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Posted by on Feb 21, 2017 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 2/17/2017

AdvisorShares Weekly Market Review – Week Ending 2/17/2017

Highlights of the Prior Week

A Little Bumpier, But Higher!  

Macro

Although there were a few more ups and downs last week, domestic markets moved strongly higher. The Dow Jones Industrial Average gained 1.73%, the S&P 500 added 1.49%, the NASDAQ moved ahead 1.77% and the Russell 2000 lagged behind up 0.77%.

The yield on the Ten Year US Treasury Note moved up two basis points on the week to 2.42% which seems rather docile given the 0.6% print for PPI last week and the same 0.6% for CPI. These were the largest gains since 2012 for these data points. While this would seem to be inflationary, the probability of a rate hike by the FOMC at its March meeting has actually declined to 17.7% as of late Friday

In the last month, the yield of the French OAT has skyrocketed more than 20 basis points back over 1% perhaps due to what could be a populist outcome in the upcoming French election should Marine Le Pen emerge as the winner. This on the heels of the successful Brexit vote and the surprise win by Donald Trump. While Le Pen would seem likely to lose the second and final round of the election Francois Fillon is dealing with a scandal over a job he gave to his wife and there is talk of a coalition between the Socialists and the far left, creating yet another new variable. This has caused a huge increase in the traded volume of OATs. Part of the Le Pen platform is her desire to leave the euro would could be tumultuous for markets.

It has been a few weeks since we’ve had room in this report to check in on the foreign equity markets. And while the S&P 500 has been very strong thus far in 2017 the foreign markets have participated somewhat. The DAX is up 2.39% year to date (through Friday), the FTSE 100 has gained 2.2%, the political environment in France has been a weight on the CAC 40 which is down 30 basis points. Over in Asia, the Shanghai Composite has rallied 3.1%, the Nikkei 225 is essentially flat, the Hang Seng has been a stalwart with a 7.01% lift and the KOSPI has chipped in with a 1.81% bump higher.

The South Korean market is interesting in that the market hasn’t done much in years, lagging far behind the emerging market indexes last year, the broad emerging market ETFs were in line with the S&P 500, and it has some serious questions looming. President Park Geun-hye was just impeached, the son, and presumed next in line, of the CEO of the country’s largest company was just arrested on a bribery charge and of course North Korea. It seems like a wall of worry yet to be climbed. Picking the seemingly down and out is a strategy that has worked in past with Argentina and Brazil being recent examples and each with political uncertainties of their own. This premise has also worked for individual commodities in the past. If there is anything to this, it could just be as simple as price leads fundamentals.

The Dollar Index was up ever so slightly last week but failed at its 50 day moving average which it tested on Wednesday. Gold priced in dollars was up slightly for the week, consistent with the dip for the greenback. West Texas Intermediate Crude also gave up a little ground but copper was more volatile, falling 2.5%.

ETF News

The IPO for Saudi Aramco seems to be running into some snags related to restructuring the company to separate out the Saudi government from the oil business. For now the expectation is that the listing will occur in 2018. It will be a huge company, likely to appear in many broad and narrow based ETFs.     

Interesting Reads

Commemorating the 25th Anniversary of Wayne’s World, The Rolling Stone shares the Oral History Of The ‘Wayne’s World’ ‘Bohemian Rhapsody’ Scene;

Myers: I fought very, very hard for Bohemian Rhapsody. At that time, the public had kind of forgotten about Queen a little bit. [Producer] Lorne [Michaels] was suggesting Guns N Roses—I don’t even remember the song—because at the time, Guns N Roses had a number one song. I said, “I hear you. I think that’s really smart,” but I didn’t have any jokes for a Guns N Roses song. I had lots of jokes for “Bohemian Rhapsody.” It’s just inherently comedic.

Sports

In what amounts to your local rec team beating the Knicks or the Dallas Mavericks (based on the standings), Lincoln City Topples Burnley As Sean Raggett Seals Historic FA Cup Shock (this is soccer). Some commentary from the Guardian that probably won’t make sense.

Burnley were “dragged down to our style”, said Matthew Rhead, and the wardrobe-sized striker was not wrong or disrespectful to his own team. His running battle with Joey Barton ensured the Burnley midfielder suffered one of his disciplinary disappearing acts, throwing himself to the ground after running into Rhead’s arm and shoving his hand into the face of Terry Hawkridge, who evened up the theatrics when collapsing from a push by Jon Flanagan.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Ycharts.com, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, CME Group, Rolling Stone, Guardian
 
2017.02.21_Table1
 
S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark – Healthcare, Financials, Staples, Telecom, and Technology. The remaining six – Discretionary, Industrials, Utilities, Real Estate, Materials, and Energy – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 3.81% for the week ending 2/17/17, with Healthcare outperforming all, and Energy coming in last.

For February 10th, 2017 to February 17th, 2017

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

2017.02.21_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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