How Every Market Performed in 2021
After the roller coaster of volatility in 2020, the majority of asset classes in 2021 saw positive returns as the world reopened for business.
The Federal Reserve’s accommodative monetary policy, supply chain struggles, and high demand for fuels and raw materials for the clean energy transition largely shaped the markets.
Alongside the rise in inflation, commodities and cryptocurrency outperformed as broad equity indices saw double-digit returns, with the S&P 500 rising by 26.9% in 2021.
Markets Roundup for 2021
Speculation and the energy fuels for the world’s reopening were two of the main themes for markets in 2021, reflected in Bitcoin (59.8%) and crude oil (56.4%) being the top two performing assets in that time frame.
The S&P GSCI commodity index (37.1%) was another top performer, as agricultural and livestock food prices rose alongside the Dow Jones Real Estate Index (35.1%).
|Asset Class||2021 Return||Asset Type|
|WTI Crude Oil||56.4%||Commodity|
|Dow Jones Real Estate Index||35.1%||Real Estate|
|Bloomberg Barclays Corporate Bonds Index||-1.2%||Bonds|
|Bloomberg U.S. Treasury Index||-2.5%||Bonds|
|MSCI Emerging Markets||-5.5%||Equities|
Despite most physical and digital commodities seeing price gains, precious metals such as gold (-3.6%) and silver (-11.7%) struggled to hold onto their value, while industrial and battery metals like lithium (477.4%) and cobalt (207.7%) surged.
Large cap equity indices like the S&P 500 (26.9%) almost doubled the returns of small caps (Russell 2000, 13.7%), with emerging markets failing to keep up as they fell 5.5%.
How the S&P 500 Sectors Performed
After last year’s poor performance as the worst-performing S&P 500 sector, energy (47.7%) was 2021’s best performing sector alongside the rise in crude oil and other energy commodities.
Two other negative performers last year, real estate (42.5%) and financials (32.6%), also turned it around and were among the top performing sectors this year.
Despite many value equities performing well, growth equities still managed to keep a strong pace. Information technology (33.4%) continued to provide strong returns with Microsoft (51.2%) outperforming many of the other tech giants.
As Amazon (2.38%) and Netflix lagged behind (11.4%), Apple (33.8%) capped off its strong 2021 returns by becoming the first U.S. company to reach a $3T market cap at the start of 2022.
Foreign Exchange and Currency Returns in 2021
While the U.S. dollar struggled last year with most currencies outperforming it, 2021 saw the dollar index rise by 6.4%, outperforming most other currencies.
The Chinese yuan (2.7%) and Canadian dollar (0.7%) were the only major currencies that managed positive returns against the U.S. dollar, while the Australian dollar (-5.7%), Euro (-7.0%), and Japanese Yen (-10.2%) were among the worst performers.
The Turkish lira was the standout loser in foreign exchange, and the turmoil was punctuated by turnover in the country’s finance minister position. While most other emerging economies raised interest rates to fight against inflation, Turkey has continued cutting rates and looks set to default on its $446 million of external debt.
The Winners and Losers of 2021
As the COVID-19 pandemic defined many of the winners and losers in 2020, the gradual reopening of international travel and business shaped the over and underperformers of 2021.
Cryptocurrencies had a standout year beyond Bitcoin (59.8%), which was greatly outpaced by many other cryptocurrencies and smart contract platforms like Ethereum (398.3%), Solana (11,177.8%), Avalanche (3,334.8%), and Luna (12,967.3%).
While Tesla (49.8%) had another strong year, Lucid and Ford Motors greatly outperformed Elon Musk’s company and the rest of the auto industry with their EV efforts. Demand was so great that Ford had to halt reservations for its F-150 Lightning pickup trucks at the end of 2021.
The pain of Evergrande Group (89.3%) shareholders is set to end soon, with the company starting 2022 by halting shares in Hong Kong as its $300 billion in liabilities remain in limbo.
Peloton (-76.4%) was another big loser in 2021 as it gave back nearly all of its gains from last year, proving lockdown speculation fueled most of its former valuation. Just Eat (-52.9%) was similarly hit hard as restaurants reopened in 2021.
Robinhood’s (53.3%) weak performance since its IPO puts a bow on 2021’s retail “stonk” frenzy kicked off by the Wall Street Bets subreddit.
With 2021 being a breakout year for retail traders and investors online, we’ll see if 2022 remains risk-on as the Fed begins tapering, or if markets are due for a change in direction.
Thematic Investing: 3 Key Trends in Cybersecurity
Cyberattacks are becoming more frequent and sophisticated. Here’s what investors need to know about the future of cybersecurity.
Thematic Investing: 3 Key Trends in Cybersecurity
In 2020, the global cost of cybercrime was estimated to be around $945 billion, according to McAfee.
It’s likely even higher today, as multiple sources have recorded an increase in the frequency and sophistication of cyberattacks during the pandemic.
In this infographic from Global X ETFs, we highlight three major trends that are shaping the future of the cybersecurity industry that investors need to know.
Trend 1: Increasing Costs
Research from IBM determined that the average data breach cost businesses $4.2 million in 2021, up from $3.6 million in 2017. The following table breaks this figure into four components:
|Cost Component||Value ($)|
|Cost of lost business||$1.6M|
|Detection and escalation||$1.2M|
|Post breach response||$1.1M|
The greatest cost of a data breach is lost business, which results from system downtimes, reputational losses, and lost customers. Second is detection and escalation, including investigative activities, audit services, and communications to stakeholders.
Post breach response includes costs such as legal expenditures, issuing new accounts or credit cards (in the case of financial institutions), and other monitoring services. Lastly, notification refers to the cost of notifying regulators, stakeholders, and other third parties.
To stay ahead of these rising costs, businesses are placing more emphasis on cybersecurity. For example, Microsoft announced in September 2021 that it would quadruple its cybersecurity investments to $20 billion over the next five years.
Trend 2: Remote Work Opens New Vulnerabilities
According to IBM, companies that rely more on remote work experience greater losses from data breaches. For companies where 81 to 100% of employees were remote, the average cost of a data breach was $5.5 million (2021). This dropped to $3.7 million for companies that had under 10% of employees working from home.
A major reason for this gap is that work-from-home setups are typically less secure. Phishing attacks surged in 2021, taking advantage of the fact that many employees access corporate systems through their personal devices.
|Type of Attack||Number of attacks in 2020||Number of attacks in 2021||Growth (%)|
As detected by Trend Micro’s Cloud App Security.
Spam phishing refers to “fake” emails that trick users by impersonating company management. They can include malicious links that download ransomware onto the users device. Credential phishing is similar in concept, though the goal is to steal a person’s account credentials.
A tactic you may have seen before is the Amazon scam, where senders impersonate Amazon and convince users to update their payment methods. This strategy could also be used to gain access to a company’s internal systems.
Trend 3: AI Can Reduce the Cost of a Data Breach
AI-based cybersecurity can detect and respond to cyberattacks without any human intervention. When fully deployed, IBM measured a 20% reduction in the time it takes to identify and contain a breach. It also resulted in cost savings upwards of 60%.
A prominent user of AI-based cybersecurity is Google, which uses machine learning to detect phishing attacks within Gmail.
Machine learning helps Gmail block spam and phishing messages from showing up in your inbox with over 99.9% accuracy. This is huge, given that 50-70% of messages that Gmail receives are spam.
– Andy Wen, Google
As cybercrime escalates, Acumen Research and Consulting believes the market for AI-based security solutions will reach $134 billion by 2030, up from $15 billion in 2021.
Introducing the Global X Cybersecurity ETF
The Global X Cybersecurity ETF (Ticker: BUG) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Cybersecurity Index. See below for industry and country-level breakdowns, as of June 2022.
|Sector (By security type)||Weight|
|🇰🇷 South Korea||0.9%|
Totals may not equal 100% due to rounding.
Investors can use this passively managed solution to gain exposure to the rising adoption of cybersecurity technologies.
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Visualizing Major Layoffs At U.S. Corporations
This infographic highlights the accelerating pace of layoffs so far in 2022, as businesses cut costs ahead of a potential recession.
Visualizing Major Layoffs at U.S. Corporations
Hiring freezes and layoffs are becoming more common in 2022, as U.S. businesses look to slash costs ahead of a possible recession.
Understandably, this has a lot of people worried. In June 2022, Insight Global found that 78% of American workers fear they will lose their job in the next recession. Additionally, 56% said they aren’t financially prepared, and 54% said they would take a pay cut to avoid being laid off.
In this infographic, we’ve visualized major layoffs announced in 2022 by publicly-traded U.S. corporations.
Note: Due to gaps in reporting, as well as the very large number of U.S. corporations, this list may not be comprehensive.
An Emerging Trend
Layoffs have surged considerably since April of this year. See the table below for high-profile instances of mass layoffs.
|JP Morgan Chase & Co.||Financial Services||~500||June|
Here’s a brief rundown of these layoffs, sorted by industry.
Ford has announced the biggest round of layoffs this year, totalling roughly 8,000 salaried employees. Many of these jobs are in Ford’s legacy combustion engine business. According to CEO Jim Farley, these cuts are necessary to fund the company’s transition to EVs.
We absolutely have too many people in some places, no doubt about it.
– Jim Farley, CEO, Ford
Speaking of EVs, Rivian laid off 840 employees in July, amounting to 6% of its total workforce. The EV startup pointed to inflation, rising interest rates, and increasing commodity prices as factors. The firm’s more established competitor, Tesla, cut 200 jobs from its autopilot division in the month prior.
Last but not least is online used car retailer, Carvana, which cut 2,500 jobs in May. The company experienced rapid growth during the pandemic, but has since fallen out of grace. Year-to-date, the company’s shares are down more than 80%.
Fearing an impending recession, Coinbase has shed 1,100 employees, or 18% of its total workforce. Interestingly, Coinbase does not have a physical headquarters, meaning the entire company operates remotely.
A recession could lead to another crypto winter, and could last for an extended period. In past crypto winters, trading revenue declined significantly.
Brian Armstrong, CEO, Coinbase
Around the same time, JPMorgan Chase & Co. announced it would fire hundreds of home-lending employees. While an exact number isn’t available, we’ve estimated this to be around 500 jobs, based on the original Bloomberg article. Wells Fargo, another major U.S. bank, has also cut 197 jobs from its home mortgage division.
The primary reason for these cuts is rising mortgage rates, which are negatively impacting the demand for homes.
Within tech, Meta and Twitter are two of the most high profile companies to begin making layoffs. In Meta’s case, 350 custodial staff have been let go due to reduced usage of the company’s offices.
Many more cuts are expected, however, as Facebook recently reported its first revenue decline in 10 years. CEO Mark Zuckerberg has made it clear he expects the company to do more with fewer resources, and managers have been encouraged to report “low performers” for “failing the company”.
Realistically, there are probably a bunch of people at the company who shouldn’t be here.
– Mark Zuckerberg, CEO, Meta
Also in July, Twitter laid off 30% of its talent acquisition team. An exact number was not available, but the team was estimated to have less than 100 employees. The company has also enacted a hiring freeze as it stumbles through a botched acquisition by Elon Musk.
More Layoffs to Come…
Layoffs are expected to continue throughout the rest of this year, as metrics like consumer sentiment enter a decline. Rising interest rates, which make it more expensive for businesses to borrow money, are also having a negative impact on growth.
In fact just a few days ago, trading platform Robinhood announced it was letting go 23% of its staff. After accounting for its previous layoffs in April (9% of the workforce), it’s fair to estimate that this latest round will impact nearly 800 people.
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