Market Commentary — July 25, 2022

Signs of a cooling economy and fading inflationary pressures boosted investor sentiment last week. Risk-on assets like small cap and tech outperformed, and consumer discretionary stocks rallied as well. Corporate earnings have proven to be more resilient than expected, with better than expected results from Netflix and Tesla. Snapchat proved to be an exception, due to lower advertising revenue.

The yield on the 10-year US Treasury traded as low as 2.73% last week, as investors are betting that the Fed will not need to be as aggressive as feared. Weekly jobless claims, reported Thursday, came in above expectations and hit their highest level (251,000) in nine months. And housing data generally disappointed, with housing starts and existing home sales missing consensus expectations.

Snap’s 35% plunge on Friday pulled down the returns of several Metaverse-themed ETFs. The Singapore Exchange announced it would team up with the NYSE for dual listings, including ETFs. And traders short-selling Energy appear to be closing out their positions, cutting the number of shares sold short by 14% over the past 30 days, according to data compiled by S3 Partners.

Even at $90 oil, energy companies are minting money and it is impossible to find any sector with higher free cash flows. This is the thesis behind our new EQM Natural Resources Dividend Income Index (NDIVITR) which will be launching at the beginning of August. The ETF tracking our Index is scheduled to launch in mid-August with an expected dividend yield of 8%, boosted by its dividend weighting scheme.

We think NDIVI Index is the perfect product for the times, generating high levels of inflation-proof income. That being said, we are also happy to see the rebound in some of our other thematic indexes such as Online Retail and Blockchain, which gained more than 7% and 10% respectively last week.

Moving into the last week of July. This summer is racing by!

Jane Edmondson
CEO and Co-Founder

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EQM Indexes LLC is a woman-owned firm dedicated to creating and supporting innovative indexes that track growth industries and emerging investment themes. Co-founded by Jane Edmondson, a former Institutional Portfolio Manager with more than 25 years in the investment industry.


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