U.S. Federal Reserve (Fed) Chair Jerome Powell stoked investor anxieties during the annual Jackson Hole symposium as he invoked former Fed Chair Paul Volcker’s relentless approach to fighting inflation while acknowledging that the process will carry “unfortunate costs” and “bring some pain to households and businesses.” Stocks and Treasuries both sank on the sobering comments. The BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index” or “Index”) fell 10.2% during the recent period between Index selection dates (August 14, 2022, to September 8, 2022, the “Period”), while the S&P 500 Index fell 4.6%. Yields on the 2–year note spiked with the rise in shorter–term rates leaving the spread between the 2–year and 10–year notes at negative twenty basis points, nearing the widest inversion since the fallout of the tech bubble of the late nineties and a signal to many of a growing consensus for a coming domestic recession.
The U.S. dollar’s July advance may have been foretelling of the volatility experienced across risk assets during August. The dollar continued its advance against a basket of currencies during the month, with the U.S. Dollar Index reaching its highest levels in twenty years. While the U.S. dollar continued to trade above parity with the euro, the Japanese yen tumbled to its weakest level since 1998 against the U.S. dollar, breaching the 140 level. The yen has been one of the worst–performing currencies relative to the dollar during 2022, as the Bank of Japan has been reluctant to raise domestic interest rates while the Fed pursues an aggressive rate hiking approach to contain soaring levels of inflation.
The BUZZ Index returned -3.58% during the month of August compared to a return of -4.08% for the S&P 500 Index during the same period. Year–to–date, the BUZZ Index trails the S&P 500 with returns of -38.64% and -16.14%, respectively, as of the end of August.
Shares of SNAP Inc. Lead within the BUZZ Index
Shares of SNAP Inc. (SNAP) led advancing stocks within the BUZZ Index during the period. Investors cheered an August 31, 2022, announcement from the company that detailed plans to reduce its headcount by 20% with chief executive and co–founder Evan Spiegel saying the changes would allow the company to focus on the “three strategic priorities” of community growth, revenue growth, and augmented reality. Investors also welcomed the announcement that the company would focus on growth in its core business lines, abandoning plans to develop a SNAP branded flying camera dubbed “Pixy,” as well as reduce investment in its games and Snap Originals short–form TV shows. A further tailwind lifting investor sentiment toward the popular messaging app came as Spiegel laid out ambitious growth plans in an internal memo to employees who targeted growth in its user base by 30% to 450 million and an increase in revenue to $6 billion by the end of 2023. Shares of SNAP remain 85% below their all–time high, recorded during Q3 2021.
| Top BUZZ Index Contributors: August 11, 2022 – September 8, 2022 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Snap Inc | SNAP | 2.66 | 0.12 |
| Enphase Energy Inc | ENPH | 1.1 | 0.10 |
| Plug Power Inc | PLUG | 1.57 | 0.07 |
| Pinterest Inc | PINS | 0.93 | 0.06 |
| General Motors Co | GM | 0.95 | 0.05 |
| Devon Energy Corp | DVN | 0.55 | 0.04 |
| Cisco Systems Inc | CSCO | 0.13 | 0.04 |
| Snowflake Inc | SNOW | 0.57 | 0.02 |
| Exxon Mobil Corp | XOM | 1.04 | 0.02 |
| Tesla Inc | TSLA | 3.23 | 0.02 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.
The top detractors to performance featured several meme–related equities. AMC Entertainments Holdings Inc. (AMC), the nation’s largest movie chain operator, and GameStop Corp. (GME), the original Reddit–powered meme–stock, both fell sharply in the recent period as investors reassessed their recent moves higher. Shares of Lucid Group Inc. (LCID), which featured as the top detractor to performance during the recent August 2022 Index reconstitution and rebalance continued its downward trajectory, falling a further 17.1% during the period and remaining in the top 10 detractors to index performance for a second consecutive month. Shares of technology companies underperformed during the recent period, with half of the top ten detractors from performance coming from the technology sector.
| Bottom BUZZ Index Contributors: August 11, 2022 – September 8, 2022 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| AMC Entertainment Holdings Inc. | AMC | 1.94 | -1.41 |
| GameStop Corp. | GME | 2.64 | -1.07 |
| NVIDIA Corp. | NVDA | 2.83 | -0.71 |
| Unity Software Inc. | U | 1.92 | -0.64 |
| Palantir Technologies Inc. | PLTR | 2.38 | -0.53 |
| Advanced Micro Devices Inc. | AMD | 2.99 | -0.49 |
| Lucid Group Inc. | LCID | 1.94 | -0.39 |
| Coinbase Global Inc. | COIN | 3.04 | -0.37 |
| Shopify Inc. | SHOP | 1.61 | -0.36 |
| Alphabet Inc. | GOOGL | 2.86 | -0.28 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.
Sentiment Stock Highlight – Cameco Corporation
While the price of oil has come down in recent weeks, much of the world remains in the midst of an energy crisis. In the U.S., heat waves in California are straining the state’s electrical grid, and wildfires are disrupting renewable energy sources. In Europe, energy prices are skyrocketing, with natural gas prices doubling over the past two months. Around the world, many governments are turning to nuclear energy, even those previously critical of the technology. Last month, Japanese Prime Minister Kishida announced the country would restart its dormant nuclear plants, a significant policy shift considering Japan’s critical view of nuclear power following the 2011 Fukushima meltdown. Shares of uranium mining companies surged on the announcement. Cameco Corporation (CCJ), one of the world’s largest uranium miners, is up 30% since Japan’s announcement, and investor sentiment towards the company has risen significantly. The current energy crisis does not appear to have a near–term solution in sight, and the shift towards nuclear may evolve into a long–term trend. This month CCJ entered the BUZZ Index for just the second time, with a 0.78% weight.
Cameco Corporation Stock Price | August 2016 – September 2022
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.
BUZZ Index September 2022 Rebalance Highlights
Oil and Gas Stocks
Despite much of the world indicating a desire to transition towards alternative energy sources, investor sentiment toward traditional oil and gas stocks remains elevated. The crude oil price shock following the Russia/Ukraine conflict has abated, and although oil has pulled back off its recent peak, it remains at multi–year highs. While consumers and central bank leaders cheer lower oil prices, investor sentiment suggests that oil prices may climb again. Supply from Organization of the Petroleum Exporting Countries (OPEC) is still trying to catch up to demand following the massive production cuts which occurred during the pandemic. The Russia/Ukraine conflict disrupted Russia’s natural gas supplies to the European Union (EU), and aid in the form of supply from Western allies does not appear to be enough to compensate the shortfall. Winter is quickly approaching, and the demand for heating may further increase the region’s energy demand. This month, several oil and gas–related stocks saw their weights increase in the BUZZ Index. Occidental Petroleum (OXY) rises to the 12th place in the Index with a 2.71% weight. At the same time, both Exxon Mobil (XOM) and Devon Energy (DVN) received higher weightings during the recent September reconstitution and rebalance.
For more on rebalancing results and a full breakdown of index constituents added and removed for the month, view the BUZZ Index reconstitution report.
Originally published by VanEck on September 21, 2022.
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