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Posted by on Nov 21, 2016 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 11/18/2016

AdvisorShares Weekly Market Review – Week Ending 11/18/2016

Highlights of the Prior Week

Still Trying To Decipher The Post Election Market

Macro

After massive gains during the week of the election, domestic equities took a bit of a breather last week but still rallied. The Dow Jones Industrial Average only gained 11 basis points but the S&P 500 went up 0.81%, the NASDAQ rallied 1.61% and the Russell 2000 was the leader again with a 2.54% lift. The sector bifurcation from right after the election was less extreme last week and actually technology was strong last week after getting left far behind the previous week. Healthcare was in the red after strong gains (no Clinton maybe means no war on drug companies) which may have been a case of too much too soon. Financials continued to show strength expressing the market’s certainty for a rate hike in December. Predictions are obviously always difficult but this sort of back and forth between haves and have nots at the sector level for the time being should not be a surprise. The market is likely to bump along with the Presidential transition process until a little more certainty about what the new President actually wants to do.

West Texas Intermediate Crude had a strong week with a $4 gain after a large decline during election week. The initial reaction Trump as drilling friendly, more supply leading to lower prices. Similar to the above, the market may need time to sort out what Trump actually will do here and while that is going on the price could very well ping-pong back and forth as OPEC tries to work through implementing a production cut.

There was wild, and we mean wild, action in some of the domestically traded shipping stocks over the last few days with moves that might remind longtime market participants of Andrea Electronics in 1993 and then again 1997. DryShips (NASDAQ: DRYS) as the poster child for this event rose from $12 on November 11th to a close on Monday the 14th of $43, then to a close of $71 on Tuesday after having been as high as $97 that day. It was halted on Wednesday, opening much lower on Thursday and ultimately closing Friday at $11.81. We were unable to find a great explanation, Wells Fargo posited that it was a post-election trade that then fizzled out.  

The yield on the Ten Year US Treasury Note continued to rocket higher to close at 2.33% on Friday. For a little context, one month earlier the yield was 1.77%. Rates are considered to be going up on expectations for a Fed rate hike as well as expectations that Trump’s policies will be inflationary (the current Barron’s splashes water on that second one). Global bond yields were mostly higher last week except for the German bund yield dropped to 0.31%. The French OAT upticked to 0.76% the UK guilt tacked on another nine basis points to 1.45% and the big news was that the JGB after many months with a negative yield went positive to the tune of four basis points. We would also note the 0.4% pop in CPI and the ten year inflation breakeven has hit an 18 month high.

Add to the list of markets reversing course last week, copper, zinc and nickel all sold off last week after a big post-election bounce on the expectation of infrastructure spending under the new administration.

ETF News

Credit Suisse is making some big changes to its ETN lineup. It recently closed an ETN tracking MLPs that had over $500 million in AUM and as ETF.com reports it is delisting, but not closing, two energy ETNs with a combined $1.6 billion. The bank has offered very little in the way of explanation other than to say it is moving forward “with a view to better aligning its product suite with its broader strategic growth plans.”

Interesting Reads

NPR reports USGS Announces Largest Oil And Gas Deposit Ever Assessed In U.S.;

On Tuesday, the USGS announced that an area known as the Wolfcamp shale contains 20 billion barrels of oil and 16 trillion cubic feet of natural gas. That is nearly three times more petroleum than the agency found in North Dakota’s Bakken shale in 2013. The USGS says all 20 billion barrels of oil are “technically recoverable,” meaning the oil could be brought to the surface “using currently available technology and industry practices.”

Sports

With tonight’s NFL game south of the border, ESPN explores the huge popularity of American Football in Mexico; Fandom Without Borders;

The passion Mexicans have for American football is why 95,500 tickets for the game sold out almost immediately. It’s why renovations were done on Azteca’s locker rooms to accommodate NFL-sized squads (the regular futbol tenants don’t require nearly as much space) and the stadium’s broadcasting facilities were upgraded. It’s why four Mexican sports channels partner with the NFL, why nine games are broadcast in Spanish from Thursday to Monday of every week, why estimates put the number of NFL fans nationwide at over 20 million.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, ESPN, NPR
 
2016-11-21_table1
 
S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark – Telecom, Financials, Energy, Discretionary, Technology. The remaining six – Utilities, Real Estate, Industrials, Materials, Staples, and Healthcare – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 4.13% for the week ending 11/18/16, with Telecom outperforming all, and Healthcare coming in last.

For November 14th, 2016 to November 18th, 2016

As measured by the S&P 500 sector indices, respective performances were:

2016-11-21_table3

 

The AlphaBaskets blog provides frequent market insight and commentary by AdvisorShares Investments, LLC, created by AdvisorShares and other leading active managers.  AdvisorShares Investments is an SEC-registered investment adviser and the investment adviser to the AdvisorShares actively managed ETFs. The views expressed on AlphaBaskets should not be taken as investment advice or a recommendation for any of the actively managed ETFs advised by AdvisorShares.

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