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Posted by on Dec 29, 2014 in AdvisorShares, ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 12/26/2014

AdvisorShares Weekly Market Review – Week Ending 12/26/2014

Highlights of the Prior Week – Christmas Week: Not Much Happened

Macro

Last week’s Market Update marveled at how many different things occurred (Cuba is on its way to being free!) even using the word epic in our description of events. Fast forward to Christmas week in which very little happened. There were a couple of milestones reached though as the Dow Jones Industrial Average closed above 18,000 and the assets held in ETFs crossed the $2 trillion mark.

US Equities were higher last week on an expectedly light holiday volume. The Dow Jones Industrial Average gained 1.39%, the S&P 500 was up 0.86%, the NASDAQ added 0.88% as it inched closer to 5000 and the Russell 2000 was up 1.60%.

Germany was only open for two days last week and gained 1.38%. France was open for three days and was also up 1.38% while the FTSE 100 was up 0.90% for the same three day period. Hong Kong and Australia also had three day weeks and rose 1.05% and 1.26% respectively. Markets in Japan and Shanghai were open for the full week, they don’t close for Christmas, were up 2.58% and 1.58% respectively although it should be noted that the Shanghai Composite started the week with a 6% decline before rallying 7.3% to close out the week. Markets in Israel are also open on Christmas.

Political dysfunction in Greece evidenced by parliament’s failure to elect a President is being blamed for a more than 10% drop in Greek equities in Monday’s session.

On the economic front third quarter GDP was revised to 5.0% which on its face supports the FOMC’s expectation to hike rates next year. With rates currently so low the Fed has less ammunition (little to no room to cut rates again) to combat a slowdown should one start unexpectedly.

Domestic yields moved higher with equities as the Ten Year US Treasury Note added five basis points to 2.25%. Yields in the European deflation-watch zone were generally flat or up very slightly; Germany flat at 0.59%, Switzerland flat at 0.25%, France up one basis point to 0.90%, Spain up three basis points to 1.73% and Italy added four basis points to close at 1.99%.

The Christmas week was not kind to West Texas Intermediate Crude which fell 5% on the week with sharp selloffs occurring on both Monday and Friday. OPEC dug in (again) on not cutting production which may have contributed to the decline. Gold fell with oil on Monday but rallied late in the week to finish with a slight loss.

Currencies saw some action as well with the euro and the British pound selling off against the dollar while the dollar gained ground against the yen. This of course has been the general trend in the majors for many months.

ETF News & Data

There were no new funds launched last week likely due to the holiday schedule but there was plenty of activity. Most notably the SDPR S&P 500 had a massive $25 billion of net inflows amounting to more than 10% of the fund’s AUM. Most of this inflow occurred on December 22nd. We will be curious to see whether these huge inflows stick or unwind after the new year. An immediate reversal would the support the argument that window dressing is actually real.

The Energy Select SPDR surprisingly also showed up on the creations list with $1.4 billion of new shares created. Upon closer examination it appears that most of those created shares were to meet short seller demand as the fund’s short interest increased by 13 million shares or close to $1.1 billion.

Interesting Reads

We found an old post from the Four Hour Work Week blog that was guest written by Gary Arndt titled 20 Things I’ve Learned From Traveling Around The World For Three Years. In 2007 Arndt set out with only a backpack, laptop and a camera to explore the planet.

Included in the post was the following;

Not shocking, but every day I meet people who are fascinated by what I do and how I live. The desire to travel is there, but fears and excuses usually prevent people from doing it. I understand that few people can drop what they are doing and travel around the world for three years, but traveling overseas for even a few months is within the realm of possibility for many people at some point in their lives.

Most of your clients will have some interest in traveling and you may as well and this article offers valuable insight.

Sports

ESPN reported that University of West Virginia quarterback Clint Trickett will “retire” from playing football to pursue coaching due to the number of concussions he has sustained.

…the senior said he had suffered five concussions over the past 14 months — including two that he hid from trainers.

This has become an increasingly problematic issue for the NFL in how it cares for current and retired players. It becomes even more troublesome if the Trickett story turns out to be the tip of the iceberg for college players.

On a lighter note, the NBA on Christmas Day has long been a part of the holiday and lately more focus has been placed on special uniforms and also footwear. ESPN takes a look at Kicks Of Christmas Past.

Roger Nusbaum

AdvisorShares ETF Strategist

Source: Google Finance, Yahoo Finance, CNBC, Wall Street Journal, Bloomberg, Barrons, ETF.com, XTF.com, ETF Channel, Convergex, ESPN.

 

2014.12.29_pic 1Weekly ETF Flows

For December 22, 2014 to December 26, 2014

2014.12.29_pic 2S&P Sector Analysis

As for the sectors of the S&P 500, eight outperformed the broad benchmark – Utilities, Discretionary, Telecom, Staples, Technology, Industrials, Financials and Materials. The remaining two – Energy and Healthcare – each underperformed.  The dispersion between the top-performing and bottom-performing sectors was roughly 5.64% this week, with Utilities outperforming all, and Healthcare coming in last.

For December 22, 2014 to December 26, 2014

2014.12.29_pic 3As measured by the S&P 500 sector indices, respective performances were:

 

 

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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