Market Commentary — February 7, 2022

We are in the middle of earnings season, with 112 names in the S&P 500 reporting last week. Amid all the earnings news, the market recorded its second consecutive week of gains.

The week’s earnings offered a mixed bag, especially among high-profile names. Meta Platforms report of a decline in Facebook’s daily users and lower revenue growth guidance resulted in a record 26% decline in its stock price, erasing $230 billion of its market cap.

On the other hand, Amazon’s earnings beat expectations, helped by Web Services, but also posted some impressive online retail sales numbers. When you are Amazon and costs go up you can pass your costs along to others. Indeed, the company announced it would be raising the cost of Amazon Prime to $139 from $119 a year and it is still so worth it. Speaking of higher costs, energy shares rose as oil hit over $90 per barrel.

Employment numbers released this week also sent mixed signals to investors. On Wednesday, ADP reported its tally of private-sector employment fell by 301,000 in January—the biggest drop since the start of the pandemic. But Friday morning’s official Labor Department jobs report showed a surprising gain of 467,000 jobs in January—3X consensus expectations—despite the impact of Omicron. In addition, last months’ gains were revised significantly higher, with average hourly earnings jumping 0.7% for the biggest gain in 10 months.

The jump in payrolls sends bond yield to new highs. FYI – we continue to utilize interest rate hedged, zero duration, and inflation hedged bond ETFs in our models. Bank loans and floating rate funds have also helped with fixed income performance.

In ETF news, Grayscale’s conversion of GBTC to an ETF was once again delayed. Bitwise’s application was delayed, but not rejected so there may be some hope. And Global X is the latest ETF issuer to test out the Metaverse.

Have a great week heading into SuperBowl weekend.

Jane Edmondson
CEO and Co-Founder

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