In this issue:

• iShares MSCI Turkey (TUR) takes flight
• US Natural Gas (UNG) – the downside exception to the commodities rally
• Invesco Solar (TAN) continues to run hot

Programming note: Here begins a periodic update of ETFs that caught your editor’s eye on the trending front. In contrast to our broad-based portfolio strategy edition (see here, for instance), Trend Watch will go granular and tactical. In this space we’ll selectively highlight funds that, for one reason or another, stand out vis-à-vis a wide-ranging list of 146 ETFs that run the gamut, from various measures of US stocks and bonds to commodities, REITs, forex, foreign fixed income, country funds and narrowly defined industry groups. For a complete list of the funds we’re monitoring, see the list below.

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The end of the pandemic’s acute phase, or something genuinely close to it, will arrive when so-called herd immunity is reached. This will mark a meaningful turning point for public health and the economy, which are inextricably linked in the age of Covid-19. That leaves the critical question: When will herd immunity arrive?

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* US Covid-19 surge weakens but unclear if this is a turning point
* Senate votes to to allow Trump impeachment trial to continue
* Senate Democrats working on plan to raise federal minimum wage
* Critics charge that Fed policies are fueling speculative bubbles
* Core consumer inflation in China falls for first time in a decade
* Buy emerging mkts via large-cap value stocks only during crises, study advises
* US small business sentiment slipped to 8-month low in January
* US job openings rise modestly in Dec, but remain well below pre-pandemic peak:

The Treasury market’s implied inflation forecast continues to rise, but the source of this reflationary trend is born of a growing divergence between nominal and real (inflation-adjusted) Treasury yields. Explaining the divergence and pondering the implications can take several paths. But no matter your preference, all roads begin with monitoring the data that highlights this expanding gap.

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* Dems propose additional $1400 payment for $1.9 trillion relief package
* Senate leadership announces plan for today’s Trump impeachment trial
* US carrier groups conduct joint exercises South China Sea
* Hacker attempts to poison water supply in Florida city
* US average junk bond yield falls below 4% for the first time
* Italian government bond yields fall to record low
* Bitcoin rises to record high after Tesla discloses $1.5 billion purchase
* US crude oil benchmark rises for 6th day to nearly $58–a 1yr high:

Shares in emerging markets moved to first place for one-week and one-year returns for the major asset classes, based on a set of exchange-traded funds through Friday’s close (Feb. 5). In addition to topping returns last week, emerging markets equities have widened a first-place performance lead over US stocks, which are in second place for one-year results.

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* Biden: herd immunity in US unlikely before end of summer
* Treasury Sec. Yellen: US could reach full employment by 2022 with Biden plan
* South Africa stops use of AstraZeneca’s Covid-19 vaccine, citing new variants
* Protesters in Mynamar defy military, demand that civilian leader be reinstalled
* Senate prepares for speedy Trump impeachment trial
* German industrial output flat in December amid second coronavirus wave
* Oil prices recover to pre-pandemic level
* US payrolls posted weak rebound in January after sharp decline
* US 10-year rose to 1.19% last week, a one-year high:

● Think Again: The Power of Knowing What You Don’t Know
Adam Grant
Review via Forbes
Several years into my career, a senior faculty member and I had a conversation that led me to one of those ‘a-ha’ moments. “Just because something is written in a textbook, it is not necessarily true. It is only the author’s version of the truth,” she told me. I was stunned. That one statement contradicted everything I learned throughout my educational and professional career. I let that statement marinate in my head for a while. Before long, I realized that my colleague was correct. I began rethinking everything I learned and reexamined the basis for that truth. In his latest book, Think Again, organizational psychologist and Wharton professor Dr. Adam Grant looks into this very issue. He suggests that success rests in the power of knowing what we don’t know and being released from our tunnel vision.

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In this issue:

• Global markets rebound
• Strong week for portfolio-strategy benchmarks
• Risk-on pays off for one of our managed-risk strategies

Return to form in February: The late-January correction turned out to be another head fake for risk assets, which rebounded sharply this week. Equities across the board were higher, led by a strong gain in Africa stocks, which topped our set of fund proxies that collectively represent the world’s major asset classes. (For details on all the risk metrics in the table below, along with profiles of the strategies and benchmarks discussed, see this summary.)

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The Treasury market continues to price in higher odds of reflation and the Federal Reserve remains inclined to let the economy expand for longer with little if any monetary pushback due to nascent signs of pricing pressure. That lays the foundation for higher inflation. But so far, the hard data offers minimal support. Will 2021 be the year of an inflationary regime shift?

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