AdvisorShares Weekly Market Review – Week Ending 5/2/2014
Highlights of the Prior Week
After a volatile session to start the week on Monday, the S&P 500 drifted to a 0.95% gain for the week. The big news came Friday with the non-farm payroll report which showed a larger than expected gain of 288,000 jobs and a larger than expected decline in the headline unemployment rate to 6.3%.
While those numbers are impressive, enthusiasm was dampened by the drop of 806,000 from the labor force participation rate which took the figure down to 62.8%. This was mostly attributed to expired unemployment benefits.
The Russell 2000 Index, which is a proxy for small cap stocks had a much more volatile ride to a 0.51% gain last week. For the year the S&P 500 is up 1.77% while the Russell is down 2.83%. While there is always a bull case and a bear case for equity prices the current divergence between large and small cap would be part of the bear case as this typically occurs late in the bull phase of the cycle.
The situation in the Ukraine has begun to escalate as news came Friday that Pro-Russian rebels shot down two Ukrainian helicopters in Slaviansk. Over the weekend there was more violence that reported killed dozens of people. This triggered a reiteration of potential sanctions that will/could be imposed on Russia and the economic toll exacted on the country so far which includes a declining stock market and currency as well as a cut in its credit rating.
While a part of this story is ultimately potential economic benefit, or Putin’s perception of it anyway, based on how natural gas is transported from Russia to its European customers this is nonetheless a peculiar episode after what was a surprisingly successful 2014 Winter Olympic Games which Russia of course hosted in Sochi.
ETF News & Data
Fund flows for the month of April showed predominance for funds tracking the S&P 500 as the three largest ETFs tracking that index were in the top ten for all funds in creations. On redemption side of the ledger there was an ever so slight tilt to “risk-off” with PowerShares QQQ (NASDAQ: QQQ) and iShares Russell 2000 ETF (NYSEARCA: IWM) being high up on the list.
The SPDR Gold Trust (NYSEARCA: GLD) had over $1 billion in outflows despite finishing the month flat, pricewise.
There were three new funds launched last week including the iShares MSCI UAE Capped ETF (NYSEARCA: UAE) and the iShares MSCI Capped Qatar ETF (NYSEARCA: QAT). Like other funds that more broadly target that region or even frontier markets more broadly, both UAE and QAT have huge weightings to the financial sector; 69% and 55% respectively.
Ever heard of houses made out of shipping containers? Although this article is more listy than anything else it is a good introduction to the concept. It is a combination of sustainability and potential luxury depending on budget and interests but building per square foot can be much lower than traditional construction.
One application of shipping container buildings could be guest houses or other outbuildings but really there is no limit to the possibilities.
BloombergBusinessweek had a lengthy sports write up titled John Henry and the Making of a Red Sox Baseball Dynasty. Henry of course made is bones managing pools of capital in the commodities markets, made a fortune doing that and branched out into sports ownership.
Just as success can be had as a trader using quantitative and statistical methods so too can success be had in the form of championships in professional sports. The Red Sox, like many teams have evolved to apply an almost hedge-fund like study of players to field their team and the Red Sox have been better at this than most other teams.
And for a sports extra; on Saturday Red Sox DH David Ortiz hit a homerun on an 0-2 count. Red Sox announcers Don Orsillo and Jerry Remy reported that it was the first HR on an 0-2 count that Ortiz had hit since 2004 and only the sixth time in his career (he has 437 career home runs) that he hit a HR on an 0-2 count.Roger Nusbaum, AdvisorShares ETF Strategist Source: Google Finance, Yahoo Finance, ETF.com, Barron’s, XTF.com, WSJ.com BloombergBusinessweek, Distractify, NESN, iShares.com
Weekly ETF Flows
For April 28, 2014 to May 2, 2014
S&P Sector Analysis
As for the sectors of the S&P 500, three outperformed the broad benchmark – Telecom, Technology, and Discretionary. The remaining seven – Materials, Staples, Healthcare, Financials, Energy, Industrials, and Utilities – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 4.10% this week, with Telecom outperforming all, and Utilities coming in last.
For April 28, 2014 to May 2, 2014
Sector performances, as measured by the S&P 500 sector indices were: