With markets in a state of panic, we noted that one of the best ways to prepare your portfolio for potential downside was by hedging volatility.
In fact, we highlighted three opportunities on May 7, 2019, including:
- iPath S&P 500 VIX Short-Term Futures (VXX)
- ProShares Ultra VIX Short-Term Futures (UVXY)
- VelocityShares Daily 2x VIX Short-Term ETN (TVIX)
Since then, the Dow Jones plummeted from 26,276 to 25,291. From here, the index could easily pullback to 24,500 after breaking through major technical support lines. As a result, the VXX jumped from $28 to $32. The UVXY rocketed from $37 to $44.
The TVIX ran from $24.50 to $29.50.
In short, you had the opportunity to make money while everyone else panicked – and as they continue to panic over fears of a prolonged trade war with the U.S. and China.
China has Defied Trump’s Tariff Demands
Trump warned China, tweeting, “I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!”
However, it would appear China didn’t take that threat seriously.
In fact, China just announced plans to add new levies to $60 billion of U.S. goods.
Some of those tariffs include:
- CHINA SAYS TO RAISE TARIFFS ON SOME U.S. GOODS FROM JUNE 1
- CHINA SAYS TO RAISE TARIFFS ON $60B OF U.S. GOODS
- CHINA SAYS TO RAISE TARIFFS ON 2493 U.S. GOODS TO 25%
- CHINA MAY STOP PURCHASING US AGRICULTURAL PRODUCTS:GLOBAL TIMES
- CHINA MAY REDUCE BOEING ORDERS: GLOBAL TIMES
- CHINA ADDITIONAL TARIFFS DO NOT INCLUDE U.S. CRUDE OIL
- CHINA RAISES TARIFF ON U.S. LNG TO 25% EFFECTIVE JUNE 1
In addition, China could stop buying agricultural products and energy, reduce Boeing orders and restrict U.S. service trade with China. Others in China may even begin dumping U.S. Treasuries. In short, this could get ugly.
But if you took our advice you’re hedged and protected.