JETS ETF joins the mile-high club, topping $1 billion in assets, even as air travel sinks 90%


Are a group of retail investors about to get grounded?

Over the past two months, investors have plowed so much money into an exchange-traded fund with an out-of-favor investing thesis that it’s recently become one of only a handful of ETFs to reach $1 billion in assets under management.

The success for the US Global Jets ETF
JETS,
+11.58%
,
a fund that tracks commercial airline stocks, in the midst of global lockdowns that left air traffic still down by nearly 90%, raises questions about whether it could be a repeat of what happened in April when individual investors lost big on a fund that bets on the oil price.

“Some portion of this might be millennials using Robinhood to speculate, but if you look beyond 2020, you can be optimistic that the industry will recover,” said Dan Weiskopf, portfolio manager for Toroso Investments. “Using an ETF as a way to reflect that thesis offers a ton of upside.”

In fact, it’s very hard to know for sure who’s buying any ETF. As MarketWatch has previously reported, big institutional investors often buy shares of ETFs in order to sell them short — that is, to make a bet that prices will decline.

There are reasons to think that’s not the case here, Weiskopf said in an interview. Bloomberg data show that short interest on JETS is 1.7 million shares, a tiny sliver compared with the 63.2 million shares outstanding.

And a tracker of investing trends on Robinhood shows that nearly 30,000 investors on that platform have a JETS holding.

Robinhood accounts with JETS holdings, compared with its share price.


Robintrack

The recent interest flies in the face of the decision made by billionaire investor Warren Buffett to exit the airline trade altogether. But Weiskopf believes that’s not a fair comparison. While Buffett famously made some very lucrative bets on nearly distressed assets in the thick of a crisis, he still is a value investor with a particular risk threshold that supports a global conglomerate, not an individual who may be looking to speculate.

While JETS’s sponsor says that it “provides investors access to the global airline industry, including airline operators and manufacturers from all over the world,” it has a fairly concentrated portfolio. The top five holdings account for half the portfolio, with Southwest Airlines Co.
LUV,
+5.08%

making up 12.2%, American Airlines Group Inc.
AAL,
+41.09%

at 10.7%, and Delta Air Lines Inc.
DAL,
+13.73%

accounting for 9.6%.

Since the market trough on March 23, JETS has climbed 36.9%, just trailing the 38.2% gain for the S&P 500 index
SPX,
-0.33%
.

For the right investor, buying into JETS could be a great bet, Weiskopf said. “This industry is needed.” And while there’s good reason to believe the U.S. government wouldn’t let the airlines fail, things may not get that dire.

“I also think people want to be optimistic about something and why not this beaten-down group?” Weiskopf said.

Read:The ‘ANTs’ came marching: how have active, non-transparent ETFs performed so far?



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European stocks climb as hopes for more stimulus get rally back on track


European stocks were poised for a strong finish to the week on Friday, as investors appeared ready to shake concerns over a powerful rally since the March lows with hopes for more stimulus. Markets will still have to get through an important U.S. jobs report due later that is expected to show soaring unemployment.

The Stoxx Europe 600 index
SXXP,
+1.09%

rose 1.4% after snapping a three-session winning streak on Thursday with a loss of 0.7%. The weekly gain stands at 6% as of Thursday, which would mark the best five-day return since the week ended April 10.

The German DAX
DAX,
+1.50%

jumped 2.3% and was set to gain over 10% this week, which would mark the best weekly return since that April week. The French CAC 40
PX1,
+1.94%

jumped 2.3% and the FTSE 100 index
UKX,
+1.09%

rose 1.2%.

Europe’s losses on Thursday were in part driven by a downbeat growth assessment from European Central Bank President Christine Lagarde, due to the pandemic. The ECB surprised investors by boosting the size of its pandemic emergency purchase program, to €1.35 trillion ($1.52 trillion) from €750 billion, and extending its run from the end of this year at least through June 2021.

Read: Pandemic bond-buying program is now ECB’s real crisis-fighting ‘bazooka,’ analysts say

The euro
EURUSD,
-0.01%

gained 0.4% to $1.1375.

U.S. stock futures climbed on Friday, with Dow futures
YM00,
+1.20%

up over 300 points after Bloomberg News reported that White House officials may spend up to $1 trillion in the next round of economic stimulus, citing sources. That action may not come until next month, though. Thursday’s session was lackluster for U.S. stocks.

A powerful rally for global equities since the March selloff has been driven by unprecedented amount of stimulus from central banks and governments to help combat the coronavirus fallout. Germany, as well, added to its own pandemic stimulus program this week.

A major focus for Friday is the U.S. nonfarm-payroll report that could show that 7.25 million U.S. jobs were lost in May, after 20 million were lost in April due to the COVID-19 pandemic. Economists believes the unemployment rate could approach 19% — the worst levels since the Depression.

Investors shook off data showing the lowest U.K. consumer confidence in over a decade and a record plunge in German manufacturing orders for April.

Shares of Deutsche Lufthansa
LHA,
+7.37%

rose 1.9%. Stock-exchange operator Deutsche Börse said Germany’s flagship carrier will move into the MDAX index. The airline has been hit hard by a loss of traffic due to the pandemic and its supervisory board recently approved a state-aid package worth €9 billion ($10.14 billion).

Shares of Total
FP,
+3.76%

TOT,
-0.22%

surged 4%, while rival oil and gas company Royal Dutch Shell Group
RDS.A,
-0.22%

RDS.B,
+0.35%

climbed nearly 5%. That is as crude prices
CL.1,
+1.89%

rose by 1%.



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Asian shares rise after jobless data halts rally on Wall Street


Shares were mostly higher in Asia on Friday after U.S. unemployment data gave the S&P 500 its first loss in five days.

Tokyo’s Nikkei 225 index
NIK,
+0.74%

closed up 0.7% after opening lower. The Hang Seng
HSI,
+1.62%

in Hong Kong rose 0.7%, India’s Sensex
1,
+0.60%

rose 0.4% and the Kospi
180721,
+1.42%

in South Korea jumped 1.5%. Australia’s S&P/ASX 200
XJO,
+0.11%

picked up 0.3%.

Shares rose in Bangkok, Taiwan and Singapore but fell back in Jakarta.

Markets got some traction from hopes for more monetary and government stimulus as the European Central Bank announced a commitment to buying 600 billion euros ($680 billion) more of bonds, nearly doubling its asset purchasing program.

But the ECB also warned it expects the region’s economy to shrink 8.7% this year due to the pandemic.

In the U.S., hopes are rising for up to $1 trillion in fresh stimulus in coming weeks.

In Asia, the Hong Kong authorities showed restraint as thousands of people defied a police ban to join a candlelight vigil Thursday marking the 31st anniversary of China’s crushing of a democracy movement in Beijing’s Tiananmen Square.

That appeared to have at least slightly alleviated worries over recent efforts by Chinese leaders to exert more control over the former British colony.

Coronavirus precautions were cited as the reason for withholding permission for the annual vigil, but participants saw that as a convenient excuse for police wary after months of sometime violent anti-government protests.

Japan reported Friday that household spending fell 11% in April from the year before, nearly twice the 6% decline in March.

Most attention is focused on U.S. unemployment data coming later Friday, analysts said.

“The good run for markets sees a pause into the end of the week, ahead of the U.S. May labor market updates, with caution cascading across the market following the disappointing jobless claims reading,” Jingyi Pan of IG said in a commentary.

Overnight, the S&P 500
SPX,
-0.33%

lost 0.3% to 3,112.35 after being on track earlier in the day for its longest winning streak since December. The Dow Jones Industrial Average
DJIA,
+0.04%

rose less than 0.1%, to 26,281.82, and the Nasdaq Composite
COMP,
-0.69%

fell 0.7% to 9,615.81.

A report showed that the number of U.S. workers filing for unemployment benefits eased for a ninth straight week, roughly in line with the market’s expectations.

But economists saw pockets of disappointment after the total number of people getting benefits rose slightly after dropping the week before. That had raised hopes that some companies were rehiring workers.

Share prices have climbed recently on optimism that the recession brought on by the coronavirus pandemic might end quickly as economies reopen from shutdowns and travel resumes. But many professional investors contend the recent rally, a nearly 40% climb for the S&P 500 since late March, is overdone and say a pullback is likely.

Rising U.S.-China tensions and the possibility of second waves of coronavirus infections are other reasons for caution, they say.

Economists expect the Labor Department’s monthly jobs report for May, due later Friday, to show employers slashed 8.5 million jobs last month, down from 20.5 million in April. That would push the unemployment rate to nearly 20% from about 15%.

On Thursday, American Airlines
AAL,
+41.09%

surged 41% for the biggest gain in the S&P 500 after it said it plans to fly 55% of its normal U.S. schedule next month, up from only 20% in April.

The S&P 500 is now within 8.1% of its record set in February after earlier being down nearly 34%.

The yield on the 10-year Treasury
TMUBMUSD10Y,
0.853%

rose to 0.82% from 0.81% late Thursday after rising decisively during the day. It tends to move with investors’ expectations for inflation and the economy’s strength and was one of the first indicators warning of the coming economic devastation from the coronavirus outbreak.

In other trading, a barrel of U.S. crude oil for delivery in July fell 5 cents to $37.36 per barrel in electronic trading on the New York Mercantile Exchange.

It has risen as major oil producers began discussing extending production cuts to reflect a collapse in demand due to the pandemic. U.S. crude
CL.1,
+0.88%

rose 12 cents to settle at $37.41 on Thursday.

Brent crude
BRNQ20,
+1.27%
,
the international standard, gained 6 cents to $40.05 per barrel. It rose 20 cents to settle at $39.99 per barrel on Thursday.

The dollar
USDJPY,
+0.19%

was trading at 109.27 Japanese yen, up from 109.15 yen late Thursday. The euro
EURUSD,
+0.21%

strengthened to $1.1373 from $1.1336.



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My ex-husband filed a joint tax return without my knowledge. He received my family’s stimulus payment — what can I do?


Dear Moneyist,

I have an estranged husband, and we have been living separately for years. He has been filing taxes jointly without my knowledge AND now he has received my stimulus money AND my kids’ stimulus money. I can’t hire an attorney because I’m poor, and I live in a rural area where there are no attorneys who will take my case without a fee.

I’ve asked a legal center how to bring this issue of financial abuse to the divorce judge and, so far, I have received no answers. I have no idea how the Internal Revenue Service will react, given that we are still legally married. I do know the money was deposited into his account. We never had joint bank accounts. My ex doesn’t communicate with me, and his phone has been off for weeks now.

He has used the pandemic to commit emotional and economic abuse. What can I do?

Claudia

Dear Claudia,

You may have to wait longer for your money, but you will get it. What your husband did is fraud, it’s against the law and, in addition to facing possible criminal charges, he may also face a hefty fine for filing these taxes in your name. He forged your name on this tax return. That’s another crime. As for keeping the money your family is owed, that is the poisoned cherry on top. That’s theft. This will all come back to haunt him, and he could end up going to jail. With so many people losing out on their income during the pandemic, I’m only sorry that money you need now will take longer to reach you.


With so many people losing out on their income during the pandemic, I’m only sorry that money you need now will take longer to reach you.


— The Moneyist

You can verify your identity with the IRS here. The phone lines are open, but customer-service support is extremely limited at this time. “Each state has at least one Local Taxpayer Advocate who is independent of the local IRS office and reports directly to the National Taxpayer Advocate,” according to the agency. You can select your state here to find the phone number and address of the Taxpayer Advocate Service office nearest you. You can also write to the office in your state. Read more on how to report fraud here.

Hundreds of people have written to me wondering why they have not received their stimulus payment. One husband actually refused to give the payment to his wife. That was a textbook case of financial abuse. “Financial abuse happens when an abuser takes control of finances to prevent the other person from leaving and to maintain power in a relationship,” according to the Office on Women’s Health at the U.S. Department of Health and Human Services. “An abuser may take control of all the money, withhold it, and conceal financial information from the victim.”

I’m sorry this has continued long after your divorce. Legal aid is a good first step. Sooner or later, tax shenanigans will catch up with the person trying to work the system. It’s now your husband’s turn. You have one advantage: You know why your economic impact payment did not arrive. That may seem like a small consolation at this time, but now at least you can do something about it. Given how overwhelmed the agency is at the present time, it will take some time, but you should eventually be compensated, and your former husband will learn of the severity of his crimes.

Also see: I received my ex-husband’s $1,200 stimulus check because we filed joint taxes in 2018. Should I give him the money or return it to the IRS

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.

Want to read more?Follow Quentin Fottrell on Twitterand read more of his columns here

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FB,
-1.68%

group where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.





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Nearly 25% of Americans have no emergency savings


The coronavirus pandemic compounds an already dire financial situation for millions of Americans.

One-third of homeowners have less than $500 or, worse, nothing set aside for an emergency home repair, according to a report released Wednesday, and that includes 50% of homeowners with an annual household income of less than $50,000.

There’s growing concern among many Americans — especially those who are most in need of the checks and already have bills piling up — that the economy won’t restart in time to save them from paying the rent, their mortgage and going hungry.

The survey found that over half of homeowners (53%) have experienced a home repair emergency in the past 12 months. The poll, conducted online by The Harris Poll on behalf of HomeServe, a home-repair company, questioned 1,400 homeowners.

Some 38% of Americans could not come up with $500 in cash without selling something or taking out a loan, another report released Wednesday from SimplyWise, a website that gives advice on Social Security; 1 in 10 are planning to withdraw from their emergency savings to pay bills.

Also see: Millions of people of color have NO access to affordable health care or quality education — and 2 million Americans lack running water

What’s more, nearly 25% of all Americans had no emergency savings and 16% have taken on more debt, and nearly one-third of households reported lower income since the start of the pandemic, a separate report by Bankrate.com concluded.

“The pandemic is deepening the financial hardship for millions of Americans,” Bankrate chief financial analyst Greg McBride said. “The financial legacy of this pandemic will be elevated unemployment, reduced household incomes, more debt and even less savings.”

The pandemic has hit the Northeast hard, with 36% of Northeasterners reporting a fall in income, compared to 31% in the West, 29% in the Midwest, and 28% in the South. People in the Northeast are also more likely to have increased debt than those in those other regions.

The $1,200 stimulus checks money can’t come soon enough for the roughly 40 million people who are out of work, and others worried about bills and rent. They also can receive $600 per week extra in unemployment insurance as part of the $2.2 trillion CARES Act.

Read also: Stimulus checks are a mere Band-Aid for Americans — amid fears of an even bigger economic crisis than the Great Recession

Gallup data released Monday add more support to previous research that less-educated workers in low-wage, blue-collar roles have been hardest hit by COVID-19, and suggest the pandemic is “exacerbating the income inequality that existed before its arrival.”

Some 95% of workers in low-income households — making less than $36,000 per year — have either been laid off as a result of the coronavirus (37%) or have experienced a loss in income (58%). A quarter of workers earning between $90,000 and $180,000 a year saw an income loss.

“These patterns were predicted in the early stages of the pandemic, and proposals for relief called for targeted and proportional funding,” Jonathan Rothwell, the principal economist at Gallup, said. Three in 10 U.S. job openings disappeared since March, recruitment company Glassdoor added.

The Dow Jones Industrial Index
DJIA,
+0.04%

and the S&P 500
SPX,
-0.33%

were slightly lower Thursday, as investors weighed the impact of the social unrest over the death of George Floyd in police custody in Minneapolis, as well as possible progress in COVID-19 vaccine research.



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