AdvisorShares Weekly Market Review – Week Ending 4/15/2016
Highlights of the Prior Week
Risk: Still On?
Domestic equity markets were deceptively strong last week with gains across the board although most of the gains were realized on Wednesday. Economic data wasn’t so hot. Inflation was weak as were capacity utilization, industrial production and even Michigan sentiment disappointed. Earnings weren’t too disruptive save for a bank or two and a blowup in the disk drive group.
Looking at the final scores, the Dow Jones Industrial Average was up 1.81%, the S&P 500 added 1.60%, the NASDAQ moved ahead by 1.80% and the Russell 2000 was the strongest with a jump of 3.06%.
All of the foreign markets we cover here, were up even more. The DAX rallied 4.46%, the CAC 40 was up 4.45%, the FTSE could only muster 2.27%, Shanghai added 3.12%, the Nikkei 225 was better by 6.39% while the Hang Seng tacked on 4.61% and the ASX 200 was up 4.45%.
The gains of late have been impressive, Bespoke Investment Group reports a 15% lift for the S&P 500 in just the last 50 trading days. Economic data in the US appears to be sending mixed signals at best, with strong job growth and weakness by just about every other metric. The larger foreign central banks are still being very accommodative because they have to be. All of this is likely contributing to the disconnect between fundamentals and market performance.
The data is conflicting. We observed one commentary noting that an earnings recession always leads to an economic recession and another commentary noting that there has never been a recession when weekly jobless claims have been this low (sub-300,000).
Markets could turn at any time for any reason of course but the Fed seems determined to keep “risk-on” as long as possible.
Crude oil was of course a feature this week, rallying as high as $42 and change before backing off to $40.40, a 1.40% gain for the week. Gold sold off to the tune of a modest 1.27% decline which as far as we are concerned means the low to negative correlation to equities is a alive and well.
Interest rates didn’t move much during the week. The Ten Year US Treasury Note inched up three basis points to 1.75%, the German bund also added three basis points to 0.12%, the French OAT was up three basis points odd (coincidence, huh?) to 0.47%, the Swiss ten year was about flat at -0.35% and the JGB now charges buyers 11 basis points.
ETF News & Data
There were five new funds last week, all of which are actively managed including SPDR expanding its relationship with DoubleLine with two new ETFs.
Fund flows were especially unremarkable as no fund had flows exceeding $1 billion, not even close.
It turns out the medical testing business is difficult and for privately held Theranos, increasingly more difficult as the Wall Street Journal reports that Regulators Propose Banning Theranos Founder Elizabeth Holmes For At least Two Years;
In a letter dated March 18, the Centers for Medicare and Medicaid Services said it plans to revoke the California lab’s federal license and prohibit its owners, including Ms. Holmes and Theranos’s president, Sunny Balwani, from owning or running any other lab for at least two years. That would include the company’s only other lab, located in Arizona.
White Sox first baseman Adam Laroche made news earlier in the spring when he announced he was walking away from a $13 million contract because of new club rules regarding his son coming to every game and being in the clubhouse and dugout. ESPN takes a long view of the story;
So here’s the deal: You need to forget everything you think you know about professional athletes. Adam LaRoche is different. He walked into the clubhouse for the first time every spring and greeted new teammates by saying, “Oh, hey, I didn’t know we signed you.” During spring training in 2010, with the Diamondbacks, he and his family pulled a trailer to Tucson, and he rode a bicycle from the campground to the ballpark every day. He’s one of the stars of the reality TV show Buck Commander, in which he bow-hunts with a couple of ex-ballplayers, two country music singers and one member of the unapologetically redneck Robertson family, they of the Duck Dynasty dynasty. He also owns E3 Meat Co., which is run out of the Kansas ranch that’s been in his wife’s family for six generations.
Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, The Guardian, Bespoke Investment Group, RollingStone, ESPN
For April 11th, 2016 to April 15th, 2016
As for the sectors of the S&P 500, five outperformed the broad benchmark – Financials, Materials, Industrials, Discretionary, and Energy. The remaining five – Technology, Healthcare, Utilities, Telecom, and Staples– each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 4.65% this week, with Financials outperforming all, and Staples coming in last.
For April 11th, 2016 to April 15th, 2016
As measured by the S&P 500 sector indices, respective performances were: