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Posted by on Sep 6, 2016 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 9/2/2016

AdvisorShares Weekly Market Review – Week Ending 9/2/2016

Highlights of the Prior Week

September Is Off The Table!

Macro

That was the conclusion by some after the August jobs data which showed a not too hot, not too cold 151,000 jobs created last month versus an expectation of 180,000. This was the first report in several months that was not shockingly low or shockingly high. The headline unemployment remained at 4.9%, which was also a slight miss. Labor force participation was also steady 62.8% and the broader U6 measure of unemployment printed at 9.7%. If there was an obvious negative, it was in the wage number which only grew at 0.1%.

Much has been made of the now 40 trading day run where the broad market has failed to move more than 1% in a single day. Last week was lining up to be exactly flat before a pop on Friday after the jobs data was digested and the market’s conclusion, for now anyway, that a September rate hike is off the table.

One theme to these reports over the summer has been about there not necessarily being a playbook for how the economy gets out of this malaise, what resolves the FOMC dilemma over where its policy goes from here or how the fixed income markets normalize. The Barron’s Streetwise column had a couple of data points that help illustrate this idea. Regarding the malaise….earnings for Standard & Poor’s 500 companies peaked in 2014 and have stagnated since to which we would add that much of the growth in earnings leading up to 2014 was attributed to stock buybacks so now even that is losing effectiveness. And regarding the jam that the FOMC is in….In the past, when unemployment was 4.9% or lower, the federal-funds rate had averaged 4.96% or more, notes Mike O’Rourke, Jones Trading’s chief market strategist. “Central banks are the largest blind buyers in the world, accumulating trillions of dollars’ worth of assets with no thought of price, valuation or exit strategy,” he writes.

For the week, the Dow Jones Industrial Average was up 0.52%, the S&P 500 added 0.50%, the NASDAQ gained 0.59% and the Russell 2000 was the leader with a 1.10% jump. For the month of August, the moves were similarly slight with the Dow dropping 0.17, S&P 500 dipped 0.12 while the NASDAQ added 0.99% and Russell 2000 tacked on 1.63%.

Foreign equity markets were mixed with the DAX adding 0.91%, the CAC 40 was up 2.32% and the FTSE 100 was good for 0.52%. In Asia the Shanghai Composite was flat, the Hang Seng gained 1.45%, the Nikkei 225 was the big winner with 3.45% while the ASX 200 fell 2.59%

The Ten Year US Treasury Note yield fell slightly to 1.59%. The German bund yield inched up to -0.04%, the French OAT yields 0.18%, the UK gilt yield jumped substantially up to 0.72%, the Swiss 10 year charges 0.44% and the Japanese JGB closed last week at -0.03%.

Gold trended higher in relatively nonvolatile fashion adding 0.94%. West Texas Intermediate Crude fell 6% to close below $45 but is still well within the range of the last few months.

ETF News

FactSet reports that in August financials and energy each saw inflows greater than $1 billion perhaps symbolizing now stale expectations that their will be a rate hike soon (financials) and that even if energy prices don’t go higher from here, the worst of the selling that occurred in February is safely in the rearview mirror. Also Emerging Markets had strong flows amid strong performance in Brazil year to date, despite that country’s political turmoil which lead to Dilma Rousseff being impeached and removed from office.

Interesting Reads

The Plaid Zebra would have us consider Why You Should Embrace Uncertainty With Confidence And Raise A Middle Finger To Comfort;

There are plenty of reasons to remain loyal to our world of screens and L-shaped couches, waiting for things to happen though they are things that we already know won’t. We already know that comfort is the killer of satisfaction.   

Sports

Baseball fans all know that Vin Scully is retiring as the Dodgers announcer after 2/3rds of a century. Local LA TV station KTLA To Broadcast Vin Scully’s Final Six Games. The article is a short read but the first comment on the article might be better;

It’s hard to believe I’ve been listening to Vin Scully, as the Dodger play by play announcer since 1950, when I was 12 years old and now I’m 78.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, Plaid Zebra, MLB Blog
 
2016.09.06_Table1
 
For August 29th, 2016 to September 2nd, 2016

2016.09.06_Table2
 
S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark – Financials, Staples, Technology, Telecom, and Utilities. The remaining five – Materials, Industrials, Discretionary, Healthcare, and Energy – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 2.19% for the week ending 9/2/16, with Financials outperforming all, and Energy coming in last.

For August 29th, 2016 to September 2nd, 2016

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

2016.09.06_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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