Eq: Total Market

Um, you might want to duck for cover.   Why? Well, because of the explosive growth experienced by the ETF industry, according to zacks.com.

 Against the backdrop of a burgeoning stock market, it’s gathering mucho assets. The fact that investors sunk about $200.6 billion in new assets into U.S.-listed ETFs in the first half of the year, didn’t exactly hurt.  

Pacing the field was U.S. fixed income ETFs with inflows of $86.7 billion, according to etf.com. Nipping at its heels was $52.9 billion in U.S. equity ETFs and $48.5 billion in international equity ETFs.

Meantime, almost assuredly considerably more on the money than many weather prognosticators, the macro outlook for core fixed income is thumbs up, according to sageadvisory.com. Over approaching quarters, attractive yield carry is tag teaming with peaking rates skews returns to the upside. Fed timing aside, market and dot plots each have rates much lower over the oncoming year or two. What’s more, yield carry looks as good as it has in 15 years.

In an article for MarketWatch, William Watts covers comments from Fundstrat’s Thomas Lee where he discusses why falling volatility is one of the major factors behind the stock market rally in 2023. YTD, the S&P 500 is up 16%, and the index is more than 25% higher from its lows last October. 

Equally impressive is that the stock market has recovered more than half of its losses. At its nadir, the market was down by 25% from its all-time high set in January 2022. Currently, it sits just 9% off these levels.

According to Lee, the volatility index is the biggest influence on S&P 500 performance, eclipsing other variables like the US dollar, earnings, rates, monetary, or fiscal policy. However, Lee’s view is not the consensus as many continue to see the market as being in a bear market rally rather than a new bull market.

These skeptics point to historically high valuations for the stock market in addition to analysts’ expectations of a modest decline in earnings per share over the next few quarters. Another headwind is that inflation continues to be stickier than expected resulting in the Fed continuing to hike further. 

Finsum: Fundstrat’s Thomas Lee was one of the few to be bullish on stocks entering 2023. He remains bullish and believes the plunging volatility index is a major factor driving returns.


Return flights.No return policy.

Well, whichever way you look at it, as the first half of the year hits the rearview mirror, you might say  fixed income has a take of its own. according to schwab.com.

The topsy turvy market aside, all signs are up on year to date returns in virtually every sub asset class of the fixed income market, Modest gains were posted by short term investments with low durations. Meantime, a duo of higher starting coupons and yields, which tracked south, boosted intermediate to long term bonds.

All that said, in 18 months, fixed income markets have been feeling their oats. 

That wasn’t the case last year, according to janushenderson.com. After all, that was in light of the central bank’s concerted monetary tightening. With that, yields rose sharply while the prices of bonds retreated. The feeling toward bonds these days? Markedly different.

Global flows into fixed income? Thumb’s up. Year to date, $152 billion entered fixed income funds, reported EPFR Global.

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