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Posted by on Sep 19, 2016 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 9/16/2016

AdvisorShares Weekly Market Review – Week Ending 9/16/2016

Highlights of the Prior Week

The FOMC Meets To Determine The Fate Of The Galaxy

Macro

The FOMC is scheduled to meet this week and while the fate of the galaxy may not actually be in play, market participants are of course very focused on whether or not there will be a rate hike this week or in December (it seems no one gives credence to a November hike) and if there is a hike whether it would be a one and done or the start of a tightening cycle. Dennis Gartman argues that the FOMC began to tighten a year and a half ago when it ended it quantitative easing. The most recent reports were weak in the form of retail sales and manufacturing data on Thursday and University of Michigan Consumer Sentiment on Friday.

Earlier in the week US CPI reported at 0.2% better than the expected 0.1% which lifts the 12 month number at 1.1% far short of the 2.0% stated objective. While CPI is flawed and doesn’t adequately capture certain segments it is still a widely accepted benchmark for inflation.

Domestic equity markets netted out to mostly modest gains but that does not capture the sequence of several 1% moves of late after a 44 day run of no such change for the S&P 500. For the week the Dow Jones Industrial Average added 20 basis points, the S&P 500 gained 0.52%, the Russell 2000 was up 0.49% with the NASDAQ the big winner with a 2.31% jump thanks in large part to a more than 11% lift for the Cupertino smartphone company on release of a new version.

The foreign equity markets we track in this report were all lower for the week. The FTSE 100 fell 0.98%, the CAC 40 declined 3.61%, the Shanghai Composite was down 2.49%, the Nikkei slid 2.64%, the Hang Seng gave back 2.89% and the ASX 200 dipped 0.8%.

The DAX was down 2.81% with about half of that decline coming on Friday as the DOJ announced $14 billion in new fines related to the financial crisis for the big German Bank,a fine it says it has no intention of paying. Bank shares fell almost 9% in reaction. This is noteworthy as it comes eight to nine years after the start of the crisis. Where it was the “worst crisis in 80 years” we should expect there to be more fallout from the crisis for years still to come.

As the FOMC gears up to make some news this week, or not as the case may be, there was central bank news elsewhere last week. The Bank of England (BOE) left rates unchanged at 0.25% as it looks like the implementation of Brexit is still a long way off. The Swiss National Bank (SNB) also left rates unchanged at -0.75%. Such an extreme policy by the SNB can’t quite seem to get the job done for the franc versus the euro against which it is flat for the last year or the US dollar (admittedly less important where exports are concerned) against which the franc is up 3% in the last year. Finally the Russian Central Bank cut by 50 bp to 10%, not every country has historically low rates.

Global bond yields were mixed last week. The Ten Year US Treasury Note moved slightly higher to 1.70%, the German bund closed positive by a fraction of a basis point, the French OAT was flat at 0.30%, the UK gilt tacked on two basis points to 0.87%, the Swiss ten year continued its move higher to -0.39% and the JGB moved lower to -0.04%.

West Texas Intermediate Crude had a rough week with a 4% decline and gold was down 1.43% perhaps in conjunction with the rise in yields over the last couple of weeks (higher rates would tend to mute inflation concerns).

ETF News

There were a lot funds launched last week including three very narrow ETFs from Global X, while Guggenheim added to its BulletShares suite, Fidelity launched six smart beta ETFs and JP Morgan launched its first actively managed ETF.

We’ve mentioned the addition of REITs as the 11th sector within the S&P 500. ETF.com reported that last week roughly $3 billion moved from the financial sector funds to REIT sectors funds as part of a rebalance of sorts to reflect the new sector.

Interesting Reads

Brain Pickings shares Bruce Lee’s Never-Before-Seen Writings on Willpower, Emotion, Reason, Memory, Imagination, and Confidence;

  • You will never get any more out of life than you expect
  • Keep your mind on the things you want and off those you don’t
  • Things live by moving and gain strength as they go
  • Be a calm beholder of what is happening around you
  • There is a difference a) the world b) our reaction to it

There is also some interesting history on the making of the movie Enter The Dragon.

Sports

Every winter we mention the Dakar Rally which many years ago moved from Africa to South America. The 2016 race was won by Stephane Peterhansel driving a Peugeot. For 2017, Peugeot has an all new look. Designboom Reports Peugeot 3008 DKR Race Car Reveals Its Aggressive Body Work;

team peugeot total + red bull have revealed the new peugeot ‘3008 DKR’: this is the all-new successor to the famous automobile with which stéphane peterhansel claimed his 12th victory on the dakar back in january, and cyril despres clinched his first win on four wheels on the silk way rally in july. following eight months of intensive work in velizy, france, the new peugeot ‘3008 DKR’ forms the inspiration for the latest evolution, following the company’s return to dakar after 25 years in 2015.  

The story though is really about the pictures.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, Designboom, Brain Pickings
 
2016-09-19_table1
 
For September 12th, 2016 to September 16th, 2016

2016-09-19_table2
 
S&P Sector Analysis

As for the sectors of the S&P 500, four outperformed the broad benchmark – Technology, Utilities, Healthcare, and Staples. The remaining six – Telecom, Discretionary, Industrials, Materials, Financials, and Energy – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 5.95% for the week ending 9/16/16, with Technology outperforming all, and Energy coming in last.

For September 12th, 2016 to September 16th, 2016

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

2016-09-19_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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