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Posted by on Apr 7, 2015 in ETF Strategist

AdvisorShares Weekly Market Review – Week Ending 4/3/2015

AdvisorShares Weekly Market Review – Week Ending 4/3/2015

Highlights of the Prior Week

MLB Opening Day but is The Fed Now in a Rain Delay?

Macro

Friday’s holiday did not stop the jobs report from printing and it was a stinker. The economy created 126,000 new jobs compared to expectations of 245,000 jobs. The headline unemployment rate held steady at 5.5% and the broader U6 number downticked to 10.9% likely due to a corresponding downtick in labor force participation to 62.7%, Average hourly earnings fared a little better than the previous month moving up 0.3%.

Equities closed the week much like they closed the quarter with very little to show for their efforts. For the week the Dow Jones Industrial Average added 30 basis points versus a decline of 24 basis points for the quarter. Likewise the S&P 500 added the same 30 basis points for the four day week and managed to gain 45 basis points on a price basis for the quarter. The NASDAQ fell 9 basis points for the week but gained 3.49% in the quarter and the Russell was the strongest of them all gaining 1.27% for the week and 4.04% for the year to date.

Last year we followed the underperformance of domestic small cap equities versus the large caps. This is typically a late cycle dynamic which after five years is a logical expectation. The outperformance of small caps as we are seeing so far this year is more of an early cycle dynamic. Two weeks ago on the AdvisorShares Alpha Call Martin Pring shared that his firm’s Business Cycle indicator had moved back from stage four to stage three and then stage two possibly giving bulls a reason to be optimistic.

Foreign equity markets mostly outperformed the US in the first quarter. Germany was up 22.21%, France up 17.99%, Shanghai 15.91%, Nikkei 10.33%, ASX 200 8.38%, Hang Seng 5.85%, FTSE up 3.33% and the Swiss Market Index managed to gain 1.74% despite enduring a 10% crash in January after that country dropped its peg to the euro.

The yield on the US Ten Year Treasury Note fell 24 basis points in the quarter to 1.93%. The yield plunged to 1.84% after the jobs data reported on Friday as the news would seem to push back the Fed’s timetable for raising rates.

Yields in the European deflation zone also traded lower last week. The German bund yield fell to 19 basis points, the French OAT now yields 0.49%, ten year paper in Spain yields 1.22% and 1.30% in Italy. The Swiss ten year moved further into negative territory at -0.06%. Negative yields persist in other European countries closer in on the yield curve. In last week’s AdvisorShares Alpha Call Thomas Urano and Anthony Parrish from Sage Advisory Services noted that low and negative yields could persist due to the ECB’s recently commenced €60 billion monthly asset purchase program and what the Sage duo referred to as scarcity of debt.

Commodities are off to a volatile start in 2015. Gold came out of the starting blocks gaining almost 10% in January. It has since worked its way lower holding on to little more than a 1% gain. West Texas Intermediate Crude has of course had a far wilder ride. At its year to date low in March it was down 21% but currently is down 9% for 2015.

We have chronicled the volatility in currencies all year although surprisingly the US dollar is flat against the Japanese yen. The action has been in the Euro/USD which is down 11% and the British pound/USD which is down 5%. These were all one way trades to start the year but over the last three weeks all three pairs have taken a bit of a breather.

ETF News & Data

There were very few fixed income funds in the list of largest creations and redemptions. Both sides of the ledger had broad based equity funds, sector funds and international funds the the $10 billion of redemptions for the SPDR S&P 500 being by far the largest.

ETF.com reported that both Hartford and Gabelli Funds have filed for the Eaton Vance ETF model, the so called exchange traded mutual fund. There was one new fund launched last week that focuses on small cap gold mining companies.

Interesting Reads

According to the New York Times Nuts Are A Nutritional Powerhouse.

As for their cardiovascular benefits, nuts are rich sources of monounsaturated and polyunsaturated fats, which prompted a health claim by the Food and Drug Administration that “Scientific evidence suggests but does not prove that eating 1.5 ounces per day of most nuts as part of a diet low in saturated fat and cholesterol may reduce the risk of heart disease.” Two exceptions are macadamia nuts and cashews, which have too much saturated fat to qualify for this claim.

As a bonus extra read, do you know what a Unimog is? Click here to find out (don’t worry, it is very G rated).

Sports

If you did not read the above article about the nutritional benefits of eating nuts you may want to after reading 2015 MLB Opening Day #FoodPorn Extravaganza about menus now available at baseball stadiums around the country; today is the first full day of the 2015 major league schedule.

Chicken-fried bacon on a stick ($8) and chicken-fried corn on the cob ($5), Globe Life Park (Texas Rangers) – The newest concession stand at Globe Life Park is State Fare, which includes these two chicken-fried masterpieces. The bacon has maple glaze, old bay and house-made batter. The corn is fried in a buttermilk batter.
 
Source: Google Finance, Yahoo Finance, Wall Street Journal, Bloomberg, Barrons, ETF.com, Convergex,NY Times, CBS Sports

2015.4.7_Table1

 

Weekly ETF Flows

For March 30, 2015 to April 3, 2015

2015.4.7_Table2
 
S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark – Telecom, Energy, Financials, Materials and Discretionary. The remaining five – Industrials, Technology, Staples, Healthcare and Utilities – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 10.59% this week, with Telecom outperforming all, and Utilities coming in last.

For March 30, 2015 to April 3, 2015

As measured by the S&P 500 sector indices, respective performances were:
 
2015.4.7_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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