Market Commentary — June 1, 2021
Stocks posted solid gains last week, revisiting previous high levels. Tech stocks and small caps were the strongest performers, and growth handily outpaced value as the market’s risk appetite has once again ramped up.
Weekly jobless claims fell more than consensus to a pandemic low of 406,000. On the downside, some regional manufacturing gauges came in lower than expected. And negotiations on a new round of infrastructure spending remain ongoing with Republicans proposing a $928 billion counter to Biden’s $1.7 trillion bill.
There is some evidence that consumers are postponing purchases in response to rising prices, lending credence to the Fed’s position that inflation is a temporary side-effect of supply chain pressures and pent-up demand.
The yield on the 10-year bond is now below 1.6% on Fed assurances, and bond investors appear to be favoring Corporates over government debt.
Some interesting tidbits in ETF land, as BlackRock’s $16 billion iShares MSCI USA Momentum Factor ETF (MTUM) rebalanced and saw an astounding 68% shift of its portfolio into value names, because of course value stocks trade on momentum. Yikes!
WisdomTree filed an application with the SEC for an Ethereum ETF, becoming the second to do so after VanEck.
And Defiance launched its Next Gen Altered Experience ETF (PSY) offering investors exposure to the “next generation of medicine” which apparently includes psychedelics. It tracks the BITA Medical Psychedelics, Cannabis and Ketamine Index. Despite poor performance, Horizon’s Canadian ETF version (PSYK) has attracted more than $50 million in new assets since its January launch. Trippy.
Hope everyone enjoyed the Memorial Day Weekend as we kick off the official start to summer. With at least 62% of American’s having received at least one vaccine dose, a 70% vaccination rate now appears within reach.
CEO and Co-Founder