Market Commentary — August 29, 2022
Stocks sold off last week on rate worries thanks to the hawkish tone coming out of the Kansas City Fed’s annual conference in Jackson Hole, Wyoming. Further spooking markets were Jerome Powell’s hawkish comments paired with weak economic data. Much of the week’s economic data surprised on the downside, providing evidence that growth had slowed considerably in recent weeks in response to previous Fed tightening. Once again, investors are questioning, will the Fed be able to tame inflation without causing a recession?
On Tuesday, S&P’s composite gauge of service and manufacturing activity fell further into contraction territory, hitting its lowest level since early 2020. Sales of new homes in July fell for the sixth month in a row, at the slowest pace since early 2016. And both personal income and spending rose well below consensus expectations (0.2% versus 0.6% and 0.1% versus 0.4%). On the positive, the University of Michigan’s index of consumer sentiment rose more than expected, hitting 58.2 in August, rebounding from June’s record low of 50.
Technology and other high-growth stock sold off the hardest last week. The Nasdaq Composite Index fell to its lowest level in a month. Rising oil prices sparked renewed inflation worries, but boosted energy stocks. All in all, volume was pretty light last week given all the Wall Street vacationing.
What’s new in ETF land?
Well, the most exciting news from our perspective is the launch of NDIV, the Amplify Natural Resources Dividend Income ETF, which is expected to pay a monthly dividend in excess of 9%. And given the dividend is tied to inflation and energy transition, commodity supercycle induced monster cash flows, which is one of the highest ETF dividend yields out there without options or leverage. (And it’s our index!).
The SEC has delayed VanEck’s third spot Bitcoin ETF application.
Innovator launched a hedged Tesla strategy (TSLH), giving investors hedged exposure to Tesla’s performance in the form of a downside buffer and capped upside return.
After a slow first half for ETF launches, thanks to a flurry of single stock and single bond ETF filings, 2022 has edged out last year once again. There have been 259 launches so far this year, versus 257 by the same time last year, according to ETF.com.
Next week is the last week of summer. Hope you get out there and enjoy it!
CEO and Co-Founder