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Posted by on Mar 28, 2016 in ETF Strategist, Market Insight

AdvisorShares Weekly Market Review – Week Ending 3/24/2016

AdvisorShares Weekly Market Review – Week Ending 3/24/2016

Highlights of the Prior Week

Markets Confront Terror & Tragedy

Macro

Good Friday is sort of a strange holiday as apparently the only thing that is closed is the stock market which means there was economic data on Friday as the final print for Q4 GDP was revised up to 1.4%. Upward revisions are a good thing but that the headline reads up to 1.4% doesn’t quite feel like a win. Durable goods fell 2.8% month over month. Dennis Gartman noted the extreme volatility in this data series and concluded that smoothing out this stat gives an average that is consistent with GDP growth carrying a one-handle.

Of course the big news of the week was the terror attack in Belgium on Tuesday. We will limit our discussion to the markets’ reaction to the event which was almost nil. When the September 11 attacks occurred the US market was closed for several days and when it reopened the S&P 500 fell approximately 10% which took three months to recover. Subsequent attacks have seen ever smaller reactions. Even the Belgium 20 Index was higher by Wednesday morning than where it had closed Monday, before the attacks. These events simply have not been reasons to sell.

Domestic equity markets were lower for the short week with the Dow Jones Industrial Average down 44 basis points, the S&P 500 sliding 0.64%, the NASDAQ giving up 0.46% while the Russell 2000 was hit the hardest dropping 2.02%.

As earnings season approaches, Barron’s noted expectations for a 7-8% decline in earnings but “admittedly, much of the shortfall in earnings can be blamed on energy—but not all of it. Only three of the 10 S&P 500 industry sectors are projected to see a quarterly increase: consumer discretionary, telecom services, and health care.”

Most of the foreign markets we follow in this report were also lower in holiday shortened trading. The FTSE 100 fell 1.41%, the CAC 40 was down 2.84% and the DAX gave up 100 basis points. In Asia, the Hang Seng Index dropped 1.58% while the ASX 200 slid 2.01%. The Nikkei 225 and Shanghai Composite were bright spots rising 0.28% and 0.82% respectively.    

After opening a stock exchange in December, Myanmar’s first stock listing debuted today with First Myanmar Investment, or FMI, being well received with a 19% pop. FMI is a conglomerate with most of its revenue coming from real estate holdings.

There was only slight movement in the bond market last week with the Ten Year US Treasury Note bumping up three basis points to 1.90%, the German bund dipping three basis points to 0.18%, the French OAT printing at 0.53%, the Swiss ten year note had a one basis point move to -0.32% and Japan remained at -0.09%.

Gold had a rough week after a decent stretch of gains. Perhaps the dollar rally of more than 1% accounts for the dip in gold or maybe it was just due for a breather, but either way it fell 3%. Crude oil also fell about 3%, with most of the decline coinciding with a poorly received inventories report but refreshingly, oil was not the lead market story as it has been in many recent months.

ETF News & Data

There were three new funds launched last week including Principal joining the fray with two index funds including one that focuses on companies’ pricing power.

Weekly fund flows favored large cap domestic equities, small cap domestic and interestingly also biotech. Redemptions were heaviest in funds targeting various equity market niches and also gold, consistent with the 3% dip in the yellow metal last week.

ETF.com posted a YTD look at flows (YTD through March 18th) which shows gold attracting the most inflows by a wide margin at greater than $6 billion. The two largest high yield bond index funds also feature prominently for inflows with close to $4 billion in creations.  

Interesting Reads

Medium.com posted How A TV Sitcom Triggered The Downfall Of Western Civilization. We are pretty sure it is intended to be satire but is interesting either way;

Maybe I should unpack this, for the uninitiated. If you remember the 1990s and early 2000s, and you lived near a television set, then you remember Friends. Friends was the Thursday night primetime, “must-see-TV” event that featured the most likable ensemble ever assembled by a casting agent: all young, all middle class, all white, all straight, all attractive (but approachable), all morally and politically bland, and all equipped with easily digestible personas. Joey is the goofball. Chandler is the sarcastic one. Monica is obsessive-compulsive. Phoebe is the hippy. Rachel, hell, I don’t know, Rachel likes to shop. Then there was Ross. Ross was the intellectual and the romantic.

Sports

Opening day for Major League Baseball is right around the corner and ESPN shows us that MLB Teams Release Wild New Ballpark Food For Fans;

Toronto Blue Jays fans will be able to get Chicken & Waffle On A Stick that comes with maple sriracha drizzle. But the item we’re most excited about out of Toronto is Buffalo Cauliflower Poutine. It’s breaded cauliflower in buffalo sauce with cheese curds, gravy and scallions.

The Rangers’ chicken and donut combo looks interesting too.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, The Guardian, Bespoke Investment Group, medium.com, ESPN
 
2016.03.28_Table1
 
For March 21st, 2016 to March 24th, 2016

2016.03.28_Table2
 
S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark – Healthcare, Utilities, Telecom, Technology, and Staples. The remaining five – Discretionary, Industrials, Materials, Financials, and Energy – each underperformed.  The dispersion between the top-performing and bottom-performing sectors was roughly 3.08% this week, with Healthcare outperforming all, and Energy coming in last.
 
For March 21st, 2016 to March 24th, 2016

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

2016.03.28_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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