ETFdb.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
It is hard to describe in one word the predominant feeling of our readers over the past week, but the most accurate would probably be “confusion.” To that end, gold and short equity ETFs are present in our list of trends, as well as retail ETFs and Amazon, which are usually considered a proxy for the health of the US economy. Meanwhile, agriculture ETFs garnered interest for reasons other than nervousness about the financial markets – they have performed relatively well year-to-date.
Retail ETF: Online vs. Brick-and-Mortar
Arguably, retail is the sector that has confused investors the most, given that e-commerce has performed well but brick-and-mortar disappointed. Our page tracking retail ETFs saw its traffic increase as much as 615% in the past week, as many retail ETFs have continued their downward slide and experienced outflows despite upbeat retail sales numbers published by the US Census Bureau last week (retail sales increased 1.3% m/m vs. consensus of 0.9% m/m).
Seemingly, investors have not been impressed by these strong numbers, particularly given that many retailers, including Macy’s (M) and Target (TGT) , have published disappointing earnings reports lately, due to poor sales. The mother of all retailers, Wal-Mart Stores (WMT) , has yet to produce its results for the latest quarter, but expectations are not high. The only bright spot in an industry that has investors worried is Amazon (AMZN) , which reported strong earnings last month on higher sales.
Further dealing a blow to the embattled sector, Staples (SPLS) and Office Depot (ODP) called off a merger after a Judge ruled against the tie-up on antitrust issues. Shares in both companies have dropped off a cliff since the ruling was announced less than a week ago.
All these stories combined have made for a relatively bad performance of ETFs tracking the sector. SPDR S&P Retail ETF (XRT ) has dropped 6% over the past five days, extending year-to-date losses to about 6.4%. By contrast, the S&P 500 has been flat since the beginning of the year.
Agriculture: Switching to Recovery Mode
The main question bugging investors in Agricultural ETFs lately has been whether the prices of many commodities, including soybean and grain, have bottomed out. Our page tracking the top 16 agricultural ETFs saw 144% more viewers in the past week compared to the week-ago period, largely due to the good performance of many ETFs in the sector. Although year-to-date gains of many funds has varied from slightly negative to double digit growths, the main ETF, PowerShares DB Agriculture Fund (DBA ), has jumped nearly 4% since the start of the year (as of yesterday, but is down this morning).
The rise has taken place in the context of worries about a flood in Argentina and dryness in parts of Brazil. In addition, the agricultural commodities have been boosted by a weaker dollar and expectations of higher demand from abroad. The U.S. Department of Agriculture will release its quarterly export projections this month on May 26, and many expect it to show an increase. Still, with the Federal Reserve hinting in its latest minutes that a June rate hike was again on the table, the dollar could prove a headwind rather than a tailwind to agricultural commodities going forward.
Gold: Recovering or Predicting Bad Times Ahead
The precious metal has dropped following the release of the Fed minutes, reaching three-week lows of $1,254 per ounce on Thursday. Because it pays no interest, gold is not a good investment in an environment in which interest rates rise, hence the reaction. The page tracking gold ETFs saw its traffic increase 22% week-over-week, as the shiny metal has been in the spotlight lately for various reasons. Despite the Thursday fall, many ETFs have still posted double digit gains since the beginning of the year. For example, SPDR Gold Trust (GLD ) fell nearly 2% on Thursday, but is up roughly 18% year-to-date.
Before the minutes were released, gold had made the headlines with news that several prominent investors, including George Soros, had bet big on the shiny metal, signaling they are preparing for a storm. China’s rising debt levels is a particular worry in this sense. And if the country’s economy implodes, it will undoubtedly send shockwaves through the global stock markets, boosting demand for safe haven assets, including gold. The interest of our readers in the metal is further signaling that investors are cautious about the future, particularly considering that the page tracking short equity ETFs sits right next to the gold in the list.
Inverse Equity: Mounting Worries
Inverse Equity ETFs; funds that rise when their underlying stocks fall, have attracted our readers this past week. The Inverse equity ETFs page saw its traffic rise nearly 20% compared to the week-ago period. Although the page tracks over 70 ETFs with exposure to a large variety of stocks, including oil and gold, the most capitalized are broad indexes such as the S&P 500. ProShares Short S&P500 (SH ), for instance, has risen above 1% over the past five days, but is down nearly 2% since the beginning of the year.
The equity short ETFs have garnered interest amid conflicting news about the health of the global and the US economy. The second-largest economy in the world, China, released disappointing data this weekend, with industrial production, retail sales and investment coming in below expectations. Retail sales in the US, by contrast, were reportedly strong in the previous month, but that somehow failed to translate into higher earnings for big retailers, prompting investors to shrug their shoulders. Furthermore, high-caliber investors such as Soros and Carl Icahn trimmed their exposure to the US equities, with the former also doubling down on a short bet on the S&P 500.
Amazon: Stepping on Brick’s Turf
The online retail company founded by Jeff Bezos has seen its share price decline slightly over the past week, as the stock retraced somewhat from all-time highs reached following a bumper earnings report last month. At the annual meeting on Tuesday, Bezos made clear that Amazon will open more brick-and-mortar stores, but said he did not know how many exactly. The announcement is more bad news for traditional retail companies, which have been hit recently by consumers’ shift to online shopping.
The Bottom Line
Investors are worried about the financial markets and the economy but are not entirely discouraged, based on the trends uncovered this week. Retail ETFs and Amazon have sent mixed signals about the health of the US economy, while gold’s ascent and the presence of short ETFs in our list serve as an indication of investors’ jitters. Agriculture ETFs made it to our list for their relatively good performance.
By analyzing how you, our valued readers, search our property each week, we hope to uncover important trends that will help you understand how the market is behaving so you can fine-tune your investment strategy. At the end of the week, we’ll share these trends, giving you better insight into the relevant market events that will allow you to make more valuable decisions for your portfoli