Market Commentary — June 6, 2022

I have just returned from the InsideETFs WealthManagement EDGE conference with a wealth of information, and my first cold since InsideETFs 2019. I passed 3 at-home tests and am almost 100% at this point, so yes, just a cold thankfully.

Stocks retreated from the previous week’s rally, as investors continue to question the Fed’s ability to rein in inflation without causing a recession. Elon Musk’s email to fellow executives that Tesla might have to lay off 10% of its workforce—and that he had a “super bad feeling” about the global economy—didn’t help market sentiment, nor did he gain favor with his remote work comments saying it is “no longer acceptable” and “pretend to work somewhere else”.

Elon, as I write this on a Saturday morning from my home office, I get that I cannot build EVs in my garage, but your comments are out of touch with the new workplace reality. Office workers are pushing back on return-to-office mandates. At the same time, Starbucks baristas and Apple retail workers are leading successful unionization drives. And hourly workers have made significant wage gains in the face of labor shortages. The future of work has changed.

Key topics at the InsideETFs WealthManagement EDGE conference were crypto investing, ESG, inflation, the continued rise of ETFs, and the “death of 60/40”. Finally, as a tribute to the power of celebrity, the most packed session by far was former Giant quarterback Eli Manning and his father Archie. They were great by the way!

In ETF news, Vanderbilt Professor Robert Whaley, the creator of the VIX, wrote a letter to the SEC backing Grayscale’s bid to convert GBTC into the first spot bitcoin ETF. The gloves are off in the ESG world, as regulators are implementing ESG name-test rules and sanctioning players like BNY Mellon $1.5 million for misleading investors. There was also plenty of talk at the conference about Tesla’s exclusion from the S&P 500 ESG Index, while companies like Exxon Mobil remain. I wonder if S&P Dow Jones felt vindicated by Elon’s workplace comments?

There has been a definite shift in investor sentiment from how great is ESG to how good are most ESG products? And ETFs like the BAD ETF (BAD) and Constrained Capital ESG Orphans ETF (ORFN) are gaining momentum on that negative backlash. My takeaway is that this skepticism is actually very healthy, helping distinguish innovative and thoughtful ESG ETF products like the Adasina Social Justice ETF (JSTC) and EngineNo. 1’s Transform 500 ETF (VOTE) from the rest of the pack. It should be noted that our firm supports the indexes behind BAD and JSTC.

Jane Edmondson
CEO and Co-Founder

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