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Posted by on Oct 12, 2015 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 10/9/2015

AdvisorShares Weekly Market Review – Week Ending 10/9/2015

Highlights of the Prior Week

The Zinc Rally?

Macro

Domestic equity markets took some time off from going down to put in a solid round of gains last week. The Dow Jones Industrial Average gained 3.72%, the S&P 500 added 3.25%, the NASDAQ tacked on 2.58%, held back on a relative basis due to biotech, and the Russell 2000 was the big winner with a 4.59% lift.

We mentioned biotech which depending on the index or ETF you look at was down 2-4% for the week still under fallout from the Hillary Tweet from the week before where she declared a holy war (slight exaggeration) against the industry’s pricing.

Earnings season got started with a whimper from big aluminum but more importantly estimates are calling for a 4% decline when all is said and done. For much of this bull market (if it still is a bull market) earnings growth although healthy came in large part from increased margins not increased revenue. Reuters’ coverage of the upcoming earnings season included the term “earnings recession.”

The lift in equities may also be partially attributable to the perception that the Fed is now out of the picture for the remainder of the year. With the weak jobs data, estimates coming down for GDP growth and an expectation for earnings contraction, perhaps the FOMC has been validated in deciding to wait.

Asian markets were up more than the US and Europe up further still. The ASX 200 gained 4.4%, the Nikkei 225 added 3.98%, the Hang Seng rallied 4.45% and despite only being open two days, the Shanghai Composite jumped 4.26%. In Europe the FTSE 100 was up 4.67%, France gained 5.44% and Germany moved ahead 5.69% even as the Diesel Debacle continued to unfold.

The yield on the Ten Year US Treasury Note took back the 2% level as it moved progressively higher all week to close at 2.09% perhaps as the panic (too strong of a word?) from the employment data wore off. Foreign bond yields also moved higher. The German bund moved up to 0.61%, the French OAT at 0.98%, Spain checked in at 1.83% at Italy closed the week at 1.69%. The only yield to move lower was Switzerland which now yields -0.16% as the franc rallied against the US dollar.

Commodities had a very interesting week. Gold trended higher most of the week to a 1.6% gain. Crude oil had a monster gain of 7.84% with most of that coming on Tuesday and Thursday. ETFs tracking the mega cap integrated oil companies had gains in the neighborhood of 8% while some of the narrower industry ETFs had double digit gains. Many attributed the lift in crude to Russia’s military action in Syria bringing into question Syria’s ability to maintain current production levels although according to the EIA Syria’s production “all but ceased in 2014.” Most interesting was the move in Zinc which had been down in excess of 30% over the last year but rallied 10% on Friday on news that Glencore was shuttering ⅓ of its zinc production as that company tries to dig out of a very big hole…so to speak.

ETF News & Data

There were four new funds last week. Guggenheim launched two new funds into its BulletShares suite and State Street rolled out two new sector (more like industry) SPDRs.

Fund flows were interesting as more than $2 billion flowed into high yield bond index funds perhaps serving as confirmation that market participants expect the Fed to remain on the sidelines for a while. There were small outflows from biotech as well as the energy sector despite the huge rally in the patch last week.

Interesting Reads

Baseball Essential shared a blog post written by veteran pitcher David Aardsma titled When Do You Accept That Your Season Is Over? Aardsma shares his story of being designated for assignment shortly before very large incentives for number of appearances would have kicked in and the way in which he balances training and family obligations while hoping to sign with another team before the season ended.

Five minutes later, life changed. I now have no idea what to do with myself. I’m no longer a Brave, I’m still in a locker room and stadium where I’m no longer welcome, my whole family just landed in Atlanta to spend the week with me, and one of my best friends just got in town with his family to see me pitch.

Sports

Recently Darryl Dawkins and Moses Malone passed away within a few weeks of each other which has cast a light on whether or not NBA big men have trouble living long healthy lives and the NBA wants to get involved to help its alumni get preventive care that can hopefully make a difference.

From ESPN;

The good-faith actions of current players were welcome news to retired veterans who have been rattled by the spate of cardiac-related deaths. Although there is no concrete data linking basketball players who are large in stature to early death from cardiac distress, the prevailing opinion among many former NBA stars is there has to be a correlation. “It’s too close to home,” former star center Bob Lanier said. “It’s the topic nobody wants to address. How many people have we seen in our lifetime who are big and really tall and are 70-something years old? Not many. That’s because people [my size] don’t live that long.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, Baseball Essential
 
2015.10.12_Table1
 
Weekly ETF Flows

For October 5th, 2015 to October 9th, 2015

2015.10.12_Table2
 
S&P Sector Analysis

As for the sectors of the S&P 500, six outperformed the broad benchmark – Energy, Materials, Industrials, Telecom, Technology and Staples. The remaining four – Discretionary, Financials, Utilities and Healthcare – each underperformed. The dispersion between the top-performing and bottom-performing sectors this week was 7.52%, with Energy the leading performer and Healthcare the biggest laggard.

For October 5th, 2015 to October 9th, 2015

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

2015.10.12_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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