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Posted by on Feb 1, 2016 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 1/29/2016

AdvisorShares Weekly Market Review – Week Ending 1/29/2016

Highlights of the Prior Week

January Finishes On An Up Note

Macro

The new year of course started with a big decline but did show some recovery for the last two weeks but markets are still far from even. For the month the Dow Jones Industrial Average was down 5.58%, the S&P 500 fell 5.18%, the NASDAQ gave up 7.95% and the Russell 2000 had an 8.92% retreat. As bad as those numbers might seem they were all several hundred basis points worse earlier in the month.

Domestic equities may have gotten a positive lift on Friday thanks to weak economic data including a GDP print at 0.7% and a more than four point contraction in durable goods. The idea here of course is with FOMC having held steady last Wednesday, the anemic economic reports reduces the chance of more rate hikes.

The rally of the last two weeks has offered relief to some, especially stock market television anchors, large daily gains are often more a part of the bear market process and while no one knows what will happen next advisors may want to remind their clients to avoid the ups and downs of the headlines and focus on their investment strategy and their true time horizon.

Foreign markets were also lower in January, most down more than the US. The DAX had a rough go with an 8.8% decline, the CAC 40 was down 5.2% and the FTSE 100 only fell 2.54% despite the UK’s growth rate slowing to its weakest number in three years. News from euroland last week included a rescue for Italian banks that will allow them to unload €200b of debt.

Looking to the east, Australia held up the best with a 5.48% decline. The Nikkei 225 was down 7.96% and closed out the month with a bombshell as the Bank of Japan announced a negative interest rate policy. The Hang Seng fell 10.05% and Shanghai had what could be described as a crash with a 22.65% decline.   

In bonds the Ten Year US Treasury Note fell 11 basis points to 1.93% which could mean the Fed is out of the picture or could be part of an overall curve flattening consistent with an economic slowing. The German bund yield dropped to 0.32% on increasingly dovish talk from Mario Draghi, the French OAT fell 16 basis points to 0.63%, Spain yields 1.51% and Italy closed out at 1.41%. Checking on the negative yield club, the Swiss ten year yields -0.25% and the German five year note yields -0.31%.

Crude oil continued its sharp, saw toothed trading gaining 3.88% on the week after a large decline last Monday but most of that gain has been given back in early trading today.

ETF News & Data

The risk on theme in fund flows carried over from the previous week with net billion dollar flows into large cap and small cap equities as well as high yield debt. Outflows were generally small but interestingly were from the same category of funds seeing inflows; large cap and small cap equities but also emerging market equities.

News out of ETF.com say that the first exchange traded mutual funds from Eaton Vance are due to start trading at the end of February.

XTF.com reports that the only new fund last week was a divdend focused, emerging market fund from ProShares.

Interesting Reads

Plaid Zebra shared the story of Stephan Shay, professional runner and Olympic hopeful, for his nomadic lifestyle living in a vintage RV. Shay offers this perspective;

But Shay doesn’t subscribe to definitions of responsibility that revolve around self-induced burdens like McMansion mortgage payments or shoveling your driveway or tiresomely racing to keep up with the Joneses, to stopping from slipping back into the imaginary suburban shadow of socio-economic inferiority. To Stephen Shay, what’s truly irresponsible and irrational is squandering life for stuff.

Sports

ESPN profiled The Ageless Jaromir Jagr to see how he is able to still be effective in the NHL. Among other he defended his mullet from 25 years ago when he first broke in for wanting to be a rock star like Bon Jovi and Motley Crue. The difference is his work ethic, he has to work harder than anyone to still be good including after games. Oddly he like muffins; seven or eight a day. Most importantly he calls hockey his love no his job, as soon as it becomes a job he’s “done.”

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group
 
2016.02.01_Table1
 
Weekly ETF Flows

For Janary 25th, 2016 to January 29th, 2016

2016.02.01_Table2
 
S&P Sector Analysis

As for the sectors of the S&P 500, seven outperformed the broad benchmark – Telecom, Energy, Utilities, Staples, Industrials, Technology, and Financials. The remaining three – Discretionary, Materials, and Healthcare – each underperformed.  The dispersion between the top-performing and bottom-performing sectors was roughly 6.17% this week, with Telecom outperforming all, and Healthcare coming in last.

For Janary 25th, 2016 to January 29th, 2016

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

2016.02.01_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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