Bitcoin ETFs Debut, The December CPI Report, Model Tidbits
January 11, 2024
Leadership came from the usual suspects as the tightly knit Magnificent Seven (or maybe the Super Six as Tesla (TSLA)did not participate) pushed Consumer Discretionary (0.80%), Technology (0.85%), and Communication Services (0.93%) higher. Industrials follow a distant fourth gaining 0.51% and Energy was yesterday’s laggard, giving back 0.98%. Overall, broad indexes were higher as the Russell 2000 gained 0.11%, the Dow rose 0.45%, the S&P 500 added 0.57% and the Nasdaq Composite closed 0.75% higher.
Bitcoin ETFs Debut
If readers have ever wondered about Bitcoin and how they could get exposure to it, today marks the first time that US investors can access Bitcoin directly in the form of an ETF. While it took the SEC over a decade to issue a final approval (which they did for real yesterday) there are now up to 11 funds set to start trading today across all exchanges including:
BlackRock's spot bitcoin ETF, the iShares Bitcoin Trust (IBIT)
WisdomTree announces the launch of the WisdomTree Bitcoin Fund (BTCW)
Invesco announced the launch of the Invesco Galaxy Bitcoin ETF (BTCO)
Up Next: The December CPI Report
US equity futures are pointing to a positive open. However, what the December Consumer Price Index (CPI) brings at 8:30 AM ET could alter those futures. The market is caught between Fed funds futures traders expecting six rate cuts this year while the central bank has signaled potentially three cuts after more cautious comments from Fed officials suggesting any cuts may not materialize until 2H 2024. This has many looking to this morning’s December CPI report, which is expected to show a tick-up for its headline figure, for clarity on which path is the likely one.
The December CPI headline figure is forecasted to rise to +3.2% YoY, up from +3.1% the prior month. The crux of the report will once again be the core-CPI reading for December, which is expected to slow to +3.8% YoY from +4.0% the month before, but even such a print suggests a long path to the Fed’s 2% target and the Fed’s first rate cut.
Heading into the report, a dramatically lower-than-expected core CPI figure would be welcomed by the stock market. But a figure that meets or is above the consensus forecast would be the latest data point arguing against the market’s expectation for rate cuts to begin this March and foster a recalibration of those expectations. Re-thinks such as that tend to bring volatility back into the market, something we could also see as the December quarter earnings season moves up a gear early next week.
For more, be sure to read our Daily Markets column published each day by Nasdaq.
Tematica Model and Index Tidbits
“Much like its predecessors, the Consumer Electronics Show (CES) of 2024 has once again dazzled the world with a spectacle of innovation and technological marvels. This year's event not only showcased the latest advancements but also set the stage for what we can expect in the tech world in the years to come. From groundbreaking AI applications to futuristic mobility solutions, CES 2024 left no stone unturned in demonstrating the extraordinary capabilities of modern technology.” Read more here.
“Ashher Zafar, Chief Technology Officer, PlanckDOT, says, ‘All aspects of our lives, business, and society are today being turned into quantifiable and usable data. The fact is the datafication of everything is a reality we must live with today. Datafication helps us derive insights, make informed decisions, optimize, and automate processes, and create new devices and software products. It is forecasted that by the end of 2024, globally 147 zettabytes of data would be created and consumed.’” Read more here.
“Distributed denial of service attacks hit an all-time high in 2023, more than doubling year over year in the fourth quarter, Cloudflare said Tuesday in a threat report.”
The strategies behind our Thematic Models:
Aging of the Population - Capturing the demographic wave of the aging population and the changing demands it brings with it.
Artificial Intelligence – Software, chips, and related companies that facilitate the collection and analysis of large data sets and autonomous generation of solutions given non-machine language prompts.
CHIPs Act – Capturing the reshoring of the US semiconductor industry and the $52.7 billion poised to be spent on semiconductor manufacturing.
Cloud Computing – Companies that provide hardware and services that enhance the cloud computing experience for users, such as co-location, security, and edge computing.
Consumer Inflation Fighters - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
Core Holdings – Companies that reflect economic activity and are large enough to not get pushed around by day-to-day market trends. Low-beta, large-cap names able to better withstand economic turmoil.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
EV Transition - Capturing the transition to EVs and related infrastructure from combustion engine vehicles.
Guilty Pleasure – Companies that produce/provide food and drink products that consumers tend to enjoy regardless of the economic environment and potential long-term health hazards associated with excessive consumption.
Homebuilding & Materials – Ranging from homebuilders to key building product companies that serve the housing market, this model looks to capture the rising demand for housing, one that should benefit as the Fed returns monetary policy to more normalized levels.
Luxury Buying Boom - Tapping into aspirational buying and affluent buyers amid rising global wealth.Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Nuclear Energy & Uranium – Companies that either build and maintain nuclear power plants or are involved in the production of uranium.
Precision Ag & Agri Science – Companies that look to address shrinking arable land by helping maximize crop yields utilizing technology, science, or both.
Rebuilding America - Turning the focused spending on rebuilding US infrastructure into revenue and profits.
Safety & Security – Targeted exposure to companies that provide goods and services primarily to the Defense and security sectors of the economy.
Space Economy – Companies that focus on the launch and operation of satellite networks.
The strategies behind our Dividend Income Models:
Monthly Dividend Model – Pretty much what the name says – this model invests in companies that pay monthly dividends to shareholders.
ETF Dividend Model – High-yielding ETFs that provide a range of exposures from domestic equities, international equities, emerging market equities, MLPS, and REITs.
ETF Enhanced Dividend Model – A group of high-yielding ETFs that utilize options to enhance yield through collecting option income.