• September lived up to its reputation as one of the worst monthly performers as we continued to see global central banks tightening policy in order to keep a lid on inflation. It seems there is still a widely coordinated global effort to reign in prices through higher rates, largely to the detriment of growth equities. [1]
• The culprit that stopped the bear market rally in its tracks was the Jackson Hole Conference. An overly Hawkish Powell did his best Volcker impression by expressing that “by any means necessary” we have to put a lid on inflation, and he won’t stop, “until the job is done.” Speaking of Jobs, the Fed later also raised their “natural” unemployment rate expectations to 4.4% from the current level of 3.7%. [2]
• We are still experiencing the hangover from binging on too much stimulus, and there are three events that need to occur to reverse the Fed’s hawkishness, giving us any reprieve in equities; 1) A Slowdown in growth; 2) Inflation heading towards the long-term target of 2%; and 3) A softer labour market. [3]
• When it comes to inflation, we are finding that it is now structural rather than transitory. Despite all monetary policy can do on the demand side, the supply side is still yet to make drastic improvements, although we are seeing signs of prices coming down in shipping containers, auto, and housing. We need lower CPI readings to come over the next couple of months to restore any order in the system. [4]
• When it comes to growth, we believe the next couple of earnings periods will be key to see which companies are hit the hardest and which are able to weather the storm as recession indicators continue to flash red. A soft landing is looking more and more like a fairy tale than it is a reality as Powell expressed that the longer restrictive policy is in place, the lower the likelihood of a soft landing. [5]
Please note that all performance figures are showing net data. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product.;
Macro Outlook
The politicization of our energy complex continues to escalate. As a result of the recent attacks on Nordstream 1 + 2, gas supplies are at a high risk and a hope for a “mild winter” is not a viable near-term solution.[6] The reality is that our fragile energy infrastructure needs to be reinforced, and renewable energy will play a critical role in this advancement.
We are now seeing the follow-on effect of the Inflation Reduction Act getting put into action.[7] The IRA has already impacted companies involved in the energy transition. For example, First Solar Inc announced a plan to spend $1.2 billion to expand its solar panel manufacturing operations in the United States.[8] The announcement is a 180 for the company, which previously said it was unlikely to build its next factory in the United States due to the lack of federal support. Now the CEO is saying, "We believe that with the IRA we have a durable industrial policy foundation, one that we have long been advocating for, that's comprehensive in its foundation and will enable the solar industry as a whole."[9] Following their announcement, First Solar shares rose more than 2% at $124.22 on the Nasdaq, and shareholders estimated that the company's earnings could be double prior estimates by 2026.[10] First Solar is among the first major corporate investments announced following the IRA; however, we expect there to be many more expanding across the various industries that ZERO invests in.
Please remember that when you invest in ETFs, your capital is at risk.
|
|
1M
|
3M
|
6M
|
YTD
|
12M
|
SI
|
|
HANetf S&P Global Clean Energy Select HANzero™ UCITS ETF
|
-13.84%
|
2.42%
|
-12.91%
|
-12.11%
|
-17.22%
|
-26.80%
|
|
S&P Global Clean Energy Select
|
-13.90%
|
2.60%
|
-12.70%
|
-11.76%
|
-16.81%
|
-26.41%
|
Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 30/09/2022. Please note that all performance figures show net data.
Learn more about our Clean Energy ETF