AdvisorShares Weekly Market Review – Week Ending 3/21/2014
Highlights of the Prior Week
The S&P 500 managed to shake off Russian politics and an interest rate threat last week to go up 1.38% on the week. Going into the last full week of the quarter the index is up 0.98% for the year which might be an indication that we may not see the volatility that end of quarter “window-dressing” often brings.
The interest rate threat mentioned above came from Janet Yellen during the Fed’s post FOMC presser. From Barron’s;With just eight words, newly minted Federal Reserve Chair Janet Yellen upended the outlook for U.S. Treasury bonds. Something “around six months or that type of thing” is what Yellen famously said—a seemingly offhand remark, but not when it comes to the question that she was answering: How long after the Fed ends its bond-buying program will the central bank take to raise rates?
The ten year US Treasury came unglued going back up to a 2.75% yield. The threat of higher yields now slightly more tangible sent gold down 3.53%. On the currency front, the US dollar gained 0.86% against the yen, while the euro lost 0.79% against the USD and the British pound gave up 0.89%.
There are 14 IPOs due to start trading this week including King Digital Entertainment (NYSE: KING) which makes the game Candy Crush Saga which you might recognize from your Facebook news feed and as of this writing is expected to price with a market value of $7 billion.
The story in Russia/Ukraine/Crimea continues to evolve albeit a little slower this week than the last couple of weeks. White House Press Secretary Jay Carney had a sharp one liner when he said “I wouldn’t, if I were you, invest in Russia equities right now, unless you were going short.”
Germany’s equity market which has been especially sensitive to the story in Russia rallied 3.02% and France chipped in with a 2.78% lift. Japan continued to struggle with volatility, dropping 3.84% and is down 11.22% so far this year.
ETF News & Data
Unusually, there were no new ETFs issued in the last week, only the second week of the year without any new funds.
Fund flows don’t tell much of a story this week other than eight of the top ten for inflows were all Vanguard equity funds. Despite the rough week for bonds, the only fixed income ETF in the top ten for outflows was the iShares iBoxx $ High Yield Corporate Bond Fund (NYSEARCA: HYG).
Vanity Fair posted a story of international intrigue involving art stolen by the Nazis in World War II (the big one, as Archie Bunker said). It is a long but fascinating read but essentially the now octogenarian son of a German art dealer has lived a wealthy life, while staying off the map, selling pieces of the art now and then.
It evokes images of wall and floor safes with stacks of Swiss francs, velvet pouches with diamonds and a handgun in a cold war era setting. Simply a fascinating read.
The first weekend of this year’s NCAA Mens Basketball Tournament was epic featuring six overtime games after there only having been two OT games in the last two tournaments combined. Quicken Loans and Warren Buffett were let off the hook from their $1 billion bracket challenge in the first batch of Thursday games when Dayton upset Ohio State. Dayton then beat Syracuse over the weekend to move into the Sweet 16.
Wichita State’s dream of a perfect season ending in a national championship ended with a close loss to Kentucky. Kentucky’s next game will be against defending champ Louisville which creates an interesting dynamic because before Louisville coach Rick Pitino won the championship last year with Louisville he won one coaching Kentucky in 1996.Roger Nusbaum AdvisorShares ETF Strategist Source: Google Finance, Yahoo Finance, XTF.com, ETF.com, Wall Street Journal
Weekly ETF Flows
For March 17, 2013 to March 21, 2014
S&P Sector Analysis
As for the sectors of the S&P 500, four outperformed the broad benchmark – Telecom, Financials, Technology, and Materials. The remaining six – Energy, Industrials, Staples, Healthcare, Discretionary, and Utilities – each underperformed. The dispersion between the top-performing and bottom-performing sectors rose to 3.70% this week, with Telecom outperforming all, and Utilities coming in last.
For March 17, 2013 to March 21, 2014
Sector performances, as measured by the S&P 500 sector indices were: