This year has been favorable for small-cap stocks. As we reach mid-February, year-to-date performance continues to show a significant advantage for smaller stocks in the US equity market, as evidenced by various exchange-traded funds through the close of trading on February 10.
* President Biden raised ‘core concerns’ with China’s President Xi.
* Democrats pressed charges against Trump during the second day of his Senate impeachment trial.
* Biden approved sanctions on Myanmar’s military leaders following a coup.
* Biden’s team indicated that the US may not achieve herd immunity until Thanksgiving at the earliest.
* Fed Chair Powell reaffirmed the central bank’s commitment to maintaining ultra-low interest rates.
* A value manager utilized behavioral bias analytics to navigate the challenges of the value drought.
* A report highlights that the rise of green energy could impose difficulties on oil-producing nations.
* Marking the end of an era, Shell announced that its oil output will decline in the coming years.
* An analyst predicted that inflation is not a short-term concern.
* In January, the one-year trend for US consumer inflation remained modest:
In this edition:
- iShares MSCI Turkey (TUR) takes flight
- US Natural Gas (UNG) – the one exception to the commodities rally
- Invesco Solar (TAN) continues to perform impressively
Programming note: This begins a periodic update highlighting ETFs that have caught our editor’s attention in terms of trends. Unlike our broad portfolio strategy edition (see here, for example), Trend Watch will provide more granular and tactical insights. Here we will select funds that stand out among a comprehensive list of 146 ETFs encompassing various US stocks, bonds, commodities, REITs, foreign investments, foreign fixed income, and specialized industry groups. For a complete overview of the funds we’re monitoring, see the list below.
The conclusion of the pandemic’s acute phase, or something very close to it, will be marked by achieving herd immunity. This milestone will represent a significant turning point for both public health and the economy, which are closely interconnected in today’s world. This raises a vital question: When might we expect herd immunity to be achieved?
* The US Covid-19 surge shows signs of weakening, but it remains uncertain if this marks a turning point.
* The Senate voted to allow the impeachment trial of Trump to proceed.
* Senate Democrats are formulating plans to raise the federal minimum wage.
* Critics accuse the Fed of fueling speculative bubbles.
* Core consumer inflation in China declined for the first time in a decade.
* It is advised to invest in large-cap value stocks during crises in emerging markets, according to a study recommendation.
* US small business sentiment dipped to an eight-month low in January.
* US job openings increased slightly in December, but still fall significantly below pre-pandemic levels:
The implied inflation forecast from the Treasury market is on the rise; however, this reflationary trend stems from an increasing divergence between nominal and real (inflation-adjusted) Treasury yields. Understanding the reasons behind this divergence and considering its implications can take various routes. Regardless of the approach, the fundamental task begins with continuous monitoring of the data revealing this expanding gap.
* Democrats proposed an additional $1400 payment as part of the $1.9 trillion relief package.
* Senate leadership revealed the schedule for today’s Trump impeachment trial.
* US aircraft carrier groups carried out joint exercises in the South China Sea.
* A hacker tried to poison the water supply in a Florida city.
* The average yield on US junk bonds dropped below 4% for the first time ever.
* Italian government bond yields hit a record low as investor confidence in Draghi grows.
* Bitcoin surged to a record high following Tesla’s $1.5 billion purchase announcement.
* US crude oil benchmarks climbed for a sixth consecutive day, reaching nearly $58, the highest in a year:
Emerging market stocks have surged ahead, securing the top position for both one-week and one-year returns among major asset classes, according to a variety of exchange-traded funds up to Friday’s closing (February 5). Not only did emerging market equities outperform last week, but they have also widened their lead over US stocks, which currently occupy the second position for one-year returns.
* According to Biden, achieving herd immunity in the US is unlikely before the end of summer.
* Treasury Secretary Yellen suggested that the US could achieve full employment by 2022 with Biden’s stimulus plan.
* South Africa halted the use of AstraZeneca’s Covid-19 vaccine due to effectiveness concerns against new variants.
* In Myanmar, protesters defied the military and called for the reinstatement of their civilian leader.
* The Senate prepares for a quick impeachment trial of Trump.
* German industrial output remained stagnant in December amid the second wave of the coronavirus.
* Oil prices have recovered to levels seen before the pandemic began.
* US payrolls showed a weak rebound in January following a sharp downturn.
* The US 10-year Treasury yield rose to 1.19% last week, marking a one-year high:
The recent economic landscape has been quite dynamic, with several key developments influencing market trends. From the resurgence of small-cap stocks to geopolitical tensions, various factors are shaping the financial narrative. Keeping a close eye on these aspects will be essential for understanding potential future movements in the equity markets and broader economic conditions. Stay informed and engaged as the situation unfolds.
