Amid a sharp drawdown in US equities, Dave McGarel highlights the risks and opportunities that may lie on the horizon.

Gibson Smith, founder and CEO of Smith Capital, discusses some of the unique challenges—and opportunities—facing fixed income investors today.

• Net inflows for US-listed ETFs totaled $111.5 billion in February, bringing total ETF assets under management to $10.47 trillion.
  
  
• Equity ETFs had net inflows totaling $65.6 billion in February, bringing trailing 12-months (TTM) net inflows to $814.9 billion. Active equity ETFs accounted for $18.9 billion in net inflows in February, compared to $46.7 billion in net inflows for passive equity ETFs. Total AUM in actively managed equity ETFs was $568.4 billion, accounting for 6.9% of all equity ETF assets ($8.28 trillion), as of 2/28/25.
  
  
• Fixed income ETFs had net inflows totaling $39.7 billion in February, bringing TTM net inflows to $341.0 billion. Active fixed income ETFs accounted for $14.5 billion in net inflows in February, compared to $25.2 billion in net inflows for passive fixed income ETFs. Total AUM in actively managed fixed income ETFs were $323.2 billion, accounting for 17.1% of all fixed income ETF assets ($1.88 trillion), as of 2/28/25.
  
  
• Commodities ETFs had net inflows totaling $6.8 billion in February, bringing TTM net inflows to $12.8 billion. Precious metals ETFs (+$6.5 billion) had the largest net inflows for the month, followed by Broad commodities (+$0.6 billion). Energy commodities ETFs (-$0.4 billion) had the largest net outflows in February.

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Momentum Unwind? 

The S&P 500 Index hit an all time closing high of 6,144 on February 19th, 2025, up 4.6% year-to-date (YTD) at that point, seemingly on an easy route to another blockbuster year for stocks. Just like most of 2024, momentum was the top factor in January and early February as the market did show some broadening outside the Magnificent 7. The same high-beta stocks, particularly those related to artificial intelligence (AI), continued to defy gravity. In fact, the AI trade broadened even more with names like Palantir (up 48% YTD through 2/19/25) and AppLovin (up 53% YTD through 2/19/25) soaring to start the year. Apparently no end in sight. Until… the last seven trading days of February. A brutal selloff in that narrow trade ensued.

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Electricity demand is poised to soar after decades of slow growth, driven by AI, reshoring, and EVs. Jim Murchie, CEO and portfolio manager at Energy Income Partners, unpacks how natural gas, nuclear power, and renewables will fuel this surge, as utilities scramble to keep up.

Brian Wesbury explains why cutting government spending could be painful in the near-term but boost longer-term economic growth, similarities and difference between Trump and Reagan, and how he thinks about investing in an overvalued market.

• Net inflows for US-listed ETFs totaled $103.5 billion in January, bringing total ETF assets under management to $10.61 trillion. 
  
  
• Equity ETFs had net inflows totaling $59.3 billion in January, bringing trailing 12-months (TTM) net inflows to $793.7 billion. Active equity ETFs accounted for $20.3 billion in net inflows in January, compared to $39.0 billion in net inflows for passive equity ETFs. Total AUM in actively managed equity ETFs was $566.1 billion, accounting for 6.7% of all equity ETF assets ($8.46 trillion), as of 1/31/25. 
  
  
• Fixed income ETFs had net inflows totaling $38.3 billion in January, bringing TTM net inflows to $312.8 billion. Active fixed income ETFs accounted for $16.9 billion in net inflows in January, compared to $21.4 billion in net inflows for passive fixed income ETFs. Total AUM in actively managed fixed income ETFs were $304.1 billion, accounting for 16.7% of all fixed income ETF assets ($1.83 trillion), as of 1/31/25. 
  
  
• Commodities ETFs had net outflows totaling $0.7 billion in January, bringing TTM net inflows to $3.6 billion. Precious metals ETFs (-$1.1 billion) had the largest net outflows for the month, while broad commodities ETFs (+$0.6 billion) had the largest net inflows. 

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Interest rates and earnings...keep your eye on the ball. 

On February 11, 1990, Mike Tyson, then the most dominant boxer in the world, was knocked out in a fight in Japan by an unknown named Buster Douglas and the United States woke up in shock. On January 27th, 2025, NVIDIA, currently the most dominant company in the world, was “knocked out” by an unknown AI company from China named DeepSeek and the United States woke up in shock.

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Mandeep Singh, Global Head of Technology Research at Bloomberg Intelligence, joins the podcast to explore how massive investments in artificial intelligence made over the past few years could drive future innovations and profits. From humanoid robots to self-driving vehicles, Mandeep shares his expert analysis on the potential impact of these technologies in the years to come.

In the fourth quarter of 2024, alternative investments (“alternatives”), on average, had slightly negative returns with Real Estate being a large negative outlier as interest rates moved significantly higher. The Federal Reserve (the “Fed”) continued the path of lowering the Federal Funds Rate, choosing to cut 25 basis points at each of its meetings in the quarter. The U.S. Treasury curve steepened significantly as short maturities followed the decline in Fed Funds Rate, while yields 5 years and longer rose precipitously to completely unwind the rally in rates of the third quarter. Intermediate and long rates are now at levels above where they began 2024. Higher rates are likely the result of significant revision in expected Fed action and bond market participants way of co-opting the Fed's “higher for longer” mantra.  The economic picture domestically remains positive if not spectacular, in our view. Recent inflation data has trended upward, and money supply growth (“M2”) has been positive but concerns over faltering growth in China may be keeping longer-term inflation expectations in check.

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