FINSUM + Magnifi: Biden Just Let Trump’s Fiduciary Rule Go Into Effect
(February 2021)
In what comes as a surprise to the entire industry, President Biden’s administration has just let the Trump-era version of the Fiduciary Rule go into effect. Almost everyone in wealth management thought Biden would surely use his administration’s powers to stop the rule’s enactment, but they elected to let it go into effect as of this Tuesday, accompanying the announcement with positive and supportive language. The industry’s reaction was immediate and positive, while consumer advocates were disappointed as they were hoping for a more stringent rule from the Democratic administration.
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FINSUM + Magnifi: Income Investors Get No Help from High Yield Bonds
(February 2021)
Two junk bond indices, Bloomberg Barclays U.S. Corporate High Yield Index and ICE BofA US High Index Yield, hit record lows both dipping to about 4%. The early stages of the pandemic were good for returns in the junk bond market, benefitting from similar bullishness in the broader stock market. The Fed’s has increased access to liquidity and with this made it easier for lower tiers of corporate bonds to access funds. Low returns in the junk bond market have pushed cautious investors into relatively appealing treasuries and riskier investors into innovative strategies. Even riskier floating rate bonds, mortgage real-estate investment trusts, and collateralized loan obligations are catching the eye of investors looking to earn a higher return.
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FINSUM + Magnifi: Surging Muni Demand Threatens Returns
(February 2021)
Municipal bond market returns remain low, but nonetheless investors seem willing to keep demanding low yield munis. This rise in demand has pushed the 10-year muni-treasury spread to -50 basis points. This comes after last March when muni’s were not only higher than the 10-year treasury but 300% of the 10-year t-bill. Part of what is driving the municipal bond market so low is a $12.5 billion dollar influx in muni mutual funds in January alone. The supply side of the market is also affecting rates as issuance slowed in the market. Munis usually provide tax relief for many investors but members of BlackRock’s municipal group said the share of taxable muni’s “remained elevated” at 29%. The group also expects these trends to continue in this segment of the bond market.
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FINSUM + Magnifi: This is the Best S&P 500 “Buy” Sign Since Before the Pandemic
(February 2021)
January and early February offered some rough times for investors. The two-week meme stock debacle had most investors’ hearts skip a beat and fear the entire market was in a bubble. However, applying some cold, rational logic to market movements yields a very nice picture. The reality is that VIX Index, Wall Street’s so-called fear gauge, just fell below 20. To put that in perspective, it is the first time that has happened since February 2020 (yes, BEFORE the pandemic). This means fear is leaving the market and could set the stage for more buying. According to one Wall Street strategist, “This is a positive divergence. Stocks churning but VIX falling. This suggests that ‘fear’ is receding from the market”.Read more
FINSUM + Magnifi: Why the Pandemic is a Big Boost to Robotics ETFs
(February 2021)
If you were to design a tailwind for the robotics sector, what would it look like. Perhaps a pandemic that causes social distancing and makes it unsafe for too many humans to congregate in one place, such as a manufacturing facility. It is from this lens that advisors would be wise to view robotics. Remember that robotics is not limited to physical machines, but also artificial intelligence, which means the huge surge in digital communications/computing that has occurred alongside the pandemic doubly boosts this sector. One great ETF to check out is the Global X Robotics & Artificial Intelligence ETF (BOTZ). The fund provides exposure to companies formally involved in robotics, but also artificial intelligence, including businesses involved with industrial robotics, automation, non-industrial robots, and autonomous vehicles.
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FINSUM + Magnifi: Why eSports ETFs May Be a Good Buy
(February 2021)
Thematic ETFs have been one of the market’s bright spots over the last couple of years. For evidence of this, look no further than ARK etfs, who has seen their AUM rise 1000% on huge inflows driven by the success of the holdings in their ETFs. So what might be the next big area? ESports is a good place to take a look. While the average advisor might not play too many videogames, eSports is a fast growing and hugely popular area for the Millennial and Gen Z generations. Take a look at Global X’s Video Games and Esports ETF (ticker: HERO), which invests in companies in the eSports space, ranging from video game production companies to businesses which facilitate the streaming of eSports play/competition.Read more
FINSUM + Magnifi: “Raging” Rally is Starting says Morgan Stanley
(February 2021)
According to both Morgan Stanley and Goldman Sachs, last week’s retail-driven chaos was nothing but a blip on the bull market radar. After a significant pullback last week (perhaps more significant psychologically than in pure price action), Morgan Stanley says a “raging” rally is starting. Like Goldman Sachs, who is now calling for a 16% gain in the S&P 500 this year, Morgan Stanley thinks the market is going to continue on a strong upward trend. The banks contend that the underlying economy has a lot of upside and thus markets are going to have a nice economic and earnings tailwind behind them.
Source: fnlondon.com
FINSUM + Magnifi: The Best ETFs for Buying Into the Ecommerce Surge
(January 2021)
One year ago you could have easily said that brick and mortar retail was effectively dead, or at least had a very bleak future as ecommerce was taking market share quarter after quarter. Taking a look around today, it is hard to imagine ecommerce could have stronger demand behind it. Understanding that, it seems like it might be a great time to buy into ecommerce, as demand for online shopping seems likely to continue for the foreseeable future (including after the pandemic). Many ecommerce ETFs had a great year in 2020 and there are numerous interesting takes on the how to invest in the sector. Some ETFs to check out include the ProShares Long Online/Short Stores ETF (CLIX), Amplify’s Online Retail ETF (IBUY), and the Global X E-commerce ETF (EBIZ).
Source: CNBC
FINSUM + Magnifi: Why it is a Good Time to Buy into Cloud Computing
(January 2021)
If you dig under the handful of headlines that have driven financial media during the pandemic, you will find a sub-narrative that is just as potent and more specific. That narrative has to do with cloud computing. For anyone that has been paying attention, cloud computing has experienced massive growth during the pandemic, as the second wave of digitalization ushered in by COVID has pushed cloud computing capacity ever higher for tech companies. Much of the headlines around this center on cloud computing leader Amazon, whose web services division help powered the hyperbolic growth Zoom was able to achieve during the pandemic, for example.
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FINSUM + Magnifi: Putnam Warns Fresh Stimulus is a Major Risk to Markets
(January 2021)
Despite all fears, markets had a fairly strong year in 2020. Why? The answer is pretty clear. Other than some general optimism about how large cap tech would perform during the pandemic, the real savior was huge government stimulus which infused massive amounts of cash into the economy and kept the US out of its worst recession since WWII. Fast forward to January 2021 and we have another major stimulus package on the horizon being pushed by Biden and the Democrats. While many investors might be elated at the prospect, Putnam Investments is warning investors that this could be a death knell for the market. The reason why is that a major new stimulus package would give the market a “sugar high” and potentially cause a melt-up that inflicts serious pain soon thereafter.
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