AdvisorShares Weekly Market Review – Week Ending 3/4/2016
Highlights of the Prior Week
Equities were strong as crude and gold rallied while bond yields moved higher. Even credit spreads have been narrowing. The Dow Jones Industrial Average gained 2.20%, the S&P 500 rallied 2.64%, the NASDAQ had a 2.74% lift and the Russell 2000 moved ahead 4.26%.
Foreign markets were even stronger, shrugging off concerns of Syrian refugees, Brexit, negative rates in many parts of the world and a bipolar People’s Bank of China (it lowered RRR and ten days after raising RRR).
In Europe the DAX jumped 3.27%, the CAC 40 added 3.25% and the FTSE 100 managed a 1.7% advance. In Asia the Shanghai Composite rallied 3.85%, the Hang Seng was up 4.2%, the Nikkei 225 was strongest at 5.1% and the ASX 200 was also strong with a 4.2% gain.
Of course we had a jobs report Friday. There were 242,000 new jobs created, the headline unemployment rate printed at 4.9% and the broader U-6 dropped a tick to 9.7%. Looking a little deeper, the labor force participation rate inched up to 62.9% and wages declined by 0.1%. Revisions added 30,000 jobs to the last two reports.
The yield on the US Ten Year Treasury Note jumped up to 1.88% with a lot of that weekly gain coming Friday after the jobs report perhaps signaling that it was a Goldilocks report leaving the FOMC unlikely to adopt a negative rate policy (an act of desperation) or raise rates anytime soon either. The yin and yang to this comes from the positive news of 242,000 new jobs with the negative news that hourly earnings declined.
The German bund yield moved up slightly to 0.17%, the French OAT moved up eight basis points to 0.58%, the Swiss ten year note was flat at -0.38%, Spain was essentially flat at 1.56% and Italy now yields 1.65%.
As mentioned it was a strong week for commodities. West Texas Intermediate Crude jumped 9.76% prompting many to opine that a bottom is in. While we don’t try to make proclamations of that sort here, we would be more comforted by a flat market instead of a market that might be going up as fast as it went down. Gold was up a more modest 2.88% but it is interesting to see both equities and gold move up together, even if it was just for one week.
ETF News & Data
ETF.com reported four new funds listing last week; two smart beta ETFs from Goldman Sachs and two yield oriented equity funds from Vanguard.
The largest flows went into gold and high yield bonds consistent with favorable price action in those segments. The leader for outflows by far was from crude oil despite the large price gain which may simply be chips being taken off the table as short interest actually went up.
The long slow demise of SeaWorld continues as SeaWorld Employees Posed as Animal Rights Activists to Scope Out Its Opponents.
According to the Orlando Sentinel, Manby announced that the decision for SeaWorld employees to go undercover came from the aquarium’s management. Manby claims that now SeaWorld’s board of directors has instructed them to “end the practice” which “was undertaken in connection with efforts to maintain the safety and security of employees, customers and animals in the face of credible threats.”
ESPN posted a fun story about a Cache Of Ty Cobb Baseball Cards Worth 7 Figures Discovered.
The cards’ value is sure to shift now that there are so many more in existence, and an exact figure is difficult to pin down. But Orlando said the total worth of the whole cache should exceed $1 million. It’s not yet clear what the family who found them intends to do with them.
Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, ESPN, Yahoo News
For February 29th, 2016 to March 4th, 2016
As for the sectors of the S&P 500, four outperformed the broad benchmark – Energy, Financials, Materials, and Technology. The remaining six – Discretionary, Industrials, Telecom, Utilities, Staples, and Healthcare – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 5.63% this week, with Energy outperforming all, and Healthcare coming in last.
For February 29th, 2016 to March 4th, 2016
As measured by the S&P 500 sector indices, respective performances were: