BlackRock’s $13.5 billion deal raises the valuation bar.

ETF and index people the world ‘round are smiling today. $13.5 billion is a big number. And this BlackRock deal is big not just for the index/ETF industry, but the financial sector in general.  It underscores just how big basis point-linked passive assets have gotten.

As I said a couple days ago in my IU.eu blog titled BlackRock IS the Buyer (Paul Amery has a nice follow-on blog there as well), this is a powerhouse deal. It’s a deal that minces no words, and says what it means. And what it means is we’ve suddenly got a global behemoth, THE global behemoth of an asset manager, with $2.7 trillion in assets. Good lord.  And frankly, on paper at least, it’s a marriage made in heaven, with BGI in a dominant position where BlackRock is mostly absent: ETFs and institutional indexed asset

Another wise guy takes pot shots at all ETFs and finds an audience in a sea of misinformation.

Yesterday, I was forwarded a blog that was published on Seeking Alpha (where we sometimes publish our own blogs). The author of the article is a certain bow-tie-wearing blogger named Neil George.

Here is a link to the blog—“Why ETFs Are A Scam”—in its entirety. It's really must-reading.

The article is so full of misleading information and flat-out factual errors that it is hard to know where to begin.

Let’s start with the first line of the email from the person who forwarded the blog to me (a friend who I know buys ETFs and works around the ETF business). He says, “This guy has some valid points.”

Unfortunately, when I forwarded it around to my email colleagues, my first line was, “This guy is a nut case.”

Because I honestly believe that George’s blog post,

I spent part of this morning sorting through the May fund flow numbers to see if any new patterns showed up in terms of where investors were putting their new money to work.

You can access the full report here. The data is from the National Stock Exchange.

There’s a lot of interesting information in the latest report, including a complete table showing assets and inflows by ETF provider. Of all the data points covered, however, one in particular caught my eye.

So far this year, the Direxion Financial Bear 3x ETF (NYSE: FAZ) has attracted the second-greatest inflow of any ETF on the market, at $4.6 billion. Only the SPDR Equity Gold (NYSE: GLD) has done better, pulling in $11.8 billion.

Despite the massive inflows, FAZ ended May with just $1.6 billion in assets. Such a gap suggests that investors in the fund have experienced terrible returns.

And they have.

Has anyone noticed that Pimco, as of yesterday, is offering (now higher-yielding, lower-priced) short-term U.S. Treasuries at an expense ratio of 9 bps (0.09%)? Hougan notes that the new fund (NYSE Arca: TUZ) traded 300,000 shares on its first day, and I expect it'll be trading a lot more than that. Pimco's got BRAND in fixed income, and the forthcoming launch of six more ETFs (along with all sorts of other plans) indicates that it is just dipping its toes in the ETF market so far ... and is planning to jump into the pool in a big way (liquidity, transparency).

That, to me, is very, very cool. (See related IU.com story that broke the news of Pimco's original plans to enter the ETF market here. You can also see how they revised those plans,

Vanguard buying iShares, Jim? You have got to be kidding.

Your blog post on the topic smacks of desperation. The deal would "give Vanguard scale with intermediaries"? Please. Vanguard's already building a nice intermediary business with its portfolio of 39 ETFs, thank you very much, and they don't want/need another 150 products to sell.

The challenge of rationalizing those product lineups would be immense, and the numbers just don't work for me. And as you so rightly point out, the ultimate question is how such a deal would benefit existing Vanguard shareholders, who own the firm. The answer is it wouldn't.

What would make more sense—and something that Dave Nadig and I discussed briefly on our weekly podcast—is for Vanguard to swoop in and pick up the pieces of BGI after someone else carves out the iShares brand. The core BGI business would fit

A deal that's been kicking around for some time in the rumor mills just got some press coverage.

ATTENTION: This is NOT an April Fool's joke. Though at first blush it may seem more implausible than the April 1 blog I posted about the "Street Shares and iDRS" (a blog that got me into so much trouble in certain circles), the word is that the Vanguard bid for iShares and/or BGI is actually for real.

Well, I'll believe it when I see it. Matt and I have been kicking this around today, and as Matt says, "You have to assume that iShares is less valuable in Vanguard's arms than someone else's. For starters, coming in, you would expect it to slash expense ratios. For instance, EEM would have to be folded into VWO, since those are essentially the same fund. But because VWO's expense ratio is about one-third of EEM's, that means you are taking a fund that made $19

I've gotten a few questions from readers and colleagues about what sources I turn to for information about the markets, exchange-traded funds and related topics.

The list is long and varied, and ebbs and flows over time. But here are some of the sources (public, private and otherwise) that I turn to in my day-to-day reading. I'm sure I'm leaving out quite a few sites, but this at least is a partial list.

NATIONAL PUBLICATIONS

IndexUniverse.com and IndexUniverse.eu: It goes without saying that IndexUniverse.com and IndexUniverse.eu are the best sites on the Web for information about ETFs and how they are used in portfolios.

IndexUniverse.com

IndexUniverse.eu

Slate/The Big Money: Those two Web sites aside, I start my day at Slate.com, and its sister finance site The Big Money. I find the daily news summary (and weekly magazine summaries) the best meta-journalism on the Web. They offer

General Motor's bankruptcy is all but a sure thing, and with it, the company's 81-year run as a component of the Dow Jones Industrial Average will come to a merciful end.

According to Reuters, sources say that GM (NYSE: GM) will likely file for bankruptcy some time after midnight tonight and before June 1. The company has apparently failed to convince bondholders to exchange their debt for an equity stake in a restructured company, ensuring the bankruptcy filing.

(In an interesting quirk, the AP reports that many bondholders hold credit default swaps on their GM debt. If the company files for bankruptcy, these CDS swaps will be triggered. The Depository Trust & Clearing Corp. says these CDS swaps will pay out $2.33 billion if the company enters bankrupt. Talk about perverse incentives.)

As always, I can't help but to speculate

Matt—since when did IndexUniverse.com start making bets?

Laying out a portfolio that adds up to 100% and filling it with mostly alternatives that should probably add up to 5 or 10% maximum of someone's portfolio seems like dangerous advice. And certain bloggers I know already have experience with doling out suspect advice.

But before I get to that, one question: Is Maine a state or some sort of Arctic hinterland? I mean, really, Matt, I am sorry that a moose knocked over the one TV truck in Maine and short-circuited your CNBC appearance yesterday, but it comes with the territory.

On the rest, for someone who has repeatedly professed to "not understanding" gold, the fact that you make it 20% of your "reinflation portfolio" is somewhat disconcerting to me. And the rest of this is appealing and thoughtful ... but that does not mean it's not highly speculative and mainly where thoughtful investors

Earlier this morning, I was supposed to take part in a discussion on CNBC about how to use ETFs to build a "reflation portfolio."

We had technological difficulties in Maine, however, and couldn't get the satellite hookup going in time.

Even so, I thought it might be interesting to share the portfolio we were going to discuss. It brings up both an important as well as an interesting topic.

According to Wikipedia, "Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes. It is the opposite of disinflation. It can refer to an economic policy whereby a government uses fiscal or monetary stimulus in order to expand a country's output."

Reflation is not necessarily good or bad, of course. The response from the Fed, the Treasury and Congress over the past few quarters probably saved us from a more crushing recession/potential depression.

But