Well, this is inconvenient. I think we speak on behalf of most of our fellow Americans when we say we were looking forward to waking up with a little more clarity. We hoped to turn the page on the elections and dive into new or returning policies. Instead, we are getting reminders of the 2000 election with just as much focus on the courts as the democratic voting process. We’re not going to postulate on who will win the election. Instead, we will discuss some of the potential outcomes and how they factor into areas seeing a surge of interest from your industry peers.
Two areas in particular caught our attention. One is directly influenced by the final make up of the political system. The other is a look back at earnings from last week and a possible review around previously anticipated capital gains tax increases.
Here are some highlights of what has been surging this week –
|TOP ETFS – BY ALL FAs (Total Traffic) Previous Week||Ticker||TOP ETFS BY FAs w/ AUM>$1B (Total Traffic) Previous Week||Ticker||TOP INDUSTRIES BY ALL FAs (Total Traffic) Previous Week||TOP ETF CATEGORIES BY ALL FAs (Total Traffic) Previous Week|
|SPDR S&P 500 ETF||SPY||SPDR S&P 500 ETF||SPY||Biotechnology||Large Cap Growth Equities|
|Invesco QQQ||QQQ||iShares Russell 2000 ETF||IWM||Internet Content & Information||Leveraged Equities|
|ProShares Ultra VIX Short-Term Futures||UVXY||VanEck Vectors Gold Miners ETF||GDX||Software – Application||Technology Equities|
|ProShares UltraPro Short QQQ||SQQQ||Invesco QQQ||QQQ||Auto Manufacturers||Leveraged Volatility|
|iPath Series B S&P 500 VIX Short-Term Futures ETN||VXX||ProShares Ultra VIX Short-Term Futures||UVXY||Consumer Electronics||Precious Metals|
|ProShares UltraPro QQQ||TQQQ||Direxion Daily Gold Miners Bull 2X Shares||NUGT||Credit Services||All Cap Equities|
|SPDR Dow Jones Industrial Average ETF||DIA||SPDR Gold Trust||GLD||Internet Retail||Volatility|
|SPDR Gold Trust||GLD||Financial Select Sector SPDR Fund||XLF||Diagnostics & Research||Alternative Energy Equities|
|iShares Russell 2000 ETF||IWM||SPDR S&P Regional Banking ETF||KRE||Software – Infrastructure||Health & Biotech Equities|
|iShares Silver Trust||SLV||iShares MSCI Emerging Markets ETF||EEM||Semiconductors||Materials|
|VanEck Vectors Gold Miners ETF||GDX||iShares Silver Trust||SLV||Specialty Retail||Small Cap Growth Equities|
|ARK Innovation ETF||ARKK||Energy Select Sector SPDR Fund||XLE||Drug Manufacturers – Specialty & Generic||Energy Equities|
|iPath S&P 500 Dynamic VIX ETN||XVZ||Global X Lithium ETF||LIT||Medical Devices||Government Bonds|
|Technology Select Sector SPDR Fund||XLK||iShares Core S&P Mid-Cap ETF||IJH||Entertainment||Oil & Gas|
|Energy Select Sector SPDR Fund||XLE||Health Care Select Sector SPDR Fund||XLV||Aerospace & Defense||Large Cap Blend Equities|
|iShares Edge MSCI USA Momentum Factor ETF||MTUM||iShares Core MSCI International Developed Markets ETF||IDEV||Utilities – Regulated Electric||Asia Pacific Equities|
|iShares 20+ Year Treasury Bond ETF||TLT||Invesco Global Listed Private Equity ETF||PSP||Conglomerates||Consumer Discretionary Equities|
|Invesco Solar ETF||TAN||ProShares Short 20+ Year Treasury||TLT||Oil & Gas E&P||Leveraged Commodities|
|Direxion Daily Aerospace & Defense Bull 3X Shares||DFEN||Technology Select Sector SPDR Fund||XLK||Specialty Industrial Machinery||China Equities|
|SPDR S&P Biotech ETF||XBI||KraneShares CSI China Internet ETF||KWEB||Scientific & Technical Instruments||Financials Equities|
The Top ETF searches by Financial Advisors with AUM>$1B were funds that could be impacted by policy including the iShare Russell 2000 (IWM), the Financial Select SPDR Fund (XLF) and the SPDR S&P Regional Bank ETF (KRE). We saw yields rally into the election on a base case scenario of Joe Biden winning the White House and the Democrats taking the Senate. This would be the easiest path for passing a mammoth fiscal stimulus that would be viewed as reflationary. This fiscal spend would be most beneficial for domestics, thus providing a basis for the small-cap IWM interest. The rise in rates, and short-term easing of credit conditions, would benefit the financials (KRE and XLF). However, there is a little more uncertainty around stimulus as the GOP is the front runner, according to polls, for holding the Senate.
The second item of interest is the focus of the entire Financial Advisor community on the FAANG and Cloud Computing space. We saw this interest reflected in the markets last night when there was a divergence between the Nasdaq and S&P right around 8:40pm ET. The Nasdaq was the clear market leader. A few schools of thoughts here: 1) that a GOP Senate could keep capital gains tax increases on the sidelines and 2) There Is No Alternative (TINA) as there are questions raised around potential fiscal stimulus and it reinflating the Value Sector. Whatever the case, a surge in the iShares Expanded Tech-Software ETF (IGV), MicroSectors FANG+ 3x Inverse ETF (FNGD), and Wisdom Tree Cloud Computing Fund (WCLD) dominated research areas for FAs.
The surge data provides some valuable information as it represents data for the first two days of November after a weak October and the last two days of trading ahead of the election. We’ll keep an eye out on results from the election and touch base on Friday.