Source: skodonnell
Good morning,
Wow, what a day for economic data on Friday. Payrolls expanded by 353K, twice as much as economists expected. There was some peculiar data when you looked under the hood (i.e., a sharp decline in the workweek). We’ll leave that discussion for another day. Bottom line: This cycle will go down as the one that is stronger than anyone expected.
Astoria entered 2024 more constructive on stocks and credit than the prior two years (10 ETFs, A New Cycle Begins). We are vocal about investors rotating out of T bills into the capital markets. The headline of our interview with Schwab was “Say Sayonara To Those T-Bills.”
We talk about China infrequently, but it’s worth acknowledging how serious their deflation problem is. According to the BAML Fund Manager survey, shorting Chinese stocks is the second most crowded trade after owning the Mag 7 stocks. China continues to take steps to stimulate its economy. Per Barrons, local authorities are considering a $280 bln stimulus package.
I can’t help but think about the number of EM ex-China ETFs launched in recent years.
With all due respect to the ETF industry, launches tend to top-tick the market. Markets need stability in China for the international stock markets to outperform. It’s no coincidence that export-driven countries like Germany are starting to suffer with China’s deflation mounting.
Last week was a massive week of earnings, and on balance, the big tech stocks delivered, defying gravity once again. Recall that our vantage point was to use equal weight to complement the market cap-weighted strategies. We hope that is clear to our ecosphere by now; we also specifically mentioned this in our Barron’s interview last week.
A few things to highlight:
ETF Trends wrote a preview/interview for Astoria’s panel at next week’s Exchange conference.
- Remember, Frank Tedesco and I will be there from Sunday through Wednesday. We have a few extra tickets if you want to book a last-minute trip.
- Nick Cerbone issued our monthly commentary last week. In short, we made a case about whether the concept of artificial intelligence was in bubble territory.
I joined Chris Hempstead on Mirae Securities’ On the Vine Podcast this past week. We talked about the early days of the ETF industry. Fun fact: the intra-day NAV ticker wasn’t always SPYIV. Also, before EEM was launched, the trading desk I worked on put together a basket of futures, ADRs, and single-country ETFs to get broad EM exposure.
It seems hard to imagine as we enter the 3rd decade of the ETF industry!
Best,
John Davi
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