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Lately, Cathie Wood, famous for the success of Ark Investment’s winning products in 2020, has been in the spotlight for forecasting an impending deflationary wave, rather than increasing inflation. She highlighted declining commodity prices, and noted that “even the oil price has dropped more than 35% from its peak, erasing most of the gain this year,” per a TipRanks article, as quoted on Yahoo Finance. United States Oil Fund, LP (USO - Free Report) has declined 7.6% past month while Invesco DB Commodity Index Tracking Fund (DBC - Free Report) has lost 5.1%.
Wood mentioned that “the Fed seems to responding to COVID-related supply shocks spanning 15 months the same way that Volcker battled inflation that had been brewing and building for 15 years. I would not be surprised to see a significant policy pivot in the next three to six months.”
Investors should note that the central bank now expects median inflation rate to jump to 5.4% this year, higher than its previous forecast of 5.2%. Although PCE inflation expectation has gone up to 2.8% for 2023 from 2.6% projected in June, we can see a substantial decline in inflation expectations next year from this year.
The Fed downgraded its forecast for 2022 median real GDP growth from 1.7% in June to 0.2% for 2022. Again, though the central bank lowered the growth rate expectations for 2023 and 2024 to 1.2% and 1.7% from 1.7% and 1.9%, respectively, GDP growth shows a recovery trail.
Against this backdrop, below we highlight a few ETFs that have a Zacks Rank #3 (Hold) or 2 (Buy) or 1 (Strong Buy). The ETFs have lost lesser than the S&P 500 (down 9.2%) past month and have a P/E less than #23X as well as a Beta less than one (as of Sep 23, 2022).
Image: Bigstock
Time to Buy the Dip? ETFs in Focus
Lately, Cathie Wood, famous for the success of Ark Investment’s winning products in 2020, has been in the spotlight for forecasting an impending deflationary wave, rather than increasing inflation. She highlighted declining commodity prices, and noted that “even the oil price has dropped more than 35% from its peak, erasing most of the gain this year,” per a TipRanks article, as quoted on Yahoo Finance. United States Oil Fund, LP (USO - Free Report) has declined 7.6% past month while Invesco DB Commodity Index Tracking Fund (DBC - Free Report) has lost 5.1%.
Wood mentioned that “the Fed seems to responding to COVID-related supply shocks spanning 15 months the same way that Volcker battled inflation that had been brewing and building for 15 years. I would not be surprised to see a significant policy pivot in the next three to six months.”
Investors should note that the central bank now expects median inflation rate to jump to 5.4% this year, higher than its previous forecast of 5.2%. Although PCE inflation expectation has gone up to 2.8% for 2023 from 2.6% projected in June, we can see a substantial decline in inflation expectations next year from this year.
The Fed downgraded its forecast for 2022 median real GDP growth from 1.7% in June to 0.2% for 2022. Again, though the central bank lowered the growth rate expectations for 2023 and 2024 to 1.2% and 1.7% from 1.7% and 1.9%, respectively, GDP growth shows a recovery trail.
Against this backdrop, below we highlight a few ETFs that have a Zacks Rank #3 (Hold) or 2 (Buy) or 1 (Strong Buy). The ETFs have lost lesser than the S&P 500 (down 9.2%) past month and have a P/E less than #23X as well as a Beta less than one (as of Sep 23, 2022).
ETFs in Focus
Vanguard High Dividend Yield ETF (VYM - Free Report) – Zacks Rank #1 (Strong Buy)
Beta: 0.84X
Performance One-Month: Down 7.86%
P/E (36 Months): 14.10X
Invesco KBW Property & Casualty Insurance ETF (KBWP - Free Report) – Zacks Rank #2 (Buy)
Beta: 0.64X
Performance One-Month: Down 5.76%
P/E (36 Months): 15.20X
iShares U.S. Healthcare Providers ETF (IHF - Free Report) – Zacks Rank #2 (Buy)
Beta: 0.87X
Performance One-Month: Down 6.1%
P/E (36 Months): 18.35X
Invesco Dynamic Food & Beverage ETF (PBJ - Free Report) – Zacks Rank #3 (Hold)
Beta: 0.59X
Performance One-Month: Down 7.0%
P/E (36 Months): 15.39X
Invesco Dynamic Large Cap Value ETF (PWV - Free Report) – Zacks Rank #3
Beta: 0.88X
Performance One-Month: Down 7.0%
P/E (36 Months): 11.06X