Market Commentary — May 31, 2021

The S&P 500 and NASDAQ Composite fended off bear market territory and broke a streak of seven consecutive declines on evidence that inflationary pressures could be peaking.

The Purchasing Managers Index (PMI) declined to 57.5 in May, down from 59.2 in April (readings above 50 still indicated economic expansion), as strong orders were offset by higher input and output costs.

But the core personal consumption expenditures price index, which excludes food and energy, moderated to 4.9% from March’s 5.2% level. This is the Fed’s favorite inflation gauge. Evidence of slowing economic growth could signal that the Fed will not have to act as aggressively raising rates as feared to curb inflation.

While some say there is evidence that Fed moves and higher prices have already resulted in “demand destruction”, strong consumer spending in areas such as retail and travel suggests that demand has just been “reallocated” to other spending categories.

The big news in ETF land is the SEC’s unveiling of a new naming rule to prevent misleading claims and enhance disclosure for ESG funds to prevent “greenwashing”. One River’s proposal for a carbon-neutral Bitcoin ETF was shot down. And Cathie Wood’s ARK and 21Shares have refiled their spot Bitcoin ETF.

Hope everyone had a great Memorial Day weekend and I hope to see some of you at InsideETFs WealthManagement EDGE this week at the Diplomat Beach Resort in Hollywood, Florida. I will be a panelist discussing:

“How to Create Value Through ESG Investing”
Inside ETFS-Track B
Wednesday, 1 June 2022 2:10pm – 2:50pm
with Moderator Deborah Fuhr, Founder of ETFGI and ETF TV and
Yasmin Dahya Bilger, Head of ETFS, Engine No. 1.

Jane Edmondson
CEO and Co-Founder

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