Bill Housey discusses recent dynamics in the bond market, including why longer-term interest rates have increased since the Fed began cutting rates, where we are in the economic cycle, and implications for fixed income investors.

A renaissance of American industry is underway, in our opinion, arising from elevated risks to global supply chains, increased trade protectionism, and U.S. industrial policies offering substantial incentives to shift manufacturing onshore. While small- and mid-capitalization (“cap”) U.S. industrial stocks have performed relatively well recently, we view U.S. reindustrialization as a largely untapped secular growth opportunity that may continue to flourish over the next decade. Below, we unpack several key drivers for the return of American manufacturing, followed by a brief discussion of why we believe the First Trust RBA American Industrial Renaissance® ETF (AIRR) is well-positioned to benefit.

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• Net inflows for US-listed ETFs totaled $87.3 billion in September, bringing total ETF assets under management to $9.83 trillion.
  
  
• Equity ETFs had net inflows totaling $52.7 billion in September, bringing trailing 12-months (TTM) net inflows to $637.2 billion. Active equity ETFs accounted for $12.0 billion in net inflows in September, compared to $40.6 billion in net inflows for passive equity ETFs. Total AUM in actively managed equity ETFs was $479.2 billion, accounting for 6.1% of all equity ETF assets ($7.82 trillion), as of 9/30/24.
  
  
• Fixed income ETFs had net inflows totaling $30.4 billion in September, bringing TTM net inflows to $289.0 billion. Active fixed income ETFs accounted for $13.0 billion in net inflows in September, compared to $17.3 billion in net inflows for passive fixed income ETFs. Total AUM in actively managed fixed income ETFs were $253.8 billion, accounting for 14.4% of all fixed income ETF assets ($1.77 trillion), as of 9/30/24.
  
  
• Commodities ETFs had net inflows totaling $1.5 billion in September, bringing TTM net outflows to $1.3 billion. Precious metals ETFs (+$1.3 billion) was the strongest commodity sub-category in September.

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The S&P 500 Index (index) looks significantly different today than it did 10 years ago. This is not your grandparents’ index. This is not your parents’ index either. Actually, it’s not even your older siblings’ index! What a difference 10 years can make!

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Dave McGarel provides insights on what sort of stocks are poised for long-term outperformance in light of Fed rate cuts, valuation gaps, and factor analysis.

Ryan talks with Bob Carey about the implications of a falling interest rate environment for equity markets.

• Net inflows for US-listed ETFs totaled $71.9 billion in August, bringing total ETF assets under management to $9.53 trillion.
  
  
• Equity ETFs had net inflows totaling $36.1 billion in August, bringing trailing 12-months (TTM) net inflows to $612.6 billion. Active equity ETFs accounted for $11.5 billion in net inflows in August, compared to $24.6 billion in net inflows for passive equity ETFs. Total AUM in actively managed equity ETFs was $454.6 billion, accounting for 6.0% of all equity ETF assets ($7.58 trillion), as of 8/31/24.
  
  
• Fixed income ETFs had net inflows totaling $32.9 billion in August, bringing TTM net inflows to $268.1 billion. Active fixed income ETFs accounted for $7.4 billion in net inflows in August, compared to $25.5 billion in net inflows for passive fixed income ETFs. Total AUM in actively managed fixed income ETFs were $237.3 billion, accounting for 13.8% of all fixed income ETF assets ($1.72 trillion), as of 8/31/24.
  
  
• Commodities ETFs had net inflows totaling $0.4 billion in August, bringing TTM net outflows to $4.6 billion. Precious metals ETFs (+$1.0 billion) was the strongest commodity sub-category in August.

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Here come the interest rate cuts. Finally! Today, futures markets are pricing the odds of a 25 basis point September rate cut at 100% (in fact they are pricing in a roughly 25% chance of 50bps). Additionally, Federal Reserve(Fed) Chair Jerome Powell all but guaranteed the Fed would begin loosening monetary policy during his recent speech in Jackson Hole. Does this materially change our outlook and where we see opportunities going forward? Not really.

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Brian Comiskey, Senior Director at the Consumer Technology Association, joins the podcast to discuss how recent trends in technology are reshaping the spending priorities of businesses, consumers, and governments around the world.

The long-term secular growth story for biotechnology stocks is compelling, in our opinion. Over the next several decades, an aging global population will support massive demand for cures and treatments for a variety of diseases, especially those associated with old age. At the same time, innovation is flourishing for biotechnology companies racing to meet these needs, supported by new technologies such as artificial intelligence/machine learning, which enables researchers to analyze massive amounts of data more efficiently, or cloud-based infrastructure, which provides virtually unlimited computing power. 

Over much of the past few years, biotechnology stocks have struggled with a hangover from COVID-19, higher costs of capital, and political pressure related to drug pricing. For the three-year period ending on June 30, 2024, the First Trust NYSE® Arca® Biotechnology Index Fund (FBT) produced a cumulative loss of 10.9%, compared to a 33.1% gain for the S&P 500® Index. However, over the past several weeks, momentum has begun to shift in favor of the biotechnology industry. Since June 30, 2024, FBT has posted an 11.1% total return, compared to a 6.8% gain for the Nasdaq Biotechnology™ Index and a 2.7% gain for the S&P 500® Index (as of 8/20/24). We discuss a few potential catalysts that may continue to benefit biotechnology stocks in the months ahead, in our opinion, including falling interest rates, increased mergers and acquisitions (“M&A”) activity, and rising demand for defensive sectors if the economy slows.

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