Monday, March 4, 2019

Marching On

Monday, March 4, 2019 - After five days of tepid swings downward, stocks ended the week a few basis points up, securing a 10th straight week of price gains for the best two-month start to the 1st quarter market in 32 years. However as mentioned last week, Monday brought uncertainty as investors seemed agitated by four persistent market concerns – recession worries, trade tensions, the global slowdown and a resumption of Fed rate hikes. Michael Cohen's testimony and the U.S. North Korea summit in Vietnam also generated a lot of headlines, yet, didn’t cause any direct market implications.

On the economic front, delayed fourth-quarter GDP came in slightly stronger than expected at 2.6% with 2018 marking the best year of GDP growth in last decade coming in at a strong 2.9%. Though uncertainties remain, what the markets learned this week supports the case for an upward climb for stocks in 2019, albeit at a notable slower pace. Stocks didn't react much to the news as a delay was already priced in, with investors now focused on a trade agreement materializing with China. Speaking of China, on Thursday MSCI announced that it is quadrupling the weighting of Chinese mainland shares in its global benchmarks later this year, this move is predicted to draw upwards of $80 billion of fresh foreign inflows to the world’s second-biggest economy. MSCI also said that it will add Chinese mid-cap stocks to its emerging market benchmark in November, boosting the number of Chinese constituents in a variety of ETFs like KraneShares Bosera MSCI China A ETF (KBA).

Turning to market news, the S&P 500 increased 0.4% this week, extending its yearly gain to 11.8%, as shares of financial (+0.8%), information technology (+1.0%), and energy (+1.1%) sectors outperformed the broader market. In earnings news, retailers had a pretty good showing. Macy's (M), AutoZone (AZO), Lowe's (LOW), TJX (TJX), Best Buy(BBY), Gap (GPS), and Foot Locker (FL) all climbed on better-than-expected results. Home Depot (HD), too, had a solid fourth quarter but issued a not-so-great earnings report - the SPDR S&P Retail ETF (XRT) increased 2.3% this week. Investors looking for alternative ways to invest in high concentrations of the aforementioned stocks ought to utilize ETFG’s Grey Market Summary to identify investment opportunities.

ETFG Quant Movers – Those ETFs who have had the largest weekly change in their respective, ETFG Quant ratings:

ETFG Quant Winners: The top five ETFG Quant gainers from this past week included funds with an EM focus as expected from trade related headlines concurrent with strong performers, as well as, a few unexpected showcases. In order the top gainers were X-trackers MSCI EAFE Hedged Equity Fund (DBEF), KraneShares Bosera MSCI China A ETF (KBA), Alpha Architect International Quantitative Momentum ETF (IMOM), Global X MSCI China Consumer Discretionary ETF (CHIQ) and X-trackers MSCI Germany Hedged Equity Fund (DBGR) seeing a point increase of 11.14, 10.16, 10.08, 10 and 9.6 to their overall score.

ETFG Quant Losers: Notable losers included iShares U.S. Oil Equipment & Services ETF (IEZ), iShares Core MSCI EAFE ETF (IEFA), ProShares S&P 500 Ex-Technology ETF (SPXT), Global X Gold Explorers ETF (GOEX) and Global X Gold Explorers ETF (GOEX) seeing declines of -8.4, -8.4, -7.65, -7.6 and -7.29 to their respective overall score.

ETFG Weekly Select List - the five most highly rated ETFs per Sector, Geographic Region and Strategy as ranked by the ETFG Quant model.

We saw some significant movement in the North American section of the Geographical category when comparing last week’s Select List to the most current one. New names to this portion of the weekly report included SPDR Portfolio S&P 500 Value ETF (SPYV) bringing up the rear at 5th place and iShares Russell Mid-Cap ETF (IWR) snagging 3rd iShares Nasdaq Biotechnology ETF (IBB) jumped from 3rd to 1st place. This resonates well with an article we published last week after some impressive headlines. To read the full analysis please see the link here: Biotech Is Worth The Hype, But Do You Have The Data?

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