All Research Archives
Financials Category Report
3.18.2024
- Financials ETFs saw $1.65 billion in net outflows in February but have gathered $1.32 billion in net inflows over the past 3 months
- The Financial Select Sector SPDR Fund (XLF) saw the largest net outflows in February with $787 million
- The SPDR S&P Bank ETF (KBE) and the SPDR S&P Regional Bank ETF (KRE) each saw more than $300 million in net outflows on the month
- The Financials category is comprised of 37 ETFs with $66.3 billion in total assets under management
- XLF is the largest ETF in the category with $37.2 billion in AUM
- The cheapest ETF in the category is the Gabelli Financial Services Opportunities ETF (GABF) with an expense ratio of 4 bps
- 13 of the 37 ETFs in the category have Low Liquidity ratings, average ADV for the category is $72.94 million
- 21 of the 37 Financials ETFs posted gains last month, average return was -0.07%
- The Invesco KBW Regional Banking ETF (KBWR) and KRE underperformed in February, both sinking more than 9%
- Average 3-month return for the category is +10.30% and average 1-year return is +8.11%
- The category has high/ above average value ratings and high/ above average volatility ratings
Daily Note
3.18.2024
Equities: On Friday, U.S. equity markets were lower once again with the NASDAQ 100 (QQQ) sinking 1.19%, the S&P 500 (SPY) falling 68 bps, and the Dow Jones Industrial Average (DIA) dropped 55 bps. Last week was another losing week for all three major averages. QQQ declined 1.16%, SPY was down 6 bps, and DIA dipped 1 bps. The Russell 2000 (IWM) added 19 bps on Friday but decreased more than 2% last week. Mega-cap tech names dragged markets lower on Friday as Amazon and Microsoft each declined more than 2% while Meta Platforms and Google-parent Alphabet each dropped more than 1%. Adobe plummeted 13.67% on the day after issuing weaker-than-expected quarterly revenue guidance. Investors also weighed consumer sentiment data from the University of Michigan, which came in slightly below expectations. The Survey of Consumers posted a reading of 76.5, down 0.4 points from February and missing the consensus estimate for 77.4. Inflation expectations were unchanged at both the 1-year and 5-year horizons, at 3% and 2.9%, respectively. The current conditions index also was unchanged at 79.4. This week, all eyes will be on the Federal Open Market Committee (FOMC) meeting beginning on Tuesday and the rate decision on Wednesday. Rates are widely expected to be unchanged this week. Housing Starts & Permits data and Existing Home Sales figures will also be released this week.
Most U.S. factor strategies saw losses on Friday with S&P 500 Growth (SPYG), S&P 500 Quality (SPHQ), and S&P 500 Pure Growth (RPG) all slipping at least 1%. S&P 500 Pure Value (RPV) gained 49 bps and S&P 500 Divided (SPYD) added 18 bps. Last week, factors were split. S&P 500 High Beta (SPHB) dropped 2.54% and was the worst performing factor. SPYD was also down 1.12% while S&P 500 Value with Momentum (SPVM) increased 1.09%. Developed ex-U.S. Markets (EFA) inched higher by 4 bps on Friday despite losses from South Korea (EWY, -2.18%) and Hong Kong (EWH, -85 bps). Japan (EWJ) climbed 74 bps. Emerging Markets (EEM, -61 bps) were pulled lower by South Africa (EZA, -1.14%) and Indonesia (EIDO, -1.05%). EFA and EEM dipped 45 bps and 12 bps, respectively, last week.
Sectors: Technology (XLK) declined 1.51% on Friday and lagged other U.S. sectors. Semiconductors (XSD, -78 bps) and Software & Services (XSW, -53 bps) were weak, impacting XLK. Communication Services (XLC) and Consumer Discretionary (XLY) both dropped 1.00% while Health Care (XLV) slid 40 bps. Financials (XLF, -10 bps), Real Estate (XLRE, -5 bps), and Consumer Staples (XLP, -4 bps) also saw modest declines. Energy (XLE) gained 30 bps and Utilities (XLU) rose 14 bps. XLE handily outgained other sectors last week, climbing 3.84%. Materials (XLB) also advanced 1.62%. XLRE retreated nearly 3% on the week while XLY sank 1.25% and XLK fell 83 bps. XSD plunged 5.66% last week and is now trading below its 50-day moving average.
Themes: After underperforming earlier in the week, Cannabis (MJ) surged 9.65% on Friday following news that the Drug Enforcement Agency would soon reclassify the cannabis to a lower-risk category. Blockchain (BLOK) and Biotech (SBIO) were also each up more than 1.30% and Advanced Materials (REMX) increased 72 bps. Cloud Computing (SKYY) lagged, dropping 1.73%. Big Data (AIQ) and Cyber Security (HACK) both declined 1.57% while Digital Infrastructure (SRVR) and 3D Printing (PRNT) each sank around 1%. MJ climbed more than 5% last week but is still down 4.48% over the past month. REMX also gained 1.59% on the week and Casinos & Gaming (BETZ) added 7 bps. All other global thematic segments were in the red last week with most falling more than 1.50%. Clean Energy (PBW) and Solar (TAN) both plummeted more than 7% and Genomics (ARKG) sank 6.35%.
Commodities & Yields: The U.S. Dollar (UUP) added 11 bps, U.S. Aggregate Bonds (AGG) dipped 1 bps, and Preferred & Income Securities (PFF) rose 22 bps on Friday. At the closing bell, the U.S. 2-Year Treasury Yield stood at 4.723% and the U.S. 10-Year Treasury Yield stood at 4.304%. Broad Commodities (DJP) added 23 bps on the day as Silver (SLV) gained 1.32%, Copper (CPER) climbed 1.98%, and Agriculture (DBA) jumped 2.17%. CPER is up nearly 10% in the last month and DBA has risen 8.21%.
Daily Note
3.15.2024
Equities: Following hotter-than-expected Producer Price Index (PPI) results, U.S. equity markets saw losses on Thursday. The Dow Jones Industrial Average (DIA) dropped 29 bps, the NASDAQ 100 (QQQ) slipped 25 bps, and the S&P 500 (SPY) declined 20 bps. Small-Caps (IJR) and Mid-Caps (IJH) underperformed, sinking 1.53% and 1.21%, respectively. The PPI increased 0.6% month-over-month in February, which was well above the +0.3% estimate and the 0.3% increase seen in January. On a year-over-year basis, the headline PPI increased 1.6%, the biggest move since September 2023. Excluding food and energy, the core PPI accelerated by 0.3%, compared with the estimate for a 0.2% increase. Treasury yields pushed higher following the results with the U.S. 2-Year nearing 4.70% and the U.S. 10-Year approached 4.30%. Separately, Retail Sales climbed 0.4% month-over-month and 1.5% year-over-year. Sales at stores, online and in restaurants rose 0.6% in February from the prior month, up from January’s revised 1.1% decline. On the earnings front, Dick’s Sporting Goods jumped more than 15% yesterday after beating earnings and revenue expectations. After the close, Adobe beat on the top and bottom lines but issued weaker-than-expected quarterly revenue guidance. On Friday, Industrial Production figures, Consumer Sentiment data, and the Empire State Manufacturing Index will be released.
S&P 500 Growth (SPYG) added 14 bps yesterday and was the only U.S. factor strategy in the green. S&P 500 High Beta (SPHB) retreated 1.74%, S&P 500 Dividend (SPYD) fell 1.35%, and S&P 500 Pure Value (RPV) sank 1.12%. Developed ex-U.S. Markets (EFA, -73 bps) were pulled lower by Australia (EWA, -1.91%) and Hong Kong (EWH, -1.84%). The Netherlands (EWN) also decreased 1.04%. Emerging Markets (EEM) dipped 51 bps on weakness from South Africa (EZA, -2.24%), China (MCHI, -1.50%), and Brazil (EWZ, -86 bps).
Sectors: Energy (XLE) had another strong showing yesterday, rising 1.03% as WTI Crude Oil prices hit the highest levels since November. Oil & Gas Equipment & Services (XES, +90 bps) and Oil & Gas Exploration & Production (XOP, +44 bps) were the only industries in positive territory on the day. Technology (XLK) also inched higher by 2 bps while all other sectors finished lower. Real Estate (XLRE) lagged, sinking 1.41%. Utilities (XLU), Financials (XLF), and Consumer Staples (XLP) were all down around 80 bps, Consumer Discretionary (XLY) declined 64 bps, and Materials (XLB) fell 53 bps. Biotech (XBI, -2.73%), Regional Banks (KRE), and Semiconductors (XSD, -2.40%) were the worst performing industries.
Themes: All global thematic segments registered negative returns on Thursday with Genomics (ARKG, -3.83%) falling the furthest. Multi-Theme (ARKK), Blockchain (BLOK), and Biotech (SBIO) all fell more than 3% while Clean Energy (PBW), FinTech (FINX), Solar (TAN), Disruptive Tech (ARKW), and Advanced Materials (REMX) all dropped more than 2.50%. Cannabis (MJ) also declined 2.20% and is approaching oversold territory, along with ARKG and PBW. Water (PHO, -63 bps) and Cloud Computing (SKYY, -75 bps) were the best performing themes for the day. Most themes are on pace for a losing week this week.
Commodities & Yields: The U.S. Dollar (UUP) increased 54 bps, U.S. Aggregate Bonds (AGG) dipped 63 bps, and 20+ Year Treasury Bonds (TLT) tumbled 1.54% yesterday. At the closing bell, the U.S. 2-Year Treasury Yield stood at 4.691% and the U.S. 10-Year Treasury Yield stood at 4.298%. Broad Commodities (DJP) added 10 bps as Natural Gas (UNG) climbed 4.43%, WTI Crude Oil (USO) rose 1.61%, Gold (GLD) declined 42 bps, and Corn (CORN) sank 1.15%.
Daily Note
3.14.2024
Equities: The NASDAQ 100 (QQQ) and the S&P 500 (SPY) declined 77 bps and 16 bps, respectively, while the Dow Jones Industrial Average (DIA) added 11 bps on Wednesday as investors awaited Thursday’s Producer Price Index (PPI) results and Retail Sales data. Markets were impacted by Nvidia, Meta Platforms, and Apple, which all slumped around 1% yesterday. United States Steel Corp also plummeted nearly 13% after a report from the Financial Times said that President Biden plans to express “serious concern” over its proposed acquisition by Nippon Steel Corp. The White House had said in December that the deal, worth $14.9 billion, warrants scrutiny given U.S. Steel’s integral role in producing a material vital to national security, and in terms of the deal’s potential impact on “supply chain reliability.” On the earnings front, DollarTree plunged more than 14% after reporting disappointing quarterly earnings results and announced plans to close nearly 1,000 stores across the country. Bitcoin also continued to push higher yesterday, leading the newly launched Bitcoin ETFs to climb around 3%. Over the past month, the recently launched Bitcoin ETFs, including IBIT, FBTC, BITO, ARKB, and BTCO, are all up around 48%.
U.S. factor strategies were split yesterday with S&P 500 Enhanced Value (SPVU) rising 76 bps and S&P 500 Growth (SPYG) falling 43 bps. S&P 500 Pure Value (RPV) gained more than 60 bps while S&P 500 High Beta (SPHB) and S&P 500 Pure Growth (RPG) each dipped 30 bps. SPVU and RPV registered new 52-week highs on Wednesday. Developed ex-U.S. Markets (EFA) inched higher by 1 bps as Australia (EWA) increased 74 bps, France (EWQ) advanced 73 bps, and Japan (EWJ) declined 87 bps. Emerging Markets (EEM, -31 bps) were pulled lower by India (INDA, -2.44%). Mexico (EWW) jumped 2.50%, South Africa (EZA) added 1.69%, and China (MCHI) was up 37 bps.
Sectors: Energy (XLE) climbed 1.60% and was the top performing U.S. sector on Wednesday. XLE, which entered overbought territory following yesterday’s gains, received a boost from Oil & Gas Exploration & Production (XOP, +2.11%) and Oil & Gas Equipment & Services (XES, +1.56%). Materials (XLB) gained 99 bps, Financials (XLF) and Utilities (XLU) were both up around 70 bps, and Industrials (XLI) and Consumer Staples (XLP) rose around 25 bps. XLB, XLF, and Communication Services (XLC, +17 bps) all hit new 52-week highs. Technology (XLK) dropped 1.08% on weakness from Semiconductors (XSD, -2.77%). Real Estate (XLRE) declined 63 bps despite strength from Homebuilders (XHB, +1.50%). Health Care (XLV) also dipped 39 bps.
Themes: Cannabis (MJ) registered just its 2nd day of positive returns in 7 sessions yesterday, gaining 2.25%. Blockchain (BLOK) also advanced 1.47% while Advanced Materials (REMX), Online Retail (IBUY), and Biotech (SBIO) all rose more than 1%. IBUY hit new 52-week highs along with FinTech (FINX, +78 bps), Digital Payments (IPAY, +47 bps), Disruptive Tech (ARKW, +36 bps), and Smart Infrastructure (GRID, +35 bps). Clean Energy (PBW) fell 2.01% to new 52-week lows. PBW has been the worst performing segments year-to-date, slumping 24.56%. Connectivity (FIVG, -1.70%), Solar (TAN, -1.68%), and Industrial Revolution (ARKQ, -1.25%) were also weak on Wednesday.
Commodities & Yields: U.S. Aggregate Bonds (AGG) dipped 18 bps, 20+ Year Treasury Bonds (TLT) declined 48 bps, and the U.S. Dollar (UUP) dropped 11 bps yesterday. At the close, the U.S. 2-Year Treasury Yield stood at 4.622% and the U.S. 10-Year Treasury Yield stood at 4.192%. Broad Commodities (DJP) rose 1.01% as Energy (DBE) jumped 2.01%, Precious Metals (DBP) advanced 1.25%, and Industrial Metals (DBB) increased 1.12%. WTI Crude Oil (USO) and Gasoline (UGA) were both up more than 2% while Silver (SLV) and Copper (CPER) both gained more than 3%.
Disruptive Tech Category Report
3.13.2024
- Disruptive Tech ETFs gathered $910 million in net inflows in February and have seen $1.34 billion in net inflows over the past 3 months
- The First Trust NASDAQ Cybersecurity ETF (CIBR) saw $392 million in net inflows on the month and the Global X Artificial Intelligence & Technology ETF (AIQ) saw $257 million in net inflows
- The average expense ratio of the 48 Disruptive Tech ETFs is 59 bps, the average lifespan is 4.73 years, and the average TTM yield is 0.85%
- CIBR is the largest ETF in the category with $6.8 billion in AUM, total category has $21.4 billion in AUM
- 31 of the 48 ETFs in the category have low liquidity ratings, average ADV is 3.62 million
- The Xtrackers Cybersecurity Select Equity ETF (PSWD) is the cheapest ETF in the category with an expense ratio of 20 bps
- 41 of the 48 Disruptive Tech ETFs posted gains last month, average return was +3.75%, average 3-month return was +14.11%
- The KraneShares CICC China 5G & Semiconductor Index ETF (KFVG) was the best performer in February, jumping 14.57%
- The category has high and above average volatility ratings, average 3-year annualized volatility vs the S&P 500 (SPY) is 25.94%
- Disruptive Tech ETFs are also highly tilted towards large-cap growth names, heavy tilt to Technology (71.9% average sector exposure)
Daily Note
3.13.2024
Equities: As investors weighed February’s Consumer Price Index (CPI) results, major averages registered positive returns yesterday with the tech-oriented NASDAQ 100 (QQQ) rising 1.43%, the S&P 500 (SPY) climbing 1.08%, and the Dow Jones Industrial Average (DIA) advancing 61 bps. SPY hit fresh 52-week highs once again and is nearing overbought territory. Mid-Caps (IJH) also added 54 bps while Small-Caps (IJR) dipped 27 bps. According to the Bureau of Labor Statistics, the CPI increased 0.4% month-over-month and 3.2% year-over-year in February, which were both relatively in line with estimates. The Core CPI, which excludes volatile food and energy prices, was up 0.4% for the month and up 3.8% for the year, also both fairly in line with estimates. Energy costs rose 2.3% in February, lifting overall inflation figures. Food costs were flat on the month while shelter rose another 0.4%. While the year-over-year inflation figure is off the mid-2022 peak, it remains well above the Fed’s 2% goal as the central bank approaches the Federal Open Market Committee (FOMC) meeting in a week. Following the CPI results, there is currently a 99% probability of no rate change at the March meeting and an 86.1% probability of no rate change at the May meeting, according to the CME FedWatch Tool. Producer Price Index (PPI) results and Retail Sales data will be released on Thursday.
Most U.S. factor strategies saw gains on Tuesday. S&P 500 Momentum (SPMO, +2.06%), S&P 500 Growth (SPYG, +1.92%), and S&P 500 Pure Growth (RPG, +1.76%) bounced back from Monday’s losses. S&P 500 Quality (SPHQ) also increased 1.18% while S&P 500 Dividend (SPYD) slid 40 bps and S&P 500 Pure Value (RPV) dropped 39 bps. Emerging Markets (EEM) were up 1.10% on the day as China (MCHI) advanced another 2.06% and Taiwan (EWT) rose 1.59%. Developed ex-U.S. Markets (EFA, +80 bps) benefitted from solid gains from Hong Kong (EWH, +1.76%), South Korea (EWY, +1.48%), the Netherlands (EWN, +1.28%) and Germany (EWG, 1.26%).
Sectors: Technology (XLK) jumped 2.05%, handily outpacing other U.S. sectors on Tuesday. Communication Services (XLC) and Consumer Discretionary (XLY) both added more than 85 bps while Consumer Staples (XLP), Health Care (XLV), Industrials (XLI), and Financials (XLF) all gained around 45 bps. XLK and XLF both registered new 52-week highs yesterday. Utilities (XLU) was the worst performing sector, slipping 97 bps. Real Estate (XLRE) declined 25 bps and Energy (XLE) fell 16 bps. Materials (XLB, -1 bps) was dragged lower by Metals & Mining (XME), which decreased 1.74%. All sectors are still trading more than 2% above relative 50-day moving averages.
Themes: Gloomy day for Solar (TAN) as it underperformed other global thematic segments yesterday, declining 3.79%. Genomics (ARKG) and Clean Energy (PBW) were also weak, slipping 1.64% and 1.63%, respectively. Wind (FAN) declined 90 bps, Advanced Materials (REMX) sank 84 bps, Biotech (SBIO) dipped 80 bps, and Multi-Theme (ARKK) was down 79 bps. Big Data (AIQ, +2.00%) was the best performing segment followed by Evolving Consumer (SOCL, +1.55%) and Connectivity (FIVG, +1.47%). eSports & Video Games (ESPO), Cloud Computing (SKYY), and Smart Infrastructure (GRID) all gained more than 1%.
Commodities & Yields: At yesterday’s closing bell, the U.S. 2-Year Treasury Yield stood at 4.599% and the U.S. 10-Year Treasury Yield stood at 4.155%. U.S. Aggregate Bonds (AGG) sank 25 bps, 20+ Year Treasury Bonds (TLT) dropped 84 bps, and the U.S. Dollar (UUP) added 7 bps on Tuesday. Broad Commodities (DJP) declined 13 bps as Precious Metals (DBP) slid 1.11% and Agriculture (DBA) rose 1.14% on the day. Gold (GLD) and Silver (SLV) were each down more than 1% and Natural Gas (UNG) fell 2.42%.
U.S. Large Cap Equity Category Report
3.12.2024
- U.S. Large-Cap Equity ETFs gathered $28.54 billion in net inflows in February
- The SPDR S&P 500 ETF Trust (SPY) saw $5.9 billion in net outflows in February while the Vanguard S&P 500 ETF (VOO) and the the iShares Core S&P 500 ETF (IVV) each gathered more than $6 billion in net inflows
- The average expense ratio of the 509 U.S. Mid-Cap Equity ETFs in the category is 40 bps, the average lifespan is 7.18 years, and the average TTM yield is 1.20%
- 252 ETFs in the category have low liquidity ratings compared to 88 ETFs in the category with high liquidity ratings
- 500 U.S. Large-Cap Equity ETFs saw positive returns in February, average 1-month return was +3.25%
- The Renaissance IPO ETF (IPO) and the Invesco S&P 500 Momentum ETF (SPMO) each jumped more than 10% last month
- The average 3-year annualized return for the category is +5.74%
- Average top 10 holdings weight for the category is 31.41%
- Top average sector exposure for the category is Technology (23.8%), Financials (13.7%), and Health Care (11.8%)
Daily Note
3.12.2024
Equities: Major averages were mixed on Monday ahead of Tuesday’s Consumer Price Index (CPI) report and Thursday’s Producer Price Index (PPI) report. The NASDAQ 100 (QQQ) fell 37 bps, the S&P 500 (SPY) dipped 9 bps, and the Dow Jones Industrial Average (DIA) added 11 bps. All three major averages are still trading above relative 50-day and 200-day moving averages. Small-Caps (IJR, -45 bps) and Mid-Caps (IJH) also saw modest losses yesterday. Technology names were once again shaken by Nvidia, which slipped another 2% after declining more than 5% on Friday. Super Micro Computer, another stock tied to artificial intelligence, dropped 5.24% on Monday. As the price above Bitcoin continued to climb above $71K, several Bitcoin ETFs, including the ProShares Bitcoin Strategy ETF (BITO), the ARK 21Shares Bitcoin ETF (ARKB), the iShares Bitcoin ETF (IBIT), and the Fidelity Wise Origin Bitcoin Fund (FBTC), all surged around 4% yesterday. IBIT has gathered more than $10 billion in net inflows since launching in January and FBTC has gathered more than $6 billion in net inflows. After the closing bell, Oracle reported earnings results that topped expectations but missed on revenue. The company’s cloud services and license support segment, its largest business, saw a 12% increase in revenue year-over-year.
Growth-oriented pockets of the markets underperformed on Monday as S&P 500 Momentum (SPMO, -1.23%), S&P 500 Pure Growth (RPG, -64 bps), and S&P 500 Growth (SPYG) trailed other U.S. factor strategies. Most factors saw modest gains with S&P 500 Low Volatility (SPLV) increasing 54 bps and S&P 500 Pure Value (RPV) adding 43 bps. Developed ex-U.S. Markets (EFA) slid 57 bps yesterday as Japan (EWJ) declined 2.22% and Australia (EWA) fell 1.45%. Emerging Markets (EEM) advanced 22 bps as China (MCHI) jumped 2.18%. China’s Consumer Price Index climbed 0.7% year-over-year in February while the country’s Producer Price Index dropped 2.7% year-over-year.
Sectors: Materials (XLB) and Energy (XLE) outgained other U.S. sectors yesterday, climbing 1.13% and 1.03%, respectively. XLE was lifted by Oil & Gas Equipment & Services (XES, +1.29%). Consumer Staples (XLP) and Utilities (XLU) were also up around 50 bps while Financials (XLF) added 17 bps. XLB and XLF hit new 52-week highs and are the only sectors sitting in overbought territory. Industrials (XLI) lagged, falling 52 bps on weakness from Aerospace & Defense (XAR, -1.33%). Real Estate (XLRE) declined 50 bps, Technology (XLK) and Consumer Discretionary (XLY) each sank 27 bps, and Communication Services (XLC) dipped 19 bps. All sectors are trading above relative 50-day and 200-day moving averages.
Themes: Cannabis (MJ) continued its recent underperformance and slid another 3.40% yesterday. Over the past month, MJ has plunged more than 16%. Blockchain (BLOK) and Biotech (SBIO) both dropped more than 2% on Monday while Genomics (ARKG) fell 1.38% and Robotics & AI (ROBO) declined 97 bps. Advanced Materials (REMX) was the best performing global thematic segment on the day, surging 3.09%. Space (UFO) gained 1.41% and Solar (TAN) rose 1.33%. Disruptive Tech (ARKW) also increased 30 bps to new 52-week highs.
Commodities & Yields: Broad Commodities (DJP) rose 43 bps yesterday with Gasoline (UGA) climbing 2.01%, Silver (SLV) adding 54 bps, Copper (CPER) gaining 99 bps, and Sugar (CANE) advancing 3.50%, Natural Gas (UNG) also slipped 2.73%. The U.S. Dollar (UUP) was up 11 bps, U.S. Aggregate Bonds (AGG) fell 11 bps, and 20+ Year Treasury Bonds (TLT) dipped 5 bps. At Monday’s closing bell, the U.S. 2-Year Treasury Yield stood at 4.534% and the U.S. 10-Year Treasury Yield stood at 4.104%.
Daily Note
3.11.2024
Equities: On Friday, U.S. equity markets posted losses as investors sifted through the Employment Situation report for February. The NASDAQ 100 (QQQ) fell 1.44%, the S&P 500 (SPY) declined 60 bps, and the Dow Jones Industrial Average (DIA) dipped 12 bps. All three major averages were lower last week with QQQ dropping 1.48%, DIA retreating 85 bps, and SPY sinking 22 bps. According to the Bureau of Labor Statistics, nonfarm payrolls increased by 275K last month, which was well above the +198K estimate. January’s figures saw a steep downward revision from +353K to +229K and December’s total was revised down to +290K from +333K. The unemployment rate unexpectedly ticked higher to 3.9%. Average hourly earnings were up just 0.1% month-over-month but rose 4.3% year-over-year. Tech-names were also impacted on Friday by Nvidia, which slipped more than 5.5%. This week, investors will be monitoring Consumer Price Index (CPI) results, Producer Price Index (PPI) figures, Retail Sales data, and the Industrial Production report.
Most U.S. factor strategies declined on Friday with S&P 500 Momentum (SPMO) sliding 1.78%, S&P 500 Pure Growth (RPG) dropping 1.23%, and S&P 500 Quality (SPHQ) falling 1.14%. S&P 500 Dividend (SPYD) outperformed, adding 60 bps. Despite Friday’s losses, most factors saw gains last week. SPYD climbed 2.62%, S&P 500 Pure Value (RPV) rose 1.47%, and SPMO increased 38 bps. S&P 500 Growth (SPYG) was down 1.18% on the week. Developed ex-U.S. Markets (EFA, -33 bps) were pulled lower by the Netherlands (EWN, -1.91%) on Friday. Emerging Markets (EEM) also dipped 10 bps as Brazil (EWZ) slipped 2.33%. Last week, EFA advanced 1.60% and EEM gained 84 bps.
Sectors: Real Estate (XLRE) outpaced other U.S. sectors on Friday, advancing 1.18%. Energy (XLE, +35 bps), Utilities (XLU, +25 bps), and Financials (XLF, +17 bps) were the only other sectors in positive territory. XLF hit fresh 52-week highs once again and remains in overbought territory. Technology (XLK) lagged other sectors, falling 1.49% on weakness from Semiconductors (XSD, -2.96%). Consumer Staples (XLP) decreased 79 bps, Materials (XLB) sank 58 bps, and Consumer Discretionary (XLY) declined 37 bps. Utilities (XLU) jumped 3.29% last week while XLRE, XLE, and XLB all gained more than 1%. XLY dropped 2.55% on the week and XLK slid 1.62%.
Themes: Global thematic segments were split on Friday, led by Blockchain (BLOK, +2.15%), Cannabis (MJ, +1.89%), and Solar (TAN, +1.78%). FinTech (FINX) also gained 1.57% while 3D Printing (PRNT), Mobile Payments (IPAY), Multi-Theme (ARKK), and Online Retail (IBUY) all rose around 1%. Connectivity (FIVG) was the worst performing segment for the day, sinking 2.18%. Advanced Materials (REMX, -1.93%), eSports & Video Games (ESPO, -1.64%), and NextGen Transportation (DRIV, -1.22%) also underperformed. Last week, TAN surged 3.60% and Wind (FAN) added 2.81%. BLOK and PRNT were also up more than 2.5% for the week while REMX sank 6.42% and MJ declined 5.26%.
Commodities & Yields: The U.S. Dollar (UUP) inched higher by 4 bps, U.S. Aggregate Bonds (AGG) rose 9 bps, and 20+ Year Treasury Bonds (TLT) dipped 18 bps on Friday. At the closing bell, the U.S. 2-Year Treasury Yield stood at 4.486% and the U.S. 10-Year Treasury Yield stood at 4.088%. Broad Commodities (DJP) decreased 23 bps on weakness from Energy (DBE, -1.10%). WTI Crude Oil (USO) fell 1.17% and Gasoline (UGA) slid 1.00%. Copper (CPER) also dropped 82 bps while Gold (GLD) increased 85 bps and Wheat (WEAT) gained 1.98%.
Technology Category Report
3.11.2024
- Technology ETFs gathered $7.71 billion in net inflows in February and have gathered nearly $20 billion in net inflows over the past year
- The Vanguard Information Technology ETF (VGT) saw the largest net inflows on the month with $5.8 billion while the iShares Semiconductor ETF (SOXX) saw $407 million in net outflows
- The 40 Technology ETFs in the category have $227 billion in total assets under management, VGT and the Technology Select Sector SPDR Fund (XLK) each have more than $63 billion in total AUM
- The Fidelity MSCI Information Technology Index ETF (FTEC) is the cheapest ETF in the category with an expense ratio of 8 bps
- The average expense ratio of the category is 46 bps, the average TTM Yield is 0.45%, and the average lifespan is 12.63 years
- 37 of the 40 Technology ETFs registered positive returns in February, the VanEck Semiconductor ETF (SMH, +11.27%) was the best performer
- The category has high volatility ratings and above average growth ratings
- The average top 10 holdings weight for the category is 52.65% and the average price to earnings (TTM) is 31.19
ETF Action Thematic All-Stars Composite Index - February Rebalance Slick
3.7.2024
-The ETF All-Stars Thematic Composite Index added 10 companies and dropped 11 companies in the February rebalance bringing the total number of securities to 120
-Notable adds include Intuit Inc. (INTU) and Micron Technology Inc. (MU)
-Notable drops include Bloom Energy (BE) and Snap (SNAP)
-Broadcom (AVGO) was upweighted 1.35% to a 2.40% weight and Palo Alto Networks (PANW) was upweighted 47 bps to a 2.36% weight
-NVIDIA (NVDA) and Tesla (TSLA) are the only two securities capped at 5% maximum weight
-The Top 10 holdings now represent 31.60% of the index
Daily Note
3.7.2024
Equities: The losing streak for U.S. equity markets ended on Wednesday as the NASDAQ 100 (QQQ) rose 63 bps, the S&P 500 (SPY) increased 51 bps, and the Dow Jones Industrial Average (DIA) gained 26 bps. Small-Caps (IJR) also added 36 bps while Mid-Caps (IJH) advanced 70 bps to new 52-week highs. Investors digested remarks from Federal Reserve Chairman Jerome Powell to the House of Representatives yesterday. Powell told the House Financial Services Committee that the central bank could lower interest rates this year, but policymakers remain attentive to the risks that inflation poses and don’t want to ease up too quickly. Powell is also slated to appear before the Senate Banking Committee on Thursday. Separately, a report from ADP showed that private sector job growth improved in February but came in slightly below estimates. Companies added 140K positions for the month, an increase from the upwardly revised 111K in January but just below the estimate for 150K. Leisure and hospitality and construction saw sizeable job growth on the month. According to the Job Openings & Labor Turnover Survey (JOLTS) results released on Wednesday by the Labor Department, job openings dipped 26K in February to 8.86 million and total separations totaled 5.3 million, little changed from the previous month. Openings are down 1.5 million from a year ago and down 3.3 million from the March 2022 peak. In addition to Powell’s comments to the Senate, investors will be keeping an eye on Jobless Claims data and U.S. International Trade in Goods and Services data on Thursday.
All U.S. factors were in positive territory on Wednesday led by S&P 500 Momentum (SPMO, +92 bps), and S&P 500 Minimum Variance (SPMV, +86 bps). SPMO hit fresh 52-week highs and sits well into overbought territory. S&P 500 Pure Growth (RPG), S&P 500 Quality (SPHQ), and S&P 500 High Beta (SPHB) all rose around 70 bps on the day while S&P 500 Pure Value (RPV) added 44 bps. Developed ex-U.S. Markets (EFA) climbed 1.18% to new 52-week highs yesterday, benefitting from solid returns from the Netherlands (EWN, +1.88%), Australia (EWA, +1.75%), and Japan (EWJ, +1.52%). Emerging Markets (EEM) increased 1.45% as South Africa (EZA) jumped 3.39%, Taiwan (EWT) advanced 2.32%, and Thailand (THD) gained 2.16%.
Sectors: Utilities (XLU) climbed 96 bps yesterday, outgaining other U.S. sectors. Consumer Staples (XLP, +84 bps), Technology (XLK, +79 bps), and Materials (XLB) also posted solid returns. XLK was bolstered by Semiconductors (XSD, +2.50%) and Software & Services (XSW, +1.64%). Health Care (XLV) added 68 bps on the day while Real Estate (XLRE), Financials (XLF), and Industrials (XLI) all rose more than 50 bps. XLI received a boost from Aerospace & Defense (XAR), which jumped 1.51%. XLB and XLF both hit new 52-week highs and sit in overbought territory. Consumer Discretionary (XLY) fell 36 bps and was the only sector to see losses. XLY was dragged lower by Retail (XRT, -1.59%).
Themes: Cannabis (MJ) was the lone global thematic segment in the red yesterday, sinking 3.03%. MJ has plunged nearly 19% over the past month and is approaching oversold territory. Advanced Materials (REMX) and Blockchain (BLOK) were the top performing segments on Wednesday, both surging more than 4%. Disruptive Tech (ARKW, +2.91%) was also strong followed by FinTech (FINX, +2.30%), Solar (TAN, +2.19%), Clean Energy (PBW, +2.16%), and 3D Printing (PRNT, +2.00%). NextGen Transportation (DRIV) and Wind (FAN) were both up more than 1.80%. eSports & Video Games (ESPO, +1.44%), Digital Payments (IPAY, +1.40%), and Smart Infrastructure (GRID, +1.26%) all hit new 52-week highs.
Commodities & Yields: U.S. Aggregate Bonds (AGG) advanced 15 bps, 20+ Year Treasury Bonds (TLT) gained 59 bps, and the U.S. Dollar (UUP) declined 36 bps on Wednesday. At the close, the U.S. 2-Year Treasury Yield stood at 4.562% and the U.S. 10-Year Treasury Yield stood at 4.104%. Broad Commodities (DJP) increased 46 bps as WTI Crude Oil (USO) rose 1.21%, Silver (SLV) climbed 1.98%, Gold (GLD) added 82 bps, and Sugar (CANE) jumped 2.52%. Wheat (WEAT) was also down 2.32% and Natural Gas (UNG) slid 1.26%.
FI Corporate Category Report
3.7.2024
- The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) each saw more than $2.2 billion in net outflows in February
- Meanwhile, the Vanguard Long-Term Corporate Bond ETF (VCLT) gathered $612 million in net inflows on the month
- The Vanguard Intermediate-Term Corporate Bond ETF (VCIT) is the largest ETF in the category with $45.8 billion in total assets under management
- The average expense ratio of the category is 28 bps, the average lifespan is 6.20 years, and the average TTM Yield is 4.38%
- Most of the 162 Corporate Bond ETFs posted losses in February, the average 1-month return for the category was -0.37% and the average 1-year return was +7.33%
- The BondBloxx CCC-Rated USD High Yield Corporate Bond ETF (XCCC) was the top performing Corporate Bond ETF on the month, rising 2.13%
- The average yield to maturity is 6.32%, the average effective duration is 4.36, and the average effective convexity is 0.28
Industrial Revolution Category Report
3.6.2024
- Despite solid performance for the month, Industrial Revolution ETFs saw modest net inflows in February
- The Global X Robotics & Artificial Intelligence ETF (BOTZ) saw the largest net inflows on the month with $79.7 million
- The ARK Autonomous Technology & Robotics ETF (ARKQ) saw the largest net outflows in February with $54.2 million
- BOTZ is the largest ETF in the category with $2.6 billion in AUM followed by the ROBO Global Robotics & Automation Index ETF (ROBO) with $1.3 billion in AUM
- The cheapest Industrial Revolution ETF is the Fidelity Electric Vehicles and Future Transportation ETF (FRDV) with an expense ratio of 39 bps
- Just 3 ETFs in the category saw losses last month, average 1-month return was +3.47%, average 1-year return was +7.34%
- The Global X Defense Tech ETF (SHLD) outpaced other Industrial Revolution ETFs in February, jumping 10.23%
- The category has high and above average volatility ratings, the average 3-year volatility relative to the S&P 500 (SPY) was 27.36%
- The category has high sector exposure to Technology, Industrials, and Consumer Discretionary
- Industrial Revolution ETFs have a strong tilt towards Large-Cap Growth names
Daily Note
3.6.2024
Equities: For the second consecutive session, U.S. equity markets posted losses on Tuesday with the NASDAQ 100 (QQQ) declining 1.79%, the Dow Jones Industrial Average (DIA) sinking 1.04%, and the S&P 500 (SPY) dropping 1.00%. SPY exited overbought territory, but all three major averages are still trading well above relative 50-day and 200-day moving averages. Tech names were shaken by Apple, which fell nearly 3% yesterday after a report that iPhone sales plummeted 24% in China in the first 6 weeks of 2024. Apple continues to face stiff competition from local smartphone firms like Huawei, Oppo, Vivo, and Xiaomi. On the earnings front, GitLab plunged 21% after posting a weak forecast for the full year and Target climbed just over 12% after reporting holiday-quarter revenue and earnings that topped estimates. Target’s total revenue increased 2% year-over-year, but the company also issued weak forward guidance. Investors also weighed February’s ISM Services Index report, which showed that services industries reported slightly slower than expected activity for the month. The index was down slightly from January and narrowly remains in expansion territory. Additionally, according to the Commerce Department, new orders for U.S.-manufactured goods dropped more than expected in January. On Wednesday, investors will be monitoring Fed Chair Jerome Powell’s monetary policy update to the House of Representatives along with the ADP Employment Report and the Job Openings & Labor Turnover Survey (JOLTS) results.
Value-oriented pockets of the markets outperformed yesterday as S&P 500 Enhanced Value (SPVU) gained 33 bps and S&P 500 Pure Value (RPV) rose 28 bps. Most other factors were in negative territory for the day with S&P 500 Growth (SPYG), S&P 500 Pure Growth (RPG), and S&P 500 High Beta (SPHB) all slipping more than 1%. S&P 500 Quality (SPHQ, -93 bps) and S&P 500 Momentum (SPMO, -77 bps) were also weak. Emerging Markets (EEM) declined 89 bps on Tuesday on losses from China (MCHI, -1.11%) and Taiwan (EWT, 66 bps). Developed ex-U.S. Markets (EFA, -18 bps) were impacted by underperformance from Hong Kong (EWH, -1.97%), South Korea (EWY, -1.97%), and the Netherlands (EWN, -1.32%).
Sectors: Energy (XLE) was the top performing U.S. sector yesterday, advancing 74 bps. Consumer Staples (XLP, +24 bps) and Financials (XLF, +2 bps) were the only other sectors in the green. XLF hit new 52-week highs and was lifted by Regional Banks (KRE, +4.03%) and Banks (KBE, +3.01%). Technology (XLK) slid 2.46%, pulled lower by Software & Services (XSW, -4.06%) and Semiconductors (XSD, -2.36%). Real Estate (XLRE) and Consumer Discretionary (XLY) were down more than 1.20% while Industrials (XLI), Communication Services (XLC), and Health Care (XLV) all fell around 80 bps. Materials (XLB) also dipped 54 bps. All sectors are trading above relative 50-day moving averages and Utilities (XLU, -29 bps) is the only sector trading below its 200-day moving average.
Themes: All global thematic segments registered negative returns on Tuesday with Advance Materials (REMX, -7.19%) falling the furthest. Blockchain (BLOK) decreased 4.79%, Disruptive Tech (ARKW) dropped 3.99%, Multi-Theme (ARKK) fell 3.51%, and Cloud Computing (SKYY) slid 3.45%. Genomics (ARKG) was also down 3.16% followed by Clean Energy (PBW, -2.91%), FinTech (FINX, -2.83%), and Cyber Security (HACK, -2.68%). PBW is now trading just 52 bps from 52-week lows. Wind (FAN) and Space (UFO) were the best performers, both dipping around 30 bps. Despite climbing more than 23.5% over the past month, Blockchain (BLOK) has seen $563 million in net outflows in the period.
Commodities & Yields: The U.S. Dollar (UUP) dipped 11 bps, U.S. Aggregate Bonds (AGG) added 54 bps, and 20+ Year Treasury Bonds (TLT) jumped 1.42% yesterday. At the closing bell, the U.S. 2-Year Treasury Yield stood at 4.552% and the U.S. 10-Year Treasury Yield stood at 4.137%. Broad Commodities (DJP) sank 41 bps as Agriculture (DBA) declined 1.16%. Wheat (WEAT) declined 1.89% and Corn (CORN) slipped 1.02%. Silver (SLV) decreased 87 bps and Gasoline (UGA) retreated 2.22%.
Daily Note
3.5.2024
Equities: U.S. equity markets slipped from 52-week highs on Monday as investors awaited monetary policy updates from Federal Reserve Chairman Jerome Powell later this week. The NASDAQ 100 (QQQ) dropped 36 bps, the Dow Jones Industrial Average (DIA) fell 28 bps, and the S&P 500 (SPY) dipped 11 bps. SPY remains in overbought territory. Mid-Caps (IJH) outperformed, climbing 60 bps, while Small-Caps (IJR) declined 51 bps. Apple retreated 2.54% on Monday after the European Commission hit the company with a nearly $2 billion antitrust fine for abusing its dominant position in the market for the distribution of music streaming apps. In response to the fine, Apple said Spotify would stand to gain the most from the EU pronouncement. Ford gained more than 2% on the day after reporting strong U.S. sales figures for February. Sales jumped 10.5% year-over-year led by increases in its hybrid and all-electric vehicles sales. JetBlue Airways and Spirit Airlines announced Monday they are ending their agreement to merge amid substantial regulatory hurdles. Spirit plunged nearly 11% yesterday while JetBlue was up more than 4%. On Tuesday, investors will be looking towards Factory Orders data and the ISM Services Index results.
U.S. factor strategies were split yesterday with S&P 500 Dividend (SPYD) jumping 92 bps and S&P 500 Growth (SPYG) sinking 41 bps. S&P 500 Value (SPYD) added 29 bps while S&P 500 High Beta (SPHB) slipped 33 bps. Developed ex-U.S. Markets (EFA) fell 26 bps on Monday despite solid returns from South Korea (EWY, +1.03%). Australia (EWA) was down 70 bps and Japan (EWJ) declined 58 bps. Emerging Markets (EEM, -22 bps) were pulled lowed by China (MCHI, -1.82%) and Indonesia (EIDO, -1.33%). Taiwan (EWT) also increased 90 bps on the day. MCHI has risen nearly 8% in the past month but is still down 4.49% year-to-date.
Sectors: Utilities (XLU) gained 1.69% on Monday led other U.S. sectors. Real Estate (XLRE) also climbed 1.14% and Materials (XLB) rose 73 bps while Industrials (XLI) and Financials (XLF) were each up around 30 bps. XLF received a boost from Capital Markets (KCE), which advanced 1.16%. XLB, XLF, XLI, and Technology (XLK, +0 bps) are all currently trading at 52-week highs. XLB and XLI are the only sectors in overbought territory. Consumer Discretionary (XLY) and Communication Services (XLC) underperformed, both declining more than 1.30%. Energy (XLE) fell 1.07% and Health Care (XLV) dipped 15 bps.
Themes: Advanced Materials (REMX) and Cannabis (MJ) lagged other global thematic segments yesterday, dropping 2.72% and 2.63%, respectively. Clean Energy (PBW) decreased 2.34%, Genomics (ARKG) slid 1.87%, and Solar (TAN) slipped 1.79%. Space (UFO), Evolving Consumer (SOCL), 3D Printing (PRNT), Casinos & Gaming (BETZ), and Biotech (SBIO) were all down more than 1%. Disruptive Tech (ARKW, +1.08%) was the only segment to gain more than 1% on the day. Connectivity (FIVG, +96 bps), Blockchain (BLOK, +87 bps), and Water (PHO, +61 bps) registered solid gains as well on Monday.
Commodities & Yields: At Monday’s closing bell, the U.S. 2-Year Treasury Yield stood at 4.608% and the U.S. 10-Year Treasury Yield stood at 4.219%. The U.S. Dollar (UUP) was flat, U.S. Aggregate Bonds (AGG) declined 25 bps, and 20+ Year Treasury Bonds (TLT) dipped 40 bps. Broad Commodities (DJP, +71 bps) were lifted by gains from Natural Gas (UNG, +5.36%), Silver (SLV, +3.26%), Gold (GLD, +1.62%), and Corn (CORN, +1.40%). WTI Crude Oil (USO) decreased 1.27% and Sugar (CANE) fell 1.48%.
Single Country Developed Ex-U.S. Markets Category Report
3.5.2024
- The WisdomTree Japan Hedged Equity Fund (DXJ) and the iShares MSCI Japan ETF (EWJ) each gathered more than $500 million in net inflows in February
- Over the past year, EWJ has gathered $4.2 billion in net inflows, the JPMorgan BetaBuilders Japan ETF (BBJP) has gathered $2.3 billion in net inflows, and DXJ has gathered $1.8 billion in net inflows
- The iShares MSCI Canada ETF (EWC) saw $229 million in net ouflows in February and has seen $1.2 billion in net outflows in the last year
- EWJ is the largest ETF amongst Single Country Developed ex-U.S. Markets ETFs with $16.3 billion in AUM
- The average expense ratio of the 56 ETFs in the category is 45 bps, the average lifespan is 15.55 years, and the average TTM yield is 3.20%
- 21 ETFs in the category have low liquidity ratings and 12 ETFs have below average liquidity ratings, average ADV is $24.15 million
- DXJ and the iShares MSCI ETF (EWI) both climbed more than 7% in February while the iShares New Zealand ETF (ENZL) slipped 4.62%
- DXJ has rocketed nearly 53% in the past year and 3 other Japan Hedged ETFs (HEWJ, DBJP, FLHJ) have all risen more than 40% in the period
- The Xtrackers MSCI Germany Hedged Equity ETF (DBGR) has the lowest volatility rating in the category
- Highest average sector exposure is Financials (20.4%), Industrials (18.4%), Consumer Discretionary (12.1%) and Technology (11.2%)
Health Care Category Report
3.4.2024
- Health Care ETFs gathered $890 million in net inflows in February but have seen $7.81 billion in net outflows over the past year
- The SPDR S&P Biotech ETF (XBI) saw the largest net inflows last month with $553 million
- The category made up of 32 ETFs has $99.1 billion in total AUM, average expense ratio is 45 bps, and average lifespan is 13.97 years
- The Health Care Select Sector SPDR Fund (XLV) is the largest ETF in the category with over $40 billion in AUM
- The Fidelity MSCI Health Care Index ETF (FDIS) has the lowest expense ratio in the category at 8 bps
- 22 Health Care ETFs posted gains in February, average return for the month was +2.57%
- The Invesco Dorsey Wright Healthcare Momentum ETF (PTH) was the top performer on the month, surging climbing 10.90%
- The category has average/ above average volatility ratings with the average volatility vs S&P 500 (SPY) at 18.19%
- The average weight of top 10 holdings for ETFs in the category is 47.81%
- The average price/ earnings (TTM) for the cateogry is 27.92 and average return on equity is 8.8%
Daily Note
3.4.2024
Equities: On Friday, U.S. equity markets registered positive returns to close out another winning week. The tech-oriented NASDAQ 100 (QQQ) climbed 1.51%, the S&P 500 (SPY) rose 94 bps, and the Dow Jones Industrial Average (DIA) gained 35 bps. All three major averages hit fresh 52-week highs and SPY currently sits in overbought territory. Last week, QQQ added 2.02%, SPY increased 98 bps, and DIA inched higher by 1 bps. QQQ was bolstered by NVIDIA, which advanced another 4% on Friday. NVIDIA has rocketed more than 262% over the past year and is up more than 65% thus far in 2024. New York Community Bancorp plunged nearly 26% on the day after announcing a leadership change and disclosed issues with its internal controls. The bank is already down more than 65% year-to-date. According to the Institute for Supply Chain Management, the ISM manufacturing index slipped to 47.8 for the month, down 1.3 points from January and below the 49.5 estimate. The index was impacted by a decline in new orders and lower production and employment readings. This week, investors will be looking towards Job Openings Labor Turnover Survey (JOLTS) results, U.S. International Trades and Services data, and the Employment Situation report. Federal Reserve Chairman Jerome Powell will also provide monetary policy updates to the House of Representatives on Wednesday and to the Senate on Thursday.
S&P 500 Momentum (SPMO) climbed 2.02% to new 52-week highs on Friday, outperforming other U.S. factor strategies. S&P 500 Pure Growth (RPG), S&P 500 Quality (SPHQ), and S&P 500 High Beta (SPHB) all gained more than 1% and hit fresh 52-week highs while S&P 500 Low Volatility (SPLV) and S&P 500 Pure Value (RPV) saw moderate losses. RPG, SPHB, and SPMO all increased around 3% last week and SPLV fell 70 bps. Emerging Markets (EEM) popped 1.23% on Friday and Developed ex-U.S. Markets (EFA) increased 97 bps. EEM slumped 30 bps last week and EFA added 78 bps.
Sectors: Utilities (XLU) and Financials (XLF) were the only U.S. sectors to finish lower on Friday, slipping 61 bps and 12 bps, respectively. Technology (XLK) was strong once again, climbing 1.83%. Energy (XLE), Real Estate (XLRE), and Health Care (XLV) all rose more than 1% while Communication Services (XLC) added 83 bps. Materials (XLB) and Industrials (XLI) both gained more than 40 bps. Last week, XLK, XLRE, and Consumer Discretionary (XLY) were all up more than 2% while XLV declined 1.03%. Energy (XLE), XLB, and XLI all increased more than 1% on the week as well.
Themes: All global thematic segments were in the green on Friday, except for Multi-Theme (ARKK, -21 bps) and Casinos & Gaming (BETZ, -2 bps). Connectivity (FIVG) and Advanced Materials (REMX) led the charge, both rising more than 3.35%. Biotech (SBIO) and eSports & Video Games (ESPO) both jumped more than 2.50% while Solar (TAN), Blockchain (BLOK), and Cloud Computing (SKYY) all gained more than 2%. Big Data (AIQ, +1.83%), NextGen Transportation (DRIV, +1.70%), and Evolving Consumer (SOCL, +1.67%) also saw solid returns on Friday. Nearly all segments posted gains last week with REMX surging more than 12%. BLOK also soared 9.30% and Disruptive Tech (ARKW) increased 7.52%.
Commodities & Yields: Broad Commodities (DJP) increased 67 bps on Friday as Precious Metals (DBP) climbed 1.67% and Energy (DBE) advanced 90 bps. U.S. Aggregate Bonds (AGG) rose 48 bps, 20+ Year Treasury Bonds (TLT) gained 62 bps, and the U.S. Dollar (UUP) dropped 18 bps. At Friday’s closing bell, the U.S. 2-Year Treasury Yield stood at 4.533% and the U.S. 10-Year Treasury Yield stood at 4.182%.
Daily Note
3.1.2024
Equities: U.S. equity markets posted gains on Thursday to close out another winning month. The NASDAQ 100 (QQQ) popped 86 bps, the S&P 500 (SPY) rose 36 bps, and the Dow Jones Industrial Average (DIA) added 9 bps. QQQ and SPY registered fresh 52-week highs. In February, SPY climbed 3.42%, QQQ advanced 2.53%, and DIA increased 1.89%. Last month was the fourth consecutive month of gains for all three major averages. Investors weighed the latest Personal Consumption Expenditures (PCE) results which showed that the index rose 0.3% month-over-month and 2.4% year-over-year, both in line with consensus estimates. The Core PCE Index, which excludes volatile food and energy prices, increased 0.4% for the month and 2.8% for the year, also in line with expectations. Notably, personal income rose 1% month-over-month in January, well above the forecast for 0.3%. Following the PCE results, there is a 97% probability that the Federal Reserve will keep rates steady at the March Federal Open Market Committee (FOMC) meeting, according to the CME FedWatch Tool. In a speech on Thursday, Atlanta Federal Reserve President Raphael Bostic said he still expects the central bank to begin lowering interest rates this summer despite elevated inflation readings. On Friday, investors will be looking towards several speeches from Federal Reserve officials along with the ISM Manufacturing Index results.
S&P 500 Low Volatility (SPLV, -13 bps) was the lone U.S. factor strategy in the red yesterday. S&P 500 High Beta (SPHB) and S&P 500 Pure Growth (RPG) each climbed more than 1% while S&P 500 Pure Value (RPV) gained 81 bps. All factors finished higher in February except for S&P 500 Dividend (SPYD), which dipped 74 bps. S&P 500 Momentum (SPMO) surged more than 10%, RPG rose 6.07%, and S&P 500 Growth (SPYG) increased 4.47%. Emerging Markets (EEM) inched higher by 5 bps on Thursday as Taiwan (EWT) jumped 1.02% and Brazil (EWZ) fell 1.02%. Developed ex-U.S. Markets (EFA, +26 bps) was boosted by Australia (EWA, +89 bps) and Japan (EWJ, +66 bps). Last month, EEM and EFA were both up more than 2%.
Sectors: Technology (XLK) advanced 1.11% on Thursday and outpaced other U.S. sectors, lifted by Semiconductors (XSD, +2.53%). Communication Services (XLC) and Real Estate (XLRE) both gained at least 80 bps while Materials (XLB) and Consumer Discretionary (XLY) each rose around 70 bps. Energy (XLE) also added 49 bps on strength from Oil & Gas Exploration & Production (XOP, +1.01%). Health Care (XLV) lagged, falling 82 bps as Biotech (XBI) slipped more than 3%. Consumer Staples (XLP, -16 bps) and Financials (XLF, -5 bps) were the only other sectors in negative territory for the day. In February, all sectors were in the green with Industrials (XLI), XLY, and XLB all climbing more than 5%. XLRE and Utilities (XLU) both added around 80 bps for the month and were the only sectors to gain less than 1%.
Themes: Biotech (SBIO) and Genomics (ARKG) underperformed other global thematic segments yesterday, both sinking more than 2.35%. Cannabis (MJ) also declined 1.45%, 3D Printing (PRNT) decreased 1.00%, and Blockchain (BLOK) dropped 85 bps. Advanced Materials (REMX) was the top performing segment, jumping 3.54%. Solar (TAN) and Cloud Computing (SKYY) were both up more than 2% and Wind (FAN) added 1.88%. Connectivity (FIVG), Disruptive Tech (ARKW), and NextGen Transportation (DRIV) all advanced more than 1.50% for the day. Most segments finished higher last month with BLOK rocketing more than 20%, ARKW climbing more than 10%, and SBIO gaining 9.36%. MJ posted its first monthly losses in 4 months, dropping 7.86%.
Commodities & Yields: U.S. Aggregate Bonds (AGG) added 16 bps, 20+ Year Treasury Bonds (TLT) rose 71 bps, and the U.S. Dollar (UUP) increased 21 bps yesterday. TLT was down 4.45% in February while UUP gained more than 1%. At the closing bell, the U.S. 2-Year Treasury Yield stood at 4.646% and the U.S. 10-Year Treasury Yield stood at 4.252%. Broad Commodities (DJP) were down just 3 bps on Thursday as Natural Gas (UNG) slipped 1.14%, Gasoline (UGA) climbed 1.43%, Gold (GLD) advanced 52 bps, and Sugar (CANE) dropped 3.72%. UNG plunged more than 13% last month but Agriculture (DBA) was up nearly 4%.
FI Government Category Report
2.29.2024
- Fixed Income Government ETFs gathered $1.18 billion in net inflows in January but have seen $7.85 billion in net outflows over the past 3 months
- The iShares 7-10 Year Treasury Bond ETF (IEF) gathered $1.65 billion in net inflows on the month while the iShares 20+ Year Treasury Bond ETF (TLT) saw $1.42 billion in net outflows
- TLT is the largest ETF in the category with $49.6 billion in total assets under management
- The average expense ratio of the category is 13 bps, the average lifespan is 6.96 years, and the average TTM Yield is 2.51%
- The average 1-month return for the category was -0.12% and the average 1-year return was +0.81%
- Longer duration ETFs in the category underperformed in January with the PIMCO 25+ Year Zero Coupon US Treasury Index ETF (ZROZ) and the iShares 25+ Year Treasury STRIPS Bond ETF (GOVZ) each falling more than 5%
- The category has above average credit quality, average/below average yield, and a varying degree of duration between funds
Daily Note
2.29.2024
Equities: Ahead of Thursday’s key Personal Consumption Expenditures (PCE) report, U.S. equity markets finished lower yesterday with the tech heavy NASDAQ 100 (QQQ) falling 53 bps, the S&P 500 (SPY) sinking 13 bps, and the Dow Jones Industrial Average (DIA) dipping 2 bps. According to the Commerce Department, the U.S. economy grew at a slightly slower pace in the fourth quarter of 2023 than previously reported. Gross Domestic Product (GDP) accelerated at a 3.2% annualized rate adjusted for seasonality and inflation, 0.1% below the initial estimate. The downward revision came primarily due to smaller than expected private inventory investment, which offset upward revisions in local government and consumer spending. In the third quarter, real GDP increased 4.9 percent. Bitcoin continued its surge on Wednesday morning, crossing the $60K mark for first time since November 2021. Several of the newly launched Bitcoin ETFs, including the iShares Bitcoin Trust (IBIT), the Fidelity Wise Origin Bitcoin Fund (FBTC), and the ARK 21Shares Bitcoin ETF (ARKB), climbed more than 6% and saw near record high trading volume on Wednesday. On the earnings front, Beyond Meat rocketed more than 30% after reporting better-than-expected revenue in Q4 and announcing plans to cut operating costs and cash use. Urban Outfitters slipped almost 13% following disappointing earnings and revenue figures. Along with the PCE report, a handful of Federal Reserve officials are scheduled to speak on Thursday and Jobless Claims data will also be released.
Most U.S. factor strategies fell slightly on Wednesday. S&P 500 High Beta (SPHB) and S&P 500 Pure Value (RPV) were the worst performers, both declining more than 40 bps, while S&P 500 Growth (SPYG) dropped 32 bps. S&P 500 Low Volatility (SPLV) rose 28 bps and S&P 500 Value (SPYV) added 4 bps. S&P 500 Equal Weight (RSP) also increased 4 bps to new 52-week highs. Developed ex-U.S. Markets (EFA) sank 58 bps yesterday as Hong Kong (EWH), Australia (EWA), and the U.K. (EWU) all retreated more than 1%. Emerging Markets (EEM, -1.31%) were impacted by losses from China (MCHI, -2.94%). South Africa (EZA) and Brazil (EWZ) both slipped more than 2% while Mexico (EWW) was down 1.86%.
Sectors: Real Estate (XLRE) outpaced other U.S. sectors yesterday, climbing 1.39%. XLRE is the only sector currently trading below its 50-day moving average. Consumer Discretionary (XLY) gained 39 bps, Financials (XLF) advanced 37 bps, and Industrials (XLI) increased 31 bps. Materials (XLB) added 31 bps despite weakness from Metals & Mining (XME, -2.58%). Utilities (XLU) also rose 31 bps on the day. XLB, XLI, XLF, and XLY all hit new 52-week highs on Wednesday. Communication Services (XLC) underperformed, sinking 68 bps followed by Health Care (XLV, -50 bps) and Technology (XLK, -47 bps). XLV was dragged lower by Health Care Equipment (XHE, -1.42%), Biotech (XBI, -1.32%), and Health Care Services (XHS, -1.26%).
Themes: Advanced Materials (REMX) and Digital Infrastructure (SRVR) advanced 2.12% and 1.54%, respectively, on Wednesday, leading other global thematic segments. Disruptive Tech (ARKW, +52 bps), Water (PHO, +41 bps), and Digital Payments (IPAY, +2 bps) were the only other segments to see positive returns, and each hit fresh 52-week highs. Genomics (ARKG) and Space(UFO) each declined around 2% for the day while Biotech (SBIO), Evolving Consumer (SOCL), and 3D Printing (PRNT) all decreased more than 1.50%. Cannabis (MJ, -1.43%), Solar (TAN, -1.29%), and eSports & Video Games (ESPO, -1.23%) were also weak. Blockchain (BLOK) slipped 85 bps. Notably, BLOK has seen $195 million in net outflows over the past week and $585 million in net outflows over the past month.
Commodities & Yields: At Wednesday’s closing bell, the U.S. 2-Year Treasury Yield stood at 4.648% and the U.S. 10-Year Treasury Yield stood at 4.274%. The U.S. Dollar (UUP) added 7 bps, U.S. Aggregate Bonds (AGG) increased 20 bps, and 20+ Year Treasury Bonds (TLT) rose 63 bps yesterday. Broad Commodities (DJP) inched higher by 10 bps as Natural Gas (UNG) advanced 3.46%, Corn (CORN) gained 1.34%, Gasoline (UGA) declined 1.82%, and Wheat (WEAT) slipped 92 bps.
Daily Note
2.28.2024
Equities: As investors weighed the latest batch of corporate earnings results, the NASDAQ 100 (QQQ) and the S&P 500 (SPY) gained 24 bps and 19 bps, respectively on Tuesday while the Dow Jones Industrial Average (DIA) sank 27 bps. Small-Caps (IJR, +84 bps) outperformed once again, and Mid-Caps (IJH) added 48 bps. Lowe’s climbed nearly 2% yesterday after topping earnings estimates. Macy’s gained more than 3% after announcing it would close around 150 stores across the country. The retailer also reported revenue results that missed expectations. Zoom Video jumped more than 8% on the day after reporting strong results after the close on Monday. Investors also considered the latest consumer confidence results along with the Durable Goods Orders report. The Conference Board Consumer Confidence Index dropped to 106.7 for February, which was lower than which was lower than the downwardly revised 110.9 in January and below the Dow Jones estimate for 115.1. According to the U.S. Department of Commerce, orders for long-lasting goods declined 6.1% month-over-month in January, with the leading factor being a large drop in demand for transportation. On Wednesday, updated Gross Domestic Product (GDP) figures will be released followed by the closely watched Personal Consumption Expenditures report on Thursday.
S&P 500 High Beta (SPHB) advanced 1.14% and led other U.S. factor strategies yesterday. S&P 500 Dividend (SPYD) and S&P 500 Pure Value (RPV) also rose more than 70 bps. S&P 500 Quality (SPHQ) and S&P 500 Minimum Variance (SPMV) were the only factors in the red, both dipping 7 bps. Emerging Markets (EEM) gained 20 bps on strength from Brazil (EWZ, +2.37%) and China (MCHI, +1.37%). Developed ex-U.S. Markets (EFA) added 27 bps despite losses from South Korea (EWY, -90 bps). Germany (EWG) climbed 79 bps and Australia (EWA) was up 67 bps for the day.
Sectors: Energy (XLE) and Health Care (XLV) were the only U.S. sectors to see losses on Tuesday, falling 43 bps and 24 bps, respectively. Utilities (XLU) handily outgained other sectors, climbing 1.89%. Communication Services (XLC) increased 81 bps while Materials (XLB), Consumer Discretionary (XLY), and Financials (XLF) all added around 30 bps. XLY was bolstered by Retail (XRT), which jumped 2.47% yesterday. Industrials (XLI) rose just 15 bps and entered overbought territory. XLI and XLY also hit fresh 52-week highs. Semiconductors (XSD) sank 31 bps and was the only industry in negative territory.
Themes: All global thematic segments registered positive returns yesterday, except for Digital Infrastructure (SRVR, -11 bps) and 3D Printing (PRNT, -4 bps). Biotech (SBIO) surged 6.16% to new 52-week highs followed by Genomics (ARKG, +4.90%), Online Retail (IBUY, +3.17%), Multi-Theme (ARKK, +2.92%), and Clean Energy (PBW, +2.48%). Blockchain (BLOK) and Advanced Materials (REMX) both climbed more than 1.70% while Space (UFO) and Disruptive Tech (ARKW) were both up more than 1.50%. IBUY and BLOK also hit new 52-week highs on the day and SBIO and BLOK entered overbought territory.
Commodities & Yields: U.S. Aggregate Bonds (AGG) dipped 13 bps, 20+ Year Treasury Bonds (TLT) fell 71 bps, and the U.S. Dollar (UUP) inched higher by 5 bps yesterday. At the closing bell, the U.S. 2-Year Treasury Yield stood at 4.695% and the U.S. 10-Year Treasury Yield stood at 4.303%. Broad Commodities (DJP) gained 74 bps, boosted by Energy (DBE, +70 bps). Natural Gas (UNG) climbed 3.52% while WTI Crude Oil (USO) and Gasoline (UGA) both increased more than 1.30%. Wheat (WEAT, +1.87%) and Sugar (CANE, +1.79%) were also strong.
Sustainability Category Report
2.28.2024
- Sustainability ETFs have seen net outflows across the 1-month, 3-month, 1-year and 3-year periods
- In January, the iShares Global Clean Energy ETF (ICLN) saw $239 million in net outflows and the Invesco Solar ETF (TAN) saw $101 million in net outflows
- ICLN has seen $1.2 billion in net outflows over the past year but is still the largest ETF in the category with $2.5 billion in assets under management
- The average expense ratio of the 52 Sustainability ETFs is 60 bps, the average lifespan is almost 6 years, and the average TTM yield is 1.59%
- The category has relatively high expense ratios and low liquidity relative to the broader market
- The average ADV for the cateogry is just $3.11 million and 41 ETFs in the category have low liquidity ratings
- Sustainability ETFs underperfomed the broader market in January with the average return at -9.19%
- The KraneShares MSCI China Clean Technology Index ETF (KRGN), TAN, and the Invesco WilderHill Clean Energy ETF (PBW) all plummeted more than 20% on the month
- Average 1-year return is -17.22% and the average 3-year annualized return for the category is -6.14%
- The category has above average stock concentration and above average/ high volatility ratings
- Highest average sector exposure is Industrials (32.4%), Utilities (23.8%), and Technology (14.8%)
Emerging Markets Category Report
2.27.2024
- Emerging Market Equity ETFs gathered nearly $1.10 billion in net inflows in $1.10 billion in January and nearly $7 billion in net inflows in the past 3 months
- The iShares MSCI Emerging Markets ex China ETF (EMXC) have seen the largest net inflows over the past year with $5.4 billion, the iShares MSCI Emerging Markets ETF (EEM) has seen $7.5 billion in net outflows in the period
- The average expense ratio of the 83 Emerging Markets Equity ETFs in the category is 48 bps, the average lifespan is 7.18 years, and the average TTM yield is 2.85%
- Notably, 42 ETFs in the category have low liquidity ratings compared to 13 ETFs in the category with high liquidity ratings
- The Vanguard FTSE Emerging Markets ETF (VWO) is the largest ETF in the category with $72.1 billion AUM
- The average 1-month return in January was -3.16%, average 1-year return is +2.23%
- The BNY Mellon Sustainable Global Emerging Markets ETF (BKES, -7.47%) was the worst performer in January
- The category is relatively diverse in terms of size & style exposure, volatility, and stock/ sector concentration
- Highest average sector exposure is Financials (22.6%) and Technology (20.3%)
Daily Note
2.27.2024
Equities: U.S. equity markets posted modest losses on Monday following a solid week last week. The S&P 500 (SPY) declined 37 bps, the Dow Jones Industrial Average (DIA) dropped 15 bps, and the NASDAQ 100 (QQQ) dipped 5 bps. Small-caps outperformed with the Russell 2000 (IWM) adding 63 bps. The U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported yesterday that new home sales came in at an annual pace of 661K for January, which was an increased of 1.5% month-over-month but below consensus estimates. The median sales price of a home decreased 2.6% year-over-year to $420,700 in, marking the fifth-straight decline, as more homes became available for sale. New-home supply increased to 456K from the prior month, equivalent to a supply of 8.3 months based on January’s sales pace. On the earnings front, Berkshire Hathaway reported a strong rise in operating earnings in the fourth quarter, thanks to huge gains in its insurance business, while its cash pile expanded to record levels. Operating earnings came in at $8.481 billion for the quarter, up 28% from a year ago. After the close, Zoom topped estimates on the top and bottom lines. Prior to the strong earnings report, Zoom was down more than 12% thus far in 2024. On Tuesday, investors will be looking towards the Durable Goods Orders report and Consumer Confidence data.
S&P 500 Pure Growth (RPG, +31 bps) and S&P 500 Momentum (SPMO, +10 bps) were the only U.S. factor strategies in the green on Monday. SPMO has outperformed other factors recently, jumping 10.50% over the past month and 17% year-to-date. S&P 500 Dividend (SPYD) underperformed, falling 1.36%, followed by S&P 500 Low Volatility (SPLV, -74 bps) and S&P 500 Pure Value (RPV, -63 bps). Developed ex-U.S. Markets (EFA) dropped 14 bps as South Korea (EWY) slumped 1.47%. Emerging Markets (EEM, -44 bps) were impacted by losses from South Africa (EZA, -95 bps) and China (MCHI, -88 bps).
Sectors: Most U.S. sectors registered negative returns yesterday with Utilities (XLU, -1.97%) and Communication Services (XLC, -1.46%) falling the furthest. Real Estate (XLRE) also declined 1.14% as Homebuilders (XHB, +6 bps) were relatively flat following the New Home Sales figures. Materials (XLB) dipped 60 bps while Health Care (XLV) and Financials (XLF) each decreased around 50 bps. XLV and Industrials (XLI, -15 bps) remain in overbought territory. Consumer Staples (XLP) was down 40 bps on the day. Energy (XLE) and Consumer Discretionary (XLY) were the top performers, each rising more than 30 bps. Technology (XLK) also added 10 bps on strength from Software & Services (XSW, +1.91%) and Semiconductors (XSD, +1.18%).
Themes: Blockchain (BLOK) climbed 6.82% yesterday and outpaced other global thematic segments, most of which saw gains. BLOK hit fresh 52-week highs and has surged more than 46% over the past 3 months. Genomics (ARKG, +4.01%), Multi-Theme (ARKK, +3.45%), and Disruptive Tech (ARKW, +2.96%) also posted strong returns. Biotech (SBIO) and FinTech (FINX) both advanced more than 2% while Clean Energy (PBW), Industrial Revolution (ARKQ), and Digital Payments (IPAY) all increased more than 1.25%. Cannabis (MJ) lagged, slipping 2.81%. Digital Infrastructure (SRVR) dropped 1.01% and Evolving Consumer (SOCL) retreated 72 bps.
Commodities & Yields: Broad Commodities (DJP) increased 58 bps on Monday as Energy (DBE, +1.37%) recovered from Friday’s losses. Natural Gas (UNG) rose 2.70% while WTI Crude Oil (USO) and Gasoline (UGA) were each up more than 1%. Silver (SLV) sank 1.76%, Copper (CPER) fell 1.28%, and Corn (CORN) gained 1.58%. The U.S. Dollar (UUP) dipped 18 bps, U.S. Aggregate Bonds (AGG) declined 22 bps, and 20+ Year Treasury Bonds (TLT) slipped 30 bps. At yesterday’s close, the U.S. 2-Year Treasury Yield stood at 4.716% and the U.S. 10-Year Treasury Yield stood at 4.299%.
Daily Note
2.26.2024
Equities: Following an excellent session on Thursday, U.S. equity markets were mixed on Friday. The tech-oriented NASDAQ 100 (QQQ) fell 29 bps while the S&P 500 (SPY) rose 7 bps and the Dow Jones Industrial Average (DIA) gained 19 bps. SPY and DIA are currently trading at 52-week highs and are approaching overbought territory. All three major averages finished higher last week with SPY climbing 1.67%, QQQ increasing 1.44%, and DIA advancing 1.32%. Investors weighed the latest corporate earnings results on Friday. Block jumped more than 16% on the day after topping revenue estimates. The payments company reported $5.77 billion in revenue for the 4th quarter and showed strong growth in its Square and Cash App revenue. Carvana rocketed just over 25% on Friday after reporting its first ever annual profit. Warner Bros. Discovery plunged nearly 10% after missing analyst estimates for both revenue and earnings amid weak advertising revenue. This week, investors will be looking towards New Home Sales data, Durable Goods Orders figures, an update on Gross Domestic Product, the Personal Consumption Expenditures (PCE) report, and the ISM Manufacturing Index report. Several Federal Reserve officials are also scheduled to speak this week.
All U.S. factors strategies were in the green on Friday, except for S&P 500 High Beta (SPHB, -38 bps), S&P 500 Pure Growth (RPG, -23 bps), and S&P 500 Growth (SPYG, -21 bps). S&P 500 Low Volatility (SPLV) and S&P 500 Minimum Variance (SPMV) were the top performers on the day, both adding 44 bps. Last week, S&P 500 Momentum (SPMO) and S&P 500 Quality (SPHQ) each jumped more than 2%. SPHB was the only factor to finish lower on the week, dipping 24 bps, while most factors rose more than 1%. Developed ex-U.S. Markets (EFA) increased 13 bps on Friday as Switzerland (EWL) advanced 57 bps and the Netherlands (EWN) declined 79 bps. Emerging Markets (EEM, -5 bps) were pulled lower by Brazil (EWZ, -1.10%) and Mexico (EWW, -1.00%). EFA and EEM were both up more than 1.25% last week.
Sectors: Utilities (XLU) gained 72 bps on Friday and outgained other U.S. sectors. Materials (XLB), Industrials (XLI), and Financials (XLF) all rose at least 50 bps while Health Care (XLV) added 48 bps. XLB, XLF, XLI, and XLV all registered new 52-week highs and XLF, XLI, and XLV all sit in overbought territory. Consumer Staples (XLP, +31 bps) also had a solid showing on the day. Energy (XLE) sank 66 bps followed by Consumer Discretionary (XLY, -45 bps). Communication Services (XLC) and Technology (XLK) were each down around 25 bps. XLC was impacted by Telecom (XTL, -1.82%) while XLK was dragged lower by Semiconductors (XSD, -1.64%). Last week, all sectors registered positive returns. XLP climbed 2.05%, XLB jumped 1.95%, and XLI advanced 1.86%. XLE was up just 46 bps on the week.
Themes: Global thematic segments were split on Friday. Cannabis (MJ) was the top performer, climbing 2.01%. Online Retail (IBUY), Digital Payments (IPAY), and Biotech (SBIO) were all up more than 1% while Cyber Security (HACK) added 94 bps and FinTech (FINX) gained 87 bps. Genomics (ARKG) and Solar (TAN) lagged, dropping 1.63% and 1.55%, respectively. Clean Energy (PBW, -1.48%), Industrial Revolution (ARKQ, -1.05%), and Blockchain (BLOK, -95 bps) were also weak. PBW hit new 52-week lows. Last week, PBW and TAN each plummeted more than 10%. Multi-Theme (ARKK), ARKG, Advanced Materials (REMX), and ARKQ were all down more than 3%. Digital Infrastructure (SRVR) outperformed, rising 2.12% for the week.
Commodities & Yields: U.S. Aggregate Bonds (AGG) increased 37 bps, 20+ Year Treasury Bonds (TLT) climbed 1.34%, and the U.S. Dollar (UUP) added 7 bps on Friday. At the closing bell, the U.S. 2-Year Treasury Yield stood at 4.690% and the U.S. 10-Year Treasury Yield stood at 4.260%. Broad Commodities (DJP) declined 1.07% on weakness from Energy (DBE, -1.99%). WTI Crude Oil (USO) fell 2.28%, Natural Gas (UNG) slumped 6.57%, and Gasoline (UGA) dropped 1.98%. Wheat (WEAT) and Sugar (CANE) were also both down around 1.70%. UNG has decreased 24.40% over the past month while Corn (CORN) has sunk 7.53%.
Energy Category Report
2.26.2024
- Energy ETFs have seen $1.62 billion in net outflows over the past 3 months and more than $7 billion in net outflows over the past year
- The Energy Select Sector SPDR Fund (XLE) saw the largest net inflows in January with $367 million, XLE has seen $2.6 billion in net outflows over the past year
- The average expense ratio of the 42 Energy ETFs in the category is 58 bps, the average TTM Yield is 3.18%, and the average ADV is $53 billion
- The total assets under management in the category is $78.1 billion, XLE is the largest ETF in the category with $37.0 billion AUM
- Energy ETFs were mixed in January with the average 1-month return at -0.25%
- Top performer was the Global X MSCI China Energy ETF (CHIE, +7.04%), worst performer was the iShares U.S. Oil Equipment & Services ETF (IEZ, -6.71%)
- Average 1-year return for the category is +4.31%, average 3-year annualized return is +23.15%
- The category has high and above average volatility ratings and high and above average value ratings
- The average return on equity for the category is 25.7% and the average price/ earnings (TTM) is 9.36
Daily Note
2.23.2024
Equities: U.S. equity markets surged on Thursday following a strong earnings beat from chip-maker NVIDIA. The tech-heavy NASDAAQ 100 (QQQ) jumped 2.93% leading major averages higher while the Dow Jones Industrial Average (DIA) advanced 1.16% and the S&P 500 (SPY) rose 2.07%. Major averages are making record highs but are also nearing overbought levels according to 14-day RSI. Small-Caps (IJR, +0.25%) and Mid-Caps (IJH, +1.56%) were also in the green on the day. After the close Fed Governor Christopher Waller reiterated what the Fed minutes stated earlier this week: the Fed may hold off on cutting rates until they are more confident in inflation cooling. Economic data isn't pushing the Fed to move either as jobless claims on Thursday came in below expectations and pending home sales surprised to the high side. Futures markets are now indicating that the Fed is not likely to cut until the June 24th meeting.
U.S. factors were strong on Thursday with all factors in positive territory and most climbing more than 0.50%. Leadership was provided by the S&P 500 Momentum (SPMO +3.87%), S&P 500 Growth (SPYG +3.26%), and S&P 500 Quality (SPHQ +2.47%). Emerging Markets (EEM) advanced 1.02% with Taiwan (EWT), China (MCHI), and India (INDA) all increasing at least 1%. Developed ex-U.S. Markets (EFA, +1.13%) were bolstered by Germany (EWG, +1.65%), the Netherlands (EWN, +2.11%), and France (EWQ, +1.18%).
Sectors: All U.S. sectors posted gains on Thursday, except for Utilities (XLU, -77 bps). Technology (XLK) and Consumer Discretionary (XLY) jumped 3.27% and 1.94%, respectively on the day, outpacing other sectors. XLK was boosted by semiconductors (XSD, +2.24%) while homebuilders (XHB +1.70%) gave a boost to XLY. Health Care (XLV) gained 1.18% on the day and is one of five sectors to make 52-week highs. A number of Health Care ETFs now crowd the top of the overbought list including IYH, XLV, PINK, VHT, and FHLC.
Themes: Global themes had a postive day as growth names moved higher with the exception of clean energy (PBW -3.94%), particularly Solar (TAN -4.71%). Leadership came from eSports & Video Games (ESPO +3.53%), Connectivity (FIVG +3.42%), and Blockchain (BLOK +3.02%). Despite new highs for many market sectors, recent declines in clean energy ETFs have led to near oversold conditions from PBW, ACES, QCLN, CTEC, PBD, TAN, and ICLN.
Commodities & Yields: U.S. Aggregate Bonds (AGG) added 8 bps, 20+ Year Treasury Bonds (TLT) rose 49 bps, and the U.S. Dollar (UUP) finished flat on Thursday. Currently, the U.S. 2-Year Treasury Yield stood at 4.700% and the U.S. 10-Year Treasury Yield stood at 4.309%. Broad Commodities (DJP) decreased 33 bps with WTI Crude Oil (USO) gaining 0.55%, Silver (SLV) falling 0.67%, and Copper (CPER) jumping 0.70%.
FI Municipal Category Report
2.22.2024
- Municipal Bond ETFs have seen $5.9 billion in net inflows over the past three months and $14.9 billion in net inflows over the past year
- In January, the Invesco National AMT-Free Municipal Bond ETF (PZA), Vanguard Tax-Exempt Bond ETF (VTEB) and JPMorgan Municipal ETF (JMUB) each saw more than $120 million in net outlows
- The average expense ratio of the 85 Municipal Bond ETFs is 33 bps, the average lifespan is 6.51 years, and the average TTM yield is 2.12%
- The category has $122.9 billion in total assets under management with the largest fund being the iShares National Muni Bond ETF (MUB)
- The Schwab Municipal Bond ETF (SCMB) is the cheapest ETF in the category with an expense ratio of 3 bps
- Municipal Bond ETFs saw mixed performance in January with half seeing gains and half seeing losses; the Invesco New York AMT-Free Municipal Bond ETF (PZT +1.20%) was the best performer while the Columbia Multi-Sector Municipal Income ETF (MUST -1.10%) was the worst performer
- The category is relatively diverse in terms of duration with a tilt towards below average
Health InnovationCategory Report
2.22.2024
- The Tema Cardiovascular and Metabolic ETF (HRTS) has seen the largest net inflows amongst Health Innovation ETFs over the past month with $17.8 million
- Just ` Health Innovation ETF have over $1 billion in assets over management: The ARK Genomic Revolution ETF ARGK with $1.71 billion
- The cateory is comprised of 25 ETFs with $2.5 billion total assets under management
- Average expense ratio is 63 bps, average lifespan is 4.41 years, and the average TTM yield is 0.88%
- Performance across the category was mixed in January with the average return for the month at -1.93% between 7 advancers and 18 decliners
- The Range Cancer Therapeutics ETF CNCR was the best performer in January with a return of +5.12%
- ARKG was the worst January performer, down 13.32%
- The category has high volatility ratings relative to the S&P 500 (SPY), the average 3-year volatility relative to SPY was 25.82%
- The category is tilted towards small-caps and growth names with a high sector concentration
Daily Note
2.22.2024
Equities: U.S. equity markets were mixed on Wednesday as minutes from the previous Fed meeting showed that policymakers are hesitant to cut interest rates without greater confidence that inflation is indeeed cooling. The tech-oriented NASDAQ 100 (QQQ) fell 40 basis points while both the S&P 500 (SPY) and the Dow Jones Industrial Average (DIA) rose 0.09%. Gains in SPY and DIA helped snap a recent losing streak but all major averages are up ~10% over the past three months. Positive earnings from NVIDIA after the close will help boost equity markets heading into Thursday.
U.S. factor strategies registered positive returns on Wednesday with S&P 500 High Dividend Low Volatility (SPHD, +0.91%), S&P 500 Enhanced Value (SPVU, +0.66%), and S&P 500 Value with Momentum (SPVM, +0.81%) outperforming. On the flip side, Pure Growth (RPG -0.87%) and High Beta (SPHB -0.27%) lagged. Developed ex-U.S. Markets (EFA) gained 0.08% as Hong Kong (EWH), Germany (EWG), France (EWQ), Switzerland (EWL), and the Netherlands all advanced. Japan (EWJ) fell 21 bps on the day but overall Japan ETFs remain largely overbought according to 14-day RSI. Emerging Markets (EEM, +0.17%) were bolstered by Thailand (THD, +1.51%) and China (MCHI, +2.11%).
Sectors: Sectors were mixed yesterday with leadership coming from Energy (XLE +1.88%), Utilities (XLU +1.32%), and Consumer Discretionary (XLY +0.74%). Tech (XLK -0.63%) and Communication Services (XLC -0.11%) were the only sectors to decline on Wednesday. From an industry perspective, Oil & Gas led (XOP +2.88%, XES +1.19%), Metals & Mining (XME +0.85%), and Homebuilders (XHB +0.33%) were the top gainers while Software & Services (XSW -2.61%) and Telecom (XTL -0.68%) lagged. Despite recent declines, four sectors remain within 1% of 52-week highs (Health Care, Financials, Industrials, Materials) along with the S&P 500. Utilities is the lone sector that is still over 10% below its one-year high.
Themes: Global thematic segments were mostly lower on Wednesday as growth names largely underperformed. Advanced Materials (REMX +1.27%), Clean Energy: Wind (FAN +0.60%), and Smart Infrastructure (GRID +0.42%) were the best peformers while Cyber Security (HACK -4.98%), Disruptive Tech (ARKW -3.29%), and Blockchain (BLOK -2.72%) led declines. From a flows perspective, we have seen recent inflows into the Disruptive Tech segment of $129 million over the past week including $138 million into the First Trust NASDAQ Cybersecurity ETF (CIBR). CIBR also happens to be nearing oversold territory along with other cybersecurity and cloud computing ETFs (CLOU, BUG, WCBR, HACK, WCLD).
Commodities & Yields: Broad Commodities (DJP) rose 0.91% yesterday, helped by a surge in Natural Gas (UNG +12.53%) and gains in Agriculture (DBA +0.68%). U.S. Aggregate Bonds (AGG) sank 30 bps, 20+ Year Treasury Bonds (TLT) declined 71 bps, and the U.S. Dollar (UUP) dipped 11 bps. Currently, the U.S. 2-Year Treasury Yield stood at 4.703% and the U.S. 10-Year Treasury Yield stood at 4.329%.
Daily Note
2.21.2024
Equities: Major averages finished lower once again on Tuesday after the NASDAQ 100 (QQQ) and the S&P 500 (SPY) snapped their 5-week winning streaks last week. QQQ and SPY slipped 75 bps and 55 bps, respectively, yesterday while the Dow Jones Industrial Average (DIA) also dipped 13 bps. NVIDIA slumped more than 4% on Tuesday, impacting QQQ (5.25% weight) and SPY (4.26% weight). The chipmaking giant is slated to report earnings after the bell on Wednesday. Investors also digested two significant acquisitions announced yesterday. Capital One Financial agreed to purchase Discover Financial Services in an all-stock deal worth $35.3 billion, which is expected to close in late 2024 or early 2025. Discover popped more than 12% on Tuesday while Capital One was relatively flat. Walmart also announced it will acquire TV maker Vizio for $2.3 billion, or $11.50 a share. Vizio climbed around 16% on the day while Walmart, which also reported earnings and revenue results that topped expectations yesterday, gained more than 3%. Walmart’s revenue increased 6% year-over-year following strong holiday sales and double-digit growth from global e-commerce sales. Home Depot reported better-than-expected results on the top and bottom lines for the fourth quarter even as sales fell. The home company expects sales will rise 1% in fiscal 2024 and plans to open several new stores over the year. Investors will be awaiting the release of the minutes of the January Federal Open Market Committee (FOMC) meeting on Wednesday along with more corporate earnings results.
S&P 500 Low Volatility (SPLV) advanced 26 bps yesterday and led other U.S. factor strategies. S&P 500 High Dividend Low Volatility (SPHD) added 6 bps, S&P 500 Value (SPYV) inched higher by 2 bps and S&P 500 Pure Value (RPV) was flat while all other factors were in negative territory. S&P 500 Momentum (SPMO), S&P 500 Pure Growth (RPG), and S&P 500 Growth (SPYG) were all down more than 1%. Developed ex-U.S. Markets (EFA) gained 41 bps to hit new 52-week highs on strength from Switzerland (EWL, +1.18%) and France (EWQ, +1.00%). Emerging Markets (EEM) added 15 bps as Brazil (EWZ) rose 1.75%, and South Africa (EZA) slid 1.01%. China (MCHI) also declined 82 bps on the day.
Sectors: Consumer Staples (XLP) was the lone U.S. sector to register positive returns on Tuesday, climbing 1.05%. Technology (XLK) dropped 1.02% on weakness from Software & Services (XSW, -1.65%) and Semiconductors (XSD, -1.07%). Consumer Discretionary (XLY) and Energy (XLE) both fell more than 90 bps while Health Care (XLV), Industrials (XLI), and Financials (XLF) all sank around 30 bps. Materials (XLB, -21 bps) was pulled lower by Metals & Mining (XME, -2.01%). Communication Services (XLC, -15 bps) and Utilities (XLU, -7 bps) also saw modest losses yesterday.
Themes: All global thematic segments were in the red on Tuesday, except for Digital Infrastructure (SRVR, +32 bps) and Robotics & AI (ROBO, +27 bps). Advanced Materials (REMX) was the worst performing segment, plunging 4.24%. REMX has also lagged all other segments year-to-date, slipping nearly 22%. Cannabis (MJ) decreased 3.91%, Clean Energy (PBW) declined 3.76%, Multi-Theme (ARKK) sank 3.26%, and Biotech (SBIO) retreated 3.22%. Disruptive Tech (ARKW), Genomics (ARKG), eSports & Video Games (ESPO), Solar (TAN), and Cloud Computing (SKYY) all dipped more than 2%.
Commodities & Yields: At Tuesday’s closing bell, the U.S. 2-Year Treasury Yield stood at 4.612% and the U.S. 10-Year Treasury Yield stood at 4.275%. The U.S. Dollar (UUP) decreased 14 bps, U.S. Aggregate Bonds (AGG) added 9 bps, and Investment Grade Corporate Bonds (LQD) increased 33 bps. Broad Commodities (DJP, -34 bps) were impacted by WTI Crude Oil (USO, -1.35%), Natural Gas (UNG, -1.47%), and Gasoline (UGA, -1.83%). Silver (SLV) also sank 1.50% while Agriculture (DBA) rose 1.43%.
Developed ex-U.S. Category Report
2.20.2024
- Developed ex-U.S. Equity ETFs gathered $2.4 billion in net inflows in January and have seen more than $36 billion in net inflows in the last year
- The Vanguard FTSE Developed Markets ETF (VEA) saw the largest net inflows in November with $525 million, the iShares MSCI EAFE ETF (EFA) saw the largest net outflows with $357.6 million
- The average expense ratio of the 99 Developed ex-U.S. Equity ETFs in the category is 36 bps, the average lifespan is 8.62 years, and the average TTM yield is 3.14%
- Notably, 36 ETFs in the category have low liquidity ratings and 25 ETFs in the category have below average liquidity ratings
- The Vanguard FTSE Developed Markets ETF (VEA) is the largest ETF in the category with $122.4 billion in AUM
- Most Developed ex-U.S. Equity ETFs posted losses in Janaury, average 1-month return was -0.45%
- The Alpha Architect International Quantitative Momentum ETF (IMOM) was the top performer in the category in Janaury, rising 3.72%
- The average 3-year annualized return for the category is +3.94%
- The category is relatively diverse in terms of size & style exposure, volatility, and stock/ sector concentration
- The highest average sector exposures is Financials (18.7%) and Industrials (17.3%)
Materials Category Report
2.20.2024
- Materials ETFs saw nearly $500 million in net outflows in January and have seen $4.13 billion in net outflows over the past year
- The VanEck Gold Miners ETF (GDX) and the SPDR S&P Metals & Mining ETF (XME) each saw more than $200 million in net outflows in January while the Materials Select Sector SPDR Fund (XLB) gathered $256 million in net inflows
- GDX is the largest ETF in the category with $11.7 billion in assets under management followed by XLB with $5.5 billion
- The category made up of 27 ETFs has $32.7 billion in total AUM, average expense ratio is 48 bps, average lifespan is 13.18 years, and average TTM yield is 1.59%
- The Fidelity MSCI Materials Index ETF (FMAT) is the cheapest ETF in the category with an expense ratio of 8 bps
- All Materials ETFs saw losses in January, average return for the month was -6.75% and average return in the last year was -7.79%
- The worst performer in January was the iShares MSCI Global Silver Miners ETF (SLVP, -13.16%)
- The category has high volatility ratings with the 3-year average volatility vs S&P 500 (SPY) at 29.46%
- The average weight of top 10 holdings for ETFs in the category is 56.22% and the category has above average quality ratings
- The average price to earnings (TTM) for the cateogry is 15.22 and average return on equity is 10.5%
Daily Note
2.20.2024
Equities: U.S. equity markets posted losses on Friday following the Producer Price Index (PPI) report, which came in hotter-than-expected. The NASDAQ 100 (QQQ) fell 91 bps, the S&P 500 (SPY) dropped 50 bps, and the Dow Jones Industrial Average (DIA) slipped 37 bps. Last week, QQQ sank 1.48% and SPY declined 34 bps while DIA added 2 bps. QQQ and SPY each broke their five-week winning streaks. The PPI, a measure of prices received by producers of domestic goods and services, increased 0.3% in January versus estimates of +0.1%, the largest rise since August. The Core PPI, which excludes volatile food and energy prices, jumped 0.5% for the month, well above the +0.1% estimate. On a yearly basis, the PPI was up just 0.9% while the core PPI rose 2.6%. The report comes just days after the Consumer Price Index (CPI) showed inflation holding stubbornly higher despite Federal Reserve expectations for moderation through the year. Treasury yields surged following the release of the PPI report with the U.S. 2-Year climbing above 4.70% and the U.S. 10-Year neared 4.33% intraday Friday. In a separate report, the Commerce Department reported that overall housing starts decreased 14.8% month-over-month in January to a seasonally adjusted annual rate of 1.33 million units. Single-family starts dropped 4.7% to a 1 million seasonally adjusted annual rate but are up 22% year-over-year. This week, investors will be looking towards the release of the Federal Open Market Committee (FOMC) minutes from the January meeting, Existing Home Sales figures, and a bevy of speeches from Federal Reserve officials.
S&P 500 High Dividend Low Volatility (SPHD) was the only U.S. factor strategy in the green on Friday, adding 17 bps. S&P 500 High Beta (SPHB) sank 1.113%, S&P 500 Pure Growth (RPG) fell 88 bps, and S&P 500 Quality (SPHQ) decreased 69 bps. Last week, factors were mixed with value-oriented strategies outperforming. S&P 500 Enhanced Value (SPVU) and S&P 500 Pure Value (RPV) climbed 1.89% and 1.20%, respectively, while S&P 500 Growth (SPYG) declined 1.35%. Developed ex-U.S. Markets (EFA) rose 16 bps on Friday as Hong Kong (EWH) and the U.K. (EWU) each increased around 1%. Emerging Markets (EEM, +48 bps) were boosted by China (MCHI, +1.57% and South Africa (EZA, +1.28%). EFA and EEM each advanced more than 1% last week.
Sectors: Just 3 U.S. sectors finished higher on Friday: Materials (XLB, +53 bps), Health Care (XLV, +32 bps), and Consumer Staples (XLP, +15 bps). XLV hit fresh 52-week highs and remains in overbought territory. Communication Services (XLC) lagged other sectors, sinking 1.56%. XLC was dragged lower by Telecom (XTL), which slipped 2.11% on the day. Real Estate (XLRE, -1.03%) and Technology (XLK, -92 bps) were also weak while Industrials (XLI) and Consumer Discretionary (XLY) each dropped around 60 bps. Energy (XLE) and XLB outperformed last week, each jumping more than 2.40%. Utilities (XLU) rose 1.59% and Financials (XLF) advanced 1.41% while XLK declined 2.54% for the week. Despite last week’s gains, XLU is the only sector currently trading below its 50-day and 200-day moving averages.
Themes: Advanced Materials (REMX) popped 4.08% on Friday and handily outgained other global thematic segments. Biotech (SBIO) added 62 bps while FinTech (FINX), Cannabis (MJ), and Blockchain (BLOK) all gained around 30 bps. All other segments were in negative territory for the day with Multi-Theme (ARKK, -2.54%) falling the furthest. Online Retail (IBUY) and Disruptive Tech (ARKW) each declined at least 2%, Evolving Consumer (SOCL) and Genomics (ARKG) both dropped around 1.50%, and Digital Infrastructure (SRVR), Clean Energy (PBW), Cyber Security (HACK), and Cloud Computing (SKYY) all slipped around 1.40%. Last week, BLOK surged nearly 8% and REMX jumped 4.47%. Most segments saw gains, but MJ fell 4.28% and SKYY dipped 3.87%.
Commodities & Yields: The U.S. Dollar (UUP) inched higher by 4 bps, U.S. Aggregate Bonds (AGG) dropped 32 bps, and 20+ Year Treasury Bonds (TLT) slipped 58 bps on Friday. At Friday’s close, the U.S. 2-Year Treasury Yield stood at 4.656% and the U.S. 10-Year Treasury Yield stood at 4.295%. Broad Commodities (DJP) rose 64 bps on the day as Natural Gas (UNG) increased 1.22%, Silver (SLV) jumped another 2.15%, Copper (CPER) advanced 1.97%, and Sugar (CANE) gained 1.60%. UNG is still down more than 35% in the past month while WTI Crude Oil (USO) is up more than 9%.
Daily Note
2.16.2024
Equities: As investors sifted through a bevy of fresh economic data, U.S. equity markets were in the green once again on Thursday. The Dow Jones Industrial Average (DIA) jumped 1.03%, the S&P 500 (SPY) rose 69 bps, and the NASDAQ 100 (QQQ) advanced 30 bps. Small-Caps (IJR, +2.49%) and Mid-Caps (IJH, +1.83%) outperformed once again. SPY, DIA, and IJH all registered new 52-week highs and SPY is nearing overbought territory. According to the Commerce Department, advance retail sales sank 0.8% month-over-month in January following a downwardly revised 0.4% gain in December. Economists were expecting a decline of 0.3% for the month and a on yearly basis, sales were up just 0.6%. The retail sales report is adjusted for seasonal factors but not for inflation, so the release showed spending lagging the pace of price increases. Jobless claims dipped 8K to 212K for the week ended February 12, below the 220K estimate. On the manufacturing front, regional surveys in the Federal Reserve’s Philadelphia and New York districts both came in better than expected for February. The Philadelphia survey showed a reading of 5.2, up 16 points and better than the -8 estimate, while the Empire State survey for New York was at -2.4. The National Association of Home Builders /Wells Fargo Housing Market Index rose 4 points to 48 in February, marking the 3rd straight month of increases. On Friday, investors will be looking towards Producer Price Index results and Housing Starts & Permits Data along with more corporate earnings reports.
U.S. factors were strong once again on Thursday with all factors in positive territory and most climbing more than 1%. S&P 500 Enhanced Value (SPVU, +2.00%) and S&P 500 High Beta (SPHB, +1.98%) were the top performers, S&P 500 Momentum (SPMO) also gained 1.59% and S&P 500 High Beta (SPHB) rose 1.28%). S&P 500 Growth (SPYG) lagged, adding just 14 bps. Emerging Markets (EEM) advanced 48 bps with Brazil (EWZ), South Africa (EZA), and Indonesia (EIDO) all increasing at least 70 bps. Developed ex-U.S. Markets (EFA, +1.13%) were bolstered by Australia (EWA, +1.63%), the Netherlands (EWN, +1.35%), and France (EWQ, +1.24%).
Sectors: All U.S. sectors posted gains on Thursday, except for Technology (XLK, -21 bps). Energy (XLE) and Real Estate (XLRE) jumped 2.79% and 2.40%, respectively on the day, outpacing other sectors. XLE was boosted by Oil & Gas Equipment & Services (XES, +4.02%) and Oil & Gas Exploration & Production (XOP, +3.55%). Materials (XLB) rose 1.89%, Financials (XLF) climbed 1.71%, and Utilities (XLU) advanced 1.68%). XLF was lifted by Regional Banks (KRE) and Banks (KBE), which increased around 3%. Consumer Discretionary (XLY) was also up 1.16% while Communication Services (XLC), Industrials (XLI), and Health Care (XLV) all added more than 70 bps. XLC, XLF, XLI, and XLV all hit fresh 52-week highs and XLV entered overbought territory.
Themes: Cyber Security (HACK) sank 1.03% yesterday and trailed other global thematic segments. Blockchain (BLOK, -53 bps), Cloud Computing (SKYY, -34 bps), and Casinos & Gaming (BETZ, -11 bps) were the only other segments to see losses. Cannabis (MJ) and Genomics (ARKG) outperformed, both surging more than 3%. Multi-Theme (ARKK) and Online Retail (IBUY) were both up more than 2% while Evolving Consumer (SOCL), Digital Infrastructure (SRVR), 3D Printing (PRNT), and Advanced Materials (REMX) all rose around 1.90%. Digital Payments (IPAY, +1.56%), Water (PHO, +1.35%), Disruptive Tech (ARKW, +98 bps), eSports & Video Games (ESPO, +88 bps), and Big Data (AIQ, +55 bps) hit new 52-week highs. ESPO entered overbought territory, joining BLOK.
Commodities & Yields: U.S. Aggregate Bonds (AGG) added 24 bps, 20+ Year Treasury Bonds (TLT) rose 52 bps, and the U.S. Dollar (UUP) aliped 39 bps on Thursday. At yesterday’s close, the U.S. 2-Year Treasury Yield stood at 4.568% and the U.S. 10-Year Treasury Yield stood at 4.240%. Broad Commodities (DJP) increased 61 bps with WTI Crude Oil (USO) gaining 1.80%, Silver (SLV) climbing 2.45%, Copper (CPER) jumping 1.52%, and Wheat (WEAT) and Sugar (CANE) both declining more than 2%.
FI Preferred Category Report
2.15.2024
- Preferred Bonds ETFs have seen $670 million in net inflows over the past year and $2.72 billion in net inflows over the past 3 years
- In January, the Invesco Preferred ETF (PGX) and the First Trust Preferred Securities & Income ETF (FPE) each saw more than $115 million in net outlows
- The average expense ratio of the 22 Corporate Bond ETFs is 58 bps, the average lifespan is 8.09 years, and the average TTM yield is 5.60%
- The category has $32.9 billion in total assets under management, the iShares Preferred & Income Securities ETF (PFF) is the largest ETF in the category with $14.2 billion in AUM
- The Global X U.S. Preferred ETF (PFFD) is the cheapest ETF in the category with an expense ratio of 23 bps
- All 22 Preferred Bond ETFs saw gains in January, the Global X SuperIncome Preferred ETF (SPFF, +4.30%) was the best performer
- The average return of the category for Janaury was +2.63% and the average 3-month return for the category is +13.53%
- The category is relatively diverse in terms of duration, but highly tilted towards high yield
- The average weighted coupon for the category is 5.89%, average yield to maturity is 7.20%, and average yield to worst is 6.49%
Daily Note
2.15.2024
Equities: U.S. equity markets rebounded from Tuesday’s losses yesterday as the tech-oriented NASDAQ 100 (QQQ) climbed 1.09%, the S&P 500 (SPY) gained 91 bps, and the Dow Jones Industrial Average (DIA) rose 38 bps. The Russell 2000 (IWM) also jumped 2.32% following sharp losses on Tuesday. Investors digested the latest corporate earnings results on Wednesday along with speeches from Federal Reserve officials. Lyft rocketed more than 35% on the day after reporting earnings per share figures that easily beat expectations after the close on Tuesday. Additionally, CFO Erin Brewer told analysts that Lyft misstated its margin expansion in the release. Instead of 500 basis points of growth for the year, Lyft sees an increase of 50 basis points. Airbnb reported better-than-expected revenue for the fourth quarter after the bell on Tuesday and issued an optimistic forecast for the current period. Revenue climbed 17% from $1.9 billion in the same quarter a year earlier. Uber jumped nearly 15% on Wednesday after announcing a share buyback program totaling $7 billion. The news comes a week after Uber reported fourth-quarter results that beat Wall Street’s earnings and revenue estimates. In prepared remarks to the National Association for Business Economics on Wednesday, Federal Reserve Vice Chair for Supervision Michael Barr expressed confidence that inflation is heading back to the Fed’s 2% goal but noted “we need to see continued good data before we can begin the process of reducing the federal funds rate.” Thursday will be a busy day on the economic front with Jobless Claims data, Retail Sales figures, Industrial Production numbers, and the Housing Market Index report all being released.
U.S. factor strategies registered positive returns on Wednesday with S&P 500 Pure Growth (RPG, +1.90%), S&P 500 High Beta (SPHB, +1.73%), and S&P 500 Momentum (SPMO, +1.62%) outperforming. Most other factors were up more than 50 bps while S&P 500 Low Volatility (SPLV) added just 16 bps. Developed ex-U.S. Markets (EFA) gained 1.12% as South Korea (EWY), Australia (EWA), France (EWQ), Switzerland (EWL), the Netherlands (EWN), and Germany (EWG) all climbed more than 1.20%. EWN has increased 7% over the past month. Emerging Markets (EEM, +1.43%) were bolstered by Indonesia (EIDO, +2.44%), China (MCHI, +1.71%), and India (INDA, +1.68%).
Sectors: Consumer Staples (XLP) and Energy (XLE) were the only U.S. sectors in the red yesterday, slipping 19 bps and 10 bps, respectively. Industrials (XLI, +1.67%) and Communication Services (XLC, +1.60%) outgained other sectors followed by Consumer Discretionary (XLY, +1.06%), Technology (XLK, +1.05%), and Financials (XLF, +96 bps). XLI received a boost from Aerospace & Defense (XAR, +2.82%) and hit new 52-week highs. XLK was bolstered by Software & Services (XSW, +3.08%) and Semiconductors (XSD, +2.45%). Health Care (XLV) increased 87 bps while Real Estate (XLRE) and Materials (XLB) each rose more than 60 bps.
Themes: All global thematic segments posted gains on Wednesday led by Blockchain (BLOK, +6.59%), Multi-Theme (ARKK, +5.47%), and Clean Energy (PBW, +4.96%). BLOK hit fresh 52-week highs and re-entered overbought territory. Solar (TAN), Disruptive Tech (ARKW), and Genomics (ARKG) all jumped more than 4.40% while Industrial Revolution (ARKQ) advanced 3.96%. FinTech (FINX, +3.50%), Space (UFO, +3.14%), and Online Retails (IBUY, +3.06%) also saw solid returns on the day. eSports & Video Games (ESPO) added 2.58% to hit new 52-week highs. Digital Infrastructure (SRVR, +75 bps) and Casinos & Gaming (BETZ, +95 bps) lagged other sectors.
Commodities & Yields: Broad Commodities (DJP) declined 1.14% yesterday, dragged lower by Energy (DBE, -1.63%) and Agriculture (DBA, -45 bps). Natural Gas (UNG) was down 4.06%, Gasoline (UGA) fell 3.06%, and WTI Crude Oil (USO) declined 1.51%. Wheat also slid 2.16%. U.S. Aggregate Bonds (AGG) rose 44 bps, 20+ Year Treasury Bonds (TLT) added 51 bps, and the U.S. Dollar (UUP) dipped 18 bps. At Wednesday’s closing bell, the U.S. 2-Year Treasury Yield stood at 4.578% and the U.S. 10-Year Treasury Yield stood at 4.267%.
FinTech Category Report
2.15.2024
- The Amplify Transformational Data Sharing ETF (BLOK) has seen the largest net inflows amongst FinTech ETFs over the past year with $455.7 million
- Just 2 FinTech ETFs have over $1 billion in assets over management: BLOK with $1.08 billion and the ARK Fintech Innovation ETF (ARKF) with $1.06 billion
- The cateory is comprised of 22 ETFs with $3.6 billion total assets under management
- Average expense ratio is 65 bps, average lifespan is 3.82 years, and the average TTM yield is 4.10%
- The category has low liquidiity ratings and high average spreads, average spread is 49 bps
- All 22 FinTech ETFs saw losses in January with the average return for the month at -12.78%
- The Valkyrie Bitcoin Miners ETF (WGMI) and the Global X Blockchain ETF (BKCH) were the worst performers on the month, each falling more than 26%
- Average 1-year returns for the category is +33.56% and average annualized 3-year return is -4.22%
- 3 Cannabis ETFs surged more than 30% on the month (MSOS, WEED, MJUS)
- The category has high volatility ratings relative to the S&P 500 (SPY), the average 3-year volatility relative to SPY was 30.62%
- The category has high average sector exposure to Financials (47.5%) and Technology (42.7%)
- 17 ETFs in the category have above average or high growth ratings
Daily Note
2.14.2024
Equities: U.S. equity markets fell sharply on Tuesday following a hotter-than-expected Consumer Price Index (CPI) report for January. The NASDAQ 100 (QQQ) declined 1.56%, the S&P 500 (SPY) dropped 1.38%, and the Dow Jones Industrial Average (DIA) sank 1.36%. Small-Caps (IJR) also slipped 3.60% while Mid-Caps (IJH) decreased 2.45%. According to the Bureau of Labor Statistic, the CPI increased 0.3% month-over-month for January. On a 12-month basis, that came out to 3.1%, down from 3.4% in December. Both figures were above expectations. Excluding volatile food and energy prices, the core CPI accelerated 0.4% in January and was up 3.9% from a year ago, unchanged from December. The forecast had been for 0.3% and 3.7%, respectively. Shelter prices, which comprise about one-third of the CPI weighting, surged 0.6% for the month and 6% for the year. The report raises doubts as to whether the Federal Reserve will be able to cut rates several times this year. Treasury yields also pushed higher following the report with the U.S. 2-Year rising above 4.65% and the U.S. 10-Year jumping above 4.30% intraday yesterday. Investors will now be looking towards Thursday’s Producer Price Index (PPI) report on Friday. Several other economic reports, including the Retail Sales, Industrial Production, Housing Markets Index, and Housing Starts and Permits, will also be released this week.
All U.S. factors strategies were in the red on Tuesday. S&P 500 High Beta (SPHB) dropped 2.89%, S&P 500 Dividend (SPYD) and S&P 500 Pure Value (RPV) each slumped 2.10%), and S&P 500 Pure Growth (RPG) declined 1.73%. S&P 500 Low Volatility (SPLV) dipped 85 bps and was the only factor to fall less than 1%. Developed ex-U.S. Markets (EFA) sank 1.54% on weakness from Australia (EWA, -2.75%), South Korea (EWY, -2.70%), and the Netherlands (EWN, -2.44%). Switzerland (SWL) also slipped 1.96%. Emerging Markets (EEM) decreased 1.88% as Brazil (EWZ), South Africa (EZA), and Taiwan (EWT) were all down more than 2.70%. Indonesia (EIDO) and China (MCHI) both declined more than 2%.
Sectors: All U.S. sectors were in negative territory yesterday with Consumer Discretionary (XLY, -1.99%) and Real Estate (XLRE, -1.83%) falling the furthest. Technology (XLK) sank 1.70% and was dragged lower by Semiconductors (XSD, -3.64%) and Software & Services (XSW, -3.63%). Utilities (XLU) slipped 1.66% and is nearing oversold territory. Communication Services (XLC), Materials (XLB), and Financials (XLF) all dropped around 1.40%. XLC was impacted by losses from Telecom (XTL, -4.50%) while XLF was pulled lower by Regional Banks (KRE, -4.23%) and Banks (KBE, -3.58%). Health Care (XLV) was the top performing segment, dipping 93 bps. XLB, XLRE, and XLRE are the only sectors trading below relative 50-day moving averages and XLU and XLE are the only sectors trading below relative 200-day moving averages.
Themes: Global themes underperformed broader markets yesterday with all segments finishing lower and most declining more than 2.60%. Genomics (ARKG) and Clean Energy (PBW) were the worst performers, plummeting 6.98% and 6.71%, respectively. Solar (TAN), Multi-Theme (ARKK), and Advanced Materials (REMX) all dropped more than 5.45% while Biotech (SBIO) sank 4.44%. Cannabis (MJ, -3.95%), Disruptive Tech (ARKW, -3.84%), Fintech (FINX, -3.34%), and NextGen Transportation (DRIV, -3.28%) were also weak. eSports & Video Games (ESPO, -1.42%), Cyber Security (HACK, -1.56%), and Water (PHO, -1.66%) were the only segments to sink less than 2%.
Commodities & Yields: At Tuesday’s closing bell, the U.S. 2-Year Treasury Yield stood at 4.656% and the U.S. 10-Year Treasury Yield stood at 4.316%. U.S. Aggregate Bonds (AGG) slid 92 bps, 20+ Year Treasury Bonds (TLT) dropped 1.71%, and the U.S. Dollar (UUP) climbed 79 bps. Broad Commodities (DJP) declined 53 bps with all broad-based sectors in negative territory. Precious Metals (DBP) sank 1.55% and Industrial Metals (DBB) slipped 71 bps. Natural Gas (UNG) fell another 4.02%, Silver (SLV) was down 2.70%, and Sugar (CANE) decreased 1.10%.
International Equity Category Report
2.14.2024
- International Equity ETFs gathered $1.04 billion in net inflows in January and $13.36 billion in net inflows over the past year
- The Vanguard Total International Stock ETF (VXUS) gathered $877 million in net inflows in January and is the largest ETF in the category with $63.2 billion in assets under management
- The average expense ratio of the 53 International Equity ETFs in the category is 49 bps, the average lifespan is 6.86 years, and the average TTM yield is 2.28%
- Notably, 30 ETFs in the category have low liquidity ratings compared to 8 ETFs in the category with high liquidity ratings
- The average 1-month return is -1.57%, average 1-year is +3.51%
- The worst performing ETF in the category was the Renaissance International IPO ETF (IPOS, -10.94%), IPOS has plunged nearly 30% in the past year
- The average 3-year annualized return for the category is +0.31%
- The category is relatively diverse in terms of size & style exposure, volatility, and stock/ sector concentration
Daily Note
2.13.2024
Equities: Ahead of Tuesday’s Consumer Price Index (CPI) report, U.S. equity markets were mixed on Monday. The Dow Jones Industrial Average (DIA) climbed 36 bps while the NASDAQ 100 (QQQ) fell 39 bps and the S&P 500 (SPY) dipped 4 bps. DIA registered fresh 52-week highs, SPY and QQQ remain in overbought territory. Small-Caps (IJR) and Mid-Caps (IJH) outperformed, rising 1.78% and 1.28%, respectively. Diamondback Energy announced yesterday it agreed to merge with Endeavor Energy, the largest privately held oil and gas producer in the Permian Basin, in a deal valued at about $26 billion, including debt. The transaction is expected to close in the fourth quarter of 2024 and the combined company would be the third largest oil and gas producer in the region behind Exxon and Chevron. Diamondback jumped more than 9% on the day yesterday following the announcement. Arm Holdings, the British software and semiconductor designer rocketed another 29.30% Monday after surging 48% two trading days ago following strong earnings results. More than 60 names in SPY are slated to report earnings results this week, including Hasbro, Coca-Cola, Kraft Heinz, AutoNAtion, and Lyft.
Value-oriented pockets of the markets outperformed yesterday with S&P 500 Pure Value (RPV) jumping 1.49% and S&P 500 Enhanced Value (SPVU) gaining 1.11%. S&P 500 High Beta (SPHB) also added 1.02% while S&P 500 Growth (SPYG) declined 62 bps. Emerging Markets (EEM) rose 78 bps yesterday as China (MCHI) climbed 1.62%, Indonesia (EIDO) advanced 1.07%, and Brazil (EWZ) increased 88 bps. Developed ex-U.S. Markets (EFA, +17 bps) were boosted by South Korea (EWY, +1.23%) and Hong Kong (EWH, +1.06%). The Netherlands (EWN) lagged, sinking 42 bps.
Sectors: Technology (XLK) slumped 76 bps on Monday and trailed other U.S. sectors. XLK was pulled lower by Software & Services (XSW, -28 bps), which was the only industry in the red. Real Estate (XLRE, -31 bps) and Consumer Discretionary (XLY, -8 bps) were the only other sectors to see losses on the day. Utilities (XLU) and Energy (XLE) were the top performing sectors, both advancing more than 1%. XLE benefitted from solid returns from Oil & Gas Exploration & Production (XOP, +1.63%) and Oil & Gas Equipment & Services (XES, +1.45%). Materials (XLB) also rose 79 bps, Consumer Staples (XLP) added 71 bps, and Financials (XLF) gained 46 bps. XLF was lifted by Regional Banks (KRE, +2.15%) and Banks (KBE, -1.67%). XLF hit new 52-week highs along with Industrials (XLI, +15 bps).
Themes: Most global thematic segments saw positive returns yesterday. Genomics (ARKG) surged 4.57%, Blockchain (BLOK) and Clean Energy (PBW) each gained 1.18%, and Solar (TAN) rose another 3.98%. Biotech (SBIO) and Multi-Theme (ARKK) were both up more than 2% while Online Retail (IBUY), Space (UFO), and Advanced Materials (REMX) all climbed more than 1.50%. Cannabis (MJ plunged 5.35% on Monday and underperformed other segments. Cyber Security (HACK, -79 bps), Cloud Computing (SKYY, -77 bps), Big Data (AIQ, -33 bps), and Casinos & Gaming (BETZ, -19 bps) were all moderately lower.
Commodities & Yields: The U.S. Dollar (UUP) added 11 bps, U.S. Aggregate Bonds (AGG) inched higher by 2 bps, and 20+ Year Treasury Bonds increased 12 bps on Monday. At the close, the U.S. 2-Year Treasury Yield stood at 4.470% and the U.S. 10-Year Treasury Yield stood at 4.170%. Broad Commodities (DJP, 20 bps) were impacted by weakness from Natural Gas (UNG, -5.71%), Gold (GLD, -26 bps), and Agriculture (DBA, -41 bps). Gasoline (UGA) rose 1.44% and Industrial Metals (DBB) gained 1.07%.
Industrials Category Report
2.12.2024
- The Industrial Select Sector SPDR Fund (XLI) saw the largest net inflows among Industrials ETFs in January with $371 million
- Over the past year, Industrials ETFs have seen just $920 million in net inflows
- XLI is the largest ETF in the category with $15.8 billion in AUM
- The category made up of 24 ETFs has $38.2 billion in total AUM, average expense ratio is 46 bps, and average lifespan is 11.42 years
- The Vanguard Industrials ETF (VIS) has an expense ratio of 10 bps and has $4.5 billion in AUM
- Only 5 ETFs in the category saw positive returns in January, the SonicShares Global Shipping ETF (BOAT, +5.41%) was the top performer
- Average 3-month return for the category is +14.74%, average 1-year return is +9.94%
- The category has above average volatility ratings with the 3-year average volatility vs S&P 500 (SPY) at 22.73%
- The average weight of top 10 holdings for ETFs in the category is 46.50%
- The average price to earnings (TTM) for the cateogry is 18.32 and average return on equity is 21.6%
Daily Note
2.12.2024
Equities: The NASDAQ 100 (QQQ) and the S&P 500 (SPY) registered positive returns on Friday, rising 98 bps and 58 bps, respectively. Meanwhile, the Dow Jones Industrial Average (DIA) slipped 16 bps. All three major averages finished higher last week with QQQ gaining 1.87%, SPY advancing 1.39%, and DIA adding 8 bps. Last week was the fifth consecutive winning week for all three major averages. QQQ and SPY are both trading at 52-week highs and sit in overbought territory. Busy economic week ahead with the Consumer Price Index (CPI) report due out on Tuesday, Retail Sales data, Industrial Production figures, and the Housing Market Index report due out on Thursday, and the Housing Starts and Permits report and the Producer Price Index report due out on Friday. Investors will also be looking towards more corporate earnings results this week. Coca-Cola, Kraft Heinz, Hasbro, AutoNation, Lyft, DoorDash, and Instacart are all slated to report this week, amongst other companies.
Most U.S. factor strategies were in the green on Friday led by S&P 500 Growth (SPYG, +1.09%). S&P 500 High Beta (SPHB), S&P 500 Momentum (SPMO), and S&P 500 Quality (SPHQ) each added more than 50 bps while S&P 500 Dividend (SPYD) dipped 8 bps. S&P 500 Pure Growth (RPG), SPYG, and SPMO were the best performing factors last week, all climbing more than 2%. S&P 500 High Dividend Low Volatility (SPLV) fell 1.43% and SPYD dropped 1.06% for the week. Developed ex-U.S. Markets (EFA) added 35 bps on Friday as the Netherlands (EWN) jumped 1.41%. Emerging Markets (EEM, +43 bps) were boosted by China (MCHI, +94 bps) and Indonesia (EIDO, +64 bps). Last week, EFA advanced 2.41% and EEM gained just 20 bps.
Sectors: Energy (XLE) and Consumer Staples (XLP) underperformed other U.S. sectors on Friday, sinking 1.54% and 92 bps, respectively. Health Care (XLV) also dipped 8 bps and was the only other sector to see losses on the day. Technology (XLK) saw the strongest returns, rising 1.35%. XLK was bolstered by Semiconductors (XSD, +2.41%) and Software & Services (XSW, +2.27%). Consumer Discretionary (XLY) increased 71 bps and Utilities (XLU) rose 38 bps. Financials (XLF), Real Estate (XLRE), and Materials (XLB) all added around 25 bps. Last week, 7 of the 11 sectors saw gains. XLK popped 2.77% while XLY, XLV, and Industrials (XLI) climbed more than 1%. XLU declined 1.98% and XLP fell 1.43%. XLI and XLK are both trading at 52-week highs. XLK and XLV sit in overbought territory.
Themes: Just 5 global thematic segments posted negative returns on Friday: Cannabis (MJ, -1.06%), Evolving Consumer (SOCL, -55 bps), 3D Printing (PRNT, -46 bps), and Online Retail (IBUY, -8 bps). Blockchain (BLOK) outgained other segments, jumping 4.58%. Solar (TAN) also shined, climbing 3.15%. Cyber Security (HACK), Biotech (SBIO), Disruptive Tech (ARKW), Clean Energy (PBW), Multi-Theme (ARKK), and Cloud Computing (SKYY) all rose more than 2%. MJ was weak last week, slipping 3.71%. SOCL was down 2.79% and Wind (FAN) decreased 1.76%. All other segments saw gains last week with BLOK surging more than 9% and TAN climbing 7.59%. TAN is still down just over 5% in the past month.
Commodities & Yields: U.S. Aggregate Bonds (AGG) dipped 3 bps, 20+ Year Treasury Bonds (TLT) fell 20 bps, and the U.S. Dollar (UUP) dropped 7 bps on Friday. At the closing bell, the U.S. 2-Year Treasury Yield stood at 4.480% and the U.S. 10-Year Treasury Yield stood at 4.159%. Broad Commodities (DJP) declined 13 bps on Friday as Natural Gas (UNG) sank 1.55%, Gold (GLD) dropped 39 bps, and Industrial Metals (DBB) fell 71 bps. UNG is down nearly 34% over the past month.
Daily Note
2.9.2024
Equities: U.S. equity markets saw modest gains on Thursday with the NASDAQ 100 (QQQ) rising 19 bps, the Dow Jones Industrial Average (DIA) adding 18 bps, and the S&P 500 (SPY) increasing 4 bps. All three major averages hit fresh 52-week highs once again. Small-Caps (IJR, +1.36%) and Mid-Caps (IJH, +93 bps) outperformed. Disney jumped more than 11% yesterday after beating quarterly earnings expectations and hiking its forward guidance after the close on Wednesday. Arm also surged nearly 48% after posting stronger-than-expected earnings and providing an encouraging profit forecast. PayPal sank 11.24% after issuing disappointing guidance. The company topped estimates and saw revenue increase 9% year-over-year. Treasury yields moved higher on the day with the U.S. 2-Year Treasury Yield climbing above 4.45% and the U.S. 10-Year Treasury Yield advanced above 4.17% intraday. Speaking to the Economic Club of New York, Richmond Federal Reserve President Thomas Barkin joined the chorus of cautious central bankers, saying in that the fight against inflation isn’t over yet. Jobless claims sank 9K to 218K for the week ended February, which was below the 220K estimate. Continuing claims also came in below expectations, declining 23K to 1.87 million. On Friday, PepsiCo and Pinterest will report earnings results, along with other companies.
U.S. factors were mixed yesterday with S&P 500 Pure Growth (RPG) advancing 93 bps, S&P 500 High Beta (SPHB) gaining 75 bps, and S&P 500 Low Volatility (SPLV) dropping 27 bps. S&P 500 Growth (SPYG), S&P 500 Quality (SPHQ), and S&P 500 Momentum (SPMO) all added more than 10 bps on the day. RPG, SPYG, SPHQ, and SPMO all hit new 52-week highs. Developed ex-U.S. Markets (EFA, -17 bps) were pulled lower by Hong Kong (EWH, -1.05%) and Switzerland (EWL, -60 bps). The Netherlands (EWN) rose 1.10%. Emerging Markets (EEM) fell 56 bps as Thailand (THD) and Brazil (EWZ) both declined more than 2%. Mexico (EWW) and China (MCHI) were each down more than 1.80% while South Africa (EZA) dipped 1.69%.
Sectors: U.S. sectors were split on Thursday. Energy (XLE) saw the strongest returns, rising 1.03% on strength from Oil & Gas Equipment & Services (XES, +1.73%) and Oil & Gas Exploration & Production (XOP, +1.23%). Real Estate (XLRE) gained 55 bps followed by Consumer Discretionary (XLY, +44 bps), Communication Services (XLC, +38 bps), and Technology (XLK, +31 bps). XLY was once again lifted by Homebuilders (XHB, +1.73%) while XLK was bolstered by Semiconductors (XSD, +2.85%) and Software & Services (XSW, +2.09%). XLK and Industrials (XLI, +2 bps) hit new 52-week highs. Utilities (XLU) sank 71 bps and underperformed other sectors. Financials (XLF) also dropped 38 bps while Health Care (XLV) and Materials (XLB) each declined around 15 bps.
Themes: Cannabis (MJ) slipped 1.82% yesterday and lagged other global thematic segments. Wind (FAN) dropped 1.12% and Evolving Consumer (SOCL) sank 94 bps. eSports & Video Games (ESPO, -20 bps) and Solar (TAN, -14 bps) were the only other segments to see losses. Blockchain (BLOK) handily outpaced other segments, jumping 4.15%. Genomics (ARKG), Multi-Theme (ARKK), Disruptive Tech (ARKW), Cloud Computing (SKYY), and FinTech (FINX) were all up more than 2.25%. Online Retail (IBUIY, +1.95%) and Clean Energy (PBW, +1.76%) were also strong on Thursday. SKYY hit fresh 52-week highs and is approaching overbought territory.
Commodities & Yields: U.S. Aggregate Bonds (AGG) dropped 31 bps, 20+ Year Treasury Bonds (TLT) decreased 58 bps, and the U.S. Dollar (UUP) added 11 bps yesterday. At Thursday’s close, the U.S. 2-Year Treasury Yield stood at 4.456% and the U.S. 10-Year Treasury Yield stood at 4.170%. Broad Commodities (DJP) gained 40 bps, lifted by WTI Crude Oil (USO, +3.03%), Gasoline (UGA, +3.11%), Silver (SLV, +1.57%), and Agriculture (DBA, +96 bps). Natural Gas (UNG) fell 4.50% while Industrial Metals (DBB) sank 1.29%.
Daily Note
2.8.2024
Equities: Major averages climbed to new 52-week highs on Wednesday following the latest batch of corporate earnings results. The NASDAQ 100 (QQQ) increased 1.03%, the S&P 500 (SPY) rose 83 bps, and the Dow Jones Industrial Average (DIA) advanced 41 bps. SPY also entered overbought territory. Small-caps underperformed with the Russell 2000 (IWM) falling 23 bps. Chipotle Mexican Grill jumped more than 7% yesterday after reporting stronger-than-expected earnings and revenue results after the close on Tuesday. Ford was also up more than 6% after topping estimates and issuing encouraging forward guidance. Alibaba tumbled nearly 6% on the day after falling short of revenue estimates. The Chinese ecommerce giant also increased the size of its share buyback program by $25 billion, bringing the total available under the plan to $35.3 billion. After the close, Disney reported better-than-expected fiscal first-quarter earnings after slashing costs while revenue was slightly below expectations. Arm also reported fiscal third-quarter earnings Wednesday that beat estimates and gave a strong profit forecast for the current quarter. The chip design company’s total revenue for the quarter surged 14% year-over-year. PayPal reported that quarterly revenue climbed 9% from this time last year and edged out expectations. Net income and total payment volume also saw strong increases on a year-over-year basis. Several Federal Reserve officials spoke on Wednesday, all urging caution and patience on rate cuts. Federal Reserve Governor Adriana Kugler said inflation is showing solid signs of slowing down, but she is not ready yet to start lowering interest rates. Minneapolis Fed President Neel Kashkari also expressed caution about cutting rates too quickly and said he would expect two or three rate cuts this year. On Thursday, Jobless Claims data will be released and investors will be monitoring more earnings results.
All U.S. factor strategies were in the green yesterday, except for S&P 500 High Dividend Low Volatility (SPHD, -31 bps) and S&P 500 Dividend (SPYD, -10 bps). Growth-oriented pockets of the markets outperformed with S&P 500 Pure Growth (RPG), S&P 500 Momentum (SPMO), and S&P 500 Growth (SPYG) all up more than 1.30%. SPMO is trading more than 24% above its 200-day moving average. S&P 500 Value (SPYV) added just 19 bps on the day. Emerging Markets (EEM) rose 13 bps on Wednesday despite losses from China (MCHI, -1.38%) and South Africa (EZA, -1.21%). Taiwan (EWT) advanced 70 bps. Developed ex-U.S. Markets (EFA) dipped 5 bps as Switzerland (EWL) Declined 91 bps and the U.K. (EWU) sank 61 bps. South Korea (EWY) climbed 1.77%.
Sectors: Technology (XLK) and Consumer Discretionary (XLY) outgained other U.S. sectors on Wednesday, rising 1.32% and 1.12%, respectively. XLK was bolstered by Semiconductors (XSD, +1.83%) and XLY received a boost from Homebuilders (XHB, +1.74%). Materials (XLB) added another 80 bps, Financials (XLF) advanced 75 bps, Industrials (XLI) climbed 66 bps, and Communication Services (XLC) popped 51 bps. XLI, XLK, and Health Care (XLV, +27 bps) all hit fresh 52-week highs. Consumer Staples (XLP) and Real Estate (XLRE) were the only sectors to see losses yesterday, both declining less than 10 bps. Biotech (XBI) was the worst performing industry, sinking 1.88%. XBI is still up more than 23% over the past 3 months.
Themes: Most global thematic segments registered positive returns yesterday led by Solar (TAN, +4.45%). Solar companies were lifted by Enphase Energy, which surged almost 17% after reporting strong quarterly profits and improving gross margins after Tuesday’s close. The company’s CEO also forecasted that the solar market could hit a bottom in the first quarter this year and then start to recover. Cyber Security (HACK) and Disruptive Tech (ARKW) each climbed more than 2% while Blockchain (BLOK) and Advanced Materials (REMX) advanced around 1.70%. Evolving Consumer (SOCL) underperformed, dropping 2.82%. Genomics (ARKG) and Cannabis (MJ) also decreased almost 2.30%.
Commodities & Yields: The U.S. Dollar (UUP) sank 11 bps, U.S. Aggregate Bonds (AGG) fell 20 bps, and 20+ Year Treasury Bonds (TLT) slipping 48 bps on Wednesday. At the closing bell, the U.S. 2-Year Treasury Yield stood at 4.422% and the U.S. 10-Year Treasury Yield stood at 4.098%. Broad Commodities (DJP) inched lower by 7 bps as Silver (SLV) dropped 88 bps, Natural Gas (UNG) declined 1.62%, Copper (CPER) decreased 1.23%, and Corn (CORN) fell 64 bps. Gasoline (UGA) jumped 2.36% and Sugar (CANE) rose 1.20%.
FI Corporate Category Report
2.8.2024
- Corporate Bond ETFs saw $11.20 billion in net inflows in January, the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) saw the largest net inflows in the period with $3.6 billion
- The average expense ratio of the 162 Corporate Bond ETFs is 28 bps, the average lifespan is 6.23 years, and the average TTM yield is 4.36%
- The Vanguard Intermediate-Term Corporate Bond ETF (VCIT) is the largest ETF in the category with $46.8 billion in AUM
- The Schwab 5-10 Year Corporate Bond ETF (SCHI) has an expense ratio of 3 bps and has a 4.32% distribution yield (TTM)
- 102 Corporate Bond ETFs posted gains in January, the Aptus Defined Risk ETF (DRSK, +1.98) was the top performer
- The average return of the category for January was +0.13% and the average 3-year annualized return for the category is -0.07%
- The majority of the category have below average or low credit ratings, 76 ETFs in the category are High Yield vs 36 as Investment Grade
- The average yield to maturity in the category is 6.12% and the average weighted coupon is 5.00%
Daily Note
2.7.2024
Equities: Mixed session for U.S. equity markets on Tuesday as the Dow Jones Industrial Average (DIA) and the S&P 500 (SPY) added 39 bps and 29 bps, respectively, while the tech-oriented NASDAQ 100 (QQQ) dipped 20 bps. All three major averages are still trading well above relative 50-day and 200-day moving averages and are trading within 1% of fresh 52-week highs. Investors digested the latest corporate earnings results yesterday. Palantir surged nearly 31% on Tuesday after the company released fourth-quarter earnings that detailed strong demand for its AI offerings. Revenue increased 20% year-over-year for the quarter and topped analysts’ estimates. Spotify reported earnings figures that missed expectations but issued strong forward guidance. Additionally, total monthly active users grew 23% year-over-year for the quarter to beat estimates and premium subscribers jumped 15%year-over-year. After the close, Chipotle handily bear earnings expectations, topped revenue estimates, and reported impressive same-store sales. Net sales rose 15.4% from the year before $2.52 billion. Ford beat Wall Street’s top and bottom-line expectations for the fourth quarter while forecasting better-than-expected results for 2024. The company also announced a special dividend of 18 cents per share in addition to a first-quarter regular dividend of 15 cents per share. Separately, New York Community Bancorp plunged another 20% Tuesday, following a 42% loss last week. NYCB took over the failed Signature Bank during the regional bank crisis in 2023. On Wednesday, Uber, Alibaba, Disney, and PayPal are all slated to report earnings figures along with other companies. The report on the U.S. deficit for total goods and services will also be released on Wednesday in addition to several more speeches from Fed officials.
Most U.S. factor strategies finished higher on Tuesday while S&P 500 Momentum (SPMO, -29 bps) and S&P 500 Pure Growth (RPG, -18 bps) underperformed. S&P 500 Dividend (SPYD) climbed 87 bps, S&P 500 Value (SPYV) rose 66 bps, and S&P 500 Pure Value (RPV) advanced 62 bps. Emerging Markets (EEM) jumped 2.27% yesterday as China (MCHI rocketed 5.45%. South Africa (EZA) and Brazil (EWZ) each gained around 2.70% while Thailand (THD), Mexico (EWW), and Taiwan (EWT) all increased at least 1.90%. Developed ex-U.S. Markets (EFA, +62 bps) were lifted by Hong Kong (EWH, +3.12%). The U.K. (EWU, +1.46%) and Australia (EWA, +1.16%) also saw solid returns on the day.
Sectors: Materials (XLB) advanced 1.77% yesterday and outperformed other U.S. sectors. Real Estate (XLRE) also gained 1.52% followed by Health Care (XLV, +1.09%) and Industrials (XLI, +90 bps). XLV received a boost from Health Care Equipment (XHE, +2.73%) and Pharmaceuticals (XPH, +2.35%). XLI was bolstered by Transportation (XTN), which climbed 2.86%. XLI and XLV both hit new 52-week highs. Consumer Discretionary (XLY) also added 61 bps. Utilities (XLU) and Energy (XLE) were up more than 30 bps. Technology (XLK) and Communication Services (XLC) were the only sectors to post losses on Tuesday, sinking 46 bps and 31 bps, respectively.
Themes: Connectivity (FIVG, -8 bps) and Cloud Computing (SKYY, -7 bps) were the only global thematic segments in negative territory on Tuesday. Cannabis (MJ) jumped 5.07% while Advanced Materials (REMX) and Clean Energy (PBW) both climbed more than 4%. Genomics (ARKG, +3.81%), Multi-Theme (ARKK, +3.32%), Solar (TAN, +2.87%), and Evolving Consumer (SOCL, +2.70%) were also strong. Disruptive Tech (ARKW) and NextGen Transportation (DRIV) each rose around 2.15% while Online Retail (IBUY) advanced 1.91%. SOCL, Biotech (SBIO, +1.40%), eSports & Video Games (ESPO, +1.07%), and Big Data (AIQ, +28 bps) all hit new 52-week highs.
Commodities & Yields: U.S. Aggregate Bonds (AGG) rose 52 bps, 20+ Year Treasury Bonds (TLT) increased 98 bps, and the U.S. Dollar (UUP) fell 28 bps yesterday. At Tuesday’s closing bell, the U.S. 2-Year Treasury Yield stood at 4.408% and the U.S. 10-Year Treasury Yield stood at 4.092%. Broad Commodities (DJP) added 34 bps as WTI Crude Oil (USO) gained 92 bps, Gold (GLD) advanced 53 bps, and Industrial Metals (DBB) increased 64 bps. Natural Gas (UNG) declined 3.69% on the day and is down more than 20% in the past month.
Evolving Consumer Category Report
2.7.2024
- The KraneShares CSI China Internet ETF (KWEB) saw the largest net inflows amongst Evolving Consumer ETFs in January with $111 million, the AdvisorShares Pure US Cannabis ETF (MSOS) also gathered $75 million in net inflows on the month
- Over the past year, KWEB has seen the largest net ouflows in the category with $589 million
- KWEB is the largest ETF in the category by a significant margin with $4.8 billion in assets under managerment, no other ETFs have more than $1 billion in AUM
- The cateory is comprised of 50 ETFs with $8.3 billion total assets under management
- Average expense ratio is 65 bps, average lifespan is 5.35 years, and the average TTM yield is 0.92%
- The category has low liquidiity ratings and high average spreads, average spread is 52 bps
- The category was split performance wise in January. Average 1-month return was +1.13% and average 3-month return was +17.24%
- KWEB was the worst performer in January, sinking 13.56%
- 3 Cannabis ETFs surged more than 30% on the month (MSOS, WEED, MJUS)
- The category has high and above average volatility ratings relative to the S&P 500 (SPY), the average 3-year volatility relative to SPY was 31.89%
- The category has high average sector exposure to Consumer Discretionary (31.2%) and Communication Services (23.9%)
- 33 ETFs in the category have above average or high growth ratings