ETF Database Trends for the Week: November 20

Our Aerospace and Defense page jumped through the roof with traffic this week. To be exact, the week-over-week increase of visitors was 443.91%. This is, of course, due to the terrorist attacks in Paris late last week. As a natural consequence, investors wish to add exposure to defense stocks and ETFs to their portfolios during these disturbing time periods. The other side of the coin is the aerospace industry, which suffers from these kinds of events. This is due to decreased demand for air travel during terrorist attacks.

On Monday, following these tragic events, the iShares US Aerospace & Defense ETF (ITA B) jumped 2.41%. ITA is the largest ETF, by assets, with exposure to the aerospace and defense subsector. Other aerospace and defense ETFs such as (PPA B+) and (XAR B+) saw a similar jump.

For more information on why we believe the aerospace and defense industry will continue to perform well in the coming months and in 2016, be sure to check out our previous article on the opportunities in the defense and aerospace industry.

The Retail ETF List got people turning their heads this week with a 156.83% increase in traffic. On Friday, November 13, core retail sales were up only 0.2% m/m vs. the 0.4% consensus, which caused The Market Vectors Retail ETF (RTH B+) to nosedive 2.84% that day. The fact that the Prelim UoM Consumer Sentiment was better than expected at 93.1 vs. consensus of 91.3 did not help much that day. However, this ETF saw a jump right back this week and is up 10.69% in a one-year period.

Black Friday is right around the corner and investors wish to get their hands on ETFs with exposure to the retail sector before this yearly event. Although consumers tend to spend more on this day of sales, the economic data suggests buyers will not be spending as much as investors believe. According to retail firm Conlumino, 45% of shoppers are planning to spend less on this year’s Black Friday than a year ago. Twenty-four percent said they will spend about the same amount; 18% said they will spend less than a year ago; and 13% said they will not shop at all that day. Furthermore, Wells Fargo warns some people might consume less in the near future due to home equity lines of credit reaching the end-of-draw periods. To add to the worries, the FOMC Meeting Minutes hawkish tone on Wednesday suggests interest rates will rise, which is a negative indicator for the retail industry, since credit will become more expensive for consumers.

Our Copper ETF List page was trending this week, with an increase in traffic by 113% from the previous week. Copper prices slide to a six-year low this week. There is a strong correlation between copper prices and global economic activity, and copper is considered an indicator for the health of the overall world economy. Copper is one of the main inputs for industrial activity, and demand for copper is slowing down, given a pullback in world economic growth. According to the International Monetary Fund, global growth forecast is at 3.1% for 2015 from 3.3%.

This week, the outlook for copper was bearish as China’s copper futures contracts on the Shanghai Futures Exchange increased more than 40% over the past month. Going forward, only a major recovery in the Chinese economy will lift the demand for copper and create an equilibrium given the continued increase in supply.

Oil continues to trend in the markets. The Crude Oil ETF List page was a top-trending page on ETF Database this week, with a increase in traffic by 76% from the previous week. It looks like our readers were interested in ways to play oil’s volatility.

Wednesday, oil rose due to short covering ahead of the contract’s expiration date on November 20. Also, the EIA (Energy Information Administration) released its weekly report, indicating that crude inventories grew by 252,000 barrels last week vs. the forecast consensus of 2 million barrels. The FOMC minutes also indicated an interest rate hike will be very likely in December. A tight monetary policy will drive the dollar higher, making dollar-denominated commodities more expensive.

Thursday, the WTI (West Texas Intermediate) crude oil futures contracts for December settled at $40.52. Different ETFs such as the United States Oil ETF (USO A) and the DB Oil fund (DBO B+) also experienced volatility. Going forward, we believe the supply issue will continue as well as the deceleration in economic growth, driving oil prices to new lows.

This week, our commodities page was also trending, with an increase in traffic by 59%. From our previous trends, we can see oil and copper were trending given their current volatility state. Overall, commodity prices have had a downward pressure this year, given China’s slowdown. Goldman Sachs still is underweight on commodities for the next year.

This week, most of the trends were very diverse – from Aerospace & Defense, given the geopolitical situation across the world, to Retail, with a rise in consumer sentiment. From FOMC minutes and Black Friday all the way to commodities, with oil and copper in the headlines with prices reaching new lows.

We continue to see an increase in interest in ways to play these market industries and asset classes, with A&D continuing to be an investment play going forward in 2016, as well as cyclical investment plays such as the retail industry.

By analyzing how you, our valued readers, search our property, we hope to uncover important trends that can help you understand how the market is behaving so you can fine-tune your investment strategy. At the end of each week, we’ll share these trends for the week, giving you better insight into the relevant market trends that will allow you to make more valuable decisions for your portfolio.