AdvisorShares Weekly Market Review – Week Ending 8/15/2014
Highlights of the Prior Week
Although it didn’t feel like it, US markets rallied last week. The Dow Jones 30 was up 66 basis points, the S&P was up 1.22% and the NASDAQ bested them all with a 2.15% gain. For those keeping track of the divergence between large cap and small cap stock the Russell 2000 Index was up 91 basis points.
On the economic-data front there was a mixed bag. Industrial production rose 0.4% which was above expectations while the Producer Price Index rose 0.1% and is up 1.7% year over year. Retail sales came in below expectations and Thursday jobless claims at 311,000 were 16,000 above estimates.
The Ten Year US Treasury Note continued to trend lower down to 2.34% from last week’s 2.41%. Most of the drop in yield came on Friday when news broke that Ukraine military forces destroyed several Russian armored vehicles at their mutual border. This news sent stocks down mid-day Friday although they recovered to close flat on the day. The Ten Year though recovered very little of its reactionary move on the news. The CBOE Volatility Index also spiked on Friday but closed the week down 16% at 13.15.
Oddly, gold also declined in the wake of Friday’s news but recovered most of Friday’s dip to close the week down 23 basis points.
The story in foreign markets continues to be more interesting than the domestic markets. For starters Japan’s GDP contracted at an annual rate of 6.8% in the second quarter. The major markets of Germany, France and the UK are all under their 200 day moving averages, yields are almost Japan low with the German Bund (ten year sovereign debt) now yielding 0.95%, GDP in Italy and Germany is contracting and GDP in France is flat.
The Washington Post noted that the eurozone GDP is still 1.9% below where it was when the great recession started in an article that makes the argument that Europe is actually in a depression. France’s unemployment rate is 10.4% and Italy’s is 12.6% which both look fantastic when compared to 25% in Spain.
Chinese markets continue to thrive after years of underperformance. Shanghai was up 1.43% last week while the Hang Seng was up 2.5%. In the last three months these markets are up 9.96% and 9.78% respectively.
Last week we considered the lack of logic by Vladimir Putin in restricting food imports. This week’s Barron’s quotes Ian Bremmer of the Eurasia Group as saying that Putin is on shaky ground and that he believes Putin’s days in charge are numbered.
ETF News & Data
Last week we noted the $13 billion outflow from the SPDR S&P 500 but this past week a large chunk came back with the fund having $3.9 billion in net inflows. Outflows were generally dominated by funds targeting domestic, small cap stocks and European equities.
There were four new funds launched last week all related to the fixed income market which underscores an ongoing theme in markets this year that investors are looking for yield and that the fund companies are trying to offer income solutions.
It seems like everyone loves Airstream Trailers whether for the nostalgic sentiment they evoke or simply for the visual appeal of the design. NPR takes a look back at Airstreams and a look at Airstreams today with plenty of pictures.
If you are suffering withdrawal from the Tour de France which ended three weeks ago, you’re in luck. This week the US Pro Challenge will run through the state of Colorado with coverage being provided every afternoon by NBC Sports.
Roger Nusbaum, AdvisorShares ETF StrategistSource: Google Finance, Yahoo Finance, Wall Street Journal, Bloomberg, Forbes, Barrons, Washington Post, NPR, The Big Picture
Weekly ETF Flows
For August 11, 2014 to August 15, 2014
Shares outstanding include totals as of current day NAV.
S&P Sector Analysis
As for the sectors of the S&P 500, four outperformed the broad benchmark – Healthcare, Technology, Staples and Industrials. The remaining six – Utilities, Discretionary, Materials, Financials, Telecom and Energy – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 2.54% this week, with Healthcare outperforming all, and Energy coming in last.
For August 11, 2014 to August 15, 2014
Sector performances, as measured by the S&P 500 sector indices were: