Eliott Wellenbach of Direxion Discusses Leveraged ETFs with Tommy O'Brien

Duration: 9:03 1756 transcript words EN summary

Video summary

The video features a discussion between Tommy O'Brien and Eliott Wellenbach from Direxion, focusing on the current market volatility driven by recent interest rate hikes and economic uncertainty. With the S&P 500 down nearly 10% and the Dow losing significant ground, the conversation centers on how investors can navigate these turbulent conditions using leveraged and inverse Exchange Traded Funds (ETFs). Wellenbach highlights that while a rate hike of 25 basis points was expected, the market's reaction depends heavily on the duration of higher rates, with expectations pointing toward another potential increase in 2026. This macroeconomic backdrop has created specific trading opportunities across various asset classes, particularly for those looking to capitalize on short-term tactical moves rather than long-term holds where leverage effects can diverge from underlying performance. A significant portion of the dialogue addresses the sensitivity of different sectors to interest rates, with a special focus on small-cap stocks and the technology sector. Wellenbach explains that smaller companies are often more vulnerable to rising rates, leading Direxion to offer triple-leveraged bull and bear ETFs for the Russell 2000 index, such as TNA for bullish views and TZA for inverse positions. Similarly, the semiconductor sector, which has been a primary driver of the market despite recent concerns about AI regulation, is accessed through SOXL and its inverse counterpart SOXS. The discussion also notes an interesting dynamic between semiconductors and software, where leaders in the software space have presented opportunities that are inversely related to chip performance, allowing traders to express specific views on individual companies like Palantir, Palo Alto Networks, and Adobe using single-stock leveraged ETFs. The conversation further explores alternative assets like gold, which has faced headwinds due to higher yields and a strengthening dollar but remains a popular hedge for many investors. Direxion provides tools to trade this asset class through spot gold ETFs like UGLD and various gold miner proxies that offer 2x leverage on both the bull and bear sides, including products focused on junior miners. Additionally, the interview touches upon the rapid innovation within the ETF industry, exemplified by the launch of single-stock leveraged funds for high-profile companies like SpaceX. Wellenbach emphasizes the team's ability to quickly bring new products to market to meet immediate investor demand, showcasing a sector that is evolving rapidly with offerings ranging from traditional leverage on indices to specialized exposure on individual stocks and emerging technologies.

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Welcome back folks. We got an S&P right now right at session lows down 9/10% right now. Dow off about 800 points as markets accelerate in the south. And great day folks. We're going to talk to our man Elliot Wallen. Elliot's a senior vice president folks, institutional ETF strategist with direction. If you head on over to the front page of tfn.com, folks, you'll see those direction banners or you can just head to direction.com. You can check out their products, folks. They have a number of great leveraged and inverse ETFs and we're going to talk to Elliot about some of them right now. Elliot Wellenbach, welcome back to TFN. Good afternoon. >> Hey, Tommy. How you doing? Thanks for having me again. Excited to be here. >> Always a pleasure, man. You know, we talk to you usually on Wednesdays, Elliot. And that means uh every month or six weeks or so, we get you on a Fed day. And uh interesting one today. We got the first hike in three years. I know we're talking a little bit getting ready for this interview. saying maybe we'll talk a little bit about treasuries and boy we got some movement today everywhere but if we could kick it off with treasuries as we got yields right now 5% but we got some volatility everywhere but for those traders please talk to me about the ETFs that you guys have at direction and what you're seeing in treasuries right now if we could kick it off there Elliot. >> Yeah no absolutely uh I mean uh not not a surprise for 25 basis points hike today. Um and really it's a question of uh you know how high for how long. Um and it looks like another um you know hike is pencled in probably for uh 2026. And there's a few ways um you know to trade the treasuries. So longer duration treasuries are particularly sensitive to uh interest rate uh expectations. So we do have our 20 plus year uh triple leverage bull and bare uh ETFs. Uh that's TMF and TMV. And then if you're looking for uh the shorter end of the curve, we also do have the 7 to 10year Treasury Bull and Bear ETF TYD and TYO. And you know, these are short-term tactical trading tools. They're leveraged. Um so these are really meant for short-term tactical trading. And what's pretty cool, folks, over at direction.com, I always say it, but head on over. They got a great education center. And it's so cool you guys put out so much great information, Elliot, because just like you talk about, they're short-term trading vehicles, folks. and to understand, you know, how they move with these. If you hold them longer term, they're not necessarily going to match the underlying um but a shorter term basis. Boy, we got some moves today. And you know, you look at treasuries and boy, everything's moving today. I just mentioned we got the Dow down almost 800 points right now. But the Russell as well in terms of small caps, Elliot down 1.3% right now. Higher yields a problem for some of these small caps. I know we got Tigers and Tigers in the den talking about the small caps. Talk to me about some of the small caps, please. >> Yeah. I know like you mentioned uh small capsu tend to be more rates uh or vulnerable to uh interest rates uh especially when uh they're higher for longer and um Russell 2000 uh a a great way to uh to trade off of that. We uh have a triple leverage ETF. Um you know, bull and bare product again. Uh TNA, uh that's the triple leverage bull product off of the Russell 2000. And then we have TZA, that's the uh triple inverse. Uh so if you're uh you know, if you're you know, have the expectation looking to trade an inverse view on small caps, um TZA is a great way to express that. >> You're seeing some action today, man. TCA up by 4% right now with a volume of 5 million shares on the day. Folks, you got some action over there. Uh if we could talk semiconductors. So, of course, chips in focus, man. They're going nowhere anytime soon. The AI, I mean, we got all the AI companies now talking about potentially regulation, but semis holding up pretty well and NASDAQ today holding up very well compared to the other markets. But talk to me about semis, please. >> Yeah, definitely. I mean semis and uh just the AI trade has you know really been holding this market up for this year and uh the news out last week about uh with open AI and anthropic uh leaders um you know uh making a suggestion to uh slow down development and uh put some safety guard rails on. um you know has really made the uh the semiconductors pull back and semi semiconductors kind of remain the highest beta way to express a view on um you know the AI trade. So we do have um you know a bull and bear product 3x again on that. SOXL is the the uh NY semiconductor 300% bull product and then the inverse fund is SOXS and then that's inverse 3X. And one thing interesting about the uh semis is a dynamic we've seen and more interesting the inverse relationship between semiconductors and software. Um so uh there has been some opportunity in the uh you know the the leaders in the software space. Um and we do have some uh leverage inverse single stock ETFs. Off of that we have Palunteer. Um, you know, all these are going to be a 2x long on the bull side and single inverse on the bare side. PLTU, that's 2x long. >> Oh, you still there? >> I got you. Yes. Lost you for a second, but I got you. >> Yep. Yep. And then uh we also Palo Alto Networks uh 2x long PL AU and then inverse P A uh P A L D as well as uh Adobe just a leverage long on that uh ADBU. Uh so some ways to trade uh the software stocks as well. Um and that you know that inverse relationship to the semiconductors. >> And then we got to talk about gold today Elliot. We got gold moving with everything of course. Now, gold has been on a heck of a run, but not today, man. As the dollar explodes higher, we got yields. You got GDX down about 2.8%. But still quite a pop from those recent lows we've had. Uh for the gold bolts and and the gold haters out there, what do you got for gold, Todd? You got some great gold ETFs, man. >> Yeah. Yeah. No, definitely. uh like you mentioned uh you know it's kind of struggling of uh near uh term uh headwinds with uh rates higher for you know longer um gold not being um you know an interest bearing asset. Um, so we do have uh a 2x long ETF on uh gold on spot gold. That's UGLD. And then we have the gold miners um a way to uh you as a proxy trade to gold. And uh we do have the uh gold miners uh 2x bull uh nug 2x bear dust. And then if you're looking for the smaller the more junior gold miners, we also do have exposure there. We have uh 2x long product uh uh JUng NG and then a 2x bear product uh JDST. So, a lot of ways to trade uh gold, the gold miners um you know, a great proxy trade to go with the gold miners if you're not looking to uh take a you know, leverage position on spot gold itself. >> And then I know that you guys are always coming out with great new products of course with all of the it's pretty amazing in terms of the companies. You got SpaceX, right? You got OpenAI, Anthropic, um SKH Highix, one of the other ones. Um but I wanted to talk about SpaceX real quickly because boy, you guys have quite an ETF here with Liftoff. Now today it's lifting off today. SpaceX having quite a day today as they had news coming into this liftoff. Um but for when you guys are sitting around the direction office I know you have so many great players there. But it's quite an interesting time in the ETF sector in terms of the demand right now. Um the innovation that you guys are putting together with these products that are coming to market literally the day that you get the IPOs and talk to me a little bit about when you're putting these together. Is this something that you're you're you're you know the team and not to talk for the team but it's pretty exciting how these ETFs are all coming to market so quickly and the demand you know SpaceX liftoff's a great example. I mean the shares that this one's doing are tremendous. Um if you could just a little bit about just how you guys are really moving forward. It's pretty cool. >> Yeah. No absolutely. Um like you mentioned you know we're a leader in the the leverage inenver space um and also in the single stock leverage inverse space. Um like you mentioned um some of our uh more recent launches uh this summer were with SpaceX um ticker uh LF uh 2x bull product and then we also actually do have the uh the inverse 2x uh the bare side of that LFD. Um and so some exciting stuff [music] coming up as well. Um but uh you know I really appreciate you having me on today. Oh great. >> Appreciate it Elliot man. And those single stock ETFs I think they're taking over. I always tell people for active traders out there, they're just phenomenal, man. So, I appreciate the work you're doing. The team at Direction, man, keep it up and we look forward to talking to you next month. Elliot, thanks for you so much as always. >> Thank you, Tommy. Pleasure being on. See you next month. >> My pleasure. Take care, folks. Check it out. Direction.com and check out that education center. Great stuff out there. We'll come right that.