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Posted by on May 4, 2015 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 5/1/2015

AdvisorShares Weekly Market Review – Week Ending 5/1/2015

Highlights of the Prior Week

Shouldn’t We Have More Growth By Now?

Macro

US equity markets were lower across the board last week. The Dow Jones Industrial Average fell 33 basis points, the S&P 500 gave up 46 basis points, the NASDAQ set back 1.71% but still barely held the 5000 level for the weekly close and the Russell 2000 was the laggard with a 3.10% drop. Recapping the current earnings season Barron’s reports;

According to Zacks, profits are up 4.7% for the 361 companies in the S&P 500 that have reported first-quarter results so far, but revenue is down 4.1%.

Related to earnings season, the poor results from several social media companies led to declines of 15-20% for many names in the space.

Most foreign equity markets also traded lower on the week. The FTSE 100 fell 1.2%, the CAC 40 gave up 1.64%, while the German DAX declined 2%, the Australian ASX 200 was also weaker by 2% and Japan fell 61 basis points. Conversely Chinese markets were up last week; Shanghai up 3.6% and Hong Kong up 1.74%.

Capital markets and their participants have been on tenterhooks about when the Federal Reserve will begin to raise the interest rates that are under its control. Barron’s pointed out that whenever it begins, it won’t be able to raise rates the way it has before due to the size of the balance sheet and how relatively small banks use of Fed Funds is currently.

Poland sold three year bonds denominated in Swiss francs that have a zero coupon and on the day they were issued had a negative 0.213% yield. While the issue obviously takes advantage of Switzerland’s low interest rates is it also a currency bet, a bet that the zloty (the currency of Poland) will not weaken against the franc. If it does then the debt will become more expensive to repay. It is a little surprising they would take the risk, the Polish 10 year note yields just 2%.

Elsewhere in the bond market yields moved noticeably higher. The German bund now yields 37 basis points, the French OAT yields 65 basis points, the Swiss ten year moved out of negative territory to 0.04% and Spain yields 1.53% which leaves it higher than Italy’s 1.50%. The yield on the US Ten Year Treasury Note backed up 20 basis points to 2.11%.

Commodities were mixed last week with West Texas Intermediate Crude lifting 3.80% and gold giving back 61 basis points. Currencies also diverged; the euro was very strong against the dollar gaining 3.07% but the British pound lost 28 basis points to the greenback while dollar/yen gained 1.11%.

This coming Friday the April jobs data is due. Consensus estimates for jobs created is 212,000 and the headline unemployment rate is expected to downtick to 5.4%. It will be interesting to see whether last month’s disappointing 126,000 jobs was the start of a new trend or if we see the number come roaring back either in the form of revisions or a beat to the upside in the April number.

ETF News & Data

In the face of last week’s equity market declines there were large outflows from funds tracking the broad domestic equity indexes including the S&P 500, Russell 2000 and the Dow Jones Industrial Average. Inflows were generally smaller and focused on select foreign markets and the domestic technology sector.

There were three new ETFs launched last week including an airline industry fund with the ticker symbol JETS.

Interesting Reads

Here is a fun, if somewhat uneasy, read as the Wall Street Journal reports that Bicyclists Defy Bolivia’s Death Road. These are the curvy, mountain roads you’ve probably seen pictures of that are one car width in most places.

Sure, there are stunning vistas and sparkling waterfalls along the winding 40-mile ribbon of dirt and gravel that clings precariously to vertical mountain faces. But it’s the occasional tragedy, like when a rider overshoots a hairpin turn and Death Road lives up to its name, that’s made it one of Bolivia’s biggest tourist attractions.

Sports

Boxing was made temporarily relevant again the the big fight over the weekend but not without at least a little controversy as ESPN reported that Manny Pacquiao Fought With Injured Shoulder, Was Denied Shot In Locker Room;

Nevada officials also denied Pacquiao’s request to take an anti-inflammatory shot in his dressing room before the fight Saturday night. The chairman of the Nevada Athletic Commission said the ruling was Pacquiao’s fault for not mentioning his injury sooner.

While the fight was competitive it was no Hearns/Hagler or Leonard/Anyone. Back to irrelevance and obscurity.

Source: Google Finance, Yahoo Finance, Wall Street Journal, Bloomberg, Barrons, ETF.com, XTF.com, Bespoke Investment Group, ESPN

2015.5.4_Table1

 
Weekly ETF Flows

For April 27, 2015 to May 1, 2015

2015.5.4_Table2
 
S&P Sector Analysis

As for the sectors of the S&P 500, six outperformed the broad benchmark – Materials, Energy, Telecom, Financials, Industrials, and Technology. The remaining four – Staples, Utilities, Discretionary, and Healthcare – each underperformed.  The dispersion between the top-performing and bottom-performing sectors was roughly 4.24% this week, with Materials outperforming all, and Healthcare coming in last.
 
For April 27, 2015 to May 1, 2015

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

2015.5.4_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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