By Mark DeCambre
A war on multiple fronts is under way in markets.
It isn’t just the military conflict kicked off by Russian President Vladimir Putin in Ukraine, but also the war being waged against rising price pressures and growing concerns about recession in the U.S. We’ll discuss investment tactics with some strategists who will aim to offer a field guide via exchange-traded funds to the new treacherous landscape.
Meanwhile, a pair of Russian ETFs are getting punched in the mouth, but they aren’t the only assets facing withering declines.
|Top 5 gainers of the past week||%Performance|
|VanEck Gold Miners ETF /zigman2/quotes/206399889/composite GDX||5.0|
|iShares MSCI Global Gold Miners ETF /zigman2/quotes/208061034/composite RING||4.9|
|Aberdeen Standard Physical Platinum Shares ETF /zigman2/quotes/206361625/composite PPLT||4.5|
|Vanguard Extended Duration ETF /zigman2/quotes/205711909/composite EDV||3.4|
|iShares Silver Trust /zigman2/quotes/205744453/composite SLV||3.2|
|Source: FactSet, through Wednesday, Feb. 23, excluding ETNs and leveraged products . Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greate r|
…and the bad
|Top 5 decliners of the past week||%Performance|
|iShares MSCI Russia ETF||-18.3|
|VanEck Russia ETF /zigman2/quotes/200464876/composite RSX||-16.7|
|ARK Next Generation Internet ETF /zigman2/quotes/201846852/composite ARKW|
|ARK Innovation ETF /zigman2/quotes/204808965/composite ARKK||-15.8|
|ARK Fintech Innovation ETF /zigman2/quotes/205650811/composite ARKF||-15.6|
|Top 5 weekly inflows|
|SPDR Bloomberg High Yield Bond ETF /zigman2/quotes/202941311/composite JNK|
|iShares Paris-Aligned Climate MSCI USA ETF (PABU)|
|Vanguard Intermediate-Term Corporate Bond ETF /zigman2/quotes/202884162/composite VCIT|
|iShares iBoxx $ Investment Grade Corporate Bond ETF /zigman2/quotes/206919681/composite LQD|
|iShares U.S. Real Estate ETF /zigman2/quotes/202389641/composite IYR|
|Top 5 weekly outflows|
|SPDR S&P 500 ETF Trust /zigman2/quotes/209901640/composite SPY|
|Financial Select Sector SPDR Fund /zigman2/quotes/209660484/composite XLF|
|Invesco QQQ Trust /zigman2/quotes/208575548/composite QQQ|
|Energy Select Sector SPDR Fund /zigman2/quotes/206420077/composite XLE|
|iShares ESG Aware MSCI USA ETF /zigman2/quotes/208081415/composite ESGU|
On Thursday, we caught up with Nancy Davis, the chief investment officer and founder of advisory firm Quadratic Capital, who said that this environment of uncertainty, marked by rising inflation, a hawkish Federal Reserve and a host of geopolitical risks could lead to stagflation.
Economists and strategists have been kicking around the idea of stagflation. MarketWatch has reported on it here and here . But the notion of higher prices and sluggish growth, last experienced in the 1970s, is starting to look more like a possibility, given supply-chain shortages, $100 oil, chip shortages and the threat of all-out war in Ukraine, which could morph into something more severe and amplify problems.
“It’s hard to have a crystal ball but I think the biggest concern for investors has to be a stagflation,” Davis told ETF Wrap.
She said in such an environment bonds and stocks could selloff together, with the Federal Reserve forced to raise rates, to tackle rising inflation.
“This stuff is really going to heat up inflation pressures,” she said.
She pointed to crude-oil prices /zigman2/quotes/211629951/delayed CL.1 -0.77% at around $100 and the threat that further embargoes against Moscow could drive futures prices into the stratosphere. “We already have supply-side shocks and labor-market shortages,” she said.
So what does, Davis recommend?
She said investors should consider their allocations to stocks and bonds.
The investor said traditional portfolio allocations where investors own a mix of 60% in stocks and 40% in fixed-income might be a loss-making recipe in this environment.