An unusual three-way division within the Federal Reserve system has brought several corners of the ETF universe into focus as market participants reassess which corners might be more impacted by changes in respective GDP and interest rate forecasts. As forecast upgrades by the Federal Open Market Committee (FOMC) for GDP have been tempered by a cool labor market and high inflation, value, financial, and cash flow ETFs have emerged as corners of the market worth watching.ETFs At Center StageAlthough there is ...

Market Overview - U.S. stock index futures are all down ahead of the market opening, with Dow futures down 0.58%, S&P 500 futures down 0.72%, and Nasdaq futures down 0.94% [1] - European indices also show declines, with Germany's DAX down 1.46%, UK's FTSE 100 down 0.20%, France's CAC40 down 0.36%, and the Euro Stoxx 50 down 0.83% [2][3] Oil Prices - WTI crude oil increased by 2.72% to $65.75 per barrel, while Brent crude oil rose by 1.60% to $69.24 per barrel [3][4] Economic Insights - Morgan Stanley predicts that the U.S. stock market will continue to rise due to strong corporate earnings and an anticipated interest rate cut by the Federal Reserve [5] - UBS warns of seasonal risks in September, historically the worst month for U.S. stocks, despite strong performance in August driven by EPS revisions [5] - UBS also forecasts that the Federal Reserve will initiate a series of rate cuts totaling 100 basis points starting in September due to stable inflation and a weakening labor market [6] - Goldman Sachs has downgraded its Q3 U.S. GDP forecast to 1.6% due to a larger-than-expected trade deficit [6] Company News - Tesla has received only over 600 orders since launching in India, significantly below expectations, attributed to high tariffs and infrastructure challenges [9] - Starbucks reports a significant increase in sales due to the return of its seasonal pumpkin spice products, marking a turnaround in its sales performance [10] - Kraft Heinz announced plans to split into two publicly traded companies to boost growth, focusing on condiments and grocery products [10] - NIO reported a total revenue of 19.0087 billion yuan for Q2, a 9% year-over-year increase, with vehicle deliveries reaching a record high [11]

Core Viewpoint - The OECD has revised Japan's GDP forecast for 2025 down to 0.7% from a previous estimate of 1.1%, while increasing the forecast for 2026 to 0.4% from 0.2% [1] Summary by Category - **Economic Forecasts** - Japan's GDP forecast for 2025 is now 0.7%, reduced from 1.1% [1] - The forecast for 2026 has been increased to 0.4%, up from 0.2% [1]

Investment Rating - The report revises the GDP forecast for 2025 upward to 4.5% from 4.0% due to stronger-than-expected growth in Q1 and solid capital expenditure momentum [1][2][3] Core Insights - The growth recovery is expected to soften from Q2 2025 onwards due to tariff impacts and reactive policy measures, despite initial positive momentum [2][4] - The report highlights a higher contribution from capital formation to GDP, driven by emerging industries and AI adoption [3][5] - The policy framework is aimed at providing a floor to growth rather than aggressive stimulus, with limited actions anticipated in the near term [11][12] Summary by Sections GDP Forecast - The revised GDP forecast for 2025 is 4.5%, reflecting a stronger-than-expected Q1 performance and solid capital expenditure [1][2] - The nominal GDP growth is projected at 3.6% YoY for 2025, below consensus expectations [2][3] Economic Drivers - Key drivers for the GDP revision include robust Q1 growth tracking at 5.4% YoY and higher capital expenditure growth supported by emerging sectors [3][4] - The report notes that the economy has become less sensitive to tariffs due to lower direct trade exposure to the US and supply chain adjustments [4][5] Policy and Market Dynamics - The report indicates a reactive policy response rather than proactive stimulus, with a wait-and-see approach on potential new initiatives [11][12] - The housing market is not expected to see a sustained recovery, with recent rebounds attributed to pent-up demand rather than broader economic strength [12][13] Currency and Inflation Outlook - The RMB forecast has been revised, expecting USDCNY to reach 7.35 by mid-2025, reflecting a focus on currency stability [14][16] - The GDP deflator is forecasted at -0.9% YoY for 2025, indicating ongoing deflationary pressures despite stronger domestic demand [13][14]