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Posted by on Feb 6, 2017 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 2/3/2017

AdvisorShares Weekly Market Review – Week Ending 2/3/2017

Highlights of the Prior Week

A Job Report For Everybody!  

Macro

The Friday jobs report had something for everyone with a mix of strong and weak data. There were 227,000 new jobs created in January which beat the Bloomberg consensus of 180,000. The headline unemployment rate printed at 4.8% which was a slight uptick from December and the U6 came in at 9.4%. There was also an uptick in the labor force participation rate to 62.9% which can be taken as a positive with people feeling optimistic enough to again look for work in the belief that a job can be had. Wages were the big disappointment, increasing by only 0.1% while previously reported wages gains were revised lower, to 0.2% from 0.4%. Although an FOMC hike was a low probability for March, the weak wage data would seem to further reduce that probability, currently there is a 30% chance the FOMC moves in March. Almost as an afterthought, there was an FOMC meeting before the jobs report that was about as antiseptic as an FOMC meeting can be, there essentially wasn’t even anything to interpret.

The new Trump administration has of course come out of the starting block trying to implement a great deal of change including attempts to stop, or at least delay, the so-called fiduciary rule. This of course would subject brokerage firm financial consultants to the same fiduciary standards that registered investment advisors must adhere to versus the less onerous suitability standard. Implementation would trigger changes in how brokerage firms and FCs conduct business with certain accounts. For many years, RIA’s have been able to hold out the fiduciary obligation as a feature of their service over brokerage consultants.

Snap, the maker of the Snapchat app of course filed to go public. This has certainly been a much anticipated event but it makes us wonder whether it could be a launch pad for the market to propel to higher levels or serve as a bell-ringing like the big AOL merger back in 2000…or neither. We do know that there is no visibility now for profitability and the shares issued in the IPO will have no voting rights.

Domestic equities had a so-so week but a decent month. Recapping last week the Dow Jones Industrial Average fell 0.13%, the S&P 500 gained ten basis, the NASDAQ added nine basis points and the Russell 2000 moved ahead 0.49%. For the month all four indexes were positive with the Dow up 0.52%, the SPX 1.79%, the NASDAQ 4.28% and the Russell 2000 0.28%.

The US dollar continued its decline last week, falling slightly below 100 as measured by the DXY Index back to levels at election day that were also tested to the downside in early December. The current downtrend is now almost six weeks in the making and while there are plenty of fundamental reasons for the other currencies to decline against the dollar, that 103 level for the DXY still looms as resistance.

The yield on the Ten Year US Treasury Note moved up a tick to 2.49% despite the small decline in the dollar and the lack of wage pressure in the jobs report. The yield on the German bund fell five basis points to 0.41%, the UK gilt dropped 0.12% to 1.35%, the JGB yields 0.10% and the Swiss ten-year charges five basis points.

Barron’s made the case for higher oil prices based on an expectation of increased demand as OPEC and Russia stick with agreed upon production cuts. For the week, West Texas Intermediate Crude was up 1.8% to close above $54.

ETF News

ETF.com reported more than $40 billion in positive fund flows in January, noting that in 2016 the average monthly flow was $26 billion. Breaking it down a little further, domestic equity added $15 billion, international equity brought in $12 billion as did domestic fixed income. Commodities contracted by $644 million     

Interesting Reads

We’re not sure if this is interesting or sad but A Robotics Expert Predicts That Kids Born In 2017 Will Never Drive A Car;

His forecast, which he shared in a December interview with The San Diego Union-Tribune, is rooted in signs that the auto industry is racing toward a driverless future. “Autonomous, driverless cars are 10, 15 years out,” he said. “All the automotive companies—Daimler, GM, Ford—are saying that within five years they will have autonomous, driverless cars on the road.”

Sports

Part of the epic win by the Patriots was the exorcising of David Tyree from 2008. CBS Sports reports Super Bowl 2017: Move over helmet catch, Edelman’s ankle catch is craziest ever;

Julian Edelman topped David Tyree’s helmet catch. In the fourth quarter of Super Bowl LI on Sunday, he came down with the craziest, most improbable catch in the history of the Super Bowl. In doing so, he gave the Patriots something that they lacked for most of Super BowlLI: hope. He gave them a chance to complete the biggest comeback in Super Bowl history.

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

 
2017.02.06_Table1
 
S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark – Healthcare, Staples, Utilities, Real Estate, and Financials. The remaining six – Technology, Discretionary, Energy, Industrials, Materials, and Telecom – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 4.41% for the week ending 2/3/17, with Healthcare outperforming all, and Telecom coming in last.

For January 30th, 2016 to February 3rd, 2016

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

2017.02.06_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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