AdvisorShares Weekly Market Review – Week Ending 4/29/2016
Highlights of the Prior Week
Fed Hike Off The Table?
Domestic equity markets had something of a rough week with declines across the board. This year has of course seen a good sized, fast decline to start the year followed by a meaningful bounce and of late a sideways trend that might be starting to rollover. Zooming out further, we would note that it is almost one year since the S&P 500 made a new all-time high and while the market could do anything from here, a lack of a new high over such a long time frame is not a check mark for bulls.
One reality of the various central bank policies intended to stimulate economic activity and prop up equity markets is diminished returns from those policies and so perhaps the latest Fed action is somehow staving off the next bear market but isn’t quite enough to lift the market past its May 2015 high.
The big economic data for the week was the Q1 GDP number which settled out at 0.5%. A weak Q1 is consistent with the last several years. Barron’s Economic Beat column which has consistently, and incorrectly, called for 3% GDP growth headlined its coverage noting that it “Could Have Been Worse.”
The FOMC of course did not raise rates and seemed to take a June hike off the table. Where before there were going to be four rate hikes, reduced to two; will there be any?
Recapping the week, the Dow Jones Industrial Average and the S&P 500 dropped each dropped an identical 1.26%, the NASDAQ fell 2.67% and the Russell 2000 gave up 1.39%.
Foreign equity markets were mostly lower save for the ASX 200 which tacked on 1.84% perhap getting an assist from the almost 5% rally in gold. The DAX fell 3.22%, the CAC 40 dropped 2.98%, the FTSE 100 was down 1.09%, the Hang Seng coughed up 1.88%, the Shanghai Composite dipped 71 basis points and the Nikkei 225 was down 1.1% with most of that decline coming Friday when the Bank of Japan surprised markets by saying that for now it would not ramp up its attempts to stimulate the economy.
The yield on the Ten Year US Treasury Note came in slightly, down to 1.81%. The German bund now yields 0.27%, the French OAT comes in at 0.63%, the Swiss ten year charges 0.23% while the Japanese JGB sold off some to -0.075. Given the looming Brexit vote we will start to track the UK ten year note, known as the Gilt, which currently reports at 1.59%.
And finally a mention of West Texas Intermediate Crude which continued to rally last week, better than 6% after the price panicked earlier in the year. Where energy stocks were “toxic” for a time, the largest, broad energy sector ETFs are up close to 12% in 2016 versus about 1% for the S&P 500.
ETF News & Data
XTF reports only one new ETF last week that interestingly, or oddly, populates its holdings based on investor opinion of individual stocks voted on through an app. The fund is appropriately named the CrowdInvest Wisdom ETF.
Broad based domestic equity and bond funds led inflows last week with narrower sector and industry funds seeing most of the outflows.
Ever wanted to live in total seclusion? Plaid Zebra invites us to Meet The Man Who Lives In Peaceful, Soleful Solitude As The Only Resident Of A Chinese Village, but he wants to move away soon.
Unfortunately, living in such a secluded place has its setbacks. The sheep breeder is forced to carry water buckets for long distances and has to travel miles just to purchase food. Apart from sheep rearing, he took a temporary job as a forest watcher in order to make ends meet. Shengjia told CCTV News that while survival is not a problem, he would prefer to move to a more populated area when the time comes.
“[The Lakers] laid it all out. They showed what they want to do, players they plan on going after, all that stuff,” Walton said. “That’s exciting to me. Get to be with one of the greatest organizations in the history of sports, and they’re ready and willing to get after it.”
Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, NY Times, ESPN, Plaid Zebra
For April 25th, 2016 to May 2nd, 2016
As for the sectors of the S&P 500, seven outperformed the broad benchmark – Utilities, Telecom, Staples, Energy, Discretionary, Materials, and Industrials. Financials was even with the broad benchmark. The remaining two – Healthcare and Technology – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 5.85% this week, with Utilities outperforming all, and Technology coming in last.
For April 25th, 2016 to May 2nd, 2016
As measured by the S&P 500 sector indices, respective performances were: