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Posted by on Dec 26, 2017 in ETF Strategist, Featured, Market Insight

AdvisorShares Weekly Market Review – Week Ending 12/22/2017

AdvisorShares Weekly Market Review – Week Ending 12/22/2017

Highlights of the Prior Week

Tax Bill Passed and Signed!  

Macro

Now maybe the folks who voted on it will have time to read it. Please forgive us for being a little cynical about the political process but more and more the landmark pieces of legislation often come with unintended consequences, so it was true for Affordable Care Act, so it is likely to be with the new tax plan.

Whether cynicism is justified or not the bond market’s reaction was interesting. The yield on the Ten Year US Treasury Note moved higher on the news to 2.48%, up about ten basis points from where it was on Monday. We take this as a positive reaction as it takes the curve further away from flat, a steeper curve is generally an economic positive, a sign or at least an initial reaction that the economy’s expansion can continue, possibly fueled by tax cuts that have been widely accepted as being positive for corporations and being cited as possible fuel for the 2017 rally to continue into 2018. We think the right question is to ask whether this is priced in, but the answer could be no, it is not priced in.

It won’t surprise you that domestic equities were up last week, albeit slightly. The Dow Jones Industrial Average was up 0.43%, the S&P 500 gained 0.30%, the NASDAQ moved ahead 0.35% and the Russell 2000 led the way with 0.81%.

The big news on Friday was the huge swing in price in Bitcoin and the other cryptocurrencies. As Zerohedge tweeted, Bitcoin crashed to levels not seen in two weeks. The move was dramatic though, falling by about one third but it rallied back pretty hard later in the day on Friday. Contributing to the volatility might be the ongoing news stream from Coinbase, one of the large platforms for buying and selling several of the larger cryptocurrencies. Coinbase has had outages and suspensions along the way, a large presence in the crypto-space going offline even if just briefly would seem to be a logical contributor to even greater volatility than what we have seen recently. How is there no VIX for bitcoin yet (by the time you read this maybe there will be)? In the middle of all of the volatility, news broke that hedge fund manager Michael Novogratz was not going to proceed with a much ballyhooed cryptocurrency hedge fund. He claimed to have made the decision a week before the decline, citing market conditions. Later though he tweeted the extent of his firm’s engagement in cryptocurrencies which includes just about everything except a hedge fund.  

ETF News

ETF fund flows for 2017 topped $500 billion as the space continues the trend of gaining on traditional mutual funds. Despite ETFs’ structural advantages, Eric Balchunas from Bloomberg tweeted his surprise that there is still more than $10 trillion in old school funds. Some portion of that $10 trillion, unfortunately, is 401k participants not engaged with their 401ks. It is not uncommon for people to retire or otherwise leave an employer and leave their 401k behind exactly as is, under the misconception that it is being tended to by the employer. And while this scenario is better than cashing out, paying taxes and possibly a penalty (depending on the employee’s age) it is far from ideal for the employees. Invariably this is an expensive scenario in terms of fees paid for 401k administration and of course, the account is not being managed.

Interesting Reads

Like many people, we were saddened to hear of the passing of legendary announcer Dick Enberg. He of course called Super Bowls, NCAA Final Fours, Wimbledons and the list goes on and on through 2016 when he wrapped up a seven year stint as the play by play announcer for the San Diego Padres.

Central Michigan honored alum Dick Enberg, who died on Thursday morning, with a helmet decal for the Chippewas’ bowl game on Friday. Enberg, the Michigan-raised broadcaster who called many of the past 50 years’ greatest sporting moments, was known for his catchphrase, “Oh my!” The Chippewas wore that catchphrase on their helmets for their Friday-afternoon game against Wyoming in the Famous Idaho Potato Bowl in Boise, Idaho.

Sports

Can it be? The XFL could be making a comeback. No word on whether Rod Smart will come back as He Hate Me or if he will update his monicker to something Bitcoin related:

The WWE confirmed the move in a statement and said the new venture will explore “investment opportunities across the sports and entertainment landscape, including professional football.” The story was first reported by the Deadspin website. The XFL was a joint venture between NBC and McMahon’s World Wrestling Federation (WWF), now known as the WWE. An outdoor league that played in the National Football League’s off-season, it was touted as having fewer rules than the more-traditional NFL. The XFL had eight teams in two divisions, all owned by the league, with games televised by NBC, UPN and TNN.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Ycharts.com, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, CME Group, Deadline

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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