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Posted by on May 26, 2015 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 5/22/2015

AdvisorShares Weekly Market Review – Week Ending 5/22/2015

Highlights of the Prior Week

Yeah, The Fed Still Wants To Hike Rates

Macro

The trend of subdued domestic equity market action continued last week. The Dow Jones Industrial average fell by 21 basis points while the S&P 500 gained 17 basis points, the NASDAQ was up 0.83% and the Russell 2000 added 65 basis points.

Foreign equities were not subdued including an 8.11% rally for the Shanghai Composite. The Nikkei 225 gained 2.71%, the Hang Seng added 62 basis points and Australia fell 1.25%. Europe was generally positive with a 3.21 % lift for the Dax, 3.03% for the CAC 40 and the FTSE 100 was better by 1.02%.

The Yield on the Ten Year US Treasury Note backed up seven basis points to 2.21%. The German bund yield moved down slightly to 0.60%, the French OAT was steady 90 basis points, the Swiss ten year had a relatively large move dropping from positive seven basis points to positive three basis points, Spain’s yield moved up to 1.78% on Friday and Italy moved to 1.86%.

Core CPI in the US rose by the most in two years in April at 0.3%, which was consistent with the message from Janet Yellen in a speech on Friday where she reiterated that as of now a rate hike later this year is on the table.

West Texas Intermediate Crude and gold were oddly both down by the same 1.50% last week but as you might expect Crude had a much more volatile ride to that result. The dollar was strong last week as it rose against the yen while both the euro and British pound both declined against the greenback.

Rounding up other news from last week, the UK CPI reported at -0.1% for April which was the first negative print for that data point since the 1960’s. Japan reported relatively strong economic growth with a 2.4% report for Q1 GDP. If you read this week’s Barron’s will find at least three mentions of a Chinese solar stock that cut in half in a matter of hours last week after months of spectacular gains. In subsequent days, Chinese financial companies associated with the solar stock had similar declines last week but one of them had a 52% lift on Tuesday. We report this not for the general interest such price moves may have but because the solar stock in question had a 12% weighting in one of the solar ETFs and so that ETF felt the impact of the decline quite noticeably.

The new week started with news of a large announced merger in the cable TV business. This industry is one of constant deal making in terms of both abandoned and completed deals. After a recent deal that was scuttled over competition concerns, we be curious to see if this one will be allowed to proceed.

ETF News & Data

Fund flows had an unusual look last week. Seven of the top ten in positive flows were more than $26 billion into 3X bullish funds targeting disparate niches ranging from India, to Semiconductors to Midcaps. Where 3X funds are commonly used for shorter term strategies we will be curious to see how long the assets stay in these ETFs. The outflows had a couple of unusual names as well, namely a levered crude oil ETF and a levered inverse VIX fund.

There were only two new funds launched last week, both from AccuShares, one tracking the upward moves of the VIX index and its sister fund tracking the downward moves of the VIX Index.

Interesting Reads

Is the human race a whole lot older than was previously thought? That turns out to sort of be the case as tools were found that predate previous evidence of how old the human race was believed to be by about 700,000 years. From TheConversation.com;

We, and the West Turkana Archaeological Project which we co-lead, had discovered the earliest stone artifacts yet found, dating to 3.3 million years ago. The discovery of the site, named Lomekwi 3, instantly pushed back the beginning of the archaeological record by 700,000 years. That’s over a quarter of humanity’s previously known material cultural history. These tools were made as much as a million years before the earliest known fossils attributed to our own genus, Homo.

Sports

Pro sports teams pull coaches from the college ranks on a regular basis, recently the Oklahoma Thunder hired now former University of Florida Coach Billy Donovan to replace long time coach Scott Brooks. This practice almost never happens in the sport of hockey. Last week the Philadelphia Flyers hired University of North Dakota coach Dave Hakstol marking the first college to NHL hire since the Minnesota North Stars hired Herb Brooks, yes Miracle on Ice Herb Brooks, away from St. Cloud State.

Sticking with college, the NCAA Baseball Tournament starts this Friday on the ESPN family of networks.

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

2015.5.26_Table1

Weekly ETF Flows

For May 18th, 2015 to May 22, 2015

2015.5.26_Table2

S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark – Healthcare, Technology, Utilities, Financials, and Discretionary. The remaining five – Telecom, Industrials, Energy, Materials, and Staples – each underperformed.  The dispersion between the top-performing and bottom-performing sectors was roughly 2.06% this week, with Healthcare outperforming all, and Staples coming in last.

For May 18th, 2015 to May 22th, 2015

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

2015.5.26_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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