Earnings season is underway as we get Q4 report cards. The early indications are that the economic environment remains difficult but is improving. Unless, of course, you are Netflix (NFLX) which continues to thrive and is slowly turning from a subscription to income story. Financials and transports have seen a sell-the-news reaction as investors are taking a little off the table following a re-opening trade rally to close out 2020. Some of that money has flowed back into the FAANG trade this week.
Financial Advisors are watching the rotation. However, the search patterns we are seeing appear to show FAs more interested in the long-term impact under a new Administration. Joseph R. Biden was inaugurated as the 46th President of the United States on Wednesday. The new President quickly signed a laundry list of executive orders to help combat the coronavirus and climate change. Prior to President Biden being sworn into office, we saw his new Treasury Secretary Janet Yellen testify in front of the Senate. Ms. Yellen’s testimony doubled-down on expectations that the new Administration would pursue an aggressive fiscal policy in order to jump start the economy. The collective headlines led FA peers to take a second look at potential winners in the Biden era.
- Trivia Question- Where was the first Presidential inauguration for George Washington held? (Answer below)
TrackStarIQ Data
Here are some highlights of research surges* this week –
| RANK | TOP ETFS – BY ALL FAs (Surge Traffic) This Week | Ticker | TOP STOCKS- BY ALL FAs (Surge Traffic) This Week | Ticker | TOP INDUSTRIES BY ALL FAs (Surge Traffic) This Week |
|---|---|---|---|---|---|
| 1 | Esoterica NextG Economy ETF | WUGI | Caladrius Bio | CLBS | Coking Coal |
| 2 | VanEck Vectors Video Gaming and eSports ETF | ESPO | Obalon Therapeutics Inc | OBLN | Misc Industrial & Commercial Machinery & Equipment |
| 3 | iShares Self-Driving EV and Tech ETF | IDRV | Bausch Health Companies Inc | BHC | Retail-Miscellaneous Shopping Goods Stores |
| 4 | iShares U.S. Infrastructure ETF | IFRA | Dare Bioscience Inc | DARE | Staffing & Outsourcing Services |
| 5 | Direxion Daily Energy Bear 2X Shares | ERY | Gritstone Oncology Inc | GRTS | Electronic & Other Electrical Equipment (No Computer Equip) |
| 6 | NETLease Corporate Real Estate ETF | NETL | Marker Therapeutics Inc | MRKR | REIT – Diversified |
| 7 | iShares U.S. Home Construction ETF | ITB | Eastman Kodak | KODK | Insurance – Property & Casualty |
| 8 | iShares TIPS Bond ETF | TIP | Universal Energy Corp. | UVSE | Beverages – Wineries & Distilleries |
| 9 | ProShares Ultra Bloomberg Crude Oil | UCO | Adamis Pharmaceuticl | ADMP | Eating places |
| 10 | Global X Lithium ETF | LIT | Inuvo Inc | INUV | Shell Companies |
Here are some of the Top ETFs that saw a surge in interest from your peers:
- Esoterica Next G Economy (WUGI)- #1 ETF by All FAs (surge traffic)- The Biden Administration has stressed the need to be at the forefront of 5G and AI technology. WUGI is an actively-managed portfolio that invests in producers in 5G technology and their end-users. Since it is actively-managed, it does have a higher Expense Ratio at 0.75%. Liquidity could be an issue for FAs as the Average Daily $ Volume is only $545K and it only has $32 mln in AUM. It is expensive at 80x Price to Earnings and 10.7x Price to Sales but that is par for the course in the current market. The United States makes up 69% of the ETF but it does look for overseas names as Hong Kong, Taiwan, Singapore and China make up 28% of the constituents. Top Holdings include Meituan, Sea LTD, Taiwan Semi (TSM), Qualcomm (QCOM) and NVIDIA Corp (NVDA). WUGI launched in April of 2020 and since it opened for business it has seen just a steady rise from $26 to all-time highs of $55.99 today.
- iShares U.S. Infrastructure (IFRA)- #5 ETF by All FAs (surge traffic)- On Capitol Hill, both sides of the aisle have expressed an interest in infrastructure projects. This has FAs looking at IFRA which tracks an index focused on U.S. companies that would benefit from any activity. In order to qualify, companies must derive over half of their revenues from the U.S.. It is well-rounded with Utilities making up 39% of the holdings followed by Industrials (25%), and Basic Materials (21%). It is also diversified with 135 holdings, the Top 10 makes up only 9% of the fund. It’s Expense Ratio is reasonable at 0.40% and the Distribution Yield of 1.98% helps offset that cost. It has $171 mln AUM and an Average Daily $ Volume of $3.9 mln. The Utilities Holdings make this a steadier investment but it has lagged overall markets as it has returned 11.2% over the past year. The ETF is running into resistance at the $32 level but, for those looking for a little more stability, this ETF provides a way to get involved in any infrastructure plans without taking some of the risk we see in other sectors.
- Drexion Daily Energy Bear- 2x Leveraged (ERY)- #6 ETF by All FAs (surge traffic)- This may be more of a near-term search for FAs but we did find it interesting given some of the sell-the-news reaction we are seeing in early energy reports (see KMI, BKR, HAL). President Biden was busy on the environmental front as he entered the U.S. back in the Paris climate agreement and rescinded permits for the Keystone XL pipeline project. The executive orders and price action was enough to lead FAs to search for some hedges in the space. Given the time decay in these leveraged bear instruments, we would not expect this to be a long term holding for FAs. But it did have us take note of this pullback in energy. The Expense Ratio is high at 1.07%. The ERY Has $36 mln AUM and has an Average Daily $ Volume of $22.4 mln so it does provide some liquidity for hedging.
- iShares TIPS Bond (TIP)- #8 ETF by All FAs (surge traffic)- Given all the talk around fiscal spending, it is not a surprise to see investors start looking around for some inflation protection. We witnessed the rally in the 10-year yield as it ran 25% in the first 12 days of 2021. We have yet to see inflation reflected in consumer or producer price data but market participants are wary. TIP was launched in 2003, created to track a market-value weighted index of U.S. Treasury inflation-protected securities with at least one year remaining of maturity. It has a strong first mover advantage as it was around for three years before a competitor was able to launch. That is why it has a hefty $26 bln in AUM. Its Expense Ratio is cheap at 0.20%. The average duration in the portfolio currently sits at 7.86 years and its Yield to Maturity is 0.79%. Its returns trail the market but the United States has not had a serious bout of inflation since Paul Volcker was roaming the halls of the Federal Reserve. TIP is trading at all-time highs at the $127 level and has had a nice steady run since the beginning of 2019 when it was trading at $108. Inflation has yet to rear its head but, when it does, FAs would like to be sitting in this hedge.
Trivia Question- George Washington was sworn in as the first President of the United States on the balcony of Federal Hall in New York City, April 30, 1789.