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Posted by on Feb 23, 2015 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 2/20/2015

AdvisorShares Weekly Market Review – Week Ending 2/20/2015

Highlights of the Prior Week

Macro

By now you know that Greece was able to convince the finance ministers of the other European countries to give it a four month extension on its bailout repayment plan after failing to strike a deal for a six month extension. Although the country recently installed a new government it is difficult to see what might change in the next four months that will create visibility for how the country will be able to pay its €240 billion bailout which leaves us to wonder how much longer they can kick the can down the road.

If you’re not sure what the big deal is about Greece, it is generally viewed that if one struggling country leaves the union or otherwise fails it would open the door to other struggling countries to leave which would undermine the entire EU.

The Greece news broke after the close of European equity trading. For the week, markets were generally higher with the DAX going up 80 basis points, the FTSE 100 was up 57 basis points while France was better by 1.51% and the Swiss Market Index rallied 2.46%.

Asian markets were also mostly higher except for Australia which was down 6 basis points. The Hang Seng and Shanghai markets were up 59 basis points and 129 basis points respectively in shortened trading weeks in celebration of the Chinese New Year. The Nikkei 225 was up 2.34%.

Equity markets in the US were all higher in the four day week led by the NASDAQ’s 1.27% gain. The Dow Jones Industrial Average was up 66 basis points, the S&P 500 was up 63 basis points and the Russell 2000 added 69 basis points.

Global bond yields were mixed with the stronger sovereigns seeing their yields rise while the weaker sovereigns saw yields drop slightly. Rising yields were seen in the US up to 2.13%, German bunds up to 0.36%, French OATs up to 0.68% and Swiss ten years up to six basis points. Yields in Spain fell to 1.50% and in Italy they fell to 1.58. Since we’re focusing on Greece this week, Greek ten year paper saw its yield rise 61 basis points on the week to 9.89%.

Crude oil volatility was alive and well last week. West Texas Intermediate Crude fell 3.28% on the week with all of the action occurring on Wednesday, the day before it was reported that inventories increased by 7.7 million barrels to a record 425 million barrels. Gold also declined this week, giving up 1.33%.

The dollar was generally weak last week as the euro and British pound both gained on the dollar while the greenback declined slightly against the yen.

Janet Yellen will be testifying before the Senate on Tuesday and then the House on Wednesday in what used to be known as the Humphrey Hawkins Testimony. While the Fed for years has seemed to make a priority out of not moving markets, these visits occasionally do drive volatility.

ETF News & Data

There were three new funds launched last week including one fund that targets a negative duration to hedge rising interest rates and a fund that tracks the spot price of coal, not equities related to coal production but the actual commodity.

Perhaps because of the current events in Greece, or in spite of those events funds tracking Europe, one way or another, saw large inflows last week with three such funds making the top ten. The Energy Sector SPDR led the way for inflows at $762 million but much of that was to accommodate increased short interest amidst the ongoing volatility in the price of crude oil.

Convergex reported that International Equity ETFs have added over $9 billion over the last 12 trading days versus just $4.7 billion for domestic equities funds.

Three different utilities sector ETFs showed up on the outflow list as yields in the US generally rose. Rising yields tend to make utilities less attractive but utilities stocks moved higher last week with the broad market.

Interesting Reads

After all the attention foisted upon Brian Williams for, shall we say, not quite remembering how close he didn’t get to military action in 2003 it turns out that Bill O’Reilly Has His Own Brian Williams Problem, so says Mother Jones, recollecting his engagement as a journalist during the Falklands War in 1982.

The magazine notes that O’Reilly recounted his experiences in various forums but;

Robert Fox, one of the embedded British reporters, recalled, “We were, in all, a party of about 32-34 accredited journalists, photographers, television crew members. We were all white, male, and British. There was no embedded reporter from Europe, the Commonwealth or the US (though they tried hard enough), let alone from Latin America.”

Sports

ESPN is reporting that the Big Ten Is Considering Ineligibility For Freshman.This would of course be a throwback to college sports before 1972. The big idea is to give freshmen a year to get used to the ways in which college life is different from living at home and attending high school. With the concept of redshirting, the athletes would still get four years of competition but they would just need to wait before starting to play. We will be curious to see whether the Big Ten, which has 14 member schools, loses out on recruiting should they choose to implement this policy independently of the other conferences.

Source: Google Finance, Yahoo Finance, Wall Street Journal, Bloomberg, Barrons, ETF.com, XTF.com, Convergex,ESPN, Mother Jones, 24/7 Wall Street

 2015.2.23_Chart1

Weekly ETF Flows

For February 16, 2015 to February 20, 2015

2015.2.23_Chart2

S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark – Telecom, Energy, Financials, Materials and Discretionary. The remaining five – Industrials, Technology, Staples, Healthcare and Utilities – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 10.59% this week, with Telecom outperforming all, and Utilities coming in last.

For February 16, 2015 to February 20, 2015

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

2015.2.23_Chart3

 

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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