Market Commentary — October 17, 2022

As third-quarter earnings season gets underway, markets were mostly lower last week as investors digested the latest inflation data and its implications for Fed policy. Defensive sectors like healthcare and consumer staples outperformed, while consumer discretionary and communication services lagged, dragged down by names like Amazon, Meta, and Tesla.

Even amid corporate earnings season, markets remain macro-economic focused, especially on inflation and jobs data. Last week, the Labor Department reported that producer prices (PPI) rose 0.4% in September, double the consensus expectations of a 0.2% increase. Year-over-year, prices rose 8.5%, slightly above expectations but still a third straight monthly decline and well below March’s peak of 11.7%.

Thursday’s CPI inflation data also came in above expectations, with core consumer prices rising 6.6% on a YOY basis. This level was above the previous March peak and the fastest pace in four decades. But looking at the core component increases, shelter was the main culprit, rising 0.7% in September, accounting for 40% of the increase in core CPI. Could it be, higher mortgage rates are to blame here, or the screwy way the government calculates housing inflation using owner-equivalent rents?

The two-year Treasury Note hit 4.5% last week, its highest level since 2007, with the ten-year moving above 4%. The Fed is playing with interest rate fire to “cure” inflation, and the economic consequences could be dire.

In ETF land, Cathie Wood’s flagship ETF ARKK, closed at a 5-year low, suffering a 78% decline over last year’s high. Jim Cramer is not very happy about the inverse ETF targeting his stock picks. Digital asset fund manager Valkyrie Funds is closing and delisting its Valkyrie Balance Sheet Opportunities ETF (VBB), which offers exposure to Bitcoin. Grayscale slammed the SEC for not applying its standards evenly to spot Bitcoin ETFs and Bitcoin futures-based ETFs.

And investors are flocking to Managed Futures ETF strategies to combat market volatility and drawdowns. The largest of these funds, the iMGP DBi Managed Futures Strategy ETF (DBMF), is approaching $1 billion in AUM and is up 34% YTD. Another newer fund in the category, the KFA Mount Lucas Index Strategy (KMLM) is up more than 50%.

Managed Futures are a collection of liquid, transparent hedge fund strategies which focus on exchange-traded futures, forwards, options, and foreign exchange markets. These funds are benched to CTA, which tracks the performance of commodity trading advisors and they fall in the alternatives bucket.

Have a great week ahead everyone!

Jane Edmondson
CEO and Co-Founder

Share this Market Commentary


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.


The information provided on this page is for illustrative purposes only and is not intended to serve as investment advice. The information provided is as of particular time and subject to change at any time without notice.

It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments based on that index. EQM Indexes does not sponsor, endorse, sell, promote or manage any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. EQM Indexes Indices makes no assurance that investment products based on the Index will accurately track index performance or provide positive investment returns. EQM Indexes is not an investment advisor, and makes no representation regarding the advisability of investing in any such investment fund or other investment vehicle. A decision to invest in any such investment fund or other investment vehicle should not be made in reliance on any of the statements set forth in this article. Prospective investors are advised to make an investment in any such fund or other vehicle only after carefully considering the risks associated with investing in such funds, as detailed in an offering memorandum or similar document that is prepared by or on behalf of the issuer of the investment fund or other vehicle. Inclusion of a security within an index is not a recommendation by EQM Indexes to buy, sell, or hold such security, nor is it considered to be investment advice.