xchange-header1

Moove Up or Tail Spin for COWL/COWS?

The outlook on the U.S. agribusiness industry is stable for 2012, according to Fitch Ratings, amid long-term growth for agricultural commodities despite their recent downward price movement.

The global agribusiness giants have relatively strong liquidity and balanced capital structures that may support their ratings through moderate earnings volatility, as improving global supplies and slowing global demand have led to a retreat in commodity prices. Still, commodity prices are well above historical long-term averages and volatility is likely to continue, Fitch said.

Mixed earnings results are expected for 2012. Overcapacity in North American soybean processing and competition from large South American crops will dampen margins. Corn processors may benefit from higher sweetener pricing and high demand from Mexico, but earnings from corn-based ethanol processing may decline with the anticipated end of incentives.

But, as we’ve noted before, some say that demand is rising to the occasion. In fact the bulls will note that the long term fundamentals for agribusiness is in their favor in the long run. According to the U.N., the world is producing consumers faster than the food to feed them, with the global population expected to rise by 2 billion to 9 billion by 2050. That works out to 175,000 new consumers of food every day.

Indeed there will probably be many bull and bear arguments for agribusiness in the upcoming months. For example, on Wednesday, December 7th, Monsanto raised its outlook for first-quarter earnings sighting strength in its seed businesses in Argentina and Brazil. Early orders of corn and soybean seeds for U.S. spring planting are strong for Monsanto, the top holding in the DAXglobal Agribusiness Index. Demand from China demand for soybeans and rising global corn demand for livestock feed and biofuels are driving seed product demand for the agriculture sector in general.

But, the ninth largest holding in the index, fertilizer maker The Mosaic Company received a downgrade from from analysts at JPMorgan on Dec. 9th. JPM also lowered its earnings estimates for the company, citing lower phosphate selling prices and weaker potash volumes. The firm said it cut its rating on Mosaic from “Overweight” to “Neutral” with a $57 price target. Our guess is that there will continue to be opportunities to trade on both good and bad news in this sector.

No matter what the new year brings for agribusiness, COWL and COWS allow you to seek profit on either side of the trade. You just have to get the direction right.

Related Direxion Shares

COWL	Daily Agribusiness Bull 3x Shares
COWS	Daily Agribusiness Bear 3x Shares

This Month's Highlights

New Insider Sentiment Shares ETFs

Year End Distributions

Mooove Up or Tail Spin for COWL/COWS?

Will Healthcare Catch Cold?

Oil Producers Heat Up Business with Natural Gas

Russian Economy in for a Siberian Freeze?

Good Times Here To Stay For Retail?

There is no guarantee that the funds will achieve their objectives. Past performance is not indicative of future results.

For more information on all Direxion Shares daily leveraged ETFs, click here, or call us at 866.476.7523.

The ETFs are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk, consequences of seeking daily leveraged investment results and intend to actively monitor and manage their investments. Due to the daily nature of the leverage employed, there is no guarantee of amplified long-term returns. Past performance is not indicative of future results.

An investor should consider the investment objectives, risks, charges, and expenses of Direxion Shares carefully before investing. The prospectus and summary prospectus contains this and other information about Direxion Shares. Download a prospectus and summary prospectus. The prospectus and summary prospectus should be read carefully before investing.

Risks:

Investing in the funds may be more volatile than investing in broadly diversified funds. The use of leverage by a fund increases the risk to the fund. The more a fund invests in leveraged instruments the more the leverage will magnify gains or losses on those investments. There is no assurance that the Funds will achieve their objectives and an investment in a Fund could lose money. No single Fund is a complete investment program. The Funds are not designed to, and will not necessarily, track the underlying index or benchmark over a longer period of time. One cannot invest directly in an index.

An investment in the Funds involve risk, including the possible loss of principal. The Funds are non-diversified and include risks associated with concentration risk that results from the Funds’ investments in a particular industry or sector which can increase volatility. The use of derivatives such as futures contracts, forward contracts, options and swaps are subject to market risks that may cause their price to fluctuate over time. The Fund does not attempt to, and should not be expected to, provide returns which are a multiple of the return of the Index for periods other than a single day. For other risks including correlation, leverage, compounding, market volatility and specific risks regarding each sector, please read the prospectus.

The views in this material represent an assessment of the current market conditions and is not intended to be a forecast of future events. These views are intended to educated the reader and do not constitute investment advice regarding the funds or any security in particular. Past performance does not gaurantee future results.

Distributor: Foreside Fund Services, LLC.