AdvisorShares Weekly Market Review – Week Ending 12/04/2015
Highlights of the Prior Week
Rough Week But A Flat Market
The non-farm payroll report was strong at 211,000 new jobs versus an estimate of 195,000. The headline unemployment rate printed at 5.0% and the broader U6 moved up a tick to 9.9%. The labor force participation rate also upticked to 62.5%. There was a 0.2% boost in hourly earnings, taking the annual wage gain to 2.3%. Revisions to the previous two reports added 35,000 jobs.
The week of course was marred by the mass shootings Wednesday in San Bernardino and Savannah, GA. Domestic equities reacted with a decline, but not a panic, falling 81 basis points that day. The nature of these types of tragedies is that they are quickly shrugged off in the market with snap back rallies the next day if not sooner. The market didn’t really have that chance after a surprise announcement out of Mario Draghi in the ECB press conference Thursday morning. While ECB policy is going to remain very accommodative, it isn’t going to be quite as accommodative as markets were expecting, at least for now. This sent European equities tumbling while the euro gained four big figures against the greenback. The Ten Year US Treasury Note saw its yield jump 11 basis points on Thursday.
One theory floating around the ECB news is that the lift in the euro give the FOMC cover to raise rates when it meets later this month. While this is plausible, a new variable for the Fed to chew on is that ISM manufacturing index printed this week at 48.6 and of course below 50 is deemed to be contractionary leaving market participants puzzled as to how the Fed can raise rates into this data point. Confusing things even further was Chair Yellen’s testimony to congress which was viewed as having been hawkish.
The news of the week sent stocks on a wild ride to a mostly flat result other than the Russell 2000 which was down 1.55% due to lagging Friday’s rally. The Dow Jones Industrial Average gained 0.25%, the S&P 500 advanced five basis points and the NASDAQ inched ahead 27 basis points.
As indicated above, European equity markets were down last week led by a 4.59% decline in Germany, France fell 4.16% and the UK was down 2.29%. Asia was mixed with Shanghai gaining 2.58% and the Hang Seng tacking on 76 basis points while the Nikkei 225 fell 1.94% and the ASX 200 gave back 1.09%.
The yield for the Ten Year US Treasury Note backed off some on Friday to close the week at 2.27%. The bund yield jumped 22 basis points to 0.68% primarily driven by the ECB news on Thursday. Likewise the French OAT gained 23 basis points to 1.00%, the Swiss ten year had a big move to -0.23%, Spain now yields 1.73% and Italy closed the week at 1.65%.
West Texas Intermediate Crude fell 3.95% but managed to hold the $40 level at $40.13. Contributing to the decline in crude was news that OPEC will maintain its current output levels despite the inability of the price to move much away from $40. Gold had a strong week moving up 2.94% with most of that gain coming on Friday.
ETF News & Data
Despite questions about whether the shootings in San Bernardino were related to terrorism, gold saw large outflows last week as did treasuries all along the curve. Domestic equities, foreign equities and high yield debt led inflows.
There were eight new funds last week including a suite of low volatility equity ETFs from SPDR and a real estate fund specializing in Latin America.
The next time you’re crammed into an airplane seat maybe you’ll think of 5 Ways Etihad’s A380 Residence Will Blow Your Mind. The suite has a bedroom, living room, bathroom with heated floor and a butler.
The living room is the first of the rooms you walk into when you enter The Residence. Its leather couch is entirely soft and comfortable, which is perfect for watching entertainment on the 32-inch TV directly in front of you. The options for in-flight entertainment were pretty standard, but the two remotes on each side of the couch were definitely better than I had expected.
An interesting story surfaced this week about NBA Superstar Steph Curry this week. Davidson Won’t Make Graduation Exception To Honor Stephen Curry meaning the school will not retire Curry’s number until he graduates.
The school retires only the jerseys of players who graduated. And Curry, the most recognized and accomplished player in school history, has not completed his degree requirements after going to the NBA a year early in 2009.
Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, The Points Guy, ESPN
For November 30th, 2015 to December 4th, 2015
As for the sectors of the S&P 500, five outperformed the broad benchmark – Technology, Telecom, Staples, Financials, and Materials. The remaining five – Discretionary, Healthcare, Utilities, Industrials, and Energy – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 6.06% this week, with Technology outperforming all, and Energy coming in last.
For November 30th, 2015 to December 4th, 2015
As measured by the S&P 500 sector indices, respective performances were: