Markets closed slightly down again after the German Finance Ministry made negative comments about the possibility of an ESM banking license. In India, while the RBI held rates unchanged as expected, there were continued widespread power outages, leaving over 600 million without electricity.
I’d like to point out INXX- Emerging Global India Infrastructure ETF, has a weighting of over 6% in Power Grid Corp of India, the second largest holding of the ETF, and may offer exposure to these events. Another poor day for Biotechs, with XBI down nearly 2.75%, while Semiconductors performed well.
On the desk we saw sellers across sectors. We had outflows from international names, EWS-Switzerland, and PIE-Emerging Markets Technical Leaders. Municipal Bonds also saw outflows, with a seller of HYD-High Yield Municipal Bonds, as did other fixed income products, such as CWB-Convertible Securities, and CIU-Intermediate Credit Bond Fund. Domestic Sectors saw sellers of XLF- Financials, XLV-Healthcare, and XLU-Utilities. DBC-Commodity Index Tracking Fund, saw sellers as well.
Thanks for reading, Eric Mustin (sitting in for Chris Hempstead)
German Finmin Schaeuble shot down reports of ECB bond buying this weekend, taking indexes slightly down to start the week. Central Banks are the theme this week, with ECB and Fed meetings Thursday and Friday.
In that vein, anticipation of rate cuts tomorrow by the Reserve Bank of India moved EPI/PIN up about 1%. EPI saw nearly 2x ADV.
Forecasts of unseasonably warm weather caused a spike in natural gas prices, with UNG up 5.75% . The prospect of further drought sent CORN up 2.25%.
IBB/FBT-Biotech were down 2% on the day, as holdings SLXP -13%/PGNX -50% dragged down index after unfavorable FDA requests.
Outsized blocks of CYB-Chinese Yuan Fund printed in the market, with 25x ADV in what looked to be outflows.
On the desk we saw small outflows from High Yield Corporate Bond ETFs- HYG and JNK, with inflows into less volatile FI like BND-Total Bond Market, BWX-International Treasury Bonds and BSV-Short Term Bonds.
Equities saw domestic inflows and international outflows, with buyers of VTI-Total Stock Market, VTV-Value ETF, DEF-Defensive Equity, and sellers of VEA-EAFE, and VWO-Emerging Markets.
WallachBeth Capital LLC
ETF Trading Desk 646.237.8588
After a better than expected Q2 GDP print pre-market, risk assets had another strong morning, and then rallied further in the afternoon on reports of a bond purchase program from the ECB and talks between ECB and Bundesbank presidents. While this chatter once again led European country ETFs EWP-Spain and EWI-Italy higher, another notable country ETF, EWY-South Korea, also had a strong day, up 4%, after markets reacted positively to Samsung’s Q2 earnings. Samsung makes up just over 22% of EWY. Oil ETFs also benefited from the potential for more European stimulus with XES-Oil and Gas Services up 3.4% on 10x Average Daily Volume.
On the desk we saw notable two way volume in India ETFs PIN and EPI. We were active in a number of other International ETFs, with sellers of EWM-Malaysia and EWH-Hong Kong, and buyers of ERUS-Russia, MCHI-China, GXG-Columbia, EDIV-Emerging Markets Dividend. HYG-High Yield Corporate Bonds once again saw two way flow. Thanks for reading this week, enjoy the weekend and the Olympics.
Eric Mustin (filling in for Chris Hempstead)
Markets rallied today on ECB statements, and naturally European country ETFs EWP-Spain and EWI-Italy benefited the most from this chatter, up 7.2% and 6.5%, respectively. Other European ETFs followed suit, with larger than average inflows into EFG-EAFE Growth.
ITB-Home Construction also rallied today, recovering from yesterday poor home sales numbers. GDXJ had another strong day, up 3.8%. VIX based ETFs gave back some of their recent gains, with VXX down nearly 7.5%.
Flows on the desk once again saw inflows into High Yield Corporate Bonds, HYG and JNK.
We also saw sellers of the short and medium dated Treasuries, IEI-3-7 Year and IEF-7-10.
Broad based commodity ETF DBC saw inflows, while we saw mostly outflows from Emerging market ETFs today, with sellers of EWT-Taiwan, and EWM-Malaysia.
Lastly, the trend in domestic Preferreds persisted, with a buyer of PFF-US Preferred. Thanks for reading, -Shakes.
Eric Mustin (sitting in this week for Chris Hempstead)
Markets saw risk off flows today, with GDXJ-Gold Miners Juniors up 4% and GDX-Gold Miners up 3%, among the biggest gainers on the day.
Semiconductor ETFs SMH, XSD, and SOXX also saw inflows as a result of strong earnings reports from top holdings. ITB-Home Construction down 3.6%, among the biggest losers on the day after poor New Home sales numbers this morning.
Larger than usual volume in TIPS funds, in particular BIL and TIP, in line with the other risk off flows we’ve seen today.
On the desk we had sellers of risk assets, such as SPY-S&P 500, DEM-High Yield Equity, and VB-Small Cap, with inflows into 7-10 year Treasuries, IEF.
We also saw sellers of EWU-England, on the heels of the weak GDP print this morning. Emerging Market names saw buyers, notably EPI-India, ERUS-Russia, EWT-Taiwan, MCHI-China, and ASEA.
Lastly we saw flows into Preferreds pick up again, with a buyer of PGF- Financial Preferred Portfolio.
Eric Mustin filling in for Chris Hempstead
WallachBeth ETF Desk 646.237.8588
Continued weakness persisted in European country ETFs, with EWP down -4.5%, and EWI down -4%. SOYB, the Teucrium Soybean Fund, was among the day’s biggest losers, down -3.8%, giving back much of the gains that it had seen in the past week.
Commodity names also showed weakness, with KOL-Coal, FCG-Natural Gas, and XME- Metals and Mining all down on the day. VIX ETF’s continued to benefit from the market selloff, with VXX leading the way, up 4.15%. We saw large block trades continue to print in JNK.
On the desk we continued to see two way flows in international ETFs, with buyers of Malaysia- EWM, EAFE- EFA, and sellers of Indonesia- IDX, Mexico- EWW, and Market Vectors Agribusiness- MOO.
In domestic names we saw late day sellers of QQQ. Two way flow in corporate bond ETFs as well, with buyers of CORP- Investment Grade Corporate Bonds, and sellers of HYS-0-5 Year High Yield Corporate Bonds.
With the day starting off heavily to the downside in equities, risk-off was the over-riding theme, best illustrated by a 6.15% uptick in VXX.
Otherwise, flows in the market picked up where last week’s left off; continued inflows into Hi-Yld and Investment Grade Corporate bonds (JNK and HYG). A spike in Spanish bond yields led to greater than average selling volumes in country ETFs (EWP down 1.35% and EWG down 3.25%). We also noticed larger than usual block trades in IEI and IEF, instigated by sellers in these 3-7 and 7-10 yr treasury bond ETFs.
Municipal Bonds and REITS were among the few gainers on the day. On our desk, we saw flows into MLN and REZ.
International names remained active again with an abundance of 2-way flows. We saw sellers of India, Rare Earths, REMX and buyers of EFAV.
Domestic ETFs with a focus on dividends saw inflows; PEY and FDL in particular.
As a reminder, I’m on holiday this week; Eric Mustin is standing in and provided above commentary.