LIVE MARKETS Exchange-traded funds: now on a blockchain? – Reuters

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Exchange-traded funds (ETFs) are some of the biggest investment vehicles in the market. CFRA estimates that as much as $700 billion flowed into equity-focused ETFs alone in 2021.
With their lower fees and relative ease of trading, it's no surprise that crypto-curious investors are eagerly awaiting the approval of a spot bitcoin ETF, but so far have had to settle for a handful that track futures , .
Meanwhile, institutional-investor focused digital asset management firm Arca thinks a next iteration of funds could involve the integration of blockchain technology – a "blockchain transferred fund" (BTF).
A BTF would issue its shares on a blockchain instead of a regular exchange. In a white paper published on Monday, Arca says this would allow for lower fees, the ability to transfer peer-to-peer, real-time settlement and potentially higher liquidity.
Arca already offers the Arca U.S. Treasury Fund, a BTF which tracks U.S. Treasuries. It issues digital assets called ArCoins where an ETF would issue traditional shares.
Still, there are roadblocks, particularly until the Securities and Exchange Commission's rules around digital assets, which still need to be ironed out. Until these rules are settled, "the utility in a market sense is not there yet," Arca CEO Rayne Steinberg says.
He also notes that some of the benefits of BTFs, most notably in how blockchain-based funds could drive down costs, will really kick in once such products are able to be offered at scale. This may take some time, given the regulatory outlook.
Meanwhile, Steinberg says Arca has seen interest from both bigger institutions as well as retail traders around their existing BTF.
The Russian invasion of Ukraine has intensified risk-off action.
Indeed, according to Bob Doll, chief investment officer at Crossmark Global Investments, the market outlook is highly uncertain, and volatility in both directions appears likely.
In any event, in his latest "Deliberations," Doll says that U.S. economic prospects are "quite upbeat" and are unlikely to be derailed by events in Ukraine.
He outpoints that from the early January peak to last week's low, U.S. stocks tumbled nearly 15%. Meanwhile, he says that the P/E ratio has fallen from 22x to 19x.
While Doll does not yet see this as "cheap" he believes selective additions to equity holdings are warranted given Crossmark's year end S&P 500 (.SPX) target remains 4,500, or a little more than 3% above current levels.
In conclusion, Doll does not expect Ukrainian developments to produce a meaningful hit to global growth and thus he anticipates that the cyclical outlook will remain bond-bearish and equity-neutral.
However, he believes equity markets became oversold and made a significant low last week.
(Terence Gabriel)
With fourth quarter earnings in for 95% of S&P 500 companies, DataTrek Research co-founder Nicholas Colas is out with a note looking at the profit trend.
"The overall story here is very good," wrote Colas who notes that benchmark S&P 500 as a whole reported net (after tax) margins of 12.4% for Q4 up from 11% a year ago.
But under the hood points to "distinct winners and losers" with six of the 11 industry sectors seeing increasing profit margins and five seeing their margins decrease.
On the winning side:
Energy: Q4 2021 9% net margin vs a Q4 2020 net loss
Industrials: 7.8% vs 4.5% year-ago
Materials: 12.9% vs 10.2%
Consumer discretionary: 7.6% vs 5.7%
Technology: 26% vs 24.1%
Health care: 10.6% vs 9.4%
On the losing side:
Utilities: 10.0% vs 11.9%
Real Estate: 34.2% vs 34.7%
Financials: 18.3% vs 18.7%
Communication Services: 12.3% vs 12.4%
Consumer Staples: 6.4% vs 6.5%
But overall, Colas' takeaway is that US large caps have on average coped well with surging domestic inflation because economic growth has been strong.
(Sinéad Carew)
Wall Street's main indexes are sliding in early trade on Monday as investors assessed the fallout from a new set of sanctions imposed by Western countries on Russia over its invasion of Ukraine.
World stocks are lower, oil prices are higher and Russia's rouble collapsed to record lows after Western allies blocked Russian banks off the SWIFT financial network and limited Moscow's ability to deploy its $630 billion foreign reserves. read more
All major S&P 500 (.SPX) sectors fell into the red initially with financials (.SPSY) taking the biggest hit. Banks (.SPXBK) are especially weak. This, with the U.S. 10-Year Treasury yield plunging back below 1.90%.
Energy (.SPNY) is moving back to positive territory. This, as tensions with Russia heat up, and NYMEX crude futures pop more than 3%.
Here is your early trade snapshot:
(Terence Gabriel)
That is, in a nutshell, what Bernstein is telling its equity clients after the invasion of Ukraine by Russia this month boosted volatility to multi-month highs and set European stocks for their worst month since October 2020.
"Despite near-term volatility and increased geopolitical risk, real yields are still very low, earnings momentum is strong, and we remain very much in an inflationary environment. All of these factors mean that investors need to keep or increase exposure to equities on a strategic horizon," say strategists at the U.S. investment house.
And even though in the near term they believe more caution is deserved, they are also "cautiously" keeping their tactical overweight of Europe versus U.S. equities.
"Recent events in the Ukraine clearly challenge this view. The possibility of further sanctions could lead to even higher energy prices leading to slowing growth in the region. In this scenario, we would reduce exposure to Europe," they note.
"However, we think it is too early to make a call on this, as there are too many unknowns at this point around future sanctions, government reactions in terms of fiscal support, etc. Fundamentally, the earnings picture for Europe is strong, buybacks are supportive and the equity yield gap v the US is widening," they argue.
(Danilo Masoni)
The S&P 500 index (.SPX) mounted an impressive snap back off its low last week. With this, the benchmark index formed a hammer candle pattern on the weekly charts, suggesting potential for a greater price reversal to the upside:
After sliding more than 5% at one point last week, bringing its decline from its early-January peak to nearly 15%, the SPX then recovered, and ended the week with a gain of nearly 1%. read more
A classic hammer candlestick formed in which the lower shadow of the pattern was more than twice the height of the real body, as in the market is "hammering out" a base, and attempting to find a bottom.
That said, traders may want to see confirmation, that is, for the price to quickly follow-through to the upside to add confidence in this pattern. So far on Monday, however, CME e-mini S&P 500 futures , although off their overnight lows, are still posting a loss of around 1.4%, suggesting a sharply lower downside open for the cash index.
Of note, a strong snapback in late-January, which formed a clear hammer in the futures, did lead to several weeks of upside follow-through.
However, the SPX failed to end a week above its descending 10-week moving average. This moving average has capped strength on a weekly closing basis since the SPX broke down in mid-January.
Therefore, traders may look for an SPX weekly close above the moving average to add confidence that the index has established a more solid floor.
The candle's low at 4,114.65 is now seen as important support.
(Terence Gabriel)
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