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Hello. There is little oxygen in these markets. Stocks barely move again on Wednesday as investors look to the next list of earnings calls (Big Finance starts tomorrow) to see if this recovering trade has any legs. In the meantime, all eyes are on Washington.
Here’s the latest from the nation’s capital: Vice President Mike Pence refused to invoke the 25th amendment (no surprise there), the establishment of a House impeachment vote that more and more republicans, including Liz Cheney of Wyoming, are warming up. Meanwhile, President Trump said his removal from office via the 25th amendment “poses no risk to me”.
“Zero risk” seems to perfectly describe today’s moribund markets. Let’s take a look… Below I explore the big shift in investment strategy from individual growth stocks to ETFs.
Market update
Asia
- The mainAsia Indexare mixed in the afternoon trade with Japan Nikkei high1%.
- New COVID outbreaks in Japan are throw new doubts know if the Summer Olympics will be delayed again beyond July. The Olympic sponsors will not be happy.
- the Houston rockets, one of China’s most popular NBA teams, saw its matches broadcast on Tencent this week after a 16 month outage. The streaming giant is however still on the blacklist of a top NBA team, Fortuneof Grady McGregor writes.
Europe
- theEuropean scholarshipsexchanged laterally at the start of the exchanges with theStoxx Europe 600 a standard 0.03% outdoors.
- German Minister of Finance Olaf Scholz said he will approach the Biden administration with a harmonization plan tax rate multinationals pay abroad, a huge sticking point between trading partners that the OECD has so far failed to resolve.
- Shares in French retail giant Carrefour were standing 9% this morning after his appearance Canada’s Couche-Tard was explore a tie.
WE
- the American Futuresare flat this morning after yesterday’s weak gains. Small caps on the Russell 2000 were the big winner yesterday; index closed 1.8% higher yesterday.
- Shares in Walmart were stable in pre-market commerce after the retail giant announced it launch of a fintech startup thanks to a partnership with VC Ribbit Capital. The latter is a real player in fintech with challenges Robin Hood, Affirm and Coinbase.
- Unfortunately, it’s not just champagne corks in the fintech world. Visa canceled his $ 5.3 billion deal to buy Plaid, a split that regulators applaud as “a victory for US consumers and small businesses.” Visa shares fell 1.9% on Tuesday.
Somewhere else
- Gold climb again, swap $ 1,878 / ounce.
- the dollar is slightly up.
- Gross is on the rise, with Brent trading $ 57 / barrel.
- Bitcoin East down 4.1% in the last 24 hours, negotiation below $ 35,000, or 15% less than the historic record reached this weekend.
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ETF Nation
Last week was not a good week for stocks. Let me correct that – it was not a good week for individual stocks.
This might surprise you given that the S&P 500 erupted through the doors, starting 2021 with a 2% rally. But dig into the numbers and you start to see investors changing their minds about individual stocks, including some of the big stars of 2020.
In BofA Securities’ latest cash flow report, they saw once again that their clients were big net sellers of stocks last week even as the S&P benchmark hit new all-time highs. The biggest releases have been (again) in tech, followed by consumer discretionary stocks. On the other hand, the biggest inflows have occurred in ETFs, as illustrated in the chart below:
As the chart above shows, eight of the S&P’s 11 sectors saw net exits last week, adding to a trend that has deepened over the past four weeks.
“Technology outflows were the second highest on record,” BofA analysts write, “driven by institutional and retail clients, while hedge funds were small net buyers. All size segments recorded exits, leading the large caps. “
Meanwhile, over the past five weeks, investors have flocked to ETFs, especially blended ETFs split between value and growth stocks.
We have described a little bit how the rotating trade has been going since November i.e. the shift from growth to value. As we have seen, there has not been a sharp exit from technology-intensive growth stocks, but rather gradual change. And, as the BofA data here shows, ETFs appear to be the preferred vehicle through which investors move their money.
ETF gives the investor wider exposure to a certain value and growth, strong hedge in an uncertain market.
I will be watching this closely to see if this trend continues. Watch this place.
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Have a very good day everyone. I’ll see you here tomorrow… Until then, there’s more news below.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
As always, you can write tobullsheet@fortune.comor reply to this email with suggestions and comments.
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