- US Stock Market Outlook: Tariffs Are 2025’s Wildcard “Many companies that import a significant amount of their products, such as Best Buy, could see their margins compress, as we expect they would be unable to quickly pass through all of the added costs to their customers. Looking forward, we expect there will be a wide range of valuation outcomes from relatively little to a lot, depending on the amount of margin compression and how long that compression will last.” (Morningstar)
- Managers rush to file for ‘risk-averse’ crypto ETFs “Risk-averse investing in cryptocurrency might sound like a contradiction in terms, but a tranche of US exchange trade fund providers have plans to let investors try to do just that. A quartet of asset managers have filed with US regulators to create ETFs that invest in bitcoin, but use derivatives to minimise or completely protect against potential losses.” (Financial Times)
- Most ‘passive’ ETFs should be re-labelled ‘active’ “Research-enhanced ETFs are active in the sense that they attempt to beat a conventional benchmark with the use of IP unavailable to anyone else, but their returns will bear much closer resemblance to a conventional benchmark than any ‘passive’ product tracking a wacky index. Of course, that IP could instead be used to construct an index then trackable by a 'passive' ETF.” (ETF Stream)
- Why are ESG-oriented ETFs going away? “The ESG backlash has also prompted some fund managers to rename ETFs to avoid running afoul of the SEC's name change rule, which could land them in hot water if terms like ‘ESG’ or ‘sustainable’ are determined to be misleading.” (FOXBusiness)
- Hedge Funds Turn to Risky Options Play amid Market Turmoil “The draw to over-the-counter binary contracts is that they allow investors to hedge against tail risks – the chance of losses stemming from rare events – that span multiple assets. The over-the-counter trades involving multiple counterparties make it hard to gauge the size of this market, but the premium shelled out this year is estimated to range from several hundred million to a billion dollars.” (FundFire)
- Mounting risks in a $14 trillion corner of financial markets are a threat to economic stability, research firm says “Private markets have ballooned in size in recent years and are brimming with hidden risks, Rosenberg Research said this week. The risks cropping up in private markets, coupled with a growing equity bubble, threaten the broader financial system, the firm's vice president and senior economist, Dylan Smith, wrote in a note.” (Business Insider)
- ETFs Attracted $118B of Inflows in November “An incredible $117.7 billion flowed into U.S.-listed exchange-traded funds during the month of November, pushing year-to-date inflows up to $930 billion. With one month left in the year, annual inflows for 2024 are on track to easily top 2021’s previous calendar-year record of $900 billion and potentially surpass the $1 trillion mark.” (ETF.com)
- REIT Sector Implied Cap Rates Have Risen More than Private Commercial Real Estate Cap Rates “Over the past few years, we have observed an inverse relationship between share prices in the REIT sector and interest-rate movements. We believe a major reason is that all commercial real estate valuations are connected to interest rates.” (Morningstar)
- Qualified Opportunity Zone Investment Surges in Q3, Nearing $40 Billion Milestone “Qualified opportunity zone funds tracked by Novogradac – a certified public accounting, valuation, and consulting organization – reported a significant surge in investment during the third quarter of 2024. The funds raised $1.24 billion in additional capital, bringing the total investment since the inception of the opportunity zones incentive to $39.54 billion.” (The DI Wire)
- Bitcoin Euphoria Threatens to Break These ETFs “The funds, from asset managers Tuttle Capital Management and Defiance ETFs, are inherently risky. MicroStrategy itself is a leveraged bet on bitcoin, holding some $35 billion of the cryptocurrency. But bullish investors have swelled its market value to almost $90 billion, or more than twice the value of the bitcoin it holds. Skeptics say this is unsustainable.” (The Wall Street Journal)
- Trump Wins, Fed Cuts, Market Rips, Now What? “Given the uncertainty around both fiscal policy implementation and the path of monetary policy, our strategy will be to stay vigilant, avoid chasing short-term market trends, and focus on the longer-term economic trajectory.” (VettaFi)
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