a>, <a href="https://podcasts.apple.com/us/podcast/benzinga-daily-stocks-to-watch/id1611216462">Apple Podcasts</a> or <a href="https://open.spotify.com/show/6mBnUV9zDJAXvqjWnx0ZnY">Spotify</a>.
</li>
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<li>
Barnes &amp; Noble Education (BNED) - A play on the education publishing industry. Shares of peer in the space, Scholastic (SCHL), were down nearly 20% Friday morning following disappointing quarterly results.
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Pre-Market Outlook

BNED

Benzinga Pro's Top 5 Stocks To Watch For Friday, March 24, 2023: C, EUFN, RH, JEF, BNED

Ken Fisher founded Fisher Asset Management in 1979, and now has north of $197 billion in assets under management, with more than 100,000 clients around the world. Fisher Asset Management is a fee-only investment adviser and money management firm serving large institutions, high-net-worth individuals, and small business <a href="https://www.benzinga.com/news/large-cap/22/12/29895418/a-philanthropic-activist-investor-maintains-stakes-in-2-canadian-railroad-stocks-paying-dividends">retirement plans globally.</a>
Fisher is currently the executive chairman and co-CIO, after stepping down from the role of CEO, a position he held&nbsp;for 37 years. Additionally, Fisher began writing a monthly column for Forbes in 1984, around the same time his bestselling book &quot;Super Stocks&quot;&nbsp;gained massive attention. Fisher wrote the &quot;Forbes Portfolio Strategy&quot; column for over 32 years until Dec. 31, 2016, making him the longest-running columnist in Forbes&rsquo; history.
Fisher is buying these two high-yielding exchange traded funds (ETFs) as we head into the end of the year.
Also Read:&nbsp;<a href="https://www.benzinga.com/government/22/11/29733838/several-developed-nations-allied-groups-come-together-with-10b-backing-for-indonesias-efforts-on-dec">Several Developed Nations, Allied Groups Come Together With $10B Backing For Indonesia&#39;s Efforts On Decarbonization</a>
iShares iBoxx $ Investment Grade Corporate Bond ETF (ARCA: LQD) is offering a dividend yield of 3.13% or $3.40 per share annually, conducting monthly payments, with an inconsistent track record of increasing its dividends. The iShares iBoxx Investment Grade Corporate Bond ETF seeks to track the investment results of an index composed of U.S. Dollar-denominated, investment-grade corporate bonds. The ETF gives you access to over 1,000 corporate bonds in a single fund, and its top three holdings include JPMorgan Chase (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jpm#NYSE">JPM</a>), Bank of America (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bac#NYSE">BAC</a>), and Goldman Sachs Group (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gs#NYSE">GS</a>).
In the third quarter, Fisher increased its stake in the iShares iBoxx Investment Grade Corporate Bond ETF by roughly 41% to over 22 million shares.
More on LQD:<a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/11/29910787/investors-abandoning-healthy-companies-at-fastest-past-in-history-is-the-fed-to-bla">&nbsp;Investors Abandoning Healthy Companies At Fastest Past In History: Is The Fed To Blame?</a>
iShares MSCI Europe Financials Sector Index Fund (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/eufn#NASDAQ">EUFN</a>) is offering a forward dividend yield of 7.61% or $1.34 per share annually, through semiannual payments, with a track record of increasing its dividends once in the past year. The iShares MSCI Europe Financials Sector Index Fund seeks to track the investment results of an index composed of developed market European equities in the financials <a href="https://www.benzinga.com/money/best-sectors-to-invest-in-right-now/">sector</a>. The ETF&rsquo;s top three holdings include HSBC Holdings (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hsbc#NYSE">HSBC</a>), Allianz (OTCPK: ALIZF), and Zurich Insurance Group (OTCQX: <a class="ticker" href="https://www.benzinga.com/stock/zfsvf#OTCQX">ZFSVF</a>).
Fisher increased its stake in the iShares MSCI Europe Financials Sector Index Fund by 125% to over 39.2 million shares during <a href="https://www.benzinga.com/news/22/11/29575037/hsbcs-top-shareholder-supports-splitting-up-the-banking-giant">the third quarter.</a>
Now Read:&nbsp;<a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/12/29935877/elon-musk-vs-tim-cook-feud-gets-over-in-a-heartbeat-analyst-says-we-were-just-serve">Elon Musk Vs. Tim Cook Feud Gets Over In A Heartbeat: Analyst Says We Were Just Served &#39;Masterclass In Crisis Management&#39;</a>

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This Hedge Funder With Over $197B Under Management Just Increased His Stake In 2 High Yielding ETFs

On <a href="https://www.cnbc.com/video/2021/09/03/final-trades-ewj-wfc-eufn-psfe.html">CNBC&#39;s &quot;Fast Money Final Trades,&quot;</a> Steve Grasso said Paysafe Ltd (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/psfe#NYSE">PSFE</a>) has not performed at all. He is still in the name and he still has conviction.
Nadine Terman is a buyer of iShares MSCI Europe Financials ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/eufn#NASDAQ">EUFN</a>). She sees great earnings growth in the European banks, good loans growth and a potential catalyst with the German elections.
Check out the&nbsp;<a href="https://www.benzinga.com/trade-ideas">Benzinga Trade Ideas</a>
Bonawyn Eison would proceed with caution with Wells Fargo &amp; Co (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/wfc#NYSE">WFC</a>). There is still too much gray area with the regulatory overhang.
Brian Kelly wants to buy iShares MSCI Japan ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ewj#NYSE">EWJ</a>).

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PSFE

'Fast Money' Picks For September 7

For all the controversy surrounding European banks, and there has been plenty dating back to last year, the iShares MSCI Europe Financials ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/eufn#NASDAQ">EUFN</a>) has been a decent performer as highlighted by a year-to-date gain of 13.43%.
<h3>What Happened</h3>
While EUFN&#39;s 2019 showing appears impressive, it&#39;s less than half the returns offered by the widely followed KBW Bank Index, a collection of domestic banks, and about 550 basis points behind the MSCI EMU Index.
EUFN&#39;s performance has been steady against the backdrop of mostly sluggish European economies, but if those economies weaken further, the fund could be in trouble.
&ldquo;The overall sector outlook for western European banks in 2020 is negative as revenue generation is likely to be pressured by the weak outlook for GDP growth and continued low interest rates,&rdquo; <a href="https://www.fitchratings.com/site/pr/10104250">Fitch Ratings said in a recent note</a>.
<h3>Why It&#39;s Important</h3>
EUFN, which tracks the MSCI Europe Financials Index, allocates almost 29% of its weight to British banks, introducing an <a href="https://www.benzinga.com/stock/ewu/">element of Brexit risk</a>. Then there&#39;s the 12.66% weight to Germany, the Eurozone&#39;s largest economy and one that recently narrowly skirted a technical recession.
Credit losses and banks&#39; ability to stem those losses via cost-cutting initiatives will be important stories for the $739.4 million EUFN in 2020.
&ldquo;We expect credit losses to increase from their cyclically low levels, and banks with weaker underwriting standards and greater reliance on net interest income could face significant earnings pressure,&rdquo; said Fitch Ratings. &ldquo;However, many banks will be able to support earnings with further cost-cutting.&rdquo;
<h3>What&#39;s Next</h3>
With a three-year standard deviation of 17.46%, EUFN reflects the volatility proposition found with European banks. By comparison, the Dow Jones U.S. Financials Capped Index has a three-year standard deviation of just 13.55%.
If Germany avoids recession and Italy finds some semblance of political and economic stability, EUFN could surprise investors next year. Italy, the Eurozone&#39;s third-largest economy behind Germany and France, accounts for 7.27% of <a href="https://www.ishares.com/us/products/239645/?referrer=tickerSearch">EUFN&#39;s geographic exposure.</a>
&ldquo;We have revised the Italian banking sector outlook to stable from negative, where it had been since 2017, as we expect the performance of Italian banks to have stabilised,&rdquo; Fitch said. &ldquo;Pressure on revenue from low interest rates and weak lending demand from the domestic corporate and SME sector will persist, but stronger asset quality, regardless of the lack of economic growth, and stronger NPL coverage should help to keep loan impairment charges under control and underpin profitability.&rdquo;
Related Links:
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Long Ideas

This Embattled Bank ETF Faces More Challenges

Global markets sank Thursday after the European Central Bank cut its 2019 economic growth forecast and announced a new round of longer-term refinancing operations (TLTRO) stimulus for European banks.
The ECB cut its 2019 Eurozone growth forecast from 1.7 percent to 1.1 percent. It also announced a third round of bank stimulus that will begin in September and run through March 2021. The ECB indicated it has no plans to raise interest rates from record lows in 2019.
<h3>Why It&rsquo;s Important</h3>
Economists anticipated there would be no rate hike from the ECB. Some suspected a TLTRO announcement, but few anticipated such an aggressive cut to 2019 economic growth forecasts.
The dovish announcement of no rate hikes and additional bank stimulus was likely already priced into markets, according to Tom Essaye, founder of Sevens Research Report.
&ldquo;For the first time in well over a year the ECB matters again for US stocks as investors need continual positive affirmation that global central banks are turning dovish. If they don&rsquo;t get it from the ECB, that will add to the headwinds facing markets,&rdquo; Essaye said Thursday.
Berenberg analyst Philipp Jaeger said much of the negative market reaction may be due to the degree of the stimulus falling short of what some investors <a href="https://www.zerohedge.com/news/2019-03-07/bad-european-banks-tumble-ecb-unveils-massive-easing-heres-why-its-not-working">had hoped</a>.
<h3>Draghi Speaks</h3>
Markets around the world headed lower after ECB President Mario Draghi spoke to reporters on Thursday about the ECB&rsquo;s economic outlook.
&ldquo;The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment,&rdquo; Draghi said.
The biggest factor creating chaos for the EU in the near-term is Brexit. The U.K. will hold a series of votes <a href="https://www.cnbc.com/2019/03/07/theresa-mays-brexit-vote-is-on-a-knife-edge-heres-what-experts-predict.html">next week </a>to determine whether it will adopt Prime Minister Theresa May&rsquo;s Brexit proposal that was initially rejected in January, exit the EU with no plan in place or postpone Brexit until a later date.
In addition, the international trade war spearheaded by U.S. president Donald Trump has created additional uncertainty in the European economy. Despite aggressive international tariffs from Trump, U.S. trade deficit surged to its highest level in a decade in 2018.
<h3>What&rsquo;s Next</h3>
The next major economic data point U.S. investors will be watching is Friday&rsquo;s U.S. jobs report. Essaye said investors will be looking for job creation in a sweet spot range of between 125,000 and 350,000.
The SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>) dropped 0.9 percent on Friday and is down 2 percent on the week.
Here&rsquo;s a look at how other stocks and ETFs were impacted Thursday:
<ul>
<li>iShares MSCI United Kingdom Index (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ewu#NYSE">EWU</a>) was down 0.7 percent.</li>
<li>Vanguard FTSE Europe ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vgk#NYSE">VGK</a>) was down 1 percent.</li>
<li>Deutsche Bank AG (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/db#NYSE">DB</a>) was down 5 percent.</li>
<li>ISHARES TR/MSCI EUROPE FINL SE (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/eufn#NASDAQ">EUFN</a>) was down 2.2 percent.</li>
</ul>
Related Links:
<a href="https://www.benzinga.com/news/19/03/13310521/us-trade-deficit-hits-10-year-high">US Trade Deficit Hits 10-Year High</a> 
<a href="https://www.benzinga.com/news/19/02/13248760/fed-chair-powell-we-are-prepared-to-adjust">Fed Chair Powell: &#39;We Are Prepared To Adjust&#39;</a>
Mario Draghi is captured during the special address session at the Annual Meeting 2013 of the <a href="https://www.flickr.com/photos/15237218@N00/8413918976">World Economic Forum</a> in Davos, Switzerland.

Stocks Fall As ECB Cuts Growth Guidance, Bank Stimulus Plan Falls Flat

The iShares MSCI Europe Financials ETF (NASDAQ: <a class="ticker" href="/stock/eufn#NASDAQ">EUFN</a>) is down just over 1 percent year-to-date. While it&#39;s not alarming decline by any mean, it&#39;s a broad view: a more focused look at EUFN reveals the exchange traded fund resides about 11 percent below the 52-week high it set in February.
EUNF is more than 11 percent below its 200-day moving average. Several other factors point to more potential downside for EUFN, which tracks the MSCI Europe Financials Index.
<h3>
	What Happened</h3>
The $2.13-billion EUFN holds 83 stocks, with HSBC Holdings Plc (NYSE: <a class="ticker" href="/stock/hbc#NYSE">HBC</a>) accounting for more than 10 percent of the fund&#39;s weight. None of EUFN&#39;s other holdings command weights of more than 5.18 percent.
At the geographic level, EUFN is top-heavy, with the U.K. representing over 30 percent of the fund&#39;s roster. Switzerland, France and Germany combine for almost 34 percent of EUFN&#39;s geographic exposure.
<h3>
	Why It&#39;s Important</h3>
&ldquo;A key question is: why are European banks weakening, given the weakness in the euro exchange rate is a tailwind for broad European equities [and] Europe is an export region?&rdquo;&nbsp;Rareview Macro founder Neil Azous said in a Monday note.&nbsp;
Some marquee economic data points could test EUFN in the near-term, which is a point to ponder for investors, as some recent data releases out of the Eurozone have been disappointing.
&ldquo;Secondly, the Eurozone economic data surprise index closed last Friday at negative&nbsp;91.7,&rdquo; said Azous. &ldquo;The 50-day moving average, effectively duration weighting the data, is negative 73.21, also the lowest since 2011 when it bottomed at negative 80.71.&rdquo;
<h3>
	What&#39;s Next</h3>
The challenges facing EUFN may indicate the ETF will be challenged to deliver compelling risk-reward for investors. EUFN&#39;s <a href="https://www.ishares.com/us/products/239645/?referrer=tickerSearch">three-year standard deviation</a> is 18.23 percent, or more than 500 basis points above the same metric on the iShares U.S. Financials ETF (NYSE: <a class="ticker" href="/stock/iyf#NYSE">IYF</a>).
The key point here is that further weakness in the financial sector could lead to broader European equity weakness,&rdquo; said Azous. &ldquo;A second question is if the financial sector leads broader European equities lower, would other markets follow, including the U.S.?&rdquo;
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/18/05/11746303/giving-consumer-staples-etfs-another-chance">Another Chance For XLP</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/18/05/11738894/another-small-cap-etf-to-consider">Look At This Small-Cap ETF</a>

Short Ideas

iShares Dow Jones US Financial Sector Index Fund

European Bank ETF Could Face Trouble Ahead

On <a href="https://www.cnbc.com/video/2017/09/07/fast-money-final-trades-sq-mu-and-more.html">CNBC&#39;s &quot;Fast Money Final Trade&quot;</a>, Pete Najarian recommended a long position in Micron Technology, Inc. (NASDAQ: <a class="ticker" href="/stock/mu#NASDAQ">MU</a>). He said that the stock looks like it&#39;s breaking out.
Tim Seymour thinks that Ishares MSCI Europe Fincls Sctr Indx Fd (NASDAQ: <a class="ticker" href="/stock/eufn#NASDAQ">EUFN</a>) should be bought after the ECB comments.
Steve Grasso believes that Square Inc (NYSE: <a class="ticker" href="/stock/sq#NYSE">SQ</a>) is a buy, despite the recent move higher.
Guy Adami is a buyer of Thermo Fisher Scientific Inc. (NYSE: <a class="ticker" href="/stock/tmo#NYSE">TMO</a>).

CNBC

Fast Money

Micron, Square, Thermo Fisher: Fast Money Picks For September 8

Tim Seymour recommended on <a href="http://www.cnbc.com/video/2017/06/28/fast-money-final-trades-tbt-vrx-and-more.html">CNBC&#39;s &quot;Fast Money Final Trade&quot;</a> a long position in Ishares MSCI Europe Fincls Sctr Indx Fd (NASDAQ: <a class="ticker" href="/stock/eufn#NASDAQ">EUFN</a>). He thinks that interest rates are going higher across the Europe.
Karen Finerman suggested that traders with a long position in Valeant Pharmaceuticals Intl Inc (NYSE: <a class="ticker" href="/stock/vrx#NYSE">VRX</a>) should sell some upside call options against it because the stock had a very big run.
Brian Kelly is a buyer of ProShares UltraShort Lehman 20+ Yr(ETF) (NYSE: <a class="ticker" href="/stock/tbt#NYSE">TBT</a>).
Guy Adami thinks that Discover Financial Services (NYSE: <a class="ticker" href="/stock/dfs#NYSE">DFS</a>) should be bought, despite the move up.

ProShares UltraShort Lehman 20+ Year Treasury

Valeant, Financials And More: Fast Money Picks For June 29

British Prime Minister Theresa May's wager on gaining majority backfired when her Conservatives party emerged the largest but lost majority in a snap election on June 8, 2017. May stunned the world in April by calling this June election, three years ahead of schedule. Continuous opposition from members of the House of Lords on Brexit negotiations led Theresa May to take this step.
Now, Britain is likely to have a hung parliament in the absence of a clear majority. As per <a href="http://indianexpress.com/article/world/uk-election-results-2017-live-updates-theresa-may-jeremy-corbyn-4695682/">the source</a>, the election saw about 69% of turnout, the highest since 1997. To gain a majority, a party needs to get 326 seats, while the Conservatives have secured 310. As a result, May's party won't be able to form a government without the help of minority parties.
Labour Party leader Jeremy Corbyn has already asked for May's resignation. Some market watchers believe that "she would attempt to form a government even if her party loses its majority."
However, at this moment, Britain needs a stable and strong government so that it can push through its mandates seamlessly. So, any kind of coalition government may not be productive for Britain over the long run.
Plus, incumbent Theresa May is less likely to secure support from other parties given her inclination toward a hard Brexit, as per <a href="http://indianexpress.com/article/world/uk-election-results-2017-live-updates-theresa-may-jeremy-corbyn-4695682/">the source</a>. And failure to amass the required seats may throw her away from power.
Market Impact 
No doubt, the result triggered the bout of political uncertainty in the U.K. Notably, formal Brexit talks are slated to start in about <a href="http://edition.cnn.com/2017/06/08/europe/uk-election-2017-results-theresa-may/index.html">10 days</a>. This will ensure Britain's exit from the EU in <a href="http://www.news18.com/news/world/uk-election-results-2017-live-britain-hung-parliament-theresa-may-brexit-1427101.html">March 2019</a>.
The CurrencyShares British Pound Sterling ETF FXB dropped over 0.1% on June 8 while it lost about 1.9% after hours in appreciation of huge volatility.iPath GBP/USD Exchange Rate ETN GBB will also be in focus in the near term (read: <a href="https://www.zacks.com/stock/news/256844/is-the-bearish-run-over-for-british-pound-etfs">Is the Bearish Run Over for British Pound ETFs?</a>).
Will a Soft Brexit Boost Europe Markets &amp; Pound?
May's faltering situation indicates that the Brexit process may be deferred or the terms of the separation of Britain from the EU's single market and customs union, which is fundamentally a <a href="http://edition.cnn.com/2017/06/08/europe/uk-election-2017-results-theresa-may/index.html">free-trade zone</a>, will now be benign. 
As per analysts like <a href="https://www.reuters.com/article/us-usa-stocks-idUSKBN18Z1J1">Brian Jacobsen</a>, chief portfolio strategist at Wells Fargo Funds Management, "a hung parliament isn't a worst-case scenario. In fact, it could be positive over the long-term as it means Brexit would have to take a softer-form." So, the U.K. election is not likely to be hugely impactful on global stocks over the medium term (read: <a href="https://www.zacks.com/stock/news/222055/europe-after-brexit-5-keys-to-investing-with-etfs">Europe After Brexit: 5 Keys to Investing with ETFs</a>)     .
Notably, in June 2016, when Britons voted in favor of leaving the EU with the ‘leave' camp gaining 51.9% support, global stocks were sold-off and British pound plunged to a 31-year low. So, one can understand that a soft Brexit will end up benefiting the currency (read: <a href="https://www.zacks.com/stock/news/221862/pound-etf-plunges-more-selloff-in-the-cards">Pound ETF Plunges: More Sell-Off in the Cards?</a>).
Likely Impact on Europe ETFs
That being said, we would like to note that short-term gyrations are expected from the market in the near term. <a href="http://indianexpress.com/article/world/uk-election-results-2017-live-updates-theresa-may-jeremy-corbyn-4695682/">EU Budget Commissioner</a> Guenther Oettinger said, "with a weak negotiating partner, there's a danger that the negotiations will turn out badly for both sides." So, U.K. ETFs like iShares MSCI United Kingdom EWU and Euro zone ETFs like iShares MSCI Eurozone EZU would be in focus in the days to come.
Investors should also note that as soon as Britain cuts the cord with EU, its importance as a corporate transit to the rest of Europe would be lost, going by an article published on CNBC. This would impact iShares MSCI Europe Financials EUFN a lot. So,the fate of this hung parliament has a lot to do with the future course of EUFN (read: <a href="https://www.zacks.com/stock/news/221574/uk-votes-for-brexit-etfs-winners-amp-losers">UK Votes for Brexit: ETFs Winners &amp; Losers</a>).
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What Does UK Hung Parliament Mean for Europe ETFs?

European banks was of the most maligned sectors in the world in 2017, at least in the headlines. June&#39;s Brexit, not to mention Deutsche Bank AG (NYSE: <a class="ticker" href="/stock/db#NYSE">DB</a>)&#39;s September near-collapse, certainly didn&#39;t do a lot to help with sentiment.
But the tide looks like it&#39;s started to turn. The MSCI Europe Financials Index, whose top holdings include HSBC Holdings plc (ADR) (NYSE: <a class="ticker" href="/stock/hsbc#NYSE">HSBC</a>), Banco Santander, S.A. (ADR) (NYSE: <a class="ticker" href="/stock/san#NYSE">SAN</a>), and Allianz SE (ADR)&nbsp;(OTC: <a class="ticker" href="/stock/azsey#OTC">AZSEY</a>),&nbsp;is up more than 12 percent this year.
Ongoing good fortune for European banks should increase the allure of the Direxion&nbsp;Daily MSCI European Financials Bull 2X Shares (NYSE: EUFL), which debuted 10 months ago as the<a href="http:// https://www.benzinga.com/trading-ideas/long-ideas/16/07/8261845/new-direxion-etfs-target-gold-miners-european-financials">first US-listed leveraged play</a> on European banks. EUFL attempts to deliver double the daily returns of the aforementioned MSCI Europe Financials Index.
The index is &quot;a free float-adjusted, market capitalization-weighted index and represents securities of large-capitalization and mid-capitalization companies across developed market countries in Europe,&quot;<a href="http://www.direxioninvestments.com/products/direxion-daily-european-financials-bull-2x-shares">according to Direxion</a>, one of the largest issuers of inverse and leveraged ETFs.&nbsp;
With the final round of France&#39;s presidential election slated for May 7th and an upcoming election in the U.K., interest is increasing in EUFL. The ETF&#39;s volume for the five days ended April 28th, was more than 153 percent above the trailing 20-day average, <a href="http://www.direxioninvestments.com/products/direxion-daily-european-financials-bull-2x-shares">according to Direxion data</a>. Only one Direxion leveraged ETF saw a larger increase in turnover during those five days.&nbsp;
Top holdings in the index include Lloyds Banking Group PLC (ADR)(NYSE: <a class="ticker" href="/stock/lyg#NYSE">LYG</a>) (24.39 percent),&nbsp;Bank of Ireland (ADR) (OTC: <a class="ticker" href="/stock/ireby#OTC">IREBY</a>) (10.48 percent), HSBC (7.52 percent) and&nbsp;Barclays PLC (ADR)(NYSE: <a class="ticker" href="/stock/bcs#NYSE">BCS</a>) (6.43 percent). Overall, over half the index is allocated to Britain, with Spain and Ireland having the second and third highest exposures.&nbsp;
Interestingly, the strength shown by the banks in this index is not spreading to the entire industry. When it comes to some of the more popular names, fundamental concerns remain.&nbsp;
&ldquo;<a href="https://www.bloomberg.com/quote/BARC:LN">Barclays Plc</a>, <a href="https://www.bloomberg.com/quote/DBK:GY">Deutsche Bank AG</a> and <a href="https://www.bloomberg.com/quote/UBSG:VX">UBS Group AG</a>&nbsp;(NYSE: <a class="ticker" href="/stock/ubs#NYSE">UBS</a>) are all expected to post smaller increases in fixed-income trading revenue than the collective 24 percent jump reported by their five largest American counterparts, analysts estimate,&quot;&nbsp;<a href="https://www.bloomberg.com/news/articles/2017-04-24/european-banks-seen-losing-more-share-amid-bond-trading-upturn">according to Bloomberg</a>. &quot;While the U.S. firms eked out a gain in equities trading from a year earlier, Europe&rsquo;s banks are estimated to report an overall decline.&quot;
Traders willing to wager that the rebound for European banks is running on fumes can turn to the Direxion Daily MSCI European Financials&nbsp;Bear 1X Shares (NYSE: <a class="ticker" href="/stock/eufs#NYSE">EUFS</a>). EUFS is not leveraged, but it does deliver <a href="http://www.direxioninvestments.com/products/daily-european-financials-bear-1x-shares">the daily inverse performance</a> of the MSCI Europe Financials Index.&nbsp;

Intraday Update

AZSEY

EUFS

IREBY

A Short-Term Way To Play The Turnaround In European Banks

On <a href="http://video.cnbc.com/gallery/?video=3000612953">CNBC&#39;s Fast Money Final Trade</a>, Tim Seymour recommended a long position in Ishares MSCI Europe Fincls Sctr Indx Fd (NASDAQ: <a class="ticker" href="/stock/eufn#NASDAQ">EUFN</a>). He thinks the European banks are going higher.
Brian Kelly thinks Freeport-McMoRan Inc (NYSE: <a class="ticker" href="/stock/fcx#NYSE">FCX</a>) should be bought. He likes the risk-reward.
Steve Grasso believes Square Inc (NYSE: <a class="ticker" href="/stock/sq#NYSE">SQ</a>) is going to break out on the upside. He has a long position in the name.
Guy Adami is a buyer of Juno Therapeutics Inc (NASDAQ: <a class="ticker" href="/stock/juno#NASDAQ">JUNO</a>).

JUNO

Freeport-McMoRan, Juno Therapeutics, Square And European Banks: Fast Money Picks For April 26

A couple of things previously highlighted in this space are that some new exchange traded funds come to market with the benefit of good timing and that European bank stocks are <a href="http://www.benzinga.com/news/16/08/8330067/banks-still-weighing-on-europe-etfs">getting smoked this year</a>.

	Marrying those themes is the new Direxion Daily European Financials&nbsp;Bear 1x Shares (NYSE: EUFS), which debuted Wednesday. The new ETF is designed to deliver the daily inverse performance of the MSCI Europe Financials Index. So if that index falls one percent, then EUFS should rise by 1 percent.

	The MSCI Europe Financials Index &ldquo;is a free float-adjusted, market capitalization weighted index and represents securities of large capitalization and mid-capitalization companies across developed market countries in Europe. As of June 30, 2016, the Index consisted of 98 constituents with an average market capitalization of $16.16 billion and a median market capitalization of $10.51 billion,&rdquo; <a href="http://www.direxioninvestments.com/products/daily-european-financials-bear-1x-shares">according to Direxion</a>.

	The index EUFS tracks is not a dedicated Eurozone index as U.K. and Swiss banks combine for about 43 percent of its weight. The index&#39;s top 10 holdings combine for about 39 percent of its weight.

	EUFS debuts just a couple of weeks after Direxion launched a double-leveraged bullish equivalent, the Direxion Daily European Financials Bull 2X Shares (NYSE: EUFL).

	Italy is widely seen as trouble spot among European bank stocks. As non-performing loans (NPLs) creep higher, investors mulling a stake in Italy ETFs or other Italy vehicles are pondering when reforms aimed at righting the banking sector there will be implemented and how long it will take those reforms to have a noticeable, positive impact.

	Italy&#39;s most recent NPL plan is not reminiscent of TARP during the financial crisis in that the country isn&#39;t looking to sell bad loans. However, complexities surrounding Italy&#39;s efforts to deal with its NPL crisis could limit participation by some of the <a href="http://www.benzinga.com/news/16/03/7652567/no-bella-for-the-italy-etf">banks residing in</a> EUFL&#39;s index.

	Italy is he seventh-largest country weight in the index tracked by EUFS and EUFL.

	For traders looking to initiate tactical, bearish positions on EUFS makes sense, particularly for those looking to avoid leverage.

	&ldquo;Since it does not employ leverage, compounding is less magnified compared to leveraged inverse ETFs,&rdquo; <a href="http://www.direxioninvestments.com/products/daily-european-financials-bear-1x-shares">according to Direxion</a>.

New ETFs

It Could Be Perfect Timing For This New ETF

It&#39;s widely known that exchange traded funds focusing on U.S. banks have had some rough patches this year, but none have performed as poorly as the iShares MSCI Europe Financials ETF (NASDAQ: <a class="ticker" href="/stock/eufn#NASDAQ">EUFN</a>). That ETF is down more than 18 percent year-to-date and the problems being wrought by European banks are affecting ETFs beyond EUFN.

	Italy has been a problem for EUFN. Italy is EUFN&#39;s seventh-largest country weight at just over 4 percent. As non-performing loans (NPLs) creep higher, investors mulling a stake in Italy ETFs or other Italy vehicles are pondering when reforms aimed at righting the banking sector, there will be implemented and how long it will take those reforms to have a noticeable, positive impact.

	Italy&#39;s most recent NPL plan is not reminiscent of TARP during the financial crisis in that the country isn&#39;t looking to sell bad loans. However, complexities surrounding Italy&#39;s efforts to deal with its NPL crisis could limit participation by some of the <a href="http://www.benzinga.com/news/16/03/7652567/no-bella-for-the-italy-etf">banks residing in </a>EUFN.

	Italy&#39;s NPL problem is four times as dire as the European average. Making matters worse is that eight in 10 NPLs are corporate loans, which dampens banks&#39; ability to increase non-financial sector loans.

	However, other well-known Europe ETFs are being crimped by the region&#39;s banking woes. That includes the Vanguard FTSE Europe ETF (NYSE: <a class="ticker" href="/stock/vgk#NYSE">VGK</a>).

	&ldquo;VGK had $1.53 billion of outflows during the last two months, and year to date through July experienced $2.61 billion of redemptions. The ETF, which has the lowest expense ratio among peers at 0.12%, is diversified across sectors, but financials (19.0% of assets) is the largest. HSBC Holdings PLC is among the top-20 positions. VGK&#39;s ranking is aided by the strong qualitative risk assessment of its holding,&rdquo; said <a href="http://trymsatoday.com/">S&amp;P Capital IQ</a> in a note out Tuesday.

	Like EUFN, VGK is not a dedicated Eurozone ETF as U.K. and Swiss stocks combine for over 45 percent of the Vanguard ETF&#39;s weight.

	Still, some Eurozone ETFs are feeling the effects of struggling banks in the region. For example, the SPDR EURO STOXX 50 ETF (NYSE: <a class="ticker" href="/stock/fez#NYSE">FEZ</a>) allocates 21.4 percent of its weight to Eurozone banks.

	&quot;&gt; FEZ&#39;s &ldquo;asset base was relatively stable in the last two months. Redemptions increased by only $51.3 million, pushing its total outflows to $938.8 million year to date through July. FEZ has 21% in financials and also has top-20 stakes in Allianz, AXA, Banco Santander, BNP Paribas and ING Groep,&rdquo; adds S&amp;P Capital IQ.

Banks Still Weighing On Europe ETFs

Among sector exchange traded funds, few were caught in the Brexit crossfire on par with the iShares MSCI Europe Financials ETF (NASDAQ: <a class="ticker" href="/stock/eufn#NASDAQ">EUFN</a>). EUFN is down 20.1 percent over the past month, a decline that meets the definition of a bear market.

	It stands to reason. Financial services was highlighted as one of the sectors most vulnerable to Brexit and EUFN allocates 30.8 percent of its weight to U.K. banks, more than double the ETF&#39;s second-largest geographic allocation which is France at 13 percent. So it&#39;s not surprising that EUFN&#39;s holdings have been favored targets of short sellers.
<h3>
	&#39;Possible Lehman Moment&#39;</h3>

	&ldquo;Europe&rsquo;s largest banking stocks included in the Stoxx 600 index have attracted an increasing amount of short interest in the wake of the UK&rsquo;s referendum on continued membership to the European Union,&rdquo; said <a href="http://www.markit.com/Commentary/Get/05072016-Equities-Brexit-attracts-shorts-to-European-banks">Markit in a note</a>. &ldquo;European banks have remained <a href="http://www.markit.com/Commentary/Get/09022016-Equities-European-financials-deflate-in-2016">under pressure</a> since the financial crisis and have already endured Grexit fears, however the shock Brexit vote has created a possible <a href="http://www.bloomberg.com/view/articles/2016-07-04/brexit-is-a-lehman-moment-for-european-banks">Lehman moment</a> for banks and short sellers alike.&rdquo;

	The research firm points out short sellers have added over $1 billion to bearish bets on U.K. bank stocks and two of the three most heavily shorted European banks hail from Italy, the Eurozone&#39;s third-largest economy.
<h3>
	Italy&#39;s Impact</h3>

	Italy is EUFN&#39;s seventh-largest country weight at just over 4 percent. As non-performing loans (NPLs) creep higher, investors mulling a stake in Italy ETFs or other Italy vehicles are pondering when reforms aimed at righting the banking sector there will be implemented and how long it will take those reforms to have a noticeable, positive impact.

	Italy&#39;s most recent NPL plan is not reminiscent of TARP during the financial crisis in that the country isn&#39;t looking to sell bad loans. However, complexities surrounding Italy&#39;s efforts to deal with its NPL crisis could limit participation by some of the <a href="http://www.benzinga.com/news/16/03/7652567/no-bella-for-the-italy-etf">banks residing in </a>EUFN.

	Italy&#39;s NPL problem is four times as dire as the European average. Making matters worse is that eight in 10 NPLs are corporate loans, which dampens banks&#39; ability to increase non-financial sector loans.

	&ldquo;Meanwhile across European banking stocks, short interest has more than doubled year to date, with average short interest rising to 2.6% currently. The iShares Euro Stoxx Banks ETF has fallen by more than a third only just over half way through the year with the ETF is plummeting 18% since the Brexit vote,&rdquo; adds Markit.

It's Not Surprising Shorts Are Hammering This ETF's Holdings

On <a href="http://video.cnbc.com/gallery/?video=3000515453">CNBC&#39;s Fast Money Final Trade</a>, Tim Seymour advised his followers to buy Guggenheim CurrencyShares Australian (NYSE: <a class="ticker" href="/stock/fxa#NYSE">FXA</a>).

	Karen Finerman is a buyer of Alphabet Inc (NASDAQ: <a class="ticker" href="/stock/googl#NASDAQ">GOOGL</a>) (NASDAQ: <a class="ticker" href="/stock/goog#NASDAQ">GOOG</a>).

	Dan Nathan would sell Ishares MSCI Europe Fincls Sctr Indx Fd (NASDAQ: <a class="ticker" href="/stock/eufn#NASDAQ">EUFN</a>).

	Guy Adami thinks Viacom, Inc. (NASDAQ: <a class="ticker" href="/stock/viab#NASDAQ">VIAB</a>) should be bought.

GOOG

GOOGL

VIAB

Alphabet, Viacom, Australia, Europe: Fast Money Picks For June 21

Hedge fund Fansanara Capital believes that financial markets are currently overly optimistic about a lackluster global economy. The firm&rsquo;s four &ldquo;conviction ideas&rdquo; for the next year are all bearish ones.
&ldquo;As we re-assess the validity of the underlying risks, we expect a shift in narrative in the few months ahead and a sizeable sell-off for risk assets,&rdquo; the report read.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/05/7922630/have-we-reached-the-carl-icahn-high">Have We Reached The &#39;Carl Icahn High&#39;?</a></bzrelatedlink>
Here&rsquo;s a look at Fansanara&rsquo;s four trade ideas for the next year:
<li>1. Short the Chinese Renminbi: Borrowing 10 percent of GDP without currency adjustment is unsustainable in the long-term. To execute this idea, consider shorting the Wisdom Tree Dreyfus Chinese Yuan Fd (ETF) (NYSE: <a class="ticker" href="/stock/cyb#NYSE">CYB</a>).</li>
<li>2. Short Oil: Soft demand and growing supply will ultimately result in a volatile path to sub-$10/bbl oil in coming years. Consider shorting the United States Oil Fund LP (ETF) (NYSE: <a class="ticker" href="/stock/uso#NYSE">USO</a>).</li>
<li>3. Short S&amp;P: The S&amp;P 500 is priced to perfection, leaving little possibility for upside and huge potential downside. Consider shorting the SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>).</li>
<li>4. Short European Banks: Headwinds for European banks banks include negative-sloped interest rate curves, deeply negative interest rates, deflationary economies, depressed GDP growth, over-regulation and fintech. Consider shorting the Ishares MSCI Europe Fincls Sctr Indx Fd (NASDAQ: <a class="ticker" href="/stock/eufn#NASDAQ">EUFN</a>).</li>
Disclosure: The author holds no position in the stocks mentioned.

4 Very Bearish Trades This Hedge Fund Is Making

There is no dearth of exchange-traded funds that have &ldquo;benchmark&rdquo; status, and plenty of those are believed to be sound gauges of risk appetite. One of the more overlooked ETFs in terms of gauging market sentiment and risk appetite might just be the Ishares MSCI Europe Fincls Sctr Indx Fd (NASDAQ: <a class="ticker" href="/stock/eufn#NASDAQ">EUFN</a>).
As has been previously noted in this space, for myriad reasons, European banks and EUFN are struggling this year. EUFN is off nearly 14 percent, a loss that is more than twice as bad the one incurred by the Financial Select Sector SPDR Fund (NYSE: <a class="ticker" href="/stock/xlf#NYSE">XLF</a>).
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/news/16/01/6172898/europe-banking-etf-faces-risks">Europe Banking ETF Faces Risks</a></bzrelatedlink>
<h3>Interest Rates, Banking Stocks And The Eurozone</h3>
If higher interest rates really are efficacious for bank stocks, then it is not surprising that European banks are being pinched. After all, the eurozone is home to negative interest rates. So is Switzerland. Nordic countries have employed negative rates as well; just look at <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/02/6205162/monetary-policy-could-make-this-etf-a-swedish-meatball">Denmark and Sweden</a>.
 And that sentiment does not even scratch the surface of a borderline banking crisis in Italy, the eurozone&#39;s third-largest economy. <a href="http://www.benzinga.com/news/16/03/7652567/no-bella-for-the-italy-etf">Italian banks</a> are almost 5.6 percent of EUFN&#39;s weight. 
At least the European Central Bank (ECB) is doing what it can, how successfully is another matter, to prop up confidence in eurozone banks.
&ldquo;On March 10th, at the last ECB meeting, the Committee surprised the market by announcing a new version of the 4-year TLTRO that would allow banks to refinance and roll their existing loans with the ECB ad infinitum,&rdquo; said <a href="https://rareviewmacro.com/">Rareview Macro</a> founder Neil Azous in a note out Monday. &ldquo;The entire event centered on reducing the risk premium for the bank sector. The message that was sent was that the stock and bond price of a bank &ndash; the real representation for financial conditions &ndash; is now a determining factor in ECB policy, not the effective lower bound of interest rates.&rdquo; 
<h3>What It Means For EUFN</h3>
To be sure, EUFN is not a dedicated eurozone ETF. Less than half the ETF&#39;s geographic weight is allocated to eurozone countries, meaning that in addition to the ECB, the Bank of England and the Swiss National, among others, impact this fund. U.K. and Swiss banks combine for over 42 percent of EUFN&#39;s. Those are the same Swiss banks being affected by the SNB&#39;s negative rate policy.
Azous points out that ECB policy, in essence, is bribing eurozone banks to take deposits and lend, but EUFN&#39;s price action does not really reflect what should be a rosier scenario.
&ldquo;And yet despite what we refer to as the equivalent of an &#39;ECBribe,&#39; European banking stocks are -7 percent from their levels preceding the ECB 4-year TLTRO announcement and -14 percent from their recent intraday highs in mid-March,&rdquo; he said.
Disclosure: Todd Shriber owns shares of XLF.
Image Credit: <a href="https://pixabay.com/en/money-rich-the-success-of-the-837383/">Public Domain</a>

This ETF Is A Potentially Important Gauge Of Risk Appetite

The Financial Select Sector SPDR Fund (NYSE: <a class="ticker" href="/stock/xlf#NYSE">XLF</a>) is down 5.6 percent year to date, which is one of the worst performances among the sector SPDR exchange-traded funds and one that serves as a reminder of the weakness in U.S. bank stocks.
European financial services names have not been anything to brag about either, as the iShares MSCI Europe Fincls Sctr Indx Fd (NASDAQ: <a class="ticker" href="/stock/eufn#NASDAQ">EUFN</a>) has been about 200 basis points worse than XLF. With woes for some of Germany&#39;s big banks to a borderline banking crisis in Italy, the eurozone&#39;s third-largest economy, it is not surprising the region&#39;s <a href="http://www.benzinga.com/news/16/03/7652567/no-bella-for-the-italy-etf">financial services stocks</a> are struggling.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/markets/eurozone/16/03/7684049/europe-and-the-central-role-of-central-banks">Europe And The Central Role Of Central Banks</a></bzrelatedlink>
<h3>Looking To The Eurozone With Minimal Exposure To Banking</h3>
Nor is it surprising that some investors would like to maintain exposure to eurozone equities without too much of that exposure going to bank stocks. The WisdomTree Inter Hedged Eq Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>), 2015&#39;s top asset-gathering ETF, can help with that objective.
Although some new reforms and regulations are seen as steps in the right direction for the eurozone&#39;s fractured banking systems, the time it takes for investors to realize the rewards of such efforts can be trying on their patience.
&ldquo;Therefore, during times of market stress, the worst is assumed until rumors can be thoroughly disproven. To start 2016, new &#39;<a href="http://www.wisdomtree.com/blog/index.php/glossary/#Bail%20in">bail-in</a>&#39; provisions have been put into effect in the eurozone. Under these measures, private sector creditors will be forced to absorb losses during bank failures before government funds are made available.
&ldquo;While these policies may serve as an important step in limiting &#39;too big to fail,&#39; some questions remain about their operations during periods of crisis,&rdquo; said WisdomTree <a href="http://www.wisdomtree.com/blog/index.php/eurozone-financials-half-empty-or-half-full/">in a recent note</a>.
<h3>Allocations And Holdings</h3>
HEDJ allocates 10.1 percent of its weight to financial services stocks, putting that sector in a tie with healthcare as the ETF&#39;s fourth-largest sector weight. However, that 10.1 percent is easily outpaced by the 18.6 percent the ETF devotes to consumer discretionary names, its third-largest sector allocation.
HEDJ&#39;s top 10 holdings feature two Spanish bank stocks, but, fortunately, the ETF&#39;s overall Italy allocation is light at less than 2 percent. Additionally, big-name German and French bank costs, many of which have recently experienced boosts to their borrowing costs, play minimal parts in determining HEDJ&#39;s fate.
&ldquo;Complicating matters further, these concerns are not limited to small, regional players on the periphery. Given the propensity for large banks to originate loans across the monetary union (often at higher rates), mega-cap financials like Deutsche Bank, UniCredit and BNP Paribas have seen borrowing costs climb as equity markets fell in recent weeks. While regulators appear confident in public that the recovery remains on track, the uncertainty is clearly causing some investors to derisk their portfolios and ask questions later,&rdquo; added WisdomTree.
Consumer staples and industrials combine for over 41 percent of HEDJ&#39;s weight.
Disclosure: Todd Shriber owns shares of XLF.
Image Credit: <a href="https://pixabay.com/en/eu-european-commission-brussels-1232430/">Public Domain</a>

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