AdvisorShares Weekly Market Review – Week Ending 8/4/2017
Highlights of the Prior Week
Still No Volatility
The nonfarms payroll report of course came out on Friday and was well received as being a “good report” but very much like the last few reports. There were 209,000 jobs created which was well ahead of expectations, the headline unemployment rate printed at 4.3% and the labor force participation rate moved up a tick to 62.9%. The broader U6 was steady at 8.6% and revisions only changed the previous two months by 2000 jobs. Wages continue to slog along, sticking at 2.5% year over year. Retail jobs increased by 900, which seems like an awfully small change for an economy of our size but there was chatter that it would have been negative if not for the increased hiring at one of the larger online retailers.
Depending on your view, the jobs data has either been in a groove or in a rut. Unemployment clearly is low but wages (along with some other economic indicators) have not recovered like in previous recoveries. Stephanie Pomboy from Macro Mavens is particularly worried about wages as well as a rise in credit delinquencies. Consumers are certainly getting by but aren’t prospering. This is a similar story to what has been happening in other developed countries but strangely the data and demographics are worse but the yields are lower. The eurozone unemployment reported a 9.1% (best since 2009) but while the U.S. ten year yields 2.26%, the German bund yields 0.46%, the French OAT yields 0.74%, Spain 1.48% and Italy 2.02%.
Domestic equities continued to do very little last week. The Dow Jones Industrial Average led the way with a 1.15% gain, thanks again to strong earnings from one high priced stock, the S&P 500 added 0.17%, the NASDAQ slid 0.38% and the Russell 2000 fell 1.18%. The VIX trended slightly lower to 10.03. Barron’s Striking Price column this week makes the observation that there is increased S&P 500 put buying while premiums are cheap and increased call buying on the VIX, again because premiums are cheap, and they interpret this as being a sign of nervousness. The idea is straightforward; if the market drops, those puts would increase in value and the VIX would probably rise (it doesn’t have to though) lifting the calls.
West Texas Intermediate Crude had a relatively quiet week, spending most of its time around $49. Gold backed off a bit to $1264 while the dollar index was flat until Friday, popping on the jobs report that probably validates FOMC balance sheet reduction. As far as a third rate hike for 2017 however, odds on the CME Countdown to FOMC went up to just 50%.
PureFunds, provider of eight ETFs including a very popular fund related to cyber security has apparently been removed as manager from its funds in a news story that no one seems to have quite figured out. More from Seeking Alpha:
The exact nature of the dispute in question is still unclear (PureFunds, for its part, is filing a lawsuit against ETFMG) but it’s rumored that a disagreement over the fee reduction may be the cause.
Here’s a weird about a radio station in Russia that has been broadcasting since 1982, but no one knows who the broadcaster is:
Twenty-four hours a day, seven days a week, for the last three-and-a-half decades, it’s been broadcasting a dull, monotonous tone. Every few seconds it’s joined by a second sound, like some ghostly ship sounding its foghorn. Then the drone continues. Once or twice a week, a man or woman will read out some words in Russian, such as “dinghy” or “farming specialist”. And that’s it.
ESPN shared the story of the Houston Astros’ rainbow uniforms from the 1970’s. It’s a long read but worth it. Amusingly, in the last few years several college baseball teams, including Louisville, have been wearing uni’s that pay homage to the Astros.
“I remember they wanted to do something really different that would stand out, something that wasn’t traditional. So Jack came up with the stripes — that was his baby. I remember us cutting out strips of different widths. Jack fooled around with them for a day or two, trying to get a pleasing effect.”
Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Ycharts.com, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, CME Group, ESPN, CNBC