Markets are pulling back again.
All on concerns of how the U.S. will respond to the latest news from China.
China just approved a proposal to impose a new national security law for Hong Kong. This could be met with a strong response from the U.S.
While details of the potential law are scarce, it will reportedly target secession, subversion of state power, terrorism, and foreign interference. On passage, it won’t sit well with most of the world, especially the U.S. President Trump says the U.S. will have “a very strong reaction” to new China legislation.
“We think it would be a significant shock to markets were Trump to announce anything that risked the phase one trade deal,” said Jasper Lawler, head of research at London Capital Group, as quoted by MarketWatch. “Revoking Hong Kong’s Special Status with the U.S. seems unlikely, It wouldn’t help the people of Hong Kong and would be a self-inflicted wound because it would just limit U.S. company access to China.”
If this is the start to a new round of chaos, volatility will return in a big way.
Some of the best ways to hedge the potential resulting madness is to again trade the following:
ProShares Ultra VIX Short-Term Futures ETF (UVXY)
The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index.
VelocityShares Daily 2x VIX Short-Term ETN (TVIX)
This ETN tracks an index of futures contracts on the S&P 500 VIX Short-Term Futures Index.
iPath S&P 500 VIX Short-Term Futures (VXX)
The VXX ETN provides exposure to the S&P 500 VIX Short-Term Futures Index Total Return.