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Posted by on Nov 9, 2015 in ETF Strategist, Investment Perspective, Market Insight

AdvisorShares Weekly Market Review – Week Ending 11/6/2015

AdvisorShares Weekly Market Review – Week Ending 11/6/2015

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Highlights of the Prior Week

Jobs Up! Rate Hike On?

Macro

The big move in equities came early in the week but the big news came late in the week with the NFP report on Friday. By now you know there were 271,000 jobs created in October which blew away expectations of 182,000. The headline unemployment rate printed at 5.0% while the broader U6 number came in at 9.8%. The much watched labor force participation rate held steady at 62.4% and average hourly earnings ticked up by an impressive 0.4%.

Part of the initial reaction to the report was that the Ten Year US Treasury Note rocketed up to 2.33% and stayed there after closing the week before at 2.15%. As the equity session opened and wore on, utilities got torched with the two largest sector ETFs dropping about 3.5%. The reason of course for these reactions was that the strength in the jobs report gives the FOMC cover to raise rates in December as various Fed-Heads have been saying. As a bit of a not so fast my friend (with a nod to Lee Corso) Morgan Creek CEO Mark Yusko Tweeted on Friday that the Fed has never raised rates when the PCE was below 2%.

Most of the foreign bond markets we cover in this report were also higher. The German bund rallied 17 basis points to 0.69%, the French OAT is back over 1% at 1.02%, the Swiss ten year actually went down slightly to -0.28% and even the Club Med markets of Spain and Italy saw yields rise last week with each market tacking on more than 20 basis points.

Rounding up the domestic equity markets the Dow Jones Industrial Average gained 1.39%, the S&P 500 added 96 basis points and the NASDAQ tacked on 1.83%. In our last weekly market update we noted the lack of participation for the Russell 2000 but this past week it led the way with a 3.22% rally.

Checking in on earnings Seeking Alpha reported “according to Bloomberg, about three-quarters of the S&P 500 have already reported results, with profits down 3.1% on a share-weighted basis due to plunging profits from oil & gas and commodity-related companies.” Bespoke Investment Group noted that “for the S&P 500, 73% of companies have exceeded bottom line EPS forecasts while just 44% have managed to exceed top line revenue estimates.”

Foreign equity markets were mostly higher. The DAX gained 1.27%, the CAC 40 moved ahead 1.72% but the FTSE 100 gave back 11 basis points. In Asia, the Shanghai Composite popped 6.13%, the Hang Seng was better by 1.05%, the Nikkei 225 was up 2.37% with the ASX 200 falling 0.60%.

West Texas Intermediate Crude had a volatile week of course but only closed down about $0.22 for the week. Gold in US dollar terms continued to go down, last week enduring a 4.7% decline as equities rallied and as the dollar rallied especially on Friday after the jobs report. The euro gave up more than a penny on Friday which is a large move for one day, the British pound fell by a penny and half and the dollar gained about a yen and half against the Japanese currency.

ETF News & Data

The SPDR S&P 500 led flows with an exodus of redemptions totaling $2.8 billion. There were also large outflows from short dated treasuries and gold. Financials had large inflows perhaps connected to increasing likelihood, as measured by the Fed Funds Futures market, of an FOMC rate hike in December.

There were four new ETFs last week including a first of its kind Israeli tech sector ETF as well as the first actively managed convertible securities fund.

Interesting Reads

IFL Science shares Stunning New Photos Of Antares Rocket Explosion Released By NASA and they are stunning;

On Tuesday October 28, 2014, an Orbital ATK Antares rocket experienced a failure just seconds into its launch in Virginia. The rocket subsequently crashed back to Earth in a ball of flame and exploded, providing quite the spectacle at the time. Now, NASA has released a host of new high-resolution photos from the event. They were posted on the agency’s Flickr account, following the release of a report into the accident last week. The photos showcase the moment the Antares rocket went out in a catastrophic blaze of glory.

Sports

Over the weekend Sportcenter aired a 30 For 30 Short On Former Bruins Enforcer John Wensink. Wensink’s claim to fame was taking out Minnesota North Stars tough guy Alex Pirus, then challenging the entire North Stars bench and then when there were no takers gave a gesture like he was washing his hands of them as he skated off the ice.

ESPN’s text that accompanied the video;

The December 1, 1977, game between the Minnesota North Stars and Boston Bruins started out as just another typical NHL game in the ’70s — no helmets and lots of brawls. One showdown that never actually happened turned this game into one of hockey legend. Shortly after Boston’s John Wensink and Minnesota’s Alex Pirus got untangled from their fight, Wensink famously skated over to the North Stars bench and motioned for the whole team to take him on. They didn’t. Through Wensink’s own words and anecdotes from die-hard fans, family, and fellow NHL players, this film takes us into the mind-set of the Bruins’ most legendary enforcer — and the journey one takes when that life is left behind.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, ESPN, Quartz.com
 
2015.11.09_Table1
 
Weekly ETF Flows

For November 2nd, 2015 to November 6th, 2015

2015.11.09_Table2
 
S&P Sector Analysis

As for the sectors of the S&P 500, four outperformed the broad benchmark – Financials, Energy, Technology, and Industrials. The remaining six – Healthcare, Discretionary, Materials, Staples, Telecom, and Utilities – each underperformed.  The dispersion between the top-performing and bottom-performing sectors was roughly 6.29% this week, with Financials outperforming all, and Utilities coming in last.
 
For November 2nd, 2015 to November 6th, 2015

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

2015.11.09_Table3

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