BUZZ Investing: Fed Signals Labor Focus and Yield Curve Normalizes
26 September 2024
Read Time 5 MIN
The market turmoil that triggered a sharp sell-off and a spike in global equity volatility in early August proved temporary. Global markets began a swift recovery from the sell-off coinciding with the start of the recent period between index selection dates (August 8, 2024 - September 11, 2024, the “Period”). Investor sentiment turned positive as expectations grew for more aggressive monetary easing from the Federal Reserve, following weaker economic data and cooling inflation. The solid second-quarter earnings season, which showed no immediate signs of a broader economic slowdown, they have further supported this recovery. Fed Chair Jerome Powell’s remarks at the Jackson Hole Symposium in late August reinforced the Fed's commitment to supporting the labor market, reducing concerns about further aggressive inflation control measures and boosting market sentiment.
One of the most significant developments during the Period was the normalization of the U.S. Treasury yield curve, which had been inverted for 783 consecutive days—an unprecedented duration. An inverted yield curve, where short-term interest rates exceed long-term rates, has historically been a reliable predictor of recessions, leading to heightened anxiety among investors anticipating a similar outcome. However, despite this prolonged inversion, the feared recession did not materialize, with the curve’s return to positive territory alleviating some of the market concerns. This, combined with expectations of lower interest rates, helped drive the steady recovery in equity markets.
The BUZZ NextGen AI US Sentiment Leaders Index (the “BUZZ Index”) returned -1.88% during the month of August compared to a return of 2.43% for the S&P 500 Index during the same period. Year-to-date, the BUZZ Index lags the S&P 500 with returns of 11.88% and 19.53%, respectively, as of the end of August.
Shares of EV manufacturers lead gains in the BUZZ Index
The broader electric vehicle (EV) segment observed gains during the recent Period, fueled by increasing investor optimism around advancements in EV technology, infrastructure, and partnerships. As part of this trend, Lucid Group (NYSE: LCID) shares stood out, advancing 24.1%. The company made headlines with the upcoming production of its ‘Gravity’ SUV and a strategic partnership to integrate Tesla's NACS charging connector, giving Lucid vehicles access to Tesla’s extensive Supercharger network. Additionally, favorable analyst reports, several of which upgraded the stock, likely further contributed to Lucid’s positive stock performance during the Period.
Top BUZZ Index Contributors: August 8, 2024 – September 11, 2024
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Lucid Group Inc | LCID | 2.88 | 0.63 |
| Unity Software Inc | U | 1.54 | 0.46 |
| Tesla Inc | TSLA | 3.07 | 0.45 |
| Broadcom Inc | AVGO | 1.76 | 0.39 |
| Amazon.com Inc | AMZN | 3.03 | 0.38 |
| NVIDIA Corp | NVDA | 3.19 | 0.38 |
| DraftKings Inc | DKNG | 1.62 | 0.37 |
| SoFi Technologies Inc | SOFI | 3.22 | 0.37 |
| Advanced Micro Devices Inc | AMD | 2.99 | 0.29 |
| NIKE Inc | NKE | 2.33 | 0.29 |
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.
Shares of Trump Media & Technology Group lead declining stocks in the BUZZ Index
Shares of Trump Media & Technology Group (NASDAQ: DJT) fell 39% during the recent Period, pacing all declining stocks in the BUZZ Index. A combination of factors may have contributed to the decline, including concerns over recent political developments including President Trump's poor performance in the latest Republican debate. Many investors associate DJT stock with Trump's political standing, and his diminished showing in polls following the debate has led to increased uncertainty about his Presidential aspirations and the company's prospects. Additionally, upcoming events like the expiration of a lock-up provision, which will allow insiders to sell their shares, have further contributed to the decline by raising fears of insider sell-offs. While revenue concerns remain, these political and market dynamics appear to have played a larger role in the recent drop in DJT's stock price.
Bottom BUZZ Index Contributors: August 8, 2024 – September 11, 2024
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Trump Media & Technology Group | DJT | 1.86 | -0.89 |
| Coinbase Global Inc | COIN | 2.76 | -0.45 |
| MARA Holdings Inc | MARA | 2.71 | -0.29 |
| Rivian Automotive Inc | RIVN | 2.36 | -0.21 |
| Intel Corp | INTC | 2.50 | -0.18 |
| Alphabet Inc | GOOGL | 2.66 | -0.13 |
| MicroStrategy Inc | MSTR | 2.89 | -0.12 |
| Moderna Inc | MRNA | 0.37 | -0.08 |
| Occidental Petroleum Corp | OXY | 0.65 | -0.07 |
| Walgreens Boots Alliance Inc | WBA | 0.53 | -0.06 |
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 September 2024 Rebalance Highlights
Chewy, Inc.
Keith Gill, better known as Roaring Kitty, continues to grab the market's attention with his cryptic social media activity. Gill, who played a central role in the 2021 GameStop (GME) frenzy, returned in May to renew his support for GME through a series of mysterious posts on X (formerly Twitter). His backing of the stock is largely tied to his confidence in Ryan Cohen, GME's CEO. In late June, Gill hinted at a long position in Chewy (CHWY), the pet retailer Cohen founded, which sparked a 35% surge in the stock before it quickly pulled back. In a surprising twist, after a September 6th post that was interpreted as him exiting the stock, CHWY shares rose another 25%. Despite the uncertainty around whether Gill is buying or selling, the meme-driven nature of these trades suggests that volatility may continue. Investor sentiment toward CHWY has been rising, and the stock enters the BUZZ Index this month with a 1.38% weight.
CAVA Group, Inc.
Cava Group (NYSE: CAVA) has rapidly emerged as a major player in the fast-casual dining space, establishing itself as the largest Mediterranean restaurant chain in the U.S. over the past five years. Starting as a small chain in Maryland, the company capitalized on the rising demand for quick, healthy food options. A pivotal moment came in November 2018 when Cava acquired Zoes Kitchen for $300 million and transformed its 250 locations into Cava-branded restaurants. Similar to Chipotle Mexican Grill (NYSE: CMG), Cava has found success by offering customizable, health-focused meals at affordable prices, especially appealing to younger consumers. Since its IPO in June 2023, shares have skyrocketed by 200%, as investors are betting on strong future growth. Sentiment on the stock has been consistently positive and this month CAVA joins the BUZZ Index this month with a 1.1% weight.
Company data is the source for all particular company information quoted.
