Jerry Hendricks
Portfolio Manager
Three Key Data Points You Need Know This Week
02/27/2024
1. Macro Update with NB.
- Strategas’ President and Head of Portfolio Strategy, Nicholas Bohnsack (NB), sits down with Envestnet’s Co-Chief Investment Officer, Dana D’Auria, to run through his latest macro thoughts on the overall investment landscape. Watch Part 1 here: Envestnet’s Quarterly Market Rundown with Nicholas Bohnsack
- Items of note which NB and team are watching as we head towards November elections:
- Inflation and the volatility of inflation expectations.
- Level-setting valuations in line with interest rates and operating margins.
- Identifying organic drivers of growth to pull capital into the economy and drive expansion.
- Prior rate hikes historically have had an inverse relationship with corporate profitability and thus we are watching for reported net income and margin figures for any signs of sustainable weakness.
Source: FactSet Research Systems Inc. and Strategas Securities, as of February 13, 2024
2. Strategas’ Head of Policy Research, Dan Clifton's latest thoughts from his Feb 20th Policy Webinar:
- Reelection years have averaged significantly stronger returns over open election years since 1960. This year is, so far, trending with past re-election years’ average performance.
- Presidents have a strong incentive to keep the economy strong heading into re-election, as avoiding a recession has been 100% correlated with presidential re-elections as far back as 1912. Biden is directly employing, or benefitting from, several tools and actions currently.
- The 2024 election will be decided by voters in a handful of states, but that decision will have huge implications for markets as former President Trump is eyeing an aggressive trade and immigration agenda coupled with deregulation while President Biden wants to continue his green energy agenda and Democratic spending priorities. The outcome of the White House, House and Senate will shape how policymakers navigate a massive fiscal cliff coming in 2025 as the 2017 tax cuts, ACA premium tax credits, and other measures expire.
With such continued ambiguity surrounding the investment landscape due to the varying paths for policy, we believe the Strategas Global Policy Opportunities ETF (ticker SAGP) is well positioned to take advantage of such uncertainty as we enter into, what could be, a wild election year with numerous elections around the globe.
Source: Bloomberg LP and Strategas Securities, as of February 20, 2024
3. Thoughts from the Road.
- While discussion around Nvidia Corp (ticker NVDA) dominated most of the conversations Strategas’ Head of Technical & Macro Strategy, Chris Verrone, had on the road recently, their positive earnings results may have eased some anxiety.
- He finds it a bit odd that there is such focus on Nvidia at the expense of the rest of the market where he observes strength has clearly broadened amongst other sectors such as Financials and Healthcare.
- Additionally, greater than 80% of the small sample of institutional clients Chris spoke with, believe the next 5% move in the S&P 500 would be to the upside.
- Chris also notes that there seems to be a lack of focus on Japan, as their equity market just broke out to a new, almost 35 year high.
- Furthermore, while Strategas’ Chief Economist, Don Rissmiller, believes a rate cut won’t occur before June, consensus from Chris’s client meetings is for 50bp in rate cuts for the year…for now. Don also observes that rate cut expectations have been changing considerably of late, making a true consensus call difficult.
Source: Bloomberg LP and Strategas Securities, as of February 23, 2024
For more information on our specific Exchange Traded Products, please visit our website www.strategasetfs.com. For additional information on Strategas Asset Management, how to access our research or our other investment solutions please visit www.strategasasset.com or contact Patrick Rista, prista@strategasasset.com / (646) 292-7984 / or Jonathan Matta, jmatta@strategasasset.com / (216) 373-4145.
Past performance is not indicative of future results.
Shares of any ETF are generally bought and sold at market price (not NAV) and are not individually redeemed from the fund. Brokerage commissions will reduce returns. Indices are unmanaged and do not include the effect of fees, expenses or sales charges. One cannot invest directly in an index.
This communication was prepared by Strategas Asset Management, LLC ("we" or "us" or “our”). This communication represents our views as of 02/23/2023, which are subject to change. The information contained herein has been obtained from sources we believe to be reliable, but no guarantee of accuracy can be made. This communication is provided for informational purposes only and should not be construed as an offer, recommendation, nor solicitation to buy or sell any specific security, strategy, or investment product. This communication does not constitute, nor should it be regarded as, investment research or a research report or securities recommendation and it does not provide information reasonably sufficient upon which to base an investment decision. This is not a complete analysis of every material fact regarding any company, industry, or security. Additional analysis would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any particular client and is not presented as suitable to any other particular client. Past performance does not guarantee future results. All investments carry some level of risk, including loss of principal.
Carefully consider each of the Funds' investment objectives, risk, and charges and expenses. This and other information can be found in the Funds' summary or full prospectus which can be obtained by calling (855) 273-7227 or by visiting strategasetfs.com. Please read the prospectus, carefully before investing.
Strategas Asset Management, LLC serves as the investment advisor for each Fund and Vident Advisory, LLC serves as a sub advisor to each Fund. The Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Strategas Asset Management, LLC or any of its affiliates, or Vident Advisory, LLC or any of its affiliates.
Shares of any ETF are generally bought and sold at market price (not NAV) and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
An investment in the Fund involves risk, including possible loss of principal.
In addition to the normal risks associated with investing, the Strategas Global Policy Opportunities ETF (SAGP) is subject to lobbying focused investment risk. The adviser's investment process utilizes lobbying intensity as the primary input when selecting investments for the Fund's portfolio and does not consider an investment's traditional financial metrics. The Fund may underperform other funds that select investments utilizing more traditional investment metrics. The Fund may also focus its investments in a particular country or geographic region outside the U.S. and may be more susceptible to economic, political, regulatory or other events or conditions affecting issuers and countries within that country or geographic regions well as risks of increased volatility and lower trading volume.
In addition to the normal risks associated with investing, the Strategas Macro Thematic Opportunities ETF (SAMT) is subject to macro-thematic trend investing strategy risk. Therefore, the value of the Fund may decline if, among other reasons, macro-thematic trends believed to be beneficial to the Fund do not develop as anticipated or maintain over time, or the securities selected for inclusion in the Fund's portfolio do not perform as anticipated.
In addition to the normal risks associated with investing, the Strategas Macro Momentum ETF (SAMM) may invest in smaller companies, heavily in specific sectors, and also invest in gold, all of which can exhibit high volatility. Securities may be difficult or impossible to sell at the time and the price desired. Investments with exposure to international markets may experience capital loss from unfavorable fluctuation in currency values, differences in generally accepted accounting principles, or from social, economic or political instability in other nations. REITs are subject to changes in economic conditions, interest rates, and credit risk. MLPs involve risks related to limited control and limited rights to vote on matters affecting the MLP. MLP common units and other equity securities can be affected by economic and other factors affecting the stock market in general, expectations of interest rates, investor sentiment towards MLPs or the energy sector, changes in a particular issuer's financial condition, or unfavorable or unanticipated poor performance of a particular issuer. MLP investments in the energy industry entail significant risk and volatility.
The Funds may be more heavily invested in particular sectors and may be especially sensitive to factors and economic risks that specifically affect those sectors.
Three Key Data Points You Need Know This Week
Feb 27 2024