A lower-than-expected CPI report resulted in a dramatic rally in equities. Also contributing to stability was the resilience of US consumer spending and domestic GDP growth.
Stability seemed to take root across domestic markets during the recent period between Index selection dates (October 13, 2022 to November 10, 2022, the “Period”), with equities gaining and the surging US dollar pausing its relentless year-to-date advance. Upbeat corporate earnings, resilient US consumer spending, and domestic GDP growth, which beat expectations, overcame earnings disappointments from several mega-cap technology stocks. The S&P 500 Index gained, pulling the widely followed index out of bear market territory for the year. Some market participants cited ‘oversold’ conditions in both price and sentiment as catalysts for the rebound.
The Federal Open Market Committee (FOMC) hiked its Federal Funds Target Rate by 75bps at its November 2 meeting, marking the fourth consecutive 75bps point hike as the committee continues to pursue its most aggressive pace of monetary policy tightening since it started using the overnight funds rate as its principal policy tool in 1990. Future readings of domestic inflation remain a key focus for many market participants trying to forecast the pace of future interest rate hikes by the Federal Reserve. Recent readings of domestic inflation revealed the consumer price index rose less than forecast, posting its smallest gains since January 2022. The CME FedWatch Tool, which analyzes the probability of FOMC rate moves for upcoming meetings using 30-Day Fed Fund futures pricing data, now indicates an approximate 20% probability of a fifth consecutive 75bps hike while projecting an easing of the pace of future increases into 2023.
The BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index” or “Index”) returned 7.00% during the month of October compared to a return of 8.10% for the S&P 500 Index during the same period. Year-to-date, the BUZZ Index trails the S&P 500 with returns of -41.43% and -17.70%, respectively, as of the end of October.
Shares of Chip Makers Pace Advancing Stocks within the BUZZ Index
Shares of NVIDIA Corp (NASD: NVDA) and Advanced Micro Devices (NASD: AMD) each surged over 14% on November 10, as investors reacted positively to signs of slowing inflation which sparked speculation the Federal Reserve might become less aggressive with future interest rate hikes. The leading chip makers snap rally helped pace gains within the BUZZ Index during the period; however, both NVDA and AMD remain 50% below their 52-week highs, a telling indicator of the breadth of the technology sell-off of 2022. Shopify Inc. (NYSE: SHOP) was another notable contributor to the BUZZ Index performance during the Period. The Canadian e-commerce company reported Q4 revenue that beat analysts’ expectations after adding more avenues for its customers to sell and promote their products. Among the hardest hit of thematic and future-growth oriented equities, SHOP gained nearly 40% during the Period, the best-performing stock in the BUZZ Index. Despite the impressive gains, shares of SHOP remain nearly 80% below their 52-week high.
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| NVIDIA Corp | NVDA | 3.20 | 0.97 |
| Carnival Corp | CCL | 2.20 | 0.68 |
| Shopify Inc | SHOP | 1.85 | 0.62 |
| Advanced Micro Devices Inc | AMD | 2.86 | 0.51 |
| Boeing Co/The | BA | 1.39 | 0.46 |
| Ford Motor Co | F | 2.12 | 0.44 |
| JPMorgan Chase & Co | JPM | 1.89 | 0.40 |
| Netflix Inc | NFLX | 2.73 | 0.35 |
| Enphase Energy Inc | ENPH | 1.19 | 0.29 |
| Bank of America Corp | BAC | 1.36 | 0.26 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.
The top detractors to performance featured a range of stocks from the Communication Services, Consumer Discretionary, and Information Technology sectors together with technology-oriented Financials. Shares of electric vehicle manufacturer Tesla Inc (NASD: TSLA) were among the top detractors to performance, falling nearly 14% during the Period. TSLA CEO Elon Musk sold at least another $3.95 billion worth of TSLA shares in his electric car company after closing his $44 billion acquisition of Twitter. Musk’s acquisition of Twitter closed on October 27th. Shares of TSLA have fallen 31.4% from the April 14th announcement of Musk’s bid through the closing of the transaction. Meta Platforms, Inc. (NASD: META), the parent company of social media platforms such as Facebook and Instagram, continued to struggle, falling 14.1% during the Period, failing to participate in the broader equity market rally. Investors appear frustrated with META CEO Mark Zuckerberg’s seemingly stubborn commitment to the company’s ‘Long-Term Vision’ for its Metaverse vision while simultaneously announcing plans to fire 13% of its workforce in a bid to reduce costs.
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Coinbase Global Inc | COIN | 1.88 | -0.56 |
| Tesla Inc | TSLA | 2.76 | -0.42 |
| Amazon.com Inc | AMZN | 2.76 | -0.41 |
| Meta Platforms Inc | META | 2.51 | -0.38 |
| Lucid Group Inc | LCID | 2.40 | -0.19 |
| Plug Power Inc | PLUG | 1.04 | -0.18 |
| Affirm Holdings Inc | AFRM | 0.80 | -0.17 |
| Robinhood Markets Inc | HOOD | 1.06 | -0.16 |
| Palantir Technologies Inc | PLTR | 2.51 | -0.15 |
| Alphabet Inc | GOOGL | 2.76 | -0.14 |
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.
Sentiment Stock Highlight – Coinbase Global, Inc.
The crypto world was left in shock this month when it was revealed that FTX, the third-largest exchange in the world as measured by trading volume, was facing liquidity issues, and pausing customer withdrawals. Many previously thought it unfathomable that the company, led by Sam Bankman-Fried (“SBF”), could implode so quickly. SBF, an enigmatic and nerdy savant, amassed a cult-like following by millions of crypto ‘believers’ who adored his messy mop of hair, T-shirts and shorts attire, and his penchant for playing computer games during pitch meetings. The 30-year-old founder of FTX, who at one time reportedly had a $26 billion net worth, could seemingly do no wrong as his influence and stature extended across celebrities and regulators alike. SBF’s unassuming down-to-earth attitude and eccentricities were often cited as proof of his ‘genius.’
The decline in value of the FTX’s token, dubbed FTT, which served as collateral for most of the company’s liabilities, ultimately exposed the company’s massive liquidity shortfall. The revelation that FTX sent customer deposits to its related hedge fund platform Alameda Research was shocking. Hanging in the balance is an increasing probability of a near-zero recovery for millions of retail investors who traded on FTX platforms. While damaging to crypto’s image, the news may ultimately boost FTX’s competitors, namely Coinbase (NASD: COIN), which sought to reassure the public that it did not misuse customer funds and holds ample reserves. Shares of COIN declined on the FTX news along with most crypto-related assets; however, the stock managed to hold its recent June 2022 lows. Of note is that investor sentiment on the stock has been climbing, suggesting investors may not expect contagion to spread from the FTX fallout to COIN. This month, COIN’s weight rises almost 1%, achieving a maximum 3% weight within the BUZZ Index.
Coinbase Global Stock Price | January 2022 – November 2022
Source: BUZZ Holdings ULC, Bloomberg. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.
BUZZ Index November 2022 Rebalance Highlights
Snap Inc.
Social media stocks have been among the hardest hit segments of the equity market over the past year. Meta Platforms, Inc. (NASD: META) has garnered much of the financial media’s attention as its stock fell nearly 75% from the start of 2022 to its low in early November. Declining revenues have also been a problem for other social media companies, notably Snap (NYSE: SNAP). SNAP’s Q3 earnings, released on October 20th, 2022, highlighted revenue growth slowing into the single digits and larger than expected losses. Shares of SNAP sank 28% following the report. To many, the poor results looked like yet another disappointment for the stock, as shares of SNAP declined sharply following each of the company’s four previous earnings reports. SNAP’s Q3 earnings report did contain several positive signs for the company, including continued daily active user growth, record subscribers in its Snapchat+ subscription service, and a $500 million share buyback program. Investors may be becoming increasingly bullish on the stock, as positive investor sentiment has recently jumped while shares of SNAP have recovered from their post-earnings losses. Previously at a 0.93% weight, this month SNAP joins COIN in ascending to a maximum 3% weight within the BUZZ Index.
For more on rebalancing results and a full breakdown of index constituents added and removed for the month, view the BUZZ Index reconstitution report.
Originally published by VanEck on November 22, 2022.
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