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Posted by on Nov 10, 2014 in ETF Strategist

AdvisorShares Weekly Market Review – Week Ending 11/7/2014

AdvisorShares Weekly Market Review – Week Ending 11/7/2014

Highlights of the Prior Week

Macro

Last week was relatively quiet with the biggest news coming from Friday’s job data. There were 214,000 jobs created, the headline unemployment rate ticked down to 5.8% (more precisely it was 5.756%), the broader U-6 rate came in at 11.6% and the labor force participation rate up-ticked to 62.8%.

Blogger Eddy Elfenbein offered some high level observations on the state of the employment situation through Twitter noting that “to have the same jobs-to-pop ratio of 7 years ago, we’d need 8.7 million more jobs. Or 13.8 million fewer people,” and “101.4 million Americans are either unemployed or out of the workforce entirely.” More positively he also observed that “The unemployment rate is lower today than at any point during the 100-month run from August 1979 to November 1987.” Eddy can be found on Twitter @EddyElfenbein.

Market reaction in equities was indifferent as the S&P 500 closed Friday up three basis points in a day with very narrow trading. The action on Friday was in the bond market, which took the job numbers as being weak overall sending the yield on the US Ten Year Treasury Note down to 2.31% after printing at 2.39% before the jobs data hit.

Most of the European bond markets followed suit; the German bund traded down to 82 basis points, the French OAT was flat on the week at 1.18% but it fell to that yield on the jobs data, the yield in Spain actually went up to 2.16% as did Italy at 2.38%.

For the week the S&P 500 was up 66 basis points, the Dow added 1.04% on a big boost from Visa, the NASDAQ was up three basis points while the Russell 2000 fell three basis points.

Foreign markets were generally flat other than the 1.88% drop in the Hang Seng Index. Japan managed to cool off in a holiday shortened week rising only 91 basis points after rallying 12% over the previous two weeks.

Gold was essentially flat last week, with the big commodity news being that West Texas Intermediate Crude finally broke below $80, touching $75 mid-week before closing on Friday at $78.65. This does have the potential to be stimulative although likely to be a drag on the energy sector of the stock market. In currencies, the euro and British pound fell against the US dollar and the greenback continued to strengthen against the Japanese yen.

The other big news of the week of course was the midterm election in which the GOP added seats in the House of Representatives and took control of the US Senate. The magnitude of the change voted in certainly implies a meaningful level of dissatisfaction but after that the disagreement takes over as to what has actually voters so dissatisfied.

The President started out trying to strike a conciliatory tone but Barron’s DC Current column keyed in on his comment that “there are going to be some ideas that they’ve (the Republicans) got that they believe will improve the economy or create jobs that, from my perspective, aren’t going to help middle-class families improve their economic situation, so I probably won’t support theirs.”

We choose to be optimistic that they will all find a way to make the next two years more productive and constructive than the previous six.

ETF News & Data

The SPDR S&P 500 dominated inflows/outflows adding $6.6 billion in new assets. Meaningful outflows continued in materials sector ETFs for a second week in a row with another $800 million that headed for the exits.

In all, domestic equities saw a net $13.8 billion in positive flows compared to $1.5 billion for domestic fixed income.

There were six new funds launched last week, three of which came from First Trust. The six included a mix of asset classes with some being actively managed and some passive.

Interesting Reads

We’ve used this section of the Weekly Market Update to track several different themes including the Tiny House Movement (although we like the word theme more than movement). One offshoot has been the resurgence in popularity of vintage (ish) travel trailers. There’s been an increased presence for trailer-related content on Facebook and Pinterest. The NY Times also covered the space with A Passion for Vintage Trailers;

Originally intended for camping, vintage trailers are being repurposed in all kinds of ways: as a roadside bakery stand, as vacation homes on a rustic piece of land, as backyard writing or painting studios.

Sports

All college sports fans know at least a little about the rules of amateurism where agents contacting athletes is concerned but apparently the rules governing athlete interaction with financial advisors are less clear. The WSJ looked at the extent to which quite a few young professional athletes were fleeced one way or another by advisors they met while still in college.

Roger Nusbaum

AdvisorShares ETF Strategist

Source: Google Finance, Yahoo Finance, Wall Street Journal, Bloomberg, Barrons, ETF.com, XTF.com, New York Times, Convergex

 

Weekly ETF Flows

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For November 3, 2014 to November 7, 2014

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S&P Sector Analysis

As for the sectors of the S&P 500, four outperformed the broad benchmark – Staples, Utilities, Industrials and Financials. The remaining six – Technology, Materials, Energy, Telecom, Discretionary and Healthcare – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 2.51% this week, with Staples outperforming all, and Healthcare coming in last.

For November 3, 2014 to November 7, 2014

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

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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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