Market Commentary — January 30, 2023

Stocks resumed their winning streak last week, as investors embraced the potential for a “soft landing” scenario. Consumer Discretionary stocks were particularly strong, thanks in part to a big jump in Tesla shares, up 33% for the week, after reporting record revenues and a favorable outlook from Elon Musk.

All the major market averages finished higher for the week, with the Nasdaq Composite climbing 4.3% to rack up a fourth straight week of gains, while the S&P 500 gained 2.4% and the Dow Jones average ended up 1.8%.

Further helping market sentiment was a WSJ article last weekend from Nick Timiraos, the so-called “Fed Whisperer” who reported comments from Fed governor Christopher Waller, previously a Fed hawk, that there was “ample evidence” of slowing demand and said that he would support a quarter-point rate increase at the Fed’s next two-day policy meeting concluding February 1. Treasury Secretary Janet Yellen also came out and said she was encouraged that falling energy and easing supply chain bottlenecks were helping cool global inflation.

Friday, the Fed’s preferred inflation gauge, Core (less food and energy) personal consumption expenditures (PCE) price index for December came in at 4.4%, which was in line with expectations. GDP also came in at 2.9% for the 4th quarter, boosting hopes for a “soft landing”.

On the corporate earnings front, tech names like Microsoft, IBM, and Intel reported weak results. But Wall Street brushed off disappointing outlooks from some of the world’s largest technology companies on speculation of smaller Federal Reserve hikes going forward as inflation shows signs of easing.

There were lots of news in ETF land last week as Invesco announced a “refinement” of their ETF line-up, resulting in the closure of 26 of their more than 240 ETFS by the end of the quarter. The full list of ETFs can be found here.

The SEC once again rejected ARK 21Shares Bitcoin ETF filing. No worries though as ARK’s flagship ETF ARKK is up 35.6% for the year.

In the first few weeks of the year, the Nobel Absolute Return ETF (NOPE) has distinguished itself as the worst-performing ETF YTD, excluding leveraged or inverse funds. The ETF, launched in September of 2022, has fallen 40+% so far this year. Maybe a ticker change to “OOPS” is in order for the active ETF? Sorry, that was just mean.

On the other end of the spectrum, similar to ARKK, many of the thematic ETFs associated with our indexes have rallied nicely this month, with BLOK (Blockchain) up 25.3%, IBUY (Online Retail) up 25.2%, BATT (Battery Tech & EVs) up 21.5%, and EMFQ (EM FinTech) + 20.9%.

The real thematic champions YTD are the many crypto-related ETFs, with Valkyrie’s Bitcoin Miners ETF up a whopping 73.6%. The ETF has only $2.5 million in assets, but the top performance could help!

And the first ETF, SPDR’s S&P 500 ETF SPY, celebrated its 30-year anniversary. Since then, SPY has accumulated $375 billion in assets. ETF pioneer attorney Kathleen Moriarity helped create the legal structure behind SPY, giving her the nickname the “Spyder Lady”. Sad that she was not around for its anniversary, as she would have loved being there. Miss her.

Jane Edmondson
CEO and Co-Founder

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