AdvisorShares Weekly Market Review – Week Ending 7/10/2015
Highlights of the Prior Week
Greece; A Long Global Nightmare Is Over?
The Barron’s Current Yield column summed up the week far better than we ever could noting “you may have missed some Fed news last Wednesday, when the New York Stock Exchange was shut down, China’s stock market was crashing, Greece was teetering on the brink of a debt default, and commodities prices were plunging” although the Fed news wasn’t that big relatively speaking; the FOMC notes were a little more dovish than expected.
Going into the weekend there were going to be very important meeting that would decide the fate of Greece once and for all after all these months, years even, of uncertainty. Sunday night came news that appeared to kick the can a little further but then early Monday a deal was struck that will require state assets to be put into a trust to be sold and require the Greek people to take on the type of austere measures the Prime Minister Alexis Tsipras had promised to avoid. While this may make things more difficult on the ground in Greece it will allow the country to remain part of the euro.
The crash in Shanghai of course has been a front burner issue. The selling continued on Tuesday and Wednesday but the market rebounded on Thursday and Friday and closed up 5.19% on the week. In last week’s AdvisorShares Alpha Call portfolio managers Mark Yusko and Brian Evans noted the crash like dynamic of the last month’s trading and pointed to the long term consumer trends underpinning the the Chinese economy. The other side of the trade to consider is the series of actions taken by Chinese regulators to try to prop up the market, the extreme nature of recent and now suspended IPO activity as well as concerns of excessive debt.
One of the most interesting stories of the week, even if the least important one fundamentally, the the outage on the NYSE floor on Wednesday. There was essentially no disruption in trading as all NYSE issues trade on many different platforms and the actual amount of volume on the floor has diminished to a fraction of what it once was.
Domestic equities had a very volatile ride to a very flat week. The Dow Jones Industrial Average rose 16 basis points, the S&P 500 fell 1 basis point, the NASDAQ fell 0.25% and the Russell 2000 gained 0.33%. The 200 day moving average came into play for the S&P as it closed below the widely watched technical indicator on Wednesday and then again Thursday before retaking it in Friday’s rally.
European equity markets were also volatile on their way to strong gains. The FTSE 100 gained 1.33%, the CAC 40 was up 2.2% and the DAX gained 2.33%. Other than Shanghai the major Asian markets went lower with the Nikkei falling 3.63%, the Hang Seng fell 4.46% and the ASX 200 dropped 0.84%.
Bonds also endured plenty of volatility last week. The Ten Year US Ten Year Treasury Note yield finished the week at 2.41% about where it started but not before trading as low as 2.20%. Yields in Europe were mixed with Germany moving up to 0.89%, France inched up to 1.28%, Switzerland was steady at 11 basis points while Spain dropped to 2.12% and Italy’s yield dipped to 2.13%.
Crude oil was crushed last week closing at $52.84 after suffering an almost 8% decline on Monday as some attributed the drop to the possibility that Iran and its 3-4 million barrels per day could soon be coming back on the market which is a big number in relation to the almost 85 million produced globally.
ETF News & Data
ETF inflows last week were tilted to broad based domestic equity indexes with three different S&P 500 funds in the top ten combining for more than $7 billion. Outflows were a mix bag of foreign equity funds, sector funds and fixed income ETFs.
There were seven new funds launched last week covering a wide range of exposures including a putwrite fund and a second to market cyber-security ETF.
The WSJ had a profile on Moxie Marlinspike: The Coder Who Encrypted Your Texts. The upside is that your messages on WhatApp are safe, the downside is, as David Cameron put it, is a “safe space” for terrorists. Marlinspike (not his real name) is a bit of an international man of mystery.
Even by the standards of privacy activists, Mr. Marlinspike is unusually secretive about himself. He won’t give his age, except to say he is “in his 30s.” In an interview, he wouldn’t say whether Moxie Marlinspike was his birth name. In an 2011 online interview with the website Slashdot, however, he wrote, “the name my parents put on my birth certificate is ‘Matthew.’ ” Friends and former associates say they know him only as Moxie.
Just as important as sports (to some of us) is sports coverage and the WSJ is reporting that ESPN Tightens Its Belt As Pressure On It Mounts. The network has endured a 7.2% decline in its subscriber base in the last four years. This at the same time as certain costs, like broadcast rights to the NBA have skyrocketed.
…the company said it was parting ways with star host Keith Olbermann. That followed the exit in May of Bill Simmons, another big name. While Mr. Olbermann’s tendency to make controversial statements sometimes landed him in hot water with ESPN and some of its business partners, including the National Football League, the decision was a financial one, a person with knowledge of the decision said.
For July 6th, 2015 to July 10th, 2015
As for the sectors of the S&P 500, four outperformed the broad benchmark – Staples, Utilities, Discretionary, and Healthcare. The remaining six – Financials, Industrials, Telecom, Technology, Energy, and Materials – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 3.68% this week, with Staples outperforming all, and Materials coming in last.
For July 6th, 2015 to July 10th, 2015
As measured by the S&P 500 sector indices, respective performances were: