A Time for Portfolio Reflection
For some people, the early days of the fourth calendar quarter is a good time for reflection. In life and certainly in portfolios.
An October Surprise
U.S. equity markets extended gains to a fourth-straight week despite a resurgence in benchmark interest rates after a critical slate of employment data showed surprisingly strong labor market trends. One of several strong employment reports, Nonfarm Payrolls data showed that the U.S. economy added 254k jobs in September - the strongest in six months and well above consensus estimates. Combined with a nearly 10% surge in crude oil prices driven by renewed Middle East tensions, markets reflected a significantly less aggressive Fed rate cut path in the months ahead.
7 Dividend Stocks I'm Buying As The Recession Debate Rages
The ongoing debate on whether the economy will face a recession or achieve a soft landing continues, with mixed opinions from experts. Despite my longstanding recession prediction, the economic expansion has been extended due to delayed deployment of pandemic-era savings. Tariffs have not benefited American manufacturing, leading to higher input costs, disrupted supply chains, and a slump in manufacturing jobs and output.
Bond ETF flows this year just topped annual record set in 2021
Investors are flocking to bond ETFs this year, according to State Street.
5 Most-Loved ETFs of Last Week
ETFs across various categories pulled in $8.6 billion in capital last week, with U.S. fixed-income ETFs leading the way.
Active, Crypto & Core ETFs, Oh My
Approximately 150 U.S.-listed ETFs gathered more than $1 billion in the first eight months of 2024. As I looked through the leaderboard, a few key themes jumped out.
Complement Your Core Bond Exposure With This Income ETF
Given the recent market volatility, investors have been flocking to bonds. With the expectation of rate cuts to come and subsequently falling yields, fixed income investors can complement their current core exposure with the NEOS Enhanced Income Aggregate Bond ETF (BNDI).
iShares Hits $1 Trillion in Fixed Income ETFs Globally
Fixed income ETFs continue to gain traction globally. As of August 2024, the asset category managed $2.5 trillion in assets, with iShares managing $1 trillion alone.
Rates Down, REITs Up
Rates down, REITs up? Two years of persistent rate-driven pressure on residential and commercial real estate markets appears to finally be abating as the worst of pandemic-era inflationary pressures subside. Since the "pivot' in early July, the REIT Index has outpaced the S&P 500 by 10 percentage points. Despite this rebound, REITs still have 35 percentage points of "catch-up" to do. REITs aren't quite as "cheap" now as they were at the end of June, but that's not such a bad thing: premium equity valuations are the "fuel" for REITs' external growth.
AGG: Expect Steady Dividends, Minimal Capital Gains Despite Fed Funds Rate Cuts
Longer-term Treasury and corporate bond rates may have already seen most of their decline, even though Fed Funds rate cuts haven't started. AGG has gained from falling rates in the past year, but capital appreciation could be limited going forward. Monthly dividends also look set to peak in the next year after increasing since 2022.
A Summer To Remember
U.S. equity markets climbed to record-highs while benchmark interest rates rebounded from eight-month lows on a relatively quiet end-of-summer week as investors parsed a 'Goldilocks' slate of economic data. PCE data showed modest inflationary pressures in July - keeping the Fed on course for multiple rate cuts by year-end - while consumer spending and consumer confidence data topped estimates. Posting gains for a fourth week following a three-week skid in late July, the S&P 500 gained another 0.3% this week. The Dow Jones finished the week at all-time record-highs.
AGG: The Window For Buying Bonds Is Narrowing (Rating Update)
AGG is diversified and has quality-rated debt, making it a good hedge for equities which are near record highs. Treasuries are offering positive real returns due to inflation's decline, which is in stark contrast to the last couple of years. This ETF is solely focused on US debt, which is offering higher yields than comparable Euro-denominated debt. This suggests relative value.
