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Posted by on Mar 5, 2014 in Market Insight

AdvisorShares Weekly Market Review – Week Ending 2/28/2014

AdvisorShares Weekly Market Review – Week Ending 2/28/2014

Highlights of the Prior Week

Macro

Domestic equities had a good week as the S&P 500 Index rallied 1.26% with most of the gains coming later in the week. For the month the index was up 3.74%, erasing January’s losses now up 60 basis points for the year.

The yield on the US ten year treasury generally trended lower to 2.65% but similar to last week stayed in narrow range.

Economic data this week was not so hot last week as preliminary Q4 GDP printed at 2.4% which was down from the advance 3.2% reading. The big report this week will of course be labor data on Friday. Bloomberg’s survey estimates 150,000 jobs created in February compared to an estimate of 145,000 posted in Barron’s versus 113,000 jobs reported last month. The headline unemployment rate is expected to stay at 6.6%.

Foreign Markets

Things have gotten worse in The Ukraine as there is now a Russian military presence in Crimea and unrest has continued to evolve Venezuela and Egypt. There have even been protests in Brazil over the billions spent preparing for the World Cup which is surprising given that country’s love of futbol (soccer).

One byproduct of the global unrest (don’t forget about Turkey and Thailand) has been that yields for European debt have come down. Widely reported, including in Barron’s, ten year yields in Spain and Italy are around 3.5%, 3.1% for Ireland, Portugal yields less than 5% and even Greece now yields less than 7%.

The immediate reaction to this weekend’s developments in the Ukraine is that gold rallied 2%, the MICEX in Russia dropped 12%, the Russian ruble hit a low against the US dollar, most European equity markets were hit hard, especially Germany and in the US yields and equity prices went down slightly.

While it is debatable whether Vladimir Putin garnered any goodwill from a successful Winter Olympics, the Ukrainian event obviously erases that goodwill as the Ukraine believes it is now at war. Hopefully it remains a war of words.

ETF News & Data

This past week there were four new ETF launches according to XTF.com; three smart beta funds and one socially oriented fund. The term smart beta is one that advisors should get familiar with as the industry has moved in this direction in the last couple of years. Generally, the term refers to screening a broad-based index such as the S&P 500 for some sort of valuation or qualitative metric like revenue, volatility or dividends while seeking to offer a better return in either nominal or risk-adjusted terms.

Interesting Reads

This week’s interesting read is a recap of the Dalai Lama’s 1991 US visit to the States, specifically his time in New Mexico. While Lama may be known as a big hitter (Caddyshack reference) he was fascinated by skiing and the article recaps his time on the slopes. Included was an anecdote of his being asked the meaning of life. He said that one was easy; happiness is the meaning of life. The difficult part is how happiness is achieved.

For advisory clients it may not be money that contributes to happiness but more like not having to worry about money which is obviously where a good advisor comes in.

Sports

The Wichita State University Shockers men’s basketball team finished their regular season at 31-0 after having made it to the Final Four in last year’s NCAA Tournament. For the next two weeks all the conferences will be having their own tournaments and then the NCAA will start on March 18. We will try to find any research about whether productivity goes down in the month of March at halftime of one of the games.

 Roger Nusbaum
AdvisorShares ETF Strategist
 
 
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Weekly ETF Flows

For February 24, 2013 to February 28, 2014

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S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark –Discretionary, Materials, Staples, Energy, and Industrials. The remaining five – Financials, Healthcare, Technology, Utilities, and Telecom – each underperformed.  The dispersion between the top-performing and bottom-performing sectors rose to 2.95% this week, with Discretionary outperforming all, and Telecom coming in last.

For February 24, 2013 to February 28, 2014

Sector performances, as measured by the S&P 500 sector indices were:

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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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