When it comes to ETF winners and losers, the U.S. and Russia scored while Mexico, Ireland and Italy had a harder time -- and the blue-chip Dow may have been the year's biggest standout.
The DJIA SPDR (NYSEARCA:DIA) gained 13.5% for the year, outpacing the S&P 500 SPDR (SPY, which gained 9.6%). Meanwhile iShares' Russell 2000 ETF (NYSEARCA:IWM) gained 19.8% for 2016.
Energy, financials and industrials were winners among sectors (Energy SPDR XLE up 24.9% on the year; Financial SPDR XLF up 20.2%; Industrial SDR XLI up 17.4%), while the healthcare SPDR XLV slipped 4.3%.
Among single-country funds, Peru (NYSEARCA:EPU), Brazil (NYSEARCA:EWZ) and Russia (NYSEARCA:ERUS) logged strong gains (62.5%, 61.2% and 50.6% respectively) while Italy (NYSEARCA:EWW) and Mexico (NYSEARCA:EWI) posted heavy declines (-11.9% and -11.8% respectively).
Fixed-income ETFs stayed relatively flat all year, but gold (GLD, up 8% for year) and silver (SLV, up 14.6%) performed among commodities.
Bank insiders have been selling stock at an unusually strong pace into the massive post-election rally, according to InsiderScore. Should the current trend hold, quarterly records will be set for both the number of people selling, and the dollar value of shares sold (data goes back to 2003).
InsiderScore's Ben Silverman tells the WSJ's Heard on the Street he's seeing a similar selling pattern for industrial names (NYSEARCA:XLI) as well - a sector which has also seen a big move since Nov. 9.
Heard's Steven Russolillo notes some bank insiders may be taking advantage of the first serious rally in a long time to exercise options that they've held for years, and are close to expiration.
The big gains in infrastructure stocks in anticipation of government spending on roads and bridges in a new Trump administration have some analysts warning that the rally is "getting long in the tooth."
One former infrastructure bull, Daniel Clifton of Strategas Research, thinks lofty expectations are now priced into the group, adding that the belief that fiscal conservatives in Congress who have long opposed increasing the deficit would suddenly pass a trillion dollars in spending has become too optimistic.
Clifton also says Trump’s infrastructure plan in its current form relies entirely on private financing and “has little to do with the actual stocks that are rallying.”
Greg Valliere, chief global strategist at Horizon Investments, reminds that "Washington moves slowly on huge projects like this, and there’s a lag time on the economic response."
Citing high and rising dividend yields, good cash flow, solid balance sheets, ability to hold/expand margins with cost cuts, this investor thinks industrials (NYSEARCA:XLI) like GE and Honeywell (NYSE:HON) could be part of a modern day "nifty fifty."
This attitude is particularly noteworthy given Davis' last report from the "smartest man" had him selling GE to buy high-beta names.
With the S&P 500 returning to more or less flat on the year, Bespoke digs down into sector performance and finds most of them nicely in the green, including the roughed-up energy group (NYSEARCA:XLE) with a 5.9% gain.
Leading on the upside, though, are the telecoms (NYSEARCA:XTL), ahead 14.4%, and utilities (NYSEARCA:XLU), up 13.3%. Consumer Staples (NYSEARCA:XLP), Materials (NYSEARCA:XLB), and Industrials (NYSEARCA:XLI) are all up between 3.7% and 4.5%, while Consumer Discretionary (NYSEARCA:XLY) is flat.
Holding the S&P 500 back, then, is healthcare (NYSEARCA:XLV), with an 8.2% decline, and financials (NYSEARCA:XLF), down 5.5%. Within, healthcare, the biotechs (NASDAQ:IBB) have plunged 27%.
Ahead of revisions to the Global Industry Classification Standard structure set to take effect next August in which real estate-related stocks will be broken out of the financial sector, State Street's (NYSE:STT) Real Estate Select Sector SPDR (NYSEARCA:XLRE) opens for trade alongside the FInancial Services Select Sector SPDR (NYSEARCA:XLFS). The Financial Select Sector SPDR (NYSEARCA:XLF) remains the same for those looking for exposure to the whole sector in just one ETF.
Concurrent with the launches, SSgA cuts the expense ratio for the entire Select Sector SPDR ETF suite to 0.14% from 0.15%.
How bad a year has it been for multi-industry stocks? Year-to-date underperformance relative to the S&P 500 is among the poorest in a decade and has gotten worse in recent weeks, say Goldman analyst Joe Ritchie and team. The negative news is no secret: Broad industrial de-stock, softening oil capex, the strong dollar, and the troubles in China. Because of this, the team remains Neutral on the beaten-up sector, but does have a few names investors should steer clear of:
With de-stock keeping U.S. industrial growth in a "headlock," the implications are particularly negative for Sell-rated Emerson Electric (NYSE:EMR), WW Grainger (NYSE:GWW), and Neutral-rated Parker-Hannifin (NYSE:PH) and Rockwell Automation (NYSE:ROK).
With oil capex going from bad to worse, and oil lower for longer, the Street is underestimating the impact of price declines for Dover (NYSE:DOV), Emerson, and Flowserve (NYSE:FLS). On the flip side, lower input costs should be a boon to Buy-rated Illinois Tool Works (NYSE:ITW) and Neutral-rated 3M (NYSE:MMM).
The weaker China backdrop is most negative for Emerson, and Neutral-rated Eaton (NYSE:ETN) and Colfax (NYSE:CFX). Though Buy-rated Honeywell (NYSE:HON) and ITT Corp (NYSE:ITT) have exposure, growth is more insulated due to their market share gains.
Expecting the S&P 500 (NYSEARCA:SPY) to gain only another 2% by year-end, and noting the index's pricey relative valuation, Goldman's David Kostin recommends investors instead by the Nasdaq 100 (NASDAQ:QQQ) - its expected earnings growth of 14% tops the S&P's 5%, but both indexes trade at similar P/Es.
Breaking it down into sectors, Kostin recommends being Overweight information technology, energy (NYSEARCA:XLE), and telecom services (XTL, IYZ).
Neutral: Health care (NYSEARCA:XLV), consumer discretionary (NYSEARCA:XLY), materials (NYSEARCA:XLB), and utilities (NYSEARCA:XLU).
Underweight: Financials (NYSEARCA:XLF), consumer staples (NYSEARCA:XLP), and industrials (NYSEARCA:XLI).