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REX Shares designs investment products that help investors diversify and manage risks. In 2018, REX successfully launched the MicroSectors™ brand. MicroSectors provides concentrated exposure to investable market segments that heavily influence many investor portfolios. Developed as trading ...more

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MicroSectors August Report

Date: Wednesday, August 7, 2019 10:54 AM EDT

Facebook (FB)

Facebook has recently been fined $5 Billion by the Federal Trade Commission in connection to allegations that Facebook was misusing user data, allowing it to be accessed by third-party companies, such as Cambridge Analytica. Despite being the largest fine ever issued by the FTC, many have argued that this is an insignificant sum of money for Facebook, and will fail to cause any real change in the long-term. This fine is seen by experts as a way to save face for the FTC, who allowed this sort of privacy breach to occur, despite regulations that should have prevented this level of data misuse.

Philips 66 (PSX)
Earlier this week, Philips 66 released their Q2 earnings report, which surpassed estimated earnings per-share by over $0.30. This performance has largely been driven by strong quarters from the midstream sector, with adjusted quarterly earnings in this sector of $423 million. Additionally, reports have claimed that these earnings have been helped by strong performance by Natural Gas Liquid terminals. This performance exceeds year-on-year performance from 2018.

Tesla (TSLA)
Tesla has recently launched their third foray into the energy storage sector, following up the Powerwall and Powerpack systems with the Megapack, which has utilized design elements from the large battery array Tesla has built in South Australia. The Megapack, which was announced last Monday, will be the largest system in their product suite, with the ability to hold up to three Megawatt-Hours of electricity. Furthermore, Tesla has claimed that multiple Megapacks can be connected to create a battery with a storage capacity of up to one Gigawatt-Hour. This marks a shift in focus by Tesla, which has previously reduced their energy-storage production capacity in order to allocate more resources to the manufacturing of more Model 3 cars.

Citigroup (C)
Citigroup has announced plans to cut more than 100 jobs in its trading division, particularly in the fixed-income and stock-trading operations. This is reflecting an industry-wide decline in revenues that has resulted in the loss of many jobs. Citi has announced that the majority of these cuts will occur in their London operation. Furthermore, reports indicate that this is not a one-off, and that other companies are looking to take similar measures in the weeks and months ahead.

Apple (AAPL)
Apple revealed during their recent quarterly earnings call that the Apple Card, the long-rumored credit card that was officially launched this past spring, will begin to accept applications this month. Unlike traditional cards, the Apple Card will not have a single 16-digit card number, with all identifying information randomly generated at the time of each transaction so as to ensure high levels of security. Furthermore, it was stated that the financial backing for the card will be provided by Goldman Sachs (GS), and the card will also function as a part of the Apple Wallet application.

July Index Performance Analysis

Source: Bloomberg

Chart of the Month

Energy Benchmark Performance since Oil bottomed to $26.21 on 2/11/2016
Source: Bloomberg

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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.

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