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Posted by on Dec 21, 2015 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 12/18/2015

AdvisorShares Weekly Market Review – Week Ending 12/18/2015

Highlights of the Prior Week

The FOMC Awakens

Macro

The Federal Open Market Committee (FOMC) raised rates for the first time in nine years as was widely telegraphed by Fed governors if not overtly stated yet somehow markets reacted on Thursday and Friday as if they’d been hit in the face with a frying pan. Wednesday, both equity prices and treasury yields moved higher but then Thursday and Friday equity prices tumbled lower perhaps questioning growth prospects while treasury yields moved lower too giving fuel to the deflationary argument that exists and includes the dramatic and ongoing decline in West Texas Intermediate Crude which was down 2.68% this past week after a 10% drop the week before.

Although domestic equity markets were very volatile the net changes were slight. The Dow Jones Industrial Average fell 0.81%, the S&P 500 was down 0.34%, the NASDAQ gave up 25 basis points and the Russell 2000 dipped 0.27%

The action in the US Treasury market was notable. After rising up to 2.30% on Wednesday as the rate hike was being announced, the yield proceeded to fall over the next two days down to 2.20% which is not a sign of confidence by the market that the Fed did the right thing. The Two Year Treasury Note briefly went above 1% but closed at 0.94% on Friday.

Despite the bond market gyrations in the US, the German bund fell 1 basis point to 0.54%, the French OAT was similarly flat at 0.88%, the yield in Switzerland was a little more active bumping up to -0.15%, Spain moved up to 1.69% and Italy yields 1.57%.

There was violence, figuratively speaking, in the currency market as the Argentine peso devalued by more than 30% as new President Mauricio Macri lifted currency controls as part of a longer term plan to attract foreign investment. On Monday Azerbaijan allowed its currency, the manat, to float under the weight of declining oil prices which led to a 48% devaluation.

Foreign equities were generally higher last week with some markets continuing to rise as the US sold off on Thursday and Friday. The German Dax gained 2.59%, the CAC 40 was up 1.72% and the FTSE 100 added 1.67%. In Asia the Shanghai Composite added 4.22%, the Hang Seng had a 1.26% lift and the ASX 200 tacked on 1.37% with the Nikkei 225 being the only market in the red giving up 1.26%.

ETF News & Data

Last year in this space we observed massive inflows into ETFs tracking the S&P 500 and questioned whether it might be “window dressing.” The massive flows may have started last week with a relatively large $6 billion flowing into the SPDR S&P 500. There were also large flows into energy sector ETF but this appears to have been to meet demand for short sales. There were large outflows from various foreign equity ETFs.

XTF.com reports only three new funds launching last week including two Trend Pilots ETFs targeting foreign markets. Trend Pilot funds sell out their equity exposure based on adverse market conditions.

Interesting Reads

The Drive.com takes us Behind The Scenes With New York’s Grand Central Fire Brigade.

As Grand Central continues to grow, so does the Fire Brigade’s call volume, averaging 120 calls per month. The brigade experiences a wide variety of emergency situations from heart attacks to, yes, fires. Since the firefighter-EMTs are specially trained to handle emergencies within the confines of the terminal, they are able to quickly render aid and resolve emergencies within minutes of a report. However, when additional resources are needed, the FDNY is called in and the GCFB Captains help acclimate the outside firefighters to the inner workings of the terminal.

Sports

Abby Wambaugh recently retired from soccer and Fortune Magazine tells us that she Scored More Goals Than Any Man, Earned Much, Much Less.

Wambach did enjoy a slew of endorsement deals, from Nike, Gatorade, Deloitte, Cree light bulbs, Triax wearables, and Scotts lawn care. Add those to her soccer salary, and her annual earnings reached just about $1 million a year, insiders tell Fortune. Compare that $1 million (salary + endorsements) to the more than $40 million David Beckham was making just from endorsements in his last year of professional soccer.

 
Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, thedrive.com, Fortune
 
2015.12.21_Table1
 

Weekly ETF Flows

For December 14th, 2015 to December 18th, 2015

2015.12.21_Table2
 

S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark – Utilities, Telecom, Healthcare, Staples, and Financials. The remaining five – Discretionary, Industrials, Energy, Technology, and Materials – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 5.81% this week, with Utilities outperforming all, and Materials coming in last.

For December 14th, 2015 to December 18th, 2015

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

2015.12.21_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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