These ETFs could be the best way to trade an easy-money Fed

While markets in general have reacted positively to the Federal Reserve's decision to stand pat on interest rates, some types of stocks may stand out more than others going forward.

"Don't overthink it; the Fed is on the side of the economy," Eddy Elfenbein, editor of the Crossing Wall Street blog, said Wednesday on CNBC's "Trading Nation."

Elfenbein is eyeing cyclical sectors, which tend to be the biggest beneficiaries of an improving economy. Specifically, he likes energy, materials and industrials.

The energy ETF, the XLE, is at the top of Elfenbein's list. The XLE is up nearly 13.5 percent year to date, and generally correlates with the price of crude oil, which has enjoyed a sweet 2016 bounce.

The XLB, comprised of processed materials giants such as Dow Chemical Company, Monsanto, Newmont Mining and Sherwin-Williams, is up about 9 percent year to date.

And the industrials ETF, the XLI, is up nearly 9 percent this year.

Another popular trade this year, in emerging markets, may also be a Fed-friendly pick.

Gina Sanchez, CEO of Chantico Global, said Wednesday on "Trading Nation" that emerging markets equity and debt would be a wise move at this point.

The emerging markets ETF, the EEM, tracks emerging markets economies like those of Brazil, China and India.

"If we continue to see low rates like this and everything stays pat, then the yield plays probably make the most sense," she said.

Sanchez called emerging market debt a "darling" for investors in this year's low-yield environment.

"You could also see high-yield continue to perform. But basically, anything that will give investors the much-needed yield that they're desperate for," she said.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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