AdvisorShares Weekly Market Review – Week Ending 12/8/2017
Highlights of the Prior Week
Down 89% In Bitcoin Terms
The monthly jobs report came in strong but without fireworks with 228,000 jobs created versus an expectation of 195,000-200,000. The headline unemployment rate was steady at 4.1% while the broader U6 moved up a tick 8.0%. The Labor Force Participation rate printed at 62.8% and revisions were quiet, adding a net 3000 jobs to the last two months. Wages however continue to slog along without making any progress as they again grew by 0.2% for the month, leading to a 2.5% gain year over year. The take here probably needs to be that we are adding jobs but without an increase in discretionary income people are more likely to be able just pay the bills and not provide the type of consumption that would hopefully propel the economy onward and upward or at the very least the lack of increased discretionary income would be a drag on the economy.
Domestic equities shrugged off an early week dip to close with mixed results for the. The Dow Jones Industrial Average gained 0.40%, the S&P 500 was up 0.35% while the NASDAQ dipped 0.13% and the Russell 2000 slid 0.99%.
The 2-10 treasury spread closed on Friday at 59 basis points which is where it was the week before but had been as tight as 52 basis points earlier in the week. The trend for getting flatter is pretty clear especially going into a Fed meeting that long ago ingrained a hike in December. We would repeat from many times before that a flattening curve is typical late in a cycle and even if the end doesn’t come soon it is clearly late. A flatter yield curve is not really a negative for equities it is simply moving in the direction of what could create a negative for equities; an inverted curve. The yield curve isn’t inverted until it is inverted and even then it is not instantly terrible but is an indicator we would choose to heed as signaling the end of the cycle.
The Barron’s cover story this week an outlook-2018 piece that features ten strategists and their predictions. Expectations for the S&P 500 range from 2675 up to 3100 or flat to up kind of a lot (3100 is about 17% away). We are not fond of predictions as they are more guesses than anything else. Someone with a nice long career is bound to nail a couple of guess exactly right over the course of 25 or 30 years but that doesn’t necessarily create any value add. We have quoted Bob Boyd from Pacific Asset Management several times here in saying there is no playbook for how to emerge from QE and ZIRP. We have obviously enjoyed a very long bull market could could wind up being the longest in history, it could all end even worse than it did in 2008, maybe the 3% for the next ten year crowd will be right, no one knows.
The Up & Down Wall Street column in Barron’s had a couple of unintentionally funny one-liners at Bitcoin’s expense noting one of the mega cap bank stocks was down 89% this year in Bitcoin terms and that the market cap of Bitcoin pales in comparison to the biggest bubble in the world which is the $10 trillion in bonds outstanding with negative yields. Possibly these are both symptoms of the same problem.
Given that it only takes a lunch hour for Bitcoin to add another $1000 (humor attempt), this may be stale depending on when you read it but the Bitcoin ETF trading in Sweden is bigger than 80% of the ETFs trading in the US.
Earlier this year, billionaire investor and the owner of NBA’s Dallas Mavericks Mark Cuban revealed at the Vanity Fair New Establishment Summit in Los Angeles that he officially invested in Bitcoin through XBT Provider in Sweden
A National Park in Washington DC? It could happen.
The name change would be largely symbolic. Rock Creek is already owned and managed by the National Park Service. In fact, Rock Creek, which was established in 1890, was one of the first three national parks chartered by the U.S. government after Yosemite and Sequoia National Parks.
Wondering why Arizona State hired Herm Edwards?
(Athletic Director) Anderson also acknowledged the issue that rubs so many the wrong way – his past with Edwards. He’s known the former NFL coach for 20 years. As an agent, Anderson represented him. When asked if he had to sell this to Edwards the first time they talked, Anderson wasn’t sure what to say because they talk so often. “He knows I wouldn’t have come to Arizona State unless there was a very significant and different opportunity,” Anderson said. “Some people say, ‘Well, it’s cronyism and his old buddy.’ What I would say to that is, it’s simply not a factor. It’s about fit and vision and very frankly, the willingness to invest. Skin in the game.”
Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Ycharts.com, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, CME Group, AZCentral, wtop.com