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Posted by on Jul 27, 2015 in AdvisorShares, ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 7/24/2015

AdvisorShares Weekly Market Review – Week Ending 7/24/2015

Markets Wilt In Summer Heat

Macro

Domestic equities had a down week despite some of the more sensational news headlines having become less sensational perhaps bringing earnings and inter-market dynamics back to the forefront as influencers of price. The news wasn’t horrible; sure a couple of earnings misses but there were some home runs as well yet markets sort of just eroded or maybe wilted is a better word.

The Dow Jones Industrial Average fell 2.85% weighed down by everyone’s favorite tablet company, the S&P 500 dropped 2.20%, the NASDAQ gave up 2.31% and the Russell 2000 endured a 3.18% decline.

Looking at foreign equities Europe was down and the eastern markets were mixed. The FTSE 100 fell 2.88%, the CAC 40 was down 1.28% and Germany gave up 2.79%. On the downside, Australia and the Hang Seng were down 1.83% and 1.13% respectively while the Nikkei was up 3.87% and Shanghai Composite had another positive week gaining 2.87%, which was soon forgotten as that index fell more than 8% in Monday’s session.

Yields in all of the markets we regularly follow for this report were lower but not such that they create a sense that the bond market might be panicking. The US Ten Year Treasury Note fell to 2.27%, the German bund now yields 0.69%, the French OAT dipped under 1% to 0.96, Switzerland is back in negative territory at 0.03%, Spain yields 1.90% and Italy once again yields less than Spain at 1.86%.

A CNBC.com article attributed the poor week in equities at least in part to the sell-off in commodities as a signal over concerns for future growth with the idea being that a downturn in demand for commodities is a leading indicator for the economy.

While we are hesitant to believe that everything the market does can be accurately explained (explanation fallacy), we would note that oil did drop 6% for the week for its first weekly close below $50 since April. Some of this decline could be attributed to concerns about growth although markets may not fully know what to expect from Iran and the extent of how much they will actually be able to engage the global market. Much was also made of the large and ongoing decline in gold; down 4% on the week. Industrial commodities have also been taken down this year. Barron’s reports that zinc has fallen 10% this year while copper has fallen 16% and nickel is down 25%.

The euro gained 1.30% against the US dollar, the British pound fell 50 basis points against the dollar and the greenback dipped 24 basis points against the yen.

ETF News & Data

XTF.com reports five new funds launched last week, all equity funds and all that one way or another attempt to help investors navigate the effect that currencies can have on equity holdings, which include three funds from Index IQ that uniquely only hedge 50% of the foreign currency exposure.

Fund inflows and outflows were a mixed bag but we would note large outflows coming from the S&P 500, Russell 2000 and from gold.

Interesting Reads

The New York Times posted Revisiting Deadwood, A Lawless Prelude To TV’s New Golden Age. Deadwood of course was the shockingly profane and violent western drama on HBO a few years ago. While the article lays it on a bit thick, the show did amass a broad fan base.

Before “Mad Men” or “The Americans” found new ways to reclaim the past, this was a period piece ahead of its time, a modern drama set during the Dakota gold rush of the 1870s. A grim, washed-out palette of sepia and gray replaced the familiar Technicolor panoramas of John Ford westerns.

Sports

Former college and WNBA star Becky Hammon, now of the San Antonio Spurs, has of course also made a name for herself as the first-ever female NBA assistant coach and in her latest exploit she led the Spurs to the NBA Summer League championship. Perhaps just as impressive as her basketball knowledge has been her ability to bridge the gender gap in getting a group of young men to take her coaching direction.

Roger Nusbaum
AdvisorShares ETF Strategist

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

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S&P Sector Analysis
As for the sectors of the S&P 500, only three outperformed the broad benchmark – Discretionary, Staples, and Financials. The remaining seven – Utilities, Technology, Healthcare, Telecom, Industrials, Energy, and Materials – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 5.02% this week, with Discretionary outperforming all, and Materials coming in last.

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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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