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Posted by on Dec 14, 2015 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 12/11/2015

AdvisorShares Weekly Market Review – Week Ending 12/11/2015

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Highlights of the Prior Week

Wasn’t Cheaper Crude Supposed To Be A Good Thing?

Macro

There was market coverage over the weekend blaming equity declines on falling crude prices, it fell 10% for the week, and other coverage blaming retail sales which for the tenth month in 12 this year came in short of expectations, concerns over the FOMC meeting next week are probably not helping and of course it is possible the market went down for no reason in particular.

But down it did go. The Dow Jones Industrial Average fell 3.27%, the S&P 500 dropped 3.79%, the NASDAQ slid 4.05% and the Russell 2000 coughed up 5.04%. While the Fed has been pretty clear about its intention to raise rates the market action in crude and the ongoing weakness in retail sales are indications of weakness (of course there are pockets of strength to be sure) typically not associated with policy restraints.

All of the foreign equity markets we track in this report were down last week as well. The German DAX down 3.83%, the CAC 40 gave up 3.32%, the FTSE 100 was the big foreign loser with a 4.58% decline, Shanghai had a 2.55% decrease, the Hang Seng even worse at -3.47%, the Nikkei 225 eased back 1.41% and the ASX 200 dropped 2.37%.

The US Ten Year Treasury Note had a big week dropping 14 basis points in yield to 2.13%. The yield falling like that could be taken as an expectation that now the Fed won’t act (seems unlikely) or an attempt to flatten the curve which is historically a later cycle phenomenon. While that doesn’t have to be the case, it is tough to argue against being late in the cycle.

Looking at other income markets the German bund yield slid 14 basis points to 0.54%, the French OAT dropped a similar amount to yield 0.86%, the Swiss ten year actually moved higher to -0.20% despite jawboning by the SNB to the contrary, Spain now yields 1.62% and Italy now yields 1.53%.
One front burner issue of the last few weeks has been the unraveling of the MLP space as well as the companies run by Richard Kinder which of course used to be the largest MLP and which endured a massive dividend cut. The big MLP ETFs are down on the order of 40% this year. There was a time a few years ago where it was popular to think about having very large allocations to the MLP space because of the generous yields and the “fact” that because they only move energy from place to place, they would be immune to a decline in energy prices. That was true until it wasn’t which is a reminder that there will be future market niches where pundits suggest 20-25% allocations and those suggestions will be just as bad as 20-25% into MLPs.

ETF News & Data

Inflows last week were generally small across the board with no fund getting close to $1 billion. There were large outflows from funds tracking the S&P 500 as well as high yield. High yield has come to play a more prominent role in many portfolios in the last few years and recently the space has struggled due to concerns over the energy sector as well as how much liquidity there is or is not in the underlying paper. There has been plenty of media coverage and worth advisors’ time to learn more about what has been happening.

Interesting Reads

Anyone who likes 4X4 trucks will have fun looking at the Hilux AT44 6X6 Arctic Truck.

These trucks are specifically built to withstand the arctic, such as the Antarctica plateau and the South Pole. Stemming from Toyota,Arctic Trucks, located in Iceland, has built numerous 6×6 vehicles before, and their latest is a serious 6 wheel drive. It’s outfitted with a 3.0L diesel engine that pushes 171 horsepower, and massive 44×18.5×15 tires. It has a monster 550L fuel tank and a 2000kg carrying capacity.

Sports

Much was made last week of the anniversary of John Lennon’s having been murdered. For many people who were around back then, they found out on Monday Night Football during a Patriots game against the Dolphins. ESPN recaps how Ex-Pats Kicker Forever Linked To Lennon;

“Remember, this is just a football game, no matter who wins or loses,” Cosell told TV viewers. “An unspeakable tragedy, confirmed to us by ABC News in New York City: John Lennon, outside of his apartment building on the West Side of New York City, the most famous, perhaps, of all the Beatles, shot twice in the back, rushed to Roosevelt Hospital, dead … on … arrival. Hard to go back to the game after that news flash, which in duty bound, we have to take.”

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, hiconsumption.com, ESPN
 
2015.12.14_Table1
 
Weekly ETF Flows

For December 7th, 2015 to December 11th, 2015

2015.12.14_Table2

S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark – Utilities, Staples, Healthcare, Telecom, and Industrials. The remaining five – Discretionary, Technology, Materials, Financials, and Energy – each underperformed.  The dispersion between the top-performing and bottom-performing sectors was roughly 4.73% this week, with Utilities outperforming all, and Energy coming in last.

For December 7th, 2015 to December 11th, 2015

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

2015.12.14_Table3

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