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Posted by on Feb 22, 2016 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 2/19/2016

AdvisorShares Weekly Market Review – Week Ending 2/19/2016

Highlights of the Prior Week

Markets Up For A Change

Macro

If last week led to confusion it may have been because the US stock market staged something of a rally. The Dow Jones Industrial Average gained 2.60%, the S&P 500 added 2.85%, the NASDAQ jumped 3.87% and the Russell 2000 advanced 3.96%.

There wasn’t necessarily an easily defined cause for the rally. Fed Governor Bullard used the word “unwise” in discussing further rate hikes this year. There was economic data that was positive like core CPI, a drop in jobless claims and West Texas Intermediate Crude tacked on 5% to $31.96 but more likely is that selling in the short term exhausted. Much of the weekend market coverage pointed to a short covering rally. While this might just be a large dip (or not), that volatility still persist likely means that it (dip or something else) is not over yet.

Europe had interesting dealings as the UK negotiates its terms with the European Union leading to a 2% drop in the pound early in Monday trading while Bosnia has applied for membership. Looking at Japan, the OECD says that the country is out options for stimulating growth and in China a PBOC vice-governor warned that the government is fomenting asset bubbles.

None of that seemed to matter last week as foreign markets took the extra day of trading last week for even bigger gains. The DAX gained 4.69%, the CAC 40 tacked on 5.49% and the FTSE 100 was better by 4.25%. In Asia the Shanghai Composite was up 3.49%, the Hang Seng gained 5.27%, the ASX 200 added 3.93% and the Nikkei 225 was up 6.79% after gaining 10% the previous week.

Income markets took a bit of a breather at home as the US Ten Year Treasury Note was flat at 1.74%, the German bund fell six basis points to 0.20%, the French OAT fell nine basis points to 0.56%, the Swiss ten year note yield fell to -0.30%, Spain yields 1.70 and Italy now pays 1.65%.  

Gold only fell a handful of basis points last week which is somewhat surprising given the strength in equities. Over the weekend Barron’s had two articles that one way or another got on the gold bandwagon including Gold Prices: How Much Higher Will They Go? We would humbly offer that gold has a high probability of doing whatever equities don’t.    

And finally a note about currencies in 2016 as the euro has surprisingly gained more than 2% against the US dollar while the greenback has declined more than 5% against the yen. A weak dollar as the Fed looks less and less likely to hike again maybe shouldn’t be a surprise but that the dollar has given up ground to currencies that are under negative rate regimes is surprising with one theory perhaps being that the US will itself have to go negative but for now this is simply a situation that should be monitored closely.

ETF News & Data

Fund flows were interesting last week with large flows into one of the larger high yield bond ETFs and all along the treasury curve. There were outflows from funds tracking the S&P 500 and Russell 2000.

UBS launched the only fund of the week, an ETN that tracks the STOXX Europe 50.

Interesting Reads

If you’re a truck person you may be interested to know The Ford Bronco Is Back! or at least it will be soon according to thedrive.com;

The Ford Bronco started life in 1966 as an innocuous, stripped-down convertible truck to challenge the International Harvester Scout and the Jeep CJ. That first-generation Bronco, a go-to off-roader that shined in Baja as a race machine for the likes of Parnelli Jones, was built until 1977. Next came the bantam Bronco II, which endured ridicule as a rollover machine but did spawn the super popular Explorer. And then there’s the big Bronco, built from 1978 onward, a model best remembered for the OJ Simpson LA Freeway chase seen on live television in 1994. Ford stopped punching out this large Bronco in 1996 [and moved on to building Expeditions and Excursions], but based on clues laid out over the last six months, it’s a pretty good guess that the body-on-frame Bronco SUV will reappear.

Sports

For the former, aspiring professional athlete in all of us is the story of Valley Banker, Arizona State Alum Gets Last-Minute Call To Be Arizona Coyotes’ Backup Goalie. More from ABC15.com;

(Nate) Schoenfeld, a 31-year-old Arizona State graduate, last played competitive hockey 10 years ago as a member of the Sun Devils’ club team. He was bathing his twin infant sons with his wife Monday afternoon when the Arizona Coyotes gave him a call and told him his presence was required.

That last name may seem familiar to hockey fans, he is the son of former NHL player and coach Jim Schoenfeld but the son did not play at an elite level which makes this a great right time/right place story.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, ABC15.com, thedrive.com
 
2016.02.22_Table1
 
Weekly ETF Flows

For February 16th, 2016 to February 19th, 2016

2016.02.22_Table2
 
S&P Sector Analysis

As for the sectors of the S&P 500, three outperformed the broad benchmark – Discretionary, Technology, and Industrials. The remaining seven – Energy, Financials, Healthcare, Materials, Staples, Utilities, and Telecom – each underperformed.  The dispersion between the top-performing and bottom-performing sectors was roughly 3.22% this week, with Discretionary outperforming all, and Telecom coming in last.

For February 16th, 2016 to February 19th, 2016

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

2016.02.22_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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