5 Inverse ETFs to Make a Fast Buck on Flaring Trade Tension

5 Inverse ETFs to Make a Fast Buck on Flaring Trade Tension

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The U.S. nine-year bull market was threatened by list of woes in recent months. After inflation fears, faster-than-expected rate hike concerns, and the tech rout, the rounds of sanctions in a tit-for-tat situation between the two largest economies, United States and China, are intensifying fears of a full-blown trade war.

5 Inverse ETFs to Make a Fast Buck on Flaring Trade Tension
5 Inverse ETFs to Make a Fast Buck on Flaring Trade Tension

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This is especially true, as President Donald Trump doubled down on the trade dispute by threatening to impose new tariff of $100 billion against China in addition to the proposed $50 billion of tariffs on Chinese goods targeting robotics, information technology, communication technology and aerospace.

The United States earlier this week unveiled a list of 1,300 China-made products, which will be hit by 25% tariffs. These include a wide array of products including raw materials, construction machinery, agricultural equipment, electronics, medical devices and consumer goods.

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In response to the new tariff of $100 billion, China hit back saying that it is ready to pay “any cost” in a trade war. The new taxes came a day after China retaliated with potential 25% duties on 106 American goods, including soybeans, corn, aircraft, and vehicles, worth an estimated $50 billion against Trump’s similar threatening action in response to alleged intellectual property theft.

The second-largest economy has already slapped a duty on 128 American food products, including meat, fruit, pork, dried fruits, wine and aluminum scrap, worth $3 billion effective Apr 2 in retaliation against Trump’s severe tariff of 24% on steel and 10% on aluminum imports.

The round of sanctions and retaliation could trigger a global trade war, hurting the worldwide economy and corporate profits, particularly at big U.S. exporters. This could lead to tumultuous trading across all the market caps. As such, investors could ride out the downbeat sentiments through inverse ETFs. While there are several options available in the space, we have highlighted five such ETFs that are widely spread across a number of sectors and are not concentrated on a particular sector or industry.

These products have provided handsome returns over the trailing one-month period and are expected to do so, especially if the current trends persist in the months ahead. Also, these are unleveraged products having a lower risk level.

Inverse ETFs to Make a Fast Buck on Flaring Trade Tension: ProShares Short QQQ (PSQ)

ProShares Short QQQ (NYSEARCA:PSQ) seeks to deliver inverse exposure to the daily performance of the Nasdaq-100 Index. It has amassed $368.2 million and trades in heavy volume of 1.2 million shares per day.