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Posted by on Oct 5, 2015 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 10/2/2015

AdvisorShares Weekly Market Review – Week Ending 10/2/2015

Highlights of the Prior Week

A Difficult Third Quarter Comes To An End

Macro

Well that employment report on Friday certainly was a doozy and may lend credibility to the recent FOMC decision to stand pat on interest rates. The number of new jobs for September came in at 142,000 well below expectations. Additionally the net revisions for the last two months was 59,000 fewer jobs than previously reported. The headline unemployment rate held steady at 5.1% while the broader U6 showed improvement down to 10.0%. Wages actually decreased by a penny. The labor force participation rate down ticked to 62.4%. The bullish take on labor force participation is that baby boomers are retiring while the bearish interpretation is that people are giving up on looking for work.

Domestic equities’ knee jerk reaction was to whoosh down 1.3% at the open only to recover and then work higher to finish the day better by 1.4% and seemingly putting the jobs news behind it. Bonds only partly recovered from that initial reaction. The Ten Year US Treasury Note hit a low yield on the day of 1.90% shortly after the jobs data and rallied back to 1.98%. For the week the ten year yield worked progressively lower before spiking down on Friday.

The third quarter of course wrapped up on Wednesday and it was not comfortable. The Dow Jones Industrial Average was down 7.58%, the S&P 500 gave up 7.16% while NASDAQ dropped 7.54% and the Russell 2000 chipped in with a 12.48% correction. The year to date numbers all show noticeable declines but none in double digits. For the week the markets were actually up except for the Russell 2000 which had an 84 basis point setback.

Many of the foreign equity markets we regularly track for this report were down more substantially than the US for the quarter. Some markets were in line with the US; France, the UK and Australia were down 7-8% respectively. The German DAX fell 11.74%, the Nikkei 225 was down 13.90%, the Hang Seng dropped 20.48% and Shanghai Composite crashed 28.63%. Since its peak in June it is down 40% but for the year it is only down 5.62%.

Foreign bond yields also plunged last week. The German bund fell 14 basis points to 0.51%, the French OAT now yields 89 basis points, Spain’s yield declined 26 basis points to 1.77% and Italy tumbled to 1.63%. The yield in Switzerland actually moved up, er less negative at -0.02%.

West Texas Intermediate Crude finished the week with a 0.84% gain but it did put in a huge, unsustainable spike on Thursday up to $47 before closing out at $45.66. Gold was down slightly despite spiking higher Friday after the jobs data hit.

ETF News & Data

John Hancock entered the ETF industry with a suite of six funds managed by Dimensional Fund Advisors (DFA). They all focus on domestic equity and use a multifactor strategy that put them in the smart beta or enhanced index category.

There were four other funds launched last week including currency hedged foreign equity from iShares and a liquid alternative strategy ETF from IndexIQ.

Interesting Reads

Mother Nature Network took a long look at Why Are We Still Talking About Chris McCandless whose story was captured in a book and movie both titled Into The Wild. McCandless took a radical departure from his apparent life path back east to explore Alaska only to die early on in his adventure.

But those most impassioned by his journey tend to fall into one of two camps: those who view him as a heroic figure who dared to live a life free from the restraints of civilization and consumer culture, and those who criticize him for venturing unprepared into the Alaskan wilderness and inspiring countless others to do the same.

Sports

24/7 Wall Street looked at the Highest Paid Public Employee In Every State and not surprisingly college football and basketball coaches rank highest in many states including the likes of Nick Saban and John Calipari.

While coaches can earn such high salaries, most state employees — including the state governor — earn much smaller salaries. In Idaho the Boise State football and basketball coaches are each compensated over half a million dollars annually — a stark contrast to the more than one-third of Idaho state employees who earn less than $40,000 a year.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, MotorSport, Pacific Standard
 
2015.10.5_Table1
 
Weekly ETF Flows

For September 28th, 2015 to October 2nd, 2015

2015.10.5_Table2
 
S&P Sector Analysis

As for the sectors of the S&P 500, six outperformed the broad benchmark – Materials, Energy, Healthcare, Discretionary, Utilities, and Industrials. The remaining four – Technology, Staples, Financials, and Telecom – each underperformed.  The dispersion between the top-performing and bottom-performing sectors was roughly 3.94% this week, with Materials outperforming all, and Telecom coming in last.

For September 28th, 2015 to October 2nd, 2015

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

2015.10.5_Table3

david@mediaworksllc.com

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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