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Posted by on Feb 25, 2014 in Market Insight

AdvisorShares Weekly Market Review – Week Ending 2/21/2014

AdvisorShares Weekly Market Review – Week Ending 2/21/2014

Highlights of the Prior Week

Macro

Minutes from the late January Fed meeting were released last Wednesday and showed a minority but growing sentiment that interest rates may need to be increased sooner than expected. This caused an intra-day reversal in equity prices that day but not an all-out panic; the S&P 500 was down 65 basis points that day.

The rest of the week for domestic indexes was very quiet. Other than the last hour on Wednesday and the first hour on Thursday the S&P 500 stayed in a 10 point range according to Google Finance. Similarly the yield on the ten year US Treasury spend most of the week, except for the same two hours, contained within a five basis point range.

Foreign Markets

While things were quiet at home, the ongoing protests in The Ukraine escalated as we saw graphic images from nighttime activity of things on fire in the central square in Kiev. Various news agencies have reported that the death toll from recent clashes now exceeds 100.

The protesting stems from division over the country’s direction under the leadership of President Viktor Yanukovich over whether the country will move further to the west as part of the European Union or align closer to Russia. Over the weekend Yanukovich was ousted by parliament.

Related to markets and investing, Seeking Alpha reported that S&P downgraded to Ukraine’s debt to CCC from CCC+ and quoting the ratings agency as saying “it is likely that the government will default.”

This would be a good opportunity to check the holdings of any emerging market bond funds owned as many of them have exposure to the Ukraine and perhaps take a little time to learn more about the story.

ETF News & Data

ETF fund flows were very puzzling over the last week. Included on the list for top ten creations according to ETF.com was the Vanguard S&P 500 ETF (NYSE: VOO) while the SPDR S&P 500 (NYSE:SPY) was on the list for top ten redemptions.

Also on the creations list was the Energy Sector SPDR (NYSE:XLE) which is obviously cyclically sensitive and the Healthcare Sector SPDR (NYSE;XLV) which tends to be more defensive. The SPDR Gold Trust (NYSE:GLD) was up 1.67% last week according to Google Finance but had $445 million in outflows.

This speaks to the churning nature of the new year compared to 2013 which was a point raised in several places in the week’s Barron’s. In general, keeping tabs on fund flows is useful but the information won’t be useful 100% of the time.

Interesting Reads

You may have heard about the packs of dogs roaming the streets of Sochi. Well apparently there are now packs of chihuahuas roaming the streets in the Maryvale section of Phoenix. On the surface this may evoke a chuckle but this is of course a story about overcrowding and the failure of too many dog owners to act responsibly in terms of spaying and neutering, adopting from shelters versus shopping at pet stores and puppy mills and the realization that a dog represents a lifelong commitment.

Sports

One of the lighter stories of the Olympics was the attention paid to the Jamaican two man bobsled team which was piloted by 46 year old Winston Watts with the help of brakeman Marvin Dixon. Interestingly Watts lives in Wyoming.

In addition to the observation from Watts that “everybody loves us,” a song was written about the team that went viral on social media and more seriously captured the Olympic spirit of giving a full and honest effort in trying to compete as representatives of their country.

Russia won the overall medal count with 33 total medals thanks in large part to a podium sweep in the last day of competition in the 50 Kilometer Cross Country Skiing Race.

 Roger Nusbaum
AdvisorShares ETF Strategist
 
 
 2.24.14 table 1
 

Weekly ETF Flows

For February 17, 2013 to February 21, 2014

2.24.14 table 2

2.24.14 table 3

S&P Sector Analysis

As for the sectors of the S&P 500, six outperformed the broad benchmark –Healthcare, Utilities, Energy, Materials, Telecom, and Discretionary. The remaining four – Industrials, Technology, Staples, and Financials – each underperformed.  The dispersion between the top-performing and bottom-performing sectors fell to 1.86% this week, with Healthcare outperforming all, and Financials coming in last.

For February 17, 2013 to February 21, 2014

Sector performances, as measured by the S&P 500 sector indices were:

2.24. 14 last

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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