The Biden administration plans to increase tariffs on Chinese electric vehicles, solar panels, and batteries for EVs, aiming to protect the American clean-energy industry. Although this move could impact the Chinese EV sector, its effect is expected to be limited. China may respond with retaliatory tariffs on U.S. EVs and agricultural exports, potentially impacting global markets and U.S. automakers.
Recent data suggests that the U.S. consumer is facing challenges, with issues such as declining wage growth, reduced savings, and slowing discretionary spending. This, coupled with concerns about interest rates and inflation, may prompt investors to consider diversifying into emerging markets. American Century Investments’ Avantis offers ETF options like AVEM and AVXC to address this situation.
The article evaluates the Schwab Emerging Markets Equity ETF (SCHE), noting its under-performance and unattractive prospects due to high exposure to China and Taiwan. With better opportunities in developed markets and concerns about elevated interest rates, the outlook for SCHE is downgraded to “hold.” The recommendation is to approach new positions in SCHE selectively.
J.P. Morgan launched the JPMorgan Active Developing Markets Equity ETF (JADE) with a focus on emerging markets. The fund aims to provide long-term capital appreciation through emerging markets equity securities, with a net expense ratio of 0.65%. Seeking opportunities beyond the U.S. borders, the ETF applies a bottom-up fundamental approach and may invest in a variety of sectors and industries.__JETPACK_AI_ERROR__
The China Securities Regulatory Commission announced measures to deepen links between stock markets in Hong Kong, Shenzhen, and Shanghai, including relaxed criteria for ETFs and support for yuan-denominated shares trading in Hong Kong. Beijing aims to encourage Chinese companies to list in Hong Kong amid slow IPO activity and a four-year losing streak for the Hang Seng Index.
The iShares 1-3 Year Treasury Bond ETF (SHY) is sensitive to rate changes. Inflation remains high due to PPI effects and labor market strength. SHY has zero credit risk and a 1.8-year effective duration. The yield curve expects rate cuts, but uncertainties exist. Inflation is likely to persist, impacting investment decisions. Consider global macro commentary for investment insights.
Alibaba Group Holding Limited (NYSE:BABA) is undervalued by traditional financial metrics but faces substantial political risk due to the Chinese government’s crackdown on private company ownership. This risk makes it an unsuitable long-term investment, despite strong financials. The stock’s performance relies heavily on political changes in China. Ultimately, it is not a recommended buy.
U.S. Treasuries are considered relatively safe, but can be affected by interest rate changes. To mitigate this risk, consider floating rate notes (FRNs) like USFR. These bonds are less volatile and provide potential for higher returns than traditional Treasuries. With their interest rates resetting frequently, FRNs offer lower rate risk.
Investor demand for corporate bonds is increasing as businesses issue more debt, from investment-grade to high yield, ahead of potential rate cuts. The macroeconomic environment may be tipping in favor of rate cuts, leading to record issuance of investment-grade debt. The Vanguard Total Corporate Bond ETF offers broad exposure to this market.
In the corporate bond world, there are investment-grade and non-investment-grade (junk) bonds. Junk bonds carry higher risk but also offer higher yields. The Eaton Vance High Yield ETF (EVHY) is an example of an exchange traded fund that capitalizes on this. Despite economic concerns, EVHY’s management and reduced recession risk make it a compelling option.
Corporate profits are on the rise, surpassing analyst expectations for the first quarter and signaling potential for even greater growth in the second quarter. This positive outlook may attract fixed income investors to corporate bonds. Vanguard offers a range of corporate bond ETF options for varying maturity dates, providing potential yield-focused and rate-risk mitigating choices.
Wealthfront introduces an Automated Bond Ladder to optimize US Treasury usage for higher interest. This liquid, low-risk product offers greater tax efficiency compared to traditional accounts, providing an ideal balance for investment portfolios. The platform’s automated approach simplifies the process and reflects a broader trend of increased interest in US Treasuries.
Renowned bond-fund manager Bill Gross challenges the appeal of bond investments, questioning the motives of bond-fund managers and advocating cautiousness in their predictions. He predicts a struggle for the bond market, advocating for Treasury Inflation-Protected Securities. While Gross stresses a bleak outlook, the author remains agnostic but shares Gross’s skepticism about current bond prices.
The Yield Curve, with the 10yr minus 3mo Treasury rate, is rising rapidly as investors anticipate more persistent inflation. Portfolio managers expect a significant rate decline, but recent industrial earnings reports and guidance suggest a shift towards industrials. This signals a turning point away from the sole focus on high tech investments to broader options.
