AdvisorShares Weekly Market Review – Week Ending 3/18/2016
Highlights of the Prior Week
It’s An Easy Planet
In our last report we noted the heavy hand of central banks and the extent of their influence over capital markets in this era of ZIRP, NIRP and asset purchases. This past week the FOMC dovishly reduced its expectation for rate increases in 2016 from four to two citing global economic and financial developments. The current condition of the economy and for that matter the entire recovery/expansion has been baffling. Job growth has been persistent and various output and productivity numbers have been solid but GDP growth has clearly lagged past recovery/expansionary periods and we can’t quite seem to create inflation when we think we need it.
Further complicating the situation is the extent to which other central banks are increasingly easing their already accommodative policies. Japan and the ECB are moving further into negative (rate) territory and increasing their asset purchases.
How complicated, maybe distorted is a better word, are things these days? Barron’s notes the recent strength in the Dow Transports in conjunction with a 33% rally in crude oil which becomes fuel which allows the transportation stocks to actually, you know, transport stuff.
Domestic equity markets took the lead from what is an easy planet and continued the rally, albeit modestly, that started five weeks ago. The Dow Jones Industrial Average gained 2.20%, the S&P 500 rallied 1.33%, the NASDAQ added 0.98% while the Russell 2000 tacked on 1.31%.
Foreign equities were more mixed. The DAX was up 1.22%, the FTSE 100 gained 81 basis points, the Hang Seng was better by 2.33%, the ASX 200 eked out 22 basis points and the Shanghai Composite jumped 5.15%. The Nikkei 225 fell 1.27% and the CAC 40 gave up 61 basis points.
In addition to the FOMC, markets had to contend with core CPI printing at 0.3% and retail sales also coming in at 0.3%. That all combined to send the yield on the Ten Year US Treasury Note down ten basis points to 1.87%. The German bund now yields 0.21%, the French OAT pays 56 basis points, the Swiss ten year is still entrenched in negative territory at -0.31%, Spain yields 1.44% and Japan has been in the negative yield club for a few weeks, currently at -0.09%
Gold added 0.23%, continuing its gradual increase even as equities rise. And West Texas Intermediate Crude gained 2.3% closing the week at $41.13 after getting as high as $42.49 earlier in the Friday session.
ETF News & Data
ETF.com reports a sharp drop in the number of funds launched through March 15th of this year at 33 versus 53 funds through last March 15th of last year.
Funds tracking the S&P 500 had the largest inflow by far with more than $3.5 billion. Other gainers were mixed between various foreign and domestic equities as well as investment grade and high yield debt. Outflows were a mixed bag of the Eurozone, Japan and several Setor SPDRs.
NPR takes a fun look at Touring The National Parks…All 59 Of Them;
This summer, the National Park Service turns 100. It’s safe to say that lots of Americans will be celebrating by visiting a national park.But two friends — Darius Nabors and Trevor Kemp — are marking the occasion by visiting all of them. That’s 59 parks, from Joshua Tree to Shenandoah, and from remote Alaskan wilderness to Virgin Island beaches. And Nabors and Kemp are crossing them off the list in 59 weeks. They quit their jobs to make the journey, which is partially crowd-funded, and are documenting the process on their website, 59in59.com.
In what is becoming a growing trend among younger professional athletes, theroot.com reports that Basketball Player Kawhi Leonard Isn’t Wasting A Penny Of His $94 Million Contract;
Leonard not only lives in a two-bedroom apartment in San Diego in the offseason but also drives a rehabbed ’97 Chevy Tahoe, which he’s named Gas Guzzler. Leonard’s had the car since he was a teenager and refuses to give it up. He explains why: “It runs,” Leonard says, “and it’s paid off.”
Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, The Guardian, Bespoke Investment Group, theroot.com, NPR
For March 14th, 2016 to March 18th, 2016
S&P Sector Analysis
As for the sectors of the S&P 500, seven outperformed the broad benchmark – Industrials, Energy, Materials, Technology, Utilities, Financials, and Discretionary. The remaining three – Telecom, Staples, and Healthcare – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 5.43% this week, with Industrials outperforming all, and Healthcare coming in last.
For March 14th, 2016 to March 18th, 2016
As measured by the S&P 500 sector indices, respective performances were: