Market Commentary — September 20, 2021

The S&P 500 notched its second straight week of losses in a September slump. Investors are processing mixed signals these days, with encouraging economic data being weighed against supply chain constraints, elevated valuations, and the prospect of Fed tapering. Energy shares moved higher on rising oil prices and strength in auto sales boosted Consumer Discretionary shares.

History is also not on the market’s side with the S&P 500 averaging a 0.4% decline for September, the worst of any month, according to the Stock Trader’s Almanac, and those September losses typically come in the back half of the month.

Higher corporate taxes have been proposed by Congress to fund infrastructure spending, raising the corporate tax rate to 26.5% from 21% and the top capital gains rate from 20% to 25%.

Inflation data came in more muted than expected, as core CPI increased only 0.1% in August versus consensus expectations of 0.3%. This was the smallest increase since February, driven by declines in airfares and used car prices. The data helped drive a rally in bonds, pushing yields lower as investors’ worries of imminent rate hikes were abated.

Among big news in ETF land, was a top Democrat proposal to eliminate a decades-old tax loophole that makes ETFs more tax efficient. Senate Finance Committee Chairman Ron Wyden’s proposal aims to tax ETFs’ use of “in-kind” transactions that currently avoid triggering capital gains taxes. The $5.4 trillion ETF industry is obviously not happy with the proposed change and will likely join forces to fight it.

The Wall Street Journal reports that Invesco and State Street might merge.

What is driving the recent melt-up in Uranium ETFs? Uranium prices are up 38% YTD, rejuvenated by the global demand for sources of alternative energy, Sprott’s buying spree (the firm’s physical uranium fund has boosted its stockpile by 45% in four weeks, potentially tightening the market and putting pressure on utilities and other consumers), and growing interest on Reddit’s WallStreetBets forum.

Finally, on Friday, the FDA endorsed Pfizer’s COVID-19 vaccine boosters for people 65 and older and high-risk groups. Those deemed at high risk are expected to include health care workers and people with certain health conditions. New data presented to the panel by Pfizer suggested protection against hospitalization waned 6% every 2 months, offering limited protection after 6 months, declining from 91% to 77%.

Lots of big news to digest. Have a great week!

Jane Edmondson
CEO and Co-Founder

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