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The charts of bitcoin, Tesla and Ark Innovation ETF are all showing the same thing: That the market for the some of the riskiest holdings is at an inflection point. "I do think the S & P 500 is vulnerable to 3,400," he said. "I'm not bearish on the S & P simply because of these charts, but they do add to the conviction." "The weakness from one area will leak to the S & P." Sohn described Ark, bitcoin and Tesla as emblems for the "speculative corner of the market." Like the Nasdaq, trading in Ark, Tesla and bitcoin is tied to the direction of interest rates.
Potentially, that marks the start of a reversal from this year's pattern, which has seen sharp outflows from high yield funds. High yield bond funds have been beaten down this year, like the rest of fixed income. FlexShares' offerings include the actively managed High Yield Value-Scored Bond Index Fund (HYGV) and the ESG & Climate High Yield Corporate Core Index Fund (FEHY) . To be sure, growing concerns about bankruptcies can hurt high yield investors, even if they never materialize. Because the underlying companies are also essentially investment funds, investors are paying management for both the companies and the ETFs.
I personally like short-dated corporate bonds, which are yielding close to 5%," he told CNBC's "Street Signs Asia" on Monday. "[It] would be a very quick, convenient way to diversify your money over a wide range of highly-rated corporate bonds. And that way, it's … a short term defensive move. The ETF's 12-month trailing yield – the yield investors receive if they held the fund for the last 12 months – is at 3.07%. Stock picks If investors are still interested in stocks, Dietze says that some energy and cyclical stocks still looked appealing.
Dow plunges and is back in a bear market
  + stars: | 2022-09-29 | by ( Paul R. La Monica | ) edition.cnn.com   time to read: +2 min
The Dow is now back in bear market territory, more than 20% below the all-time high it set in January. The tech-laden Nasdaq Composite sank 3.4% Thursday and has plummeted even more than the Dow and S&P in 2022. The stock market had a promising start to the quarter, soaring in July. But fears about inflation, rate hikes, rising bond yields and recession returned with a vengeance in August and September. But two popular, widely held bond funds, the Vanguard Total Bond Market Index Fund ETF (BND) and iShares Core U.S.
DoubleLine Capital CEO Jeff Gundlach on Tuesday noted a rally in the Treasury market and said he's been purchasing US debt. The 10-year yield fell Tuesday after hitting its highest level in 12 years. "The U.S. Treasury Bond market is rallying tonight. The 10-year Treasury yield fell 10 basis points to 3.813% after the yield on Monday rose above 3.9% for the first time since 2010. The iShares US Aggregate Bond ETF has tumbled 16% during 2022 and the global bond market has dropped into its first bear market in more than three decades.
As stocks sink and interest rates rise, investors are getting more excited about corporate bonds than they've been in a generation. One side effect of Federal Reserve tightening policy is it has made interest rates go up everywhere — including in the corporate bond market. The way we choose to access corporate bonds is through a highly diversified low cost index fund and part of the reason for that is when it comes to corporate bonds, there's more difficulty with them than with government bonds," he said. Playing through funds A fund that tracks short-term corporates is the SPSB, SPDR Portfolio Short Term Corporate Bond ETF . There is also the Vanguard Short-Term Corporate Bond ETF VCSH , which tracks a corporate bond index, is off 8.5% this year.
And below, I'm breaking down what Bank of America has to say about the worst bond market decline in over 70 years. The bond market is in the middle of a historic crash and it'll hammer stocks, according to a Friday note from Bank of America. As central banks around the world move to stem inflation, BofA analysts said bonds are experiencing their worst decline since 1949. What's your stock market outlook heading into year-end? As stocks sell off, Fundstrat's Tom Lee is sticking to his bullish year-end stock market forecast.
The worst bond market decline since 1949 is set to disrupt the stock market, according to Bank of America. The bank said soaring interest rates will unwind the most crowded trades in the stock market, including long US tech. "Bond crash in recent weeks means highs in credit spreads, lows in stocks are not yet in," BofA said. Bonds are experiencing their worst decline since 1949 as interest rates soar amid a global central bank campaign to fight inflation. "Bond crash in recent weeks means highs in credit spreads, lows in stocks are not yet in," BofA's Michael Hartnett said.
The latest threat to stocks now isn't any macro risk — it's rising 2-year Treasury yields, according to some fund managers and strategists. Short-term, relatively risk-free Treasury bonds and funds are back in the spotlight as the yield on the 2-year Treasury continues to surge. Meanwhile, U.S.-listed short-term Treasury ETFs have attracted $7 billion of inflows so far in September — six times the volume of inflows last month, BlackRock said. Here's what analysts say about how to allocate your portfolio right now. This sees investors put 60% of their portfolio in stocks, and 40% bonds.
The U.K. has unveiled a large stimulus program, the biggest tax cut in half a century and will pay for it by substantially raising the debt level. Wait, don't markets love stimulus programs? Stimulus programs might even be welcomed for stoking some inflation in those circumstances. The stimulus program and the attendant need to borrow was immediately seen as inflationary, hardly what the market wants to hear. If stimulus programs are no longer greeted as a positive, what can they do to help out weak economies?
The S & P 500 is about 70 points below where it was at the close of the last Federal Reserve meeting on July 27. The last several Fed meetings have seen the S & P close up on the announcement day, but there's no pattern after that. After the May 4 meeting, the S & P dropped three days in a row, and after the March 16 meeting, a rally continued for several days. Corporate bond funds are also at new lows, including the Vanguard Short-Term Corporate Bond ETF (VCSH) and the iShares Investment Grade Corporate Bond ETF (LQD) . Remarkably, there have not been outflows from these funds, likely because they have strong institutional support and broad bond funds like these tend to be "sticky."
One option could be inverse Treasury ETFs, which should rise along with rates. For example, the ProShares Short 20+ Year Treasury ETF (TBF) has gained more than 30% this year. Other major floating rate funds include the Invesco Senior Loan ETF (BKLN) and SPDR Bloomberg Investment Grade Floating Rate ETF (FLRN) . Another fund that has had success this year is FolioBeyond's Rising Rates ETF (RISR) . This smaller fund invests in Treasury bonds and interest-only mortgage-backed securities, which can benefit from rising rates as mortgage refinancings decline.
This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. Once again, nothing happening now is incompatible with this being a prolonged, messy bottoming effort longer term. Are equities still "too expensive" with bond yields here, the 10-year neat 3.5%? The S & P index, maybe, at 16.5x, with some cross-asset models saying it should be one or two multiple points cheaper. VIX getting puffed up 24 hours ahead of the Fed decision, near 27, mechanical stuff.
As inflation remains stubbornly high, and volatility in U.S. stocks and bonds persists, one strategist has shared his top ways for investors to protect their income. High inflation increases the chances of the U.S. Federal Reserve raising rates further, which tends to mean a stronger dollar. His picks include the iShares Euro Inflation Linked Government Bond UCITS ETF and the iShares TIPS Bond ETF . That's a bad combination for agricultural output, and high gas prices will contribute to higher fertilizer prices, he added. The 'best sweet spot' As U.S. investors scramble to navigate continued volatility, particularly in stocks, Jolley said the "brave" could consider stocks overseas.
The JPMorgan Ultra-Short Income ETF ha s pulled in more than $3.5 billion of new money this year. AllianceBernstein launched its first ETFs last Wednesday, including the AB Ultra Short Income ETF , a fund that invests in debt with less than one year to maturity. An inverted yield curve refers to short-term yields that are higher than longer-dated yields. The combination of quickly rising interest rates and an inverted yield curve creates a couple of benefits for short-duration funds. AllianceBernstein's municipal ETF has a management fee of 0.27%, while the fee on the ultra short income fund stands at 0.25%.
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But for 2022, Tocqueville Asset Management's John Petrides sees the fixed income market as the safe haven. "It's not often we think of the high-yield bond market as the safety place," the portfolio manager told CNBC's "Trading Nation." Inside Edge Capital Management founder Todd Gordon is more cautious on the fixed income trade. Instead, Gordon suggested an options strategy to make up for lack of yield in the fixed income space. Gordon said it will allow investors to participate in the market upside with some guardrails for safety.
One of the reporters noted that Powell's public calendar showed calls with Larry Fink, BlackRock's chief executive, in March, April, and May. The exchange was hardly the first time no-bid contracts between the Fed and BlackRock's Financial Markets Advisory unit raised questions. Still, former employees told Insider that FMA has served as a clear source of public-facing clout for BlackRock. "The FMA clients have extended their advisory relationships to be multiyear." A little over a year ago, FMA pulled employees out of BlackRock's office there, three former employees said.
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