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Equities started the year with impressive gains, despite ending the last year with a whimper. Investors interpreted slower-than-anticipated wage growth as an indication of a potential Fed pivot.
Domestic equities were volatile, yet finished little changed, during the recent period between Index selection dates (December 8, 2022, to January 11, 2023, the "Period") for the BUZZ NextGen AI US Sentiment Leaders Index. Stocks were broadly lower to close December, with most widely watched indices posting their first annual losses since 2018 and their worst declines since the Global Financial Crisis in 2007-2008. The S&P 500 Index, which set a new all-time high on its first day of trading in 2022, proceeded to fall 18.1% for the year, as positive investor sentiment and optimistic growth expectations quickly gave way to geopolitical instabilities and inflation realities, collectively weighing on asset valuations throughout the year.
While the broader equity markets finished the year with a whimper, they roared out of the gate to start the New Year, with most widely watched benchmarks posting impressive gains. Economic reports released early in January showed signs that inflation might be cooling. Some investors took measures of slower-than-anticipated wage growth as an indication that the Fed's Hawkish pivot, during which time it aggressively raised its target Federal Funds Rate from near zero to 4.5%, maybe having its intended effect.
The BUZZ NextGen AI US Sentiment Leaders Index (the "BUZZ Index" or "Index") returned -12.41% during the month of December compared to a return of -5.76% for the S&P 500 Index during the same period. Year-to-date, the BUZZ Index trails the S&P 500 with returns of -47.54% and -18.11%, respectively, as of the end of December.
Shares of Meta Platforms, Inc. Lead Advancing Stocks within the BUZZ Index
Shares of Meta Platforms, Inc. (META), the parent company of Facebook, paced advancing stocks within the BUZZ Index during the recent Period. The social media company faced a host of challenges during 2022 as it went 'all-in' on its vision for a virtual reality world dubbed "Horizon Worlds." Launched in August 2022, the virtual reality space was widely criticized across the internet leaving many to question whether Mark Zuckerberg, the company's founder & CEO, had lost touch with the interests of consumers for its core product offerings. Shares of META fell 64% during 2022, and while they gained over 15% during the Period, they remain far below their all-time high. Investors may be viewing shares of the company as providing 'value' after the dramatic failures and declines of 2022. Zuckerberg has recently pivoted his efforts and focus to cost-cutting initiatives and employee layoffs to appease investor concerns.
| Top BUZZ Index Contributors: December 8, 2022 - January 11, 2023 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Meta Platforms Inc | META | 3.36 | 0.48 |
| Paramount Global | (PARA) | 1.61 | 0.27 |
| Boeing Co/The | (BA) | 1.79 | 0.27 |
| Carnival Corp | (CCL) | 1.69 | 0.21 |
| Plug Power Inc | (PLUG) | 1.11 | 0.20 |
| Amazon.com Inc | (AMZN) | 3.02 | 0.16 |
| Walt Disney Co/The | (DIS) | 2.88 | 0.16 |
| Salesforce Inc | (CRM) | 1.12 | 0.14 |
| Block Inc | (SQ) | 1.07 | 0.14 |
| Target Corp | (TGT) | 1.32 | 0.13 |
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.
The top detractors to performance primarily largely featured stocks from the Consumer Discretionary and Information Technology sectors. Shares of industry-leading electric vehicle (EV) manufacturer Tesla Inc. (TSLA), led decliners within the segment as they fell 29% during the Period. The company, whose share price posted its worst-ever annual performance in 2022, falling 65%, continued to struggle into 2023 as it reported less than forecast vehicle deliveries during the fourth quarter. Investors openly questioned Founder & CEO Elon Musk's commitment to the company as distractions relating to his acquisition of Twitter continue to mount. Investors increasingly point to Musk's share sales of Tesla, which have topped $39B since the stock peaked in November 2021, as a sign that he has grown disinterested in the prospects for the automaker, turning his attention to SpaceX and other ventures, including Twitter. Some investors have called for a change in leadership as the company faces increased competition in the EV segment from the likes of General Motors, Ford, Volkswagen, Hyundai, Kia, and Toyota.
| Bottom BUZZ Index Contributors: December 8, 2022 - January 11, 2023 | |||
| Company | Ticker | Average Weight (%) | Return Contribution (%) |
| Tesla Inc | (TSLA) | 2.41 | -0.90 |
| GameStop Corp | (GME) | 2.51 | -0.75 |
| Enphase Energy Inc | (ENPH) | 1.28 | -0.39 |
| DraftKings Inc | (DKNG) | 1.86 | -0.34 |
| Rivian Automotive Inc | (RIVN) | 0.6 | -0.33 |
| NVIDIA Corp | (NVDA) | 2.98 | -0.23 |
| CrowdStrike Holdings Inc | (CRWD) | 1.02 | -0.22 |
| Apple Inc | (AAPL) | 2.97 | -0.21 |
| Robinhood Markets Inc | (HOOD) | 1.39 | -0.12 |
| Shopify Inc | (SHOP) | 1.83 | -0.11 |
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.
Sentiment Stock Highlight - Warner Bros. Discovery, Inc.
One of the new additions to the BUZZ Index this month is Warner Bros Discovery (WBD). WBD was formed as a result of a merger between Discovery, Inc., and WarnerMedia, which was spun off by AT&T (T). The merger, which was completed in April 2022, combined the business units of the two companies to form an impressive portfolio of content and intellectual properties, including Warner Bros films, DC Entertainment, HBO, CNN, and major sports TV networks. The company also owns HBO Max, which is re-positioning itself as a 'premium' streaming service. Its largest streaming rival, Netflix (NFLX), experienced challenges during 2022, highlighted by declining subscriber growth. Challenges at NFLX led to a negative outlook for the industry which contributed to pressure shares of WBD since their debut. NFLX recently alleviated some investor concerns after reporting better-than-expected subscriber growth. It successfully executed price increases on its ad-free plans and simultaneously rolled out lower-priced ad-supported plans. WBD has pursued a similar strategy for HBO Max, successfully raising the price of its ad-free subscription to $15.99, the highest in the industry. Industry fundamentals have appeared to stabilize, and rising investor sentiment may suggest that shares of WBD now represent a 'value' opportunity, especially across its traditional media assets. This month WBD enters the Index for the first time with a 1.13% weight.
Warner Bros. Discovery Stock Price | April 2022 - January 2023
Author
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 January 2023 Rebalance Highlights
Rivian Automotive, Inc.
Equity markets had a choppy end to 2022 but started the New Year with a broad-based rally. One sector with recent increasing levels of positive investor sentiment has been the hard-hit electric vehicle (EV) space. Industry leader Tesla (TSLA), whose share price had long withstood the industry downturn, succumb to a host of pressures during the fourth quarter of 2022, coinciding with Elon Musk's acquisition of Twitter which dominated the spotlight and redefined the narrative surrounding the company. Tesla's EV rivals, including Lucid Motors (LCID) and Rivian Automotive (RIVN) have been hurt by declining investor enthusiasm toward the segment throughout 2022. LCID is down over 90% since its peak in November 2021, while shares of RIVN have been in a consistent downtrend ever since its November 2021 IPO. While traditional media coverage of Musk, Tesla, and EV manufacturers, in general, has been overwhelmingly negative, positive investor sentiment has recently been noticeably increasing. The sentiment surge may foretell that the sector may be close to a bottom. Both TSLA and LCID currently have 3% weights in the Index, and this month RIVN's weight jumped to 1.38%.
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