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Posted by on Apr 9, 2018 in ETF Strategist, Featured, Market Insight

AdvisorShares Weekly Market Review – Week Ending 4/6/2018

AdvisorShares Weekly Market Review – Week Ending 4/6/2018

Highlights of the Prior Week

Tariffs Throw A Cat Amongst The Pigeons

Macro

Last week was a crazy one; it is difficult to know where to get started so we will try with the jobs data, which showed a disappointing gain of 103,000, which was about 80,000 short of expectations. The headline unemployment rate reported at 4.1%. The broader U6 dropped to 8.0%. The Labor Force Participation rate downticked to 62.9%. Revisions were tough, taking 50,000 out of the previous reports. Wages perked up a little, rising 0.3%, which works out to 2.7% year over year.

Although it was a lousy report, remember that last month printed above 300,000 (that report was actually revised higher despite the net revision for the last two months being negative), which raises the possibility that jobs were pulled forward and a two month average around 200,000 is still pretty good an generally in line with the previous few months.

The bigger story was whatever the hell is going on with the tariff threats. The rhetoric seemed to tone down as equity markets perhaps got comfortable with the idea that this might be a negotiating ploy. Then Thursday shortly after the close, the President tweeted out another $100 billion tariff threat. Aside from the President, not too many people think trade wars are easy to win as the American farmer appears to be in the crosshairs for a Chinese retaliation.

It may all turn out to be a ploy but the markets might need convincing on that point. Markets were on their way to a modestly positive week before the most recent tweet and jobs data, then a roughly 1% decline early Friday set the stage for a flat week before Fed Chair Jerome Powell took a few more basis points out of the markets in a speech in Chicago where he said that “the U.S. central bank will likely need to keep raising interest rates to keep inflation under control.”

For the week, the Dow Jones Industrial Average fell 0.82%, the S&P 500 dropped 1.10%, the NASDAQ gave up 1.59% and the Russell 2000 slid 0.82%. For now, the decline last week looks like another successful test by the S&P 500 of its 200 moving day average. Despite the poorly received comments from Jerome Powell, the yield on the Ten Year US Treasury Note slid six basis points to 2.77% while the two year was flat on the week, down three basis points on Friday to 2.27%, a mild curve flattening. The US dollar was remarkably flat against volatile tariff headlines with a slight upside bias for the week still below 90 as measured by the DXY Index.

Bitcoin had a bit of a tumble last week down as much as 10%, trading in the $6500’s for a time on Friday before snapping back to $7000 over the weekend. The cryptocurrencies continue to be fascinating on several levels including what seems like compressed bull and bear market cycles, it was up over 1000% in about a year, YTD in 2018 it is down more than 50%. If it turns out to go poof (not a prediction on our part) then the hindsight bias will come from all corners pointing out it was never backed by anything, never tied to anything, it was simply created and started trading. Despite the large YTD decline though it is tough to finds signs of panic. Depending on your Twitter feed, the people who were skeptical at $19,000 are probably still skeptical today and there is still plenty of bullishness to be found, at least on our Twitter feed. Against that backdrop, there would be nothing surprising about another 50% move in the price in short order, regardless of direction.  

ETF News

We were lucky enough to get our hands on a copy of a report from ICI, titled Who Benefits from the US Retirement System. It is an immense and useful compilation of industry data that is well worth your time to read.   

Interesting Reads

Did Portlandia change Portland?

After hundreds of voters weighed in, the results came back. Old Portland died on January 21, 2011—the day Portlandia debuted.

Sports

Major League Baseball showed its first game on social media on Thursday and they still have a few kinks to work out including the screen getting cluttered with game information and viewer comments:

During the stream, Braun suggested to clear the screen, viewers could swipe right to get rid of the comments. But as you can see from the comments above, not everyone embraced the idea…

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Ycharts.com, Reuters, Barrons, ETF.com, XTF.com, Zerohedge, Bespoke Investment Group, CME Group, Yahoo, Slate, Forbes, Awful Announcing, ICI