2018 – True Normalization?

2018 – True Normalization? –  With one more 2017 rate hike expected from the US Federal Reserve this Wednesday, market participants’ attention is shifting to thinking about 2018, and the pace of FED hikes for the year ahead. Will it be 4 hikes as “telegraphed” by the FED itself, or something closer to what markets are pricing in, which is … what? 2? Put this in the context of anticipation of the removal of quantitative easing in Europe for instance, and a gradual unwinding of the Central Banks’ massive balance sheets – and what we have are circumstances possibly putting the currently rosy global synchronized growth scenario if not in jeopardy, perhaps facing some clouds and questions as far as both its strength and duration …

And then you have some … talking about the potential of a US recession if not in 2018, in 2019 … Which … given the longevity of the current cycle, shouldn’t exactly come as a surprise – but may well come as a shock to Global markets that have – in 2017 – certainly been blessed in terms of overall returns …

Latest Developments:

  • BCA Research – Has identified 5 potential “black swan” events which could prove challenging in 2018 – Possible trade war with China, triggered by a US President eager to shift the focus abroad, given a lack of meaningful progress on the homefront … Confrontation with Iran; A coup in North Korea; UK Prime Minister Theresa May being replaced by Labour’s Jeremy Corbyn as retribution for the BREXIT fiasco … A sharp setback in Latin America, courtesy a combination of Politics and a China-induced credit contraction …
  • Gluskin Sheff’s David Rosenberg – Suggests Canadians shed their home-bias and look to Japan … while otherwise opining in a Globe roundtable article that “the easy money” in Marijuana stocks has been made …
  • Bitcoin – (OMG) – Futures started trading on Dec 10 … where will it … or will it (?) end? Bitcoin seems to have done one thing of late, other than going parabolic, which is to eclipse Trump in terms of headline grabbing “prowess”.
  • Talking of which … – the US President recognized Jerusalem as capital of Israel – a move that is causing anxiety, push back, and the prospect of violence in the region…
  • GE – 12,000 jobs axed … As restructuring and taking costs out of the company take hold.
  • Canadian PM Trudeau – Coming back “empty-handed” as far as hoped for deal with China …

Latest market numbers as seen through ETFs providing exposure to the most commonly referred to benchmarks:

ticker name change ticker name change ticker name change
XIU S&P/TSX 60 0.76% PXG RAFI Global Fundamental 1.38% VCN FTSE Canada All Cap Index ETF 0.37%
XIC S&P/TSX Capped Composite 0.31% PXS RAFI US Fundamental Index 1.65% VCE FTSE Canada Index ETF 0.58%
CRQ RAFI CDN Fundamental 0.25% QQC/F NASDAQ 100 CAD Hedged 0.02% VUN CRSP US Total Market Index Unhedged 1.59%
XSP S&P 500 CAD Hedged 0.40% PZC RAFI CDN Small-Mid Fundam -1.02% VSP S&P 500 CAD Hedged 0.47%
XUS S&P500 1.73% VXC FTSE All-World Ex Canada Index ETF 1.38%
XMU MSCI Min Vol US 1.28% XXM/b Morningstar US Value (Unh) 3.26% VEF FTSE Developed ex North-Am CAD H 0.80%
CLU RAFI US Fund 1000 CAD H 0.30% YXM/b Morningstar US Momentum (Unh) 1.12% VDU FTSE Developed ex North-America 1.24%
XSU Russell 2000 CAD Hedged -1.01% FXM Morningstar CDN Value 0.58% VE FTSE Developed Europe 1.30%
XIN MSCI EAFE CAD Hedged 1.10% WXM Morningstar CDN Momentum 0.44% VA FTSE Developed Asia Pacific 0.89%
XEH MSCI Europe IMI CAD H 0.89% VXM/b Morningstar Intl Value (Unh) 1.66% VEE FTSE Emerging Mkts 1.49%
XEC MSCI EM IMI 1.24% ZXM/b Morningstar Intl Momentum (Unh) 1.22% HAZ Active Global Dividends 1.97%
XMM MSCI Min Vol Emerging 1.83% RWE MSCI Europe Low Risk Weighted (H) 1.58% HHF Morningstar Hedge Fund Index 0.35%
CWO RAFI Broad Emerging 0.81% HMF Auspice Managed Futures 0.36%
CJP RAFI Fundam Japan CAD H 1.35% ZDJ Dow Jones CAD Hedged 0.41% HAC Seasonal Rotation 0.95%
CDZ CDN Div Aristocrats 0.11% ZEQ MSCI Europe High Quality CAD H 0.99% HPR Active Preferred Shares -0.83%
week of: Dec 4-8, 2017 OVERALL Source: ETFinsight/Bloomberg

Respectively through available “FACTORS” (Smart or Strategic Beta) ETFs:

ticker name change ticker name change
RAFI: Value: Yield:
CRQ RAFI CDN Fundamental 0.25% VXM/b Morningstar Intl Value (Unh) 1.66% CDZ iShares S&P/TSX Canadian Dividend Aristocrats Index ETF 0.11%
CLU RAFI US Fund 1000 CAD H 0.30% XXM/b Morningstar US Value (Unh) 3.26% XHU iShares US High Dividend Equity Index ETF 1.47%
CJP RAFI Fundam Japan CAD H 1.35% FXM Morningstar CDN Value 0.58% VGG Vanguard US Dividend Appreciation Index ETF 1.95%
CWO RAFI Broad Emerging 0.81% XCV iShares Canadian Value Index ETF 0.15% CUD iShares US Dividend Growers Index ETF CAD-Hedged 0.49%
PXG RAFI Global Fundamental 1.38% VVL Vanguard Global Value Factor Etf 1.64%
PZC RAFI CDN Small-Mid Fundam -1.02% Momentum:
YXM/b Morningstar US Momentum (Unh) 1.12%
Min Vol: ZXM/b Morningstar Intl Momentum (Unh) 1.22%
VVO Vanguard Global Minimum Volatility Etf 0.46% WXM Morningstar CDN Momentum 0.44% Multi-Factors:
XMW MSCI Min Vol World 1.41% VMO Vanguard Global Momentum Factor Etf 1.25% XFC iShares Edge MSCI Multifactor Canada Index ETF -0.08%
XMI MSCI Min Vol EAFE 1.33% Liquidity: XFS iShares Edge MSCI Multifactor USA Index ETF 1.81%
XMM MSCI Min Vol Emerging 1.83% VLQ Vanguard Global Liquidity Factor Etf 0.71% XFI iShares Edge MSCI Multifactor EAFE Index ETF 0.71%
XMU MSCI Min Vol US 1.28% Quality: Low Risk Weighted:
XMV MSCI Min Vol Canada 0.53% ZEQ BMO MSCI Europe High Quality Hedged To CAD Index ETF 0.99% RWE First Asset MSCI Europe Low Risk Weighted ETF 1.58%
week of: Dec 4-8, 2017 FACTORS / SMART BETA / STRATEGIC BETA Source: ETFinsight/Bloomberg

Factors, Factors, and more Factors –  including Multi Factors, and Single Factors on a Global basis.

Active, you say? – See below, which captures weekly performance for ETFs managed by Strategists, or wraps incorporating several ETFs into one to solve for Conservative, Balanced, or Growth objectives:

ticker name change ticker name change ticker name change
HGM Horizons Managed Global Opportunities ETF -0.18%
EXGG Excel Global Growth Asset Allocation Etf -0.12% HAC Horizons Seasonal Rotation ETF 0.95%
EXGB Excel Global Balanced Asset Allocation Etf -0.08% HRA Horizons Global Risk Parity ETF -0.10%
HHF Horizons Morningstar Hedge Fund Index ETF 0.35%
DWG PowerShares DWA Global Momentum Index ETF 0.86%
SID First Asset US Trendleaders Index Etf -0.59%
XTR iShares Diversified Monthly Income ETF 0.09%
FIE iShares Canadian Financial Monthly Income ETF -0.07%
ZMI BMO Monthly Income ETF 0.98%
CBD iShares Balanced Income CorePortfolio Index ETF 0.22% FUT First Asset US Tactical Sector Allocation Index ETF 0.09%
ETP First Trust Global Risk Managed Income Index ETF 0.36% PRP Purpose Conservative Income Fund -0.77%
CBN iShares Balanced Growth CorePortfolio Index ETF 0.09%
week of: Dec 4-8, 2017 ETF Strategists & ETFs of ETFs Source: ETFinsight/Bloomberg

Providers’ News:

iShares – Rieder: 2017, the acid test for active bond Investing

Vanguard – The Outlook for 2018: Rising risks to the status quo

Horizons ETFs – Globe’s Clare O’Hara: Horizons launches Robotics and Automation ETF => Click HERE!

Other:

Mackenzie – Launches Global Leadership Impact ETF => Click HERE!

To which we’d say: finally – more product, finally, on the ESG/SRI/Impact/Gender Equality/Impact front … The impact these will have going forward should be interesting to follow … will the flows materialize? Will 2018 be fertile ground for them?

ETFinsight – December 2017 Perspectives: 2018: Onward and Upward?

New records as far as AUM, reaching CAD 145.9 Billion as at Nov 30, 2017

Weekly volume history to Dec 8, 2017:

Top and Bottom performing ETFs for the week of Dec 4-8, 2017:

Ticker Name % Change Avg Price Weekly Volume $ Volume traded
Top Performers week of Dec 4-8, 2017
HMMJ CN Equity Horizons Marijuana Life Sciences Index ETF 5.43% $14.30 4,251,696 $60,789,728
ZID CN Equity BMO India Equity Index ETF 3.60% $23.72 298,683 $7,111,647
XID CN Equity iShares India Index ETF 3.57% $34.70 28,846 $999,213
ZBK CN Equity BMO Equal Weight US Banks Index ETF 3.35% $26.70 1,394,972 $37,194,425
XXM/B CN Equity First Asset Morningstar US Value Index ETF 3.26% $17.08 96,444 $1,652,173
UXM/B CN Equity First Asset Morningstar US Dividend Target 50 Index ETF 2.96% $16.12 24,839 $396,748
ZTL CN Equity BMO Long-Term US Treasury Bond Index ETF 2.49% $51.01 15,743 $798,784
FHD CN Equity First Trust AlphaDEX US Consumer Discretionary Sector Index ETF 2.39% $25.33 26,542 $678,991
ZLD CN Equity BMO Low Volatility International Equity Hedged to Cad Etf 2.30% $22.94 34,973 $800,904
RUSA CN Equity RBC US Equity Index Etf 2.23% $22.18 30,662 $680,187
Bottom Performers
HEP CN Equity Horizons Enhanced Income Gold Producers ETF -3.06% $23.61 89,898 $2,133,856
ZGD CN Equity BMO Equal Weight Global Gold Index ETF -3.07% $8.90 2,182,624 $19,366,763
HUZ CN Equity Horizons Silver ETF -3.19% $8.91 24,215 $215,179
HEE CN Equity Horizons Enhanced Income Energy ETF -3.29% $11.89 66,912 $799,266
SVR CN Equity iShares Silver Bullion ETF -3.32% $8.84 108,617 $958,122
HUN CN Equity Horizons Natural Gas ETF -4.49% $5.78 29,963 $172,860
OXF CN Equity First Asset Can-Energy Covered Call ETF -5.08% $8.93 40,172 $361,878
HNY CN Equity Horizons Natural Gas Yield ETF -6.10% $11.26 59,670 $665,205
CCX CN Equity Auspice Canadian Crude Oil Index ETF -6.83% $9.52 12,451 $119,530
HUV CN Equity BetaPro S&P 500 VIX Short-Term Futures ETF -7.81% $5.60 169,267 $974,178

Top Performing ETFs for the week: Higher Highs (couldn’t wait to be able to say that in relation to this ETF …) for the Marijuana ETF ($HMMJ); strength in India ETFs, and US Banks and Value areas (both trends to be continued in 2018?) …

Bottom Performing ETFs for the week: Volatility; Oil; Nat Gas, Energy overall, and gold and silver all on the losing end of the equation this past week … (Bitcoin’s fault? possibly in part as far as Gold and Silver …)

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