The Toronto Stock Exchange’s parent company has already completed a major deal this year: its acquisition of ETF education company VettaFi.

According to TMX Group CEO John McKenzie, the deal helps expand its exchange-traded fund business globally.

“The exchange-traded fund is essentially one of the most important innovations in investing in the marketplace history — at least in the last 20 [to] 30 years,” McKenzie told CNBC’s “ETF Edge” this week. “What we were really looking to do is … get deeper into providing more support to our clients.”

Even though ETF activity has cooled off from its 2022 records, action in 2023 was still above previous years, according to iShares data.

McKenzie plans to utilize the VettaFi acquisition to facilitate more ETF creation.

“ETF providers can create new products and great solutions so that they can reach a broader investing audience,” McKenzie said. “That’s the one two punch of what we’re doing with that investment.”

TMX’s ETF Screener lists 1,264 ETFs and ETF-related funds on the Toronto Stock Exchange as of Friday.

With VettaFi in the exchange’s tool belt, McKenzie hopes to create new ETFs focusing on Canada’s economic strengths and how they can reach international investors.

“We want to be more global than local,” added McKenzie. “This is a great asset to help us build not just in the U.S., not just in Canada, but around the world.”

Since the acquisition was completed on Jan. 2, TMX shares are up 11%.

Disclaimer

UBS shares climbed on Tuesday morning after the Swiss banking giant resoundingly beat expectations for underlying profit.

The bank recorded an underlying operating profit before tax of $844 million, well ahead of consensus expectations. UBS shares added 4% in early trade as a result.

Factoring in $2 billion in expenses related to the integration of fallen rival Credit Suisse, UBS posted a bigger-than-expected third-quarter net loss attributable to shareholders of $785 million. Analysts polled by Reuters had anticipated a quarterly net loss of $444 million in a company-compiled poll.

Here are some other highlights:

Total group revenues were $11.7 billion, up 23% from $9.54 billion in the second quarter.CET1 capital ratio, a measure of bank liquidity, was 14.4%, unchanged from the previous quarter.Credit Suisse Wealth Management generated positive net new money inflows for the first time since the first quarter of 2022, contributing to inflows of $22 billion for UBS Global Wealth Management.

“You could see that, sequentially, we improved the underlying performance across Wealth Management, Asset Management and our Personal and Corporate banking in Switzerland. They both grew on a quarter-on-quarter basis,” UBS CEO Sergio Ermotti told CNBC on Tuesday.

“The IB [investment bank] has been facing more challenging market conditions, particularly when you look at our business model and the fact that we have been onboarding resources from Credit Suisse. But it was a very solid quarter, and we made very good progress in our integration plans, and at the same time we saw very strong inflows from clients.”

A ‘good set of results’

Analysts at Citi highlighted on Tuesday that the $844 million underlying profit before tax figure was “notably ahead of prior company guidance (of break-even), treble consensus expectations and 6% ahead of our above-consensus forecast.”

“As we expected the beat is driven by better opex [operating expense], 7% below consensus, with revenues also 1% ahead. This is then slightly offset by heavier provisions,” they noted, adding that the acceleration of Wealth Management net new money inflows in September was also “encouraging.”

UBS is also in the process of fully integrating Credit Suisse’s Swiss banking unit — a key profit center — and is expected to cut a hefty proportion of the legacy bank’s workforce.

UBS reported net new deposits of $33 billion across its Global Wealth Management and Personal and Corporate Banking (P&C) divisions, with $22 billion coming from Credit Suisse clients and positive deposit inflows for P&C in September, the month after UBS announced the decision to integrate the domestic bank.

The bank also announced earlier this year that it is targeting gross cost savings of at least $10 billion by 2026, when it hopes to have completed the integration all of Credit Suisse Group’s businesses.

For the first time in nearly two decades running JPMorgan Chase, CEO Jamie Dimon will voluntarily sell stock in the bank.

The disclosure, in a securities filing Friday, detailed next year’s planned sales — pressuring JPMorgan (JPM) shares and the Dow Jones Industrial Average and highlighting why tracking trades made by executives involving the companies they lead should be an important part of every investor’s homework.

Dimon is setting up the trades through a predetermined plan that executives at publicly traded companies use to protect against insider trading accusations. It will mark the first time that the 67-year-old CEO has offloaded shares of JPMorgan for non-technical reasons, such as exercising options.  

The planned sales – amounting to roughly 12% of the JPMorgan stock owned by Dimon and his family – are being done for tax planning and personal wealth diversification reasons, the bank said. Both are common reasons for executives to sell stock in their firms. The bank also said Dimon continues to believe JPMorgan’s prospects are “very strong,” and his planned trades are not related in any way to succession. Such sales are often seen when CEOs get close to retirement.

As you can see, making sense of insider transactions can sometimes be a tall task.

When they buy, it’s generally seen as an encouraging sign by Wall Street — and there is, perhaps, no better example of this than another move by Dimon in 2016, when he purchased JPMorgan stock.

Fears of a weakening global economy sent stocks into a tailspin in early 2016, driving shares of JPMorgan down nearly 20% and the S&P 500 down more than 10% at their lows.

But that weakness didn’t last long.

The trajectory of the market changed just six weeks into the new year. That’s when Dimon disclosed — after the closing bell on Feb. 11, 2016 — that he bought 500,000 shares of the bank, worth about $26 million at the time.

Dimon’s stock purchase, intended to show confidence in the financial sector, has become legendary on Wall Street. It ultimately coincided with — or perhaps was the reason for — the closing lows for not only shares of JPMorgan in 2016 but also the S&P 500 overall.

Jim Cramer has since dubbed Feb. 11, 2016: “The Jamie Dimon Bottom.” JPMorgan finished up 30% that year, while the S&P 500 ended more than 9% higher — both huge turnarounds.

While executive stock sales — such as Dimon’s planned transactions next year — are not universally red flags, they can get complicated.

The market has long been pricing in interest rate cuts from major central banks toward the end of 2023, but sticky core inflation, tight labor markets and a surprisingly resilient global economy are leading some economists to reassess.

Stronger-than-expected U.S. jobs figures and gross domestic product data have highlighted a key risk to the Federal Reserve potentially taking its foot off the monetary brake. Economic resilience and persistent labor market tightness could exert upward pressure on wages and inflation, which is in danger of becoming entrenched.

The headline U.S. consumer price index has cooled significantly since its peak above 9% in June 2022, falling to just 4.9% in April, but remains well above the Fed’s 2% target. Crucially, core CPI, which excludes volatile food and energy prices, rose by 5.5% annually in April.

As the Fed earlier this month implemented its 10th increase in interest rates since March 2022, raising the Fed funds rate to a range of 5% to 5.25%, Chairman Jerome Powell hinted that a pause in the hiking cycle is likely at the FOMC’s June meeting.

However, minutes from the last meeting showed some members still see the need for additional rises, while others anticipate a slowdown in growth will remove the need for further tightening.

Fed officials including St. Louis Fed President James Bullard and Minneapolis Fed President Neel Kashkari have in recent weeks indicated that sticky core inflation may keep monetary policy tighter for longer, and and that more hikes could be coming down the pike later in the year.

The personal consumption expenditures price index, a preferred gauge for the Fed, increased by 4.7% year-on-year in April, new data showed Friday, indicating further stubbornness and triggering further bets on higher for longer interest rates.

Several economists have told CNBC over the past couple of weeks that the U.S. central bank may be forced to tighten monetary policy more aggressively in order to make a breakthrough on stubborn underlying dynamics.

According to CME Group’s FedWatch tool, the market currently places an almost 35% probability on the target rate ending the year in the 5% to 5.25% range, while the most likely range by November 2024 is 3.75% to 4%.

Patrick Armstrong, chief investment officer at Plurimi Group, told CNBC last week that there was a double-sided risk to current market positioning.

“If Powell cuts, he probably cuts a lot more than the market’s pricing, but I think there is above 50% chance where he just sits on his hands, we get through year-end,” Armstrong said.

“Because services PMI is incredibly strong, the employment backdrop incredibly strong, consumer spending all strong — it’s not the kind of thing where the Fed really needs to pump liquidity out there unless there is a debt crisis.”

European slowdown

The European Central Bank faces a similar dilemma, having slowed the pace of its hiking increments from 50 basis points to 25 basis points at its May meeting. The bank’s benchmark rate sits at 3.25%, a level not seen since November 2008.

Headline inflation in the euro zone rose in April to 7% year-on-year, though core price growth posted a surprise slowdown, prompting further debate as to the pace of rate rises the ECB should be adopting as it looks to bring inflation back to Earth.

The euro zone economy grew by 0.1% in the first quarter, below market expectations, but Bundesbank President Joachim Nagel said last week that several more rate hikes will be needed, even if that tips the bloc’s economy into recession.

“We are in a not at all easy phase, because inflation is sticky and it’s not moving as we would all hope it would, so it’s quite important as Joachim Nagel said today that the ECB stays open for further rate hikes as long as it needs until the drop-off is done,” former Bundesbank executive board member Andreas Dombret told CNBC last week.

“Of course, this will have negative implications and negative effects on the economy too, but I strongly believe that if you let inflation [de-anchor], if you let inflation go, those negative effects will be even higher, so it is very important for the credibility of the ECB that the ECB stays the course.”

The Bank of England

The U.K. faces a much tougher inflation challenge than the U.S. and the euro zone, and the U.K. consumer price inflation rate fell by less than expected in April.

The annual consumer price index dropped from 10.1% in March to 8.7% in April, well above consensus estimates and the Bank of England’s forecast of 8.4%. Meanwhile core inflation jumped to 6.8% from 6.2% in March, which will be of greater concern to the Bank’s Monetary Policy Committee.

With inflation continuing to prove stickier than the government and the central bank had hoped, now almost double the comparable rate in the U.S. and considerably higher than in Europe, traders increased bets that interest rates will need to be hiked further in order to curtail price rises.

“Supply shocks, still de-anchored inflation expectations, fewer promotional discounting, and some potential margin building are likely keeping prices from normalising as quickly as traditional models would imply,” explained Sanjay Raja, chief U.K. economist at Deutsche Bank.

“We now expect a slower descent to target, and with price and wage inflation now likely to remain stronger than anticipated, we raise our terminal rate forecast to 5.25%. Risk management considerations will, we think, force the MPC to push rates higher and further than previously intended.”

Deutsche Bank now sees monetary policy shifting “firmly” toward a “higher for longer” era, Raja added.

The market is now pricing a 92% chance of a further 25 basis point rate hike from the Bank of England at its June meeting to take the main bank rate to 4.75%, according to Refinitiv data on Friday afternoon.

But despite the expectations for rates to rise further for longer, many economists still see a full reversal of course before the end of this year.

Berenberg had previously projected three cuts by the end of 2023, but cut this down to one in response to last week’s inflation print.

The German bank kept its end-2024 call for a 3% rate unchanged, projecting six 25 basis point cuts over the course of next year, but also put a 30% probability on a further 25 basis point hike in August to take the bank rate to 5%.

“Policy changes operate with uncertain effects and variable lags. As a consequence of the shift away from floating-rate mortgages towards fixed products over the past decade, the pass-through of monetary policy to consumption via the housing market takes longer than in the past,” said Berenberg Senior Economist Kallum Pickering.

“This highlights the risk that, if the BoE overreacts to near-term inflation surprises, it may set the stage for a big inflation undershoot once the full effects of its past policy decisions play out.”

There’s a corner of the market gaining traction among ETF investors, according to The ETF Store’s Nate Geraci.

The firm’s president finds international ETFs are experiencing stronger inflows.

“There is a little bit of performance chasing going on here, because broad international stocks have fairly significantly outperformed U.S. stocks since about the beginning of the fourth quarter of last year,” he told CNBC’s “ETF Edge” this week. “Investors are looking at that performance and perhaps reallocating there.”

BofA Global Research’s latest market data out late this week appears to support Geraci’s thesis. It shows emerging markets are seeing strong inflows so far this year.

According to the firm, inflows into emerging-market equities are clipping along at $152.3 billion on an annualized basis. This would mark the group’s largest ever inflows if the pace continues.

Geraci believes a weakening U.S. dollar due to a potential pivot away from interest rate hikes by the Federal Reserve is partially responsible for the shift. The U.S. Dollar Currency Index is down almost 1% year to date.

Valuations of overseas companies may also be more attracting investors, he added.

And, there may be even more growth ahead.

D.J. Tierney of Schwab Asset Management contends retail investors don’t own enough global stocks. He suggests the upside will continue into the second quarter, which starts Monday.

“Rebalancing [to international stocks] to get some more exposure could make sense for a lot of investors,” said the senior investment portfolio strategist.

His firm’s Schwab International Equity ETF, which tracks large- and mid-cap companies in over 20 developed global markets, is up 8.1% so far this year.