MicroSectors July Newsletter

Facebook (FB) Facebook has officially released it's white paper on ‘Libra’, their long-awaited foray into the cryptocurrency industry. According to the white paper, a collection of groups, such as Facebook, PayPal, and Uber will each have voting power in what has been called the ‘Libra Association’. Some have argued that this currency, due to the fact that it has limited oversight from a central banking system, places too much power in the hands of corporations, who may have an incentive to create more currency following the widespread adoption of this system. Additionally, despite the aims of Libra to help provide banking services to the 1.7 billion ‘unbanked’ adults in the world today, there appears to be a lack of a concrete plan as to how this would actually work.

Alphabet (GOOGL) Google has recently been the center of a potential anti-trust probe brought forth by the United States Department of Justice. However, one recent development is the preparation of many competitors of Google to release documents pertaining to the case in upcoming meetings with the department of Justice. Some of these competitors, such as TripAdvisor, Yelp, and News Corp, claim Google has been promoting its own content over theirs, a practice which violates anti-trust legislation. However, according to many in the industry, there is much more unrest that is yet to be publicly voiced.

Exxon Mobil (XOM) Exxon Mobil has begun preparations for the sale of their Norwegian upstream holdings, hoping to focus upstream operations on other regions instead. These assets currently produce 150,000 Barrels of Oil (Equivalent) per day, and are in an attractive region for potential buyers. Some sources have stated that the value of these assets is $3-4 billion, and could represent a significant step in Exxon’s attempt to meet a goal of $15 billion in divestment. Front runners for the purchase of these assets include other North Sea independents, such as Okea and Chryasor.

Alibaba (BABA) With less than three months until Alibaba founder Jack Ma steps down from his chairman position, major changes are coming to the Chinese e-commerce giant. Ma will be succeeded by Alibaba’s current CEO, Daniel Zhang, who has already begun implementing his agenda in the form of recent management changes. On June 18th, the company announced that current CFO, Maggie Wu, will be promoted to head Alibaba’s strategic investments unit. This function was previously performed by Executive Vice-Chairman, Joe Tsai, who operated as Ma’s right hand man.

Morgan Stanley (MS) & Big Banks Morgan Stanley was among a group of the 18 largest U.S. banks that passed the first component of the Federal Reserve’s stress test on June 21st. In a statement, the Fed maintained that U.S. big banks have “strong capital levels that would allow them to stay well above their minimum requirements after being tested against a severe hypothetical recession.” The hypothetical scenario being tested involved the unemployment rate rising to 10%, a large decline in the prices of real assets, and increased stress in corporate loan markets. Although the results of this test indicate that the big banks would be able to continue lending to businesses and households during a recession, the Fed noted that the banks would experience “substantial losses.”

Occidental (OXY) After months of negotiation, Occidental Petroleum emerged victorious in what was a nearly two-year pursuit of competitor, Anadarko Petroleum. Occidental’s bid was accepted in May when Chevron, who had previously agreed to acquire Anadarko, decided to bow out of negotiations. Occidental’s offer of $38 billion includes cash payments of almost 80% of the purchase price. With the acquisition still pending, Occidental has made an agreement with Total S.A. to acquire Anadarko’s African assets. This second deal is contingent on the Occidental successfully completing the acquisition of Anadarko, but the $8.8 billion price tag for APC’s African assets will reduce the blow to Occidental’s cash account following the substantial cash payments for the acquisition.


FANG+ Performance Analysis

Source: Bloomberg, See FANG+ Rebalance Report

Big Oil Performance Analysis

Source: Bloomberg, See Big Oil Rebalance Report

Big Bank Performance Analysis

Source: Bloomberg, See Big Bank Rebalance Report.


Chart of the Month

A look at Bloomberg classifications of the underlyings within the Nasdaq 100 Index & the NYSE Fang+ Index

Source: Bloomberg


What We're Reading

What We're Watching & Listening to

In Other News

We Have Been Nominated

MicroSectors has been nominated for 'Best alternative ETF provider' in the ETFExpress 2019 USA Awards. Show your support by voting for us using the button below (see question #11).



What is MicroSectors?

MicroSectors provides concentrated exposure to investable market segments that heavily influence many investor portfolios. Developed as trading and hedging instruments, MicroSectors give sophisticated investors specified exposures to popular niches of the market. More info on MicroSectors can be found here.


For Institutional use only, this is not intended for retail investors, public viewing or distribution.

Past performance is no guarantee of future returns. The opinions and views expressed are as of the date published and are subject to change without notice. They are for information purposes only and should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation to buy, sell or hold any security, investment strategy or market sector. All third party links are not sponsored, endorsed, or provided by REX Shares, LLC. There is no guarantee that the information supplied is accurate, complete, or timely, nor are there any warranties with regards to the results obtained from its use. Investing involves risk, including the loss of principal. Index performance does not reflect the expenses of managing a portfolio as an index is unmanaged and not available for direct investment. The performance of any index herein is not illustrative of the performance of any security.

The Index has limited actual historical information. The Index Calculation Agent may adjust the Index in a way that may affect its level, and may, in its sole discretion, discontinue the public disclosure of the intraday Index value and the end-of-day closing value of the Index. The Index lacks diversification and is vulnerable to fluctuations in the technology and consumer discretionary industries. A limited number of Index constituents may affect the Index Closing Level, and the Index is not necessarily representative of its focus industry. An Index constituent may be replaced upon the occurrence of certain adverse events. The Index uses a proprietary selection methodology, which may not select the constituent issuers in the same manner as would other index providers or market participants.

MicroSectors™ and REX™ are registered trademarks of REX Shares, LLC (“REX”). FANG+ is a registered trademark of ICE Data Indices, LLC (“ICE Data”). The trademarks have been licensed for use for certain purposes by Bank of Montreal. The NYSE® FANG+™ Index is a product of ICE Data, and has been licensed for use by Bank of Montreal. REX Index Parties and ICE Data Index Parties make no representation or warranty, express or implied, to the ability of the NYSE® FANG+™ Index to track general market performance. REX Index Parties and ICE Data Index Parties’ only relationship to Bank of Montreal with respect to the Index is the licensing of the Index and certain trademarks, service marks and/or trade names of REX Index Parties and ICE Data Index Parties.

Solactive AG (“Solactive”) is the licensor of the Solactive MicroSectors™ U.S. Big Banks Index and the Solactive MicroSectors™ U.S. Big Oil Index. Solactive makes no express or implied representation, guarantee or assurance with regard to: (a) the quality, accuracy and/or completeness of the Index; and/or (b) the results obtained or to be obtained by any person or entity from the use of the Index. Solactive does not guarantee the accuracy and/or the completeness of the Index and shall not have any liability for any errors or omissions with respect thereto. Notwithstanding Solactive’s obligations to its licensees, Solactive reserves the right to change the methods of calculation or publication of the Index, and Solactive shall not be liable for any miscalculation of or any incorrect, delayed or interrupted publication with respect to the Index. Solactive shall not be liable for any damages, including, without limitation, any loss of profits or business, or any special, incidental, punitive, indirect or consequential damages suffered or incurred as a result of the use (or inability to use) of the Index.

Solactive AG (“Solactive”), as the Index Calculation Agent (as defined in the applicable pricing supplement), may adjust the Index in a way that may affect its level, and may, in its sole discretion, discontinue the public disclosure of the intraday Index value and the end-of-day closing value of the Index. The Index lacks diversification and is vulnerable to fluctuations in the applicable sector. A limited number of Index constituents may affect the Index Closing Level, and the Index is not necessarily representative of its focus industry. An Index constituent may be replaced upon the occurrence of certain adverse events.

Copyright © 2019 REX Shares, LLC, All rights reserved.


REX Shares White Font RGB_30_36_46_Backg
Stay updated

203-557-6201

info@rexshares.com

  • White Twitter Icon
  • White LinkedIn Icon

© 2020 REX Shares, LLC