The Daily Note Archives
Daily Note
10.2.2023
Equities: Mixed session for U.S. equity markets on Friday to close out a weak September and 3rd quarter. Investors weighed Personal Consumption Expenditures (PCE) Index results, the Fed's preferred inflation metric. The NASDAQ 100 (QQQ) added 7 bps while the Dow Jones Industrial Average (DIA) and the S&P 500 (SPY) dropped 50 bps and 24 bps on Friday. Core PCE, which excludes volatile food and energy prices, increased 0.1% month-over-month and 3.9% year-over-year in August, which were relatively in line with estimates. It was the smallest monthly increase since November 2020. Headline PCE was up 0.4% on the month and 3.5% on the year for August. Along with the modest inflation gain, consumer spending rose 0.4% on a current dollar basis in August, down sharply from +0.9% in July. Last week, QQQ rose 10 bps, SPY fell 68 bps, and DIA declined 1.36%. In September, SPY and QQQ both slipped more than 4% while DIA dipped 3.66%. In Q3, SPY sank 2.08% while QQQ and DIA were down around 1.35%. All three major averages are trading mroe than 3% below relative 50-day moving averages and are approaching oversold territory. This week, investors will be looking towards ISM Manufacturing Index data, Job Openings & Labor Turnover Survery (JOLTS) results, Factory Orders figures, and the Employment Situation report.
All U.S. factors posted losses on Friday except for S&P 500 Dividend (SPYD, +29 bps) and S&P 500 High Beta (SPHB, +17 bps). S&P 500 Momentum (SPMO) and S&P 500 Pure Growth (RPG) both sank at least 85 bps on the day. RPG and SPHB were the only factors to see gains last week, adding 60 bps and 53 bps, respectively. S&P 500 Low Volatility (SPLV) slipped 2.60% on the week. In September, all factors were down more than 1% with most declining more than 4%. SPHB dropped 6.86%, and S&P 500 Equal Weight (RSP) fell 5.12%. In Q3, SPMO jumped 3.75% while SPHB retreated 6.79% and SPLV fell 5.00%. Emerging Markets (EEM) added 8 bps on Friday as China (MCHI) gained 77 bps. Developed ex-U.S. Markets (EFA, -29 bps) were dragged lower by Japan (EWJ, -1.41%). EEM and EFA both retreated more than 1.30% last week, more than 4% in September, and more than 3% in Q3.
Sectors: Energy (XLE) plunged 2.02% on Friday and underperformed other U.S. sectors. Financials (XLF) fell 93 bps and Health Care (XLV) dropped 76 bps while Communication Services (XLC) and Industrials (XLI) each dipped more than 50 bps. Consumer Discretionary (XLY, +53 bps) was the top performing sector on the day followed by Real Estate (XLRE, +35 bps) and Technology (XLK, +34 bps). Utilities (XLU) also added 17 bps. Last week, XLU plummeted nearly 7% while XLE rose 1.21%. In September, XLE was the only sector to register positive returns, climbing 2.98%. Meanwhile, XLRE fell 7.58%, XLU declined 6.97%, and XLI, XLK, and Consumer Staples (XLP) all sank more than 5%. Health Care Equipment (XHE) and Pharmaceuticals (XPH) were the worst performing industries in September each slipping around 10%. XLE rocketed 12.90% and XLC increased 2.02% in Q3 while all other sectors were in negative territory. XLRE and XLU decreased more than 8% for the quarter.
Themes: Global themes were split on Friday led by 3D Printing (PRNT, +1.50%) and Mutli-Theme (ARKK, +1.41%). Disruptive Tech (ARKW), Digital Infrastructure (SRVR), Industrial Revolution (ARKQ), and eSports & Video Games (ESPO) each added at least 1% on the day. Cannabis (MJ, -1.35%) and Biotech (SBIO, -1.09%) lagged other global thematic segments on Friday. Themes were mixed last week with ARKW and ARKK both gaining more than 2% and MJ and Wind (FAN) both slipping more than 3%. In September, MJ surged nearly 26% and Cyber Security (HACK) inched higher by 8 bps. All other segments dropped more than 3%. Clean Energy (PBW) dropped 14.62% and Genomics (ARKG) fell 12.88%. In Q3, just 3 segments were in the green: MJ (+23.42%), HACK (+2.93%), and Cloud Computing (SKYY, 1.12%). Solar (TAN) plunged nearly 25% for the quarter while PBW sank nearly 20%.
Commodities & Yields: The U.S. Dollar (UUP) added 7 bps, U.S. Aggregate Bonds (AGG) dipped 10 bps, and 20+ Year Treasury Bonds (TLT) were relatively flat on Friday. In September, TLT plunged 7.63% while UUP gained 3.23%. TLT was down more than 12% in Q3 and UUP climbed 4.32%. At Friday's closing bell, the U.S. 2-Year Treasury Yield stood at 5.046% and the U.S. 10-Year Treasury Yield stood at 4.571%. The 10-Year was below 4% for most of the first month of Q3 before climbing steadily later in the quarter. Broad Commodities (DJP) declined 1.35% on Friday as Gaosline (UGA) dropped 2.88%, Gold (GLD) slipped 1.03%, and Corn (CORN) decreased 2.09%. WTI Crude Oil (USO) climbed more than 10% in September while Silver (SLV) fell 10.44%.
Daily Note
9.29.2023
Equities: U.S. equity markets finished higher on Thursday but are on their way to closing out a losing month as economic concerns and higher rates have caused a surge in treasury yields. Yesterday, the NASDAQ 100 (QQQ) rose 0.84%, the S&P 500 (SPY) gained 0.58%, and the Dow Jones Industrial Average (DIA) finished 0.35% higher. From a seasonality perspective, September has historically been one of the worst performing months of the year for the S&P 500 while October typically brings better returns.
All U.S. factors were in the green yesterday with High Beta (SPHB +1.35%), Momentum (SPMO +1.03%), and Growth (SPYG +61bps) all leading. Quality (SPHQ +0.60%), Value (SPYV +0.56%) and Low Volatility (SPLV +0.02%) lagged. Year-to-date S&P 500 Growth (SPYG) has outperformed S&P 500 Value (SPYV) by 10.5%. Emerging Markets gained 26 basis points as gains in Brazil (EWZ +1.33%) and South Africa (+1.29%) outweighed losses in India (-0.76%) and Thailand (THD -0.40%). Developed ex-U.S. (EFA) rose 82 basis points with a jump in Australia (EWA +1.79%).
Sectors: 10 of 11 sectors finished higher on Thursday with leadership coming from Consumer Discretionary (XLY +1.12%) and Communication Services (XLC +1.10%). The lone sector to see losses was Utilities (XLU) which finished 2.16% lower and has made its way well into oversold territory. It isn't alone however, as Real Estate (XLRE) and Consumer Staples (XLP) are also in oversold territory according to 14-day RSI. From an industry perspective, Retail (XRT +1.85%), Metals & Mining (XME +1.80%), and Semiconductors (XSD +1.70%) were the top performers.
Themes: Global themes were mostly up yesterday with leadership coming from Advanced Materials (REMX +3.10%), Space (UFO +2.40%), and Blockchain (BLOK +1.84%). Cannabis (MJ) continued its bumpy ride and lagged all categories, down 1.60%. We have noted over the past week that many ETFs within the biotech and genomics category were well into oversold technical territory. Now over the past week we have seen the Global X Genomics & Biotechnology ETF (GNOM) lead all thematic ETFs in net inflows with $48 million. We have largely seen net outflows for the thematic space in aggregate over the past year but there continues to be pockets of inflows from month to month. Please reach out to team@etfaction.com to learn more about how to track thematic segments on our dashboards.
Commodities & Yields: The U.S. Aggregate (AGG) was able to close higher on Monday by 30 bps as long-term bonds (TLT) outpaced short-term (SHY). Currently the 10-year treasury yield is sitting at 4.528% and the 2-year is at 5.467%. Broad commodities (DJP) rose 25bps despite declines in energy prices (DBE -1.06%).
Daily Note
9.28.2023
Equities: Markets finished mixed on Wednesday as we get closer to the end of September and the third quarter. All major averages are poised to finish lower for the quarter as higher interest rates and economic concerns have weighed. A new earnings season will begin in the next few weeks along with guidance on what we should expect from the consumer heading into the holiday season. Yesterday, the NASDAQ 100 (QQQ) rose 0.23%, the S&P 500 (SPY) gained 0.04%, and the Dow Jones Industrial Average (DIA) finished 0.18% lower.
It was a better day for mid-caps (IJH) and small-caps (IJR), finishing +0.59% and +0.99% higher, respectively. Developed ex-U.S. lagged EM by 35 basis points on Wednesday as losses in France (EWQ), Switzerland (EWL), and Germany (EWG) outweighed gains in Japan (EWJ) and Hong Kong (EWY). Dev ex-U.S. (EFA) finished 19 basis points lower as EM (EEM) closed 16 basis points higher.
Sectors: Sectors were split yesterday with leadership coming from Energy (XLE +2.49%), Industirals (XLI +0.74%), and Communication Services (XLC +0.26%). On the flip side, the largest laggards came from rate sensitive sectors Utilities (XLU -1.92%) and Real Estate (XLRE -0.88%). From an industry perspective, Oil & Gas continue their strong performance with XES and XOP up 3.79% and 2.96%, respectively. Meanwhile laggards came from Pharmaceuticals (XPH -1.92%) and Regional Banking (KRE -0.54%). From a flows perspective, over the past week we have seen $55 million flow into Oil & Gas Equipment & Services ETFs while seeing $165 million flow out of Regional Bank ETFs.
Themes: It was a good day for global themes on Wednesday as most categories were in the green. Leadership came from Genomics (ARKG +1.19%), Cloud Computing (SKYY +1.18%), and Cyber Security (HACK +0.89%) while only a few global thematic groups fell on the day. These include Digital Infrastructure (SRVR -1.52%), Advanced Materials (REMX -0.82%), and Cannabis (MJ -0.79%). From a fund perspective, the best performers were mostly crypto/blockchain related including BITQ and BKCH.
Commodities & Yields: The U.S. Aggregate (AGG) closed lower yesterday by 35 bps as long-term bonds (TLT -0.52%) lagged short-term (SHY -0.07%). The Dollar (UUP) finished 47 bps higher along with Broad Commodities (DJP +0.46%). Currently the 10-year treasury yield is sitting at 4.614% while the 2-year sits at 5.106%. The 10year-2year treasury yield inversion will be entering its 16th consecutive month in a few days.
Daily Note
9.27.2023
Equities: U.S. equity markets tumbled on Tuesday as all major averages moved lower. The Dow Jones Industrial Average (DIA) dropped 1.16%, the S&P 500 (SPY) declined 1.47%, and the NASDAQ 100 (QQQ) fell 1.50%. The recent sell-off has mostly been due to rising bond yeilds but Tuesday saw poor macroeconomic data in the form of slumping New Home Sales and plunging consumer confidence. Despite entering/nearing oversold territories for the major averages, all three still remain within 9% of their 52-week highs.
All U.S. factor strategies were also down on Thursday. S&P 500 Momentum (SPMO) led, falling only 1.08% while S&P 500 Dividend (SPYD) fell1.72%. S&P 500 Growth (SPYG), S&P 500 Quality (SPHQ) and S&P 500 Low Volatility (SPLV), and S&P 500 Enhanced Value (SPVU) all fell more than ~130 basis points. Emerging Markets (EEM, -1.41% bps) were dragged lower by Brazil (EWZ, -1.84%) and Indonesia (EIDO, -2.28%). Developed ex-U.S. Markets (EFA) fell 1.29% with the largest losses coming from South Korea (EWY, -3.17%).
Sectors: All sectors were down yesterday with Energy (XLE -0.58%) and a few defensive sectors providing leadership. Health Care (XLV) dropped 85bps and Consumer Staples (XLP) declined 74 bps; however, Utilities (XLU) lagged all sectors dropping 2.99%. Other laggards included Real Estate (XLRE) dropping 1.77%, Consumer Discretionary (XLY) falling 1.82%, and Tech (XLK) declining 1.80%. All industries were also in the red with exception to biotech(XBI) which rose 1.85%. From a flows perspective over the past week, we have seen positive net inflows into Industrials (+$237MM), Technology (+$277MM), and Energy (+$80MM).
Themes: Global themes was a sea of red on Thursday as risk assets sold off. The best performing (and only positive) segments were Biotech (SBIO) and Genomics (ARKG) which rose 2.81% and 0.14%, respectively. Seven global thematic groups fell more than 2% yesterday including Advanced Materials (REMX), Space (UFO), Blockchain (BLOK), Wind (FAN), Cloud Computing (SKYY), Digital Infrastructure (SRVR), and Nexgen Transportation (DRIV). No global thematic ETFs remain in overbought territory after the recent sell-off but a number now sit in oversold territory and could be poised for a bounce. This includes ETFs Pet Care (PAWZ), Telemedicine (EDOC), Robotics (ROBO, BOTZ), Fintech (FINX), and many more.
Commodities & Yields: Broad Commodities (DJP) decreased 40 bps on Thusday with natural gas (UNG) dropping 1.93%. Both Brent (BNO) and WTI crude oil (USO) were up slightly as energy prices continue to creep up. As the treasury yield steepened yesterday, the U.S. Dollar (UUP) advanced 30 bps, U.S. Aggregate Bonds (AGG) dipped 13 bps, and 20+ Year Treasury Bonds (TLT) declined 35 bps. Currently, the U.S. 2-Year Treasury Yield stood at 5.06% and the U.S. 10-Year Treasury Yield stood at 4.497%.
Daily Note
9.26.2023
Equities: Markets finished higher on Monday following losses last week in which the Federal Reserve indicated that there may be another rate hike to go this year and rates may stay higher for longer than anticipated. Yesterday, the NASDAQ 100 (QQQ) rose 0.47%, the S&P 500 (SPY) gained 0.42%, and the Dow Jones Industrial Average (DIA) finished 12 basis points higher. Since the beginning of last week, we have seen treasury yields jump to levels we have not seen since 2007; however, futures markets are still putting a 61% chance that rates remain the same at the end of the year (according to the CME Fed Watch Tool).
U.S. factors finished mostly higher yesterday with Quality (SPHQ +0.52%) and Pure Growth (RPG +0.80%) outperforming Pure Value (RPV +0.46%) and High Beta (SPHB +27%). Emerging Markets (EEM) slipped 44 bps on Monday due to losses in Mexico (EWW -1.92%) and China (MCHI -1.41%). Developed ex-U.S. (EFA) also fell by 44 basis points as losses in France (EWQ), Germany (EWG), and Hong Kong (EWH) outweighed gains in Canada (EWC +0.44%).
Sectors: Sectors were split on Monday with leadership coming from Energy (XLE +1.25%), Materials (XLB +0.79%), and Consumer Discretionary (XLY +0.61%). Weakness came from the defensive sectors on Monday as Consumer Staples (XLP -0.36%), Utilities (XLU -0.14%), and Real Estate (XLRE -0.17%). From an industry perspective, Oil & Gas Exploration & Production (XOP +1.84%) and Oil & Gas Services (XES +31bps) were the best performing while Biotech (XBI -1.48%) and Telecom (XTL -1.06%) lagged. Oil & Gas industries (XOP, XES) have been surging over the past three months, up 20% and 33% respectively. With recent calls for crude oil prices to reach above $100/barrel, these two industries should continue moving higher if those calls come to fruition.
Themes: Global themes were split on Monday. Cannabis (MJ) led all categories finishing up 1.06% while Biotech (SBIO) lagged again, down 1.80%. Other notable themes that finished higher include eSports & Video Games (ESPO), Blockchain (BLOK), and Water (PHO). With poor performance coming from risk assets and global themes as of late, there are no global thematic ETFs in overbought territory but the list of oversold ETFs continues to grow. Most recently we have seen Sports Betting ETF BETZ enter oversold territory, joining a long list of Health Care services ETFs (SBIO, EDOC, HTEC, ARKG, GNOM, IDNA, GDOC) among others.
Commodities & Yields: The U.S. Aggregate (AGG) closed lower on Monday by 79 bps as long-term bonds (TLT -2.46%) outpaced short-term (SHY -0.04%). Currently the 10-year treasury yield is sitting at 4.493%, down 5bps over the past day. Broad commodities (DJP) finished lower by 64bps despite gains in natural gas (UNG +60 bps) and softs (CORN +1.14%, SOYB +0.40%, WEAT +1.55%).
Daily Note
9.24.2023
Equities: On Friday, U.S. markets started the day higher but faded in afternoon trading as markets continue to digest the recent Fed meeting and the impact of what higher rates for longer will mean. The NASDAQ 100 (QQQ) finshed up 1 basis point, the S&P 500 (SPY) declined 22 bps%, and the Dow Jones Industrial Average (DIA) dipped 29 bps.
Currently markets are on pace for their worst month of performance since December as we head into the final week of trading with several key items on deck. The government is facing another shutdown if Congress does not find a spending resolution by October 1 and there is a number of macroecnomic data pointse coming out this week including new home sales, consumer confidence, and personal income & outlays.
U.S. factors were mixed on Friday with the S&P 500 Momentum (SPMO) leading in performance, up 42 bps. Quality (SPHQ) also rebounded finishing up 6bps. Other factors including S&P 500 Growth (SPYG), S&P 500 High Beta (SPHB) and S&P 500 Value (SPYV) all finished modestly lower. All factors were finished the week down over 2% with the Invesco S&P 500 High Beta (SPHB) lagging all others, down 4.62%. Although markets finished mostly lower domestically, Emerging Markets (EEM) jumped 1.18% on Friday as China (MCHI) surged 3.14%. Developed ex-U.S. Markets (EFA, +9 bps) also closed higher on the day with help from Hong Kong (EWH +2.10%).
Sectors: 9 of 11 sectors were in the red on Friday with exeption for Technology (XLK, +0.21%) and Energy (XLE, +0.17%). XLK was impacted by Semiconductors (XSD), which jumped 1.21%. On the flip side, Consumer Discretionary (XLY -98 bps), Financials (XLF -77 bps), and Real Estate (XLRE -69 bps) lagged. Semiconductors (XSD) led all industries followed by Metals & Mining (XME +96 bps), Oil & Gas Equipment & Services (XES +84 bps), and Insurance (KIE +16 bps). Energy (XLE) is the only sector remaining that is above its 50 day moving average following the recent sell-off. Meanwhile Real Estate (XLRE) and Utilities (XLU) are now within 3% of their 52-week lows.
Themes: Cannabis (MJ) was once again active on Friday, leading all global thematic groups in performance, up 2.44%. Other segments that finished more than 1% higher included Evolving Consumer (SOCL), Advanced Materials (REMX) and eSports & Video Games (ESPO). Laggards included Cathie Wood's flagship multi-them fund ARKK which finished 1.82% lower, Biotech (SBIO -1.67%), and Solar (TAN -1.44%). Flows have been largely negative to global themes. Notable negative outflows over the past week include $138 million for ARKK, $19 million for SKYY, and $18 million for CIBR. In total, global thematic ETFs have seen over $7.2 billion in net outflows over the past year.
Commodities & Yields: Currently, the U.S. 2-Year Treasury Yield stood at 5.122% and the U.S. 10-Year Treasury Yield stood at 4.505%. U.S. Aggregate Bonds (AGG) rose 42 bps, 20+ Year Treasury Bonds (TLT) gained 35 bps, and the U.S. Dollar (UUP) advanced 24 bps on Friday. Broad Commodities (DJP, +31 bps) finished higher with help from Natural Gas (UNG, +1.21%) and Industrial Metals (DBB, +1.03%).
Daily Note
9.22.2023
Equities: U.S. equity markets are heading for a losing week following another day of losses on Thursday. The Dow Jones Industrial Average (DIA) dropped 1.09%, the S&P 500 (SPY) declined 1.65%, and the NASDAQ 100 (QQQ) fell 1.83%. This will be the third consecutive week of negative performance for SPY and QQQ as bond yields have jumped on the recent Fed meeting. Despite nearing oversold territories for the major averages, all three still remain within 8% of their 52-week highs.
All U.S. factor strategies were also down on Thursday with some protection coming from S&P 500 Enhanced Value (SPVU, -0.85%). S&P 500 Momentum (SPMO) fell nearly 2% while S&P 500 Dividend (SPYD), S&P 500 Growth (SPYG), and S&P 500 Quality (SPHQ) all fell more than 150 basis points. Emerging Markets (EEM, -1.73% bps) were dragged lower by Brazil (EWZ, -3.38%) and Taiwan (EWT, -2.01%). Developed ex-U.S. Markets (EFA) fell 1.66% with the largest losses coming from Australia (EWA, -3.17%).
Sectors: All sectors were down yesterday with defensives once again providing leadership. Health Care (XLV) dropped 87bps, Utilities (XLU) fell 1.05%, and Consumer Staples (XLP) declined 1.29%. On the flip side, Real Estate (XLRE) dropped 3.47% while Consumer Discretionary (XLY) fell 2.73%. All industries were also in the red. The lone sector & industry ETF in the green yesterday was the iShares U.S. Healthcare Providers ETF (IHF) which rose 38bps. From a flows perspective over the past week, we have seen positive net inflows into Consumer Discretionary (+$263MM), Consumer Staples (+$232MM), and Energy (+$573MM).
Themes: Global themes was a sea of red on Thursday as risk assets sold off. The best performing segment was Biotech (SBIO) which fell 55 bps, followed by Cyber Security (HACK -1.12%), and 3D Printing (PRNT -1.27%). Cannabis (MJ) continued its recent fall yesterday, dropping another 5.87%. MJ is now down over 15% this week alone but remains up 25% over the past month. No global thematic ETFs remain in oversold territory after the recent sell-off but a number now sit in oversold territory and could be poised for a bounce. This includes ETFs Pet Care (PAWZ), Telemedicine (EDOC), Robotics (ROBO, BOTZ), Genomics (GNOM), and many more.
Commodities & Yields: Broad Commodities (DJP) decreased 73 bps on Thusday with natural gas (UNG) dropping 2.50%. Both Brent (BNO) and WTI crude oil (USO) were up slightly as energy prices continue to creep up. As the treasury yield steepened yesterday, the U.S. Dollar (UUP) advanced 7 bps, U.S. Aggregate Bonds (AGG) dipped 68 bps, and 20+ Year Treasury Bonds (TLT) declined 2.57 bps. Currently, the U.S. 2-Year Treasury Yield stood at 5.114% and the U.S. 10-Year Treasury Yield stood at 4.462%.
Daily Note
9.21.2023
Equities: U.S. markets declined on Wednesday as the Fed kept their target rate the same at 5-5.25% but indicated that there may be yet another hike before the end of the year. Their dot plot also indicated that rates may stay higher for longer, with two fewer cuts projected in 2024 than at the previous FOMC meeting. The NASDAQ 100 (QQQ) and the S&P 500 (SPY) slid 1.44% and 0.92%, respectively, while the Dow Jones Industrial Average (DIA) dipped a modest 22 bps. Small-Caps (IJR) and Mid-Caps (IJH) were also down over 50 bps on the day.
S&P 500 Low Volatility (SPLV, +31 bps) led U.S. factor strategies yesterday while most others were in the red. S&P 500 Growth (SPYG) and S&P 500 High Beta (SPHB) underperformed, each sinking around 1.10%. S&P 500 Value (SPYV -0.77%) and S&P 500 Momentum (SPMO -0.94%) didn't fare much better. Developed ex-U.S. Markets (EFA) slipped 24 bps on Wednesday as Japan (EWJ) declined 1.34% and South Korea (EWY) fell 70 bps. Emerging Markets (EEM) dipped just 41 bps with Thailand (THD) declining 1.50% and China (MCHI) decreasing 74 bps. From a region perspective, we have seen Europe (IEUR) outperform Asia Pacific (IPAC,EEMA) by about a 1% this week.
Sectors: U.S. sectors were mostly in the red again on Wednesday with defensive sectors providing leadership. Consumer Staples (XLP +10bps), Utilities (XLU +9bps), and Health Care (XLV +1bp) were the only sectors to finish higher. Tech lagged (XLK -1.57%), followed by Communication Services (XLC -1.36%) and Materials (XLB -1.05%). Despite the losses we have seen over the past few days, 9 of 11 sectors are still within 10% of their 52-week highs. Real Estate (XLRE) and Utilities (XLU) are the only two that are not. From a technical perspective, several ETFs in health care industries are oversold and could be due for a near-term bounce. Tickers include (XHS, PSCH, XHE, XBI, PTH).
Themes: WGlobal themes were mostly negative on Wednesday with just a few groups finishing higher. Wind (FAN, +24 bps), Cyber Security (HACK +19bps), Digital Infrastructure (SRVR +14bps), and Smart Infrastructure (GRID +4bps) were the lone global thematic segments to register positive returns yesterday. Meanwhile, Biotech (SBIO) decreased more than 2% while NextGen Transportation (DRIV), Disruptive Tech (ARKW), and Genomics (ARKG) all finished 1.75% or lower. Amid the poor performance for global themes this week, flows have been negative for all segments totalling $305 million in net outflows.
Commodities & Yields: As the yield curve flattened yesterday, the U.S. Dollar (UUP) added 17 bps, U.S. Aggregate Bonds (AGG) decreased 5 bps, and 20+ Year Treasury Bonds (TLT) rose 31 bps yesterday. Currently, the U.S. 2-Year Treasury Yield stands at 5.180% and the U.S. 10-Year Treasury Yield stood at 4.484%. Broad Commodities (DJP) dropped 85 bps as Energy (DBE) fell 1.61% and Agriculture (DBA) dropped 0.27%. Natural Gas (UNG) was down 3.41% and Oil (USO) declined 1.67%.
Daily Note
9.20.2023
Equities: U.S. markets finished lower on Tuesday as investors await the conclusion of the Federal Open Market Committee and whether the Fed will keep their key target rate the same. After finishing nearly flat on Monday, the NASDAQ 100 (QQQ) declined 0.21%. The S&P 500 (SPY) fell 21 bps and the Dow Jones Industrial Average (DIA) dipped 31 bps while Small-Caps (IJR -0.21%) and Mid-Caps (IJH -0.16% ) saw similar movements. Instacart opened 40% higher than its IPO price on Tuesday but ultimately closed at $33.70, 12% above IPO price. All eyes will be on the Fed on Wednesday as markets are they are largely expected to keep rates the same. There is a 99% chance that the Federal Reserve will not hike interest rates according to the CME FedWacth Tool. More importantly, markets will be keenly listening to guidance on if there are any other rate hikes coming and how long rates will remain elevated.
Growth-oriented pockets of the markets slightly underperformed on Tuesday with S&P 500 Growth (SPYG) sinking 21 bps. S&P 500 High Beta (SPHB, -29 bps) and S&P 500 Quality (SPHQ, -19 bps) were also weak while S&P 500 Enhanced Value (SPVU) finished just 2 basis points lower. Developed ex-U.S. Markets (EFA, +8 bps) were lifted by Japan (EWJ +0.49%) and France (EWQ, +27 bps). Emerging Markets (EEM) dipped 59 bps as Thailand (THD) decreased 1.76% and Taiwan (EWT) advanced 0.94%.
Sectors: Sectors were mostly lower on Tuesday as Health Care (XLV) rose 8 basis points and Energy (XLE) dropped 0.93%. Oil & Gas Exploration & Production (XOP) and Oil & Gas Equipment & Services (XES) both fell by more than 1%, dragging XLE. The only other sectors to advance on Tuesday was Communication Services (XLC) which rose by only 7 basis points. The top performing sector ETFs on the day were the Invesco KBW Property & Casualty Insurance ETF (KBWP +0.79%) and the Alerian MLP ETF (AMLP +0.74%).
Themes: Most global thematic segments saw negative returns again on Tuesday with large losses coming from the Cannabis sector (again). Cannabis (MJ) sank 5.71% but remains up nearly 30% over the past month. MJ no longer sits in overbought territory. Only a handful global thematic ETFs made gains yesterday with top performances coming from Solar (TAN +0.66%), Clean Energy (CTEC, ICLN, PBD, CNRG), and Space (UFO +0.45%). Important to note that we are seeing several Biotech and Genomic ETFs now sitting in oversold territory and could be due for a short-term reversal. Some of these tickers include HTEC, ARKG, and GNOM.
Commodities & Yields: U.S. Aggregate Bonds (AGG) dipped by 29 bps, 20+ Year Treasury Bonds (TLT) fell 74 bps, and the U.S. Dollar (UUP) added 7 bps on Tuesday. Currently, the U.S. 2-Year Treasury Yield stood at 5.056% and the U.S. 10-Year Treasury Yield stood at 4.329%. Broad Commodities (DJP) gained 6 bps with Energy (DBE) climbing 0.04% and Precious Metals (DBP) dropping 12 bps. Natural Gas (UNG) jumped 1.15%, WTI Crude Oil (USO) gained 0.06%, and Gold (GLD) declined 9 bps.
Daily Note
9.19.2023
Equities: Markets finished slightly higher on Monday ahead of the the Federal Reserve's two day session that will conclude on Wednesday. Most are expecting the Fed to keep rates steady at this month's meeting, with the current target range remaining at 5.25 - 5.50%. Yesterday, the NASDAQ 100 (QQQ) rose 0.10%, the S&P 500 (SPY) gained 0.06%, and the Dow Jones Industrial Average (DIA) finished flat.
U.S. factors were mixed yesterday with Quality (SPHQ +0.41%) and Growth (SPYG +0.19%) outperforming Value (SPYV - 0.07%) and High Beta (SPHB -0.53%). Longer term perspective we have seen Growth really outperform year-to-date relative to its Value counterpart. SPYG is currently leading SPYV by more than 10% YTD. Emerging Markets (EEM) slipped 13 bps on Monday due to losses in South Africa (EZA) and Thailand (THD). Developed ex-U.S. lagged EM by 22 basis points as losses in France (EWQ), Swizerland (EWL), and Germany (EWG) outweighed gains in Japan (EWJ) and South Korea (EWY).
Sectors: Sectors were split on Monday with leadership coming from Tech (XLK +48 bps) and Financials (XLF +27 bps). On the flip side, the largest laggards came from Consumer Discretionary (XLY -1.09%) and Materials (XLB -41 bps). From an industry perspective, Insurance (KIE +75 bps) and Oil & Gas Services (XES +31bps) were the best performing while Regional Banking (KRE -1.89%) and Retail (XRT -1.59%) lagged.
Themes: It was a tough day for global themes on Monday as all categories were in the red. Cannabis (MJ) lagged all categories finishing down 4.55%. This was followed by other Cannabis ETFs (YOLO, MJUS) and Solar (TAN) which dropped for the second consecutive day, down 3.00%. However, it wasn't all bad as some names were able to finish higher. The ARK Space Exploration & Innovation ETF (ARKX) closed 64 basis points higher followed by the Global X Robotics & Artificial Intelligence ETF (BOTZ +35 bps). While oftentimes we see the global thematic category trade together directionally, there are still clear distinctions between different segments within the composite. Using the ETF Action Classification system, you can see these category differences (or email our team to find out more at team@etfaction.com).
Commodities & Yields: The U.S. Aggregate (AGG) was able to close higher on Monday by 15 bps as long-term bonds (TLT) outpaced short-term (SHY). Currently the 10-year treasury yield is sitting at 4.35% ahead of the Fed meeting beginning today. While the market largely expects rates to remain steady this week, language from the meeting or during Jerome Powell's speech could send the 10-year moving in either direction.