AdvisorShares Weekly Market Review – Week Ending 8/14/2015
Highlights of the Prior Week
If investors were hoping for a quiet summertime week, they were disappointed as a lot happened despite the broad domestic averages finishing modestly higher. The Dow Jones Industrial Average gained 61 basis points,the S&P 500 added 0.68%, the NASDAQ eked out a positive nine basis points and the Russell 2000 inched up 42 basis points. Small gains were difficult to envision after more than 2% declines across the board starting Tuesday into Wednesday’s session because, well there is no real because, sometimes markets just reverse.
Working against markets these days is the inability to make new highs and the decreasing number of S&P components trending higher and on the plus side, although the S&P 500 has been flirting with its 200 day moving average for the last few weeks that trend line has held thus far and it is still positively sloped.
As has been the case for most of 2015, foreign markets were far more volatile than the US. In Europe the FTSE 100 fell 2.5%, the CAC 40 gave up 3.73% and the DAX dropped 4.4%. Eurozone GDP printed at 0.3% compared to estimates of 0.4%. Individually, Germany reported 0.4% but France was flat.
Things weren’t much better in Asia other than Shanghai which rose 5.92% after the Chinese yuan was allowed to drop more than 3% against the dollar over the course of two days as part of an ongoing effort by government officials to maintain confidence in equity markets. The Nikkei 225 fell 0.99%, the Hang Seng slid 2.25% and the ASX 200 declined 2.16%.
The misery in the crude oil market continued last week (pasted verbatim from last week’s Market Update) with WTI falling more than 3% touching lows last seen in 2009. It probably didn’t help that it was reported that OPEC increased production by over 100,000 barrel per day in July. Gold rallied almost 2% on the week despite a report from the World Gold Council that that demand in July decreased 12% from the previous year.
Global bond markets were a mixed bag with no discernable pattern. The US Ten Treasury Note added 2 basis points to 2.19%. Yields in Germany and France were both unchanged at 0.66% and 0.97% respectively, Switzerland moved further into negative territory at -0.15%, Spain moved up to 2.01% and Italy fell to 1.80%. Oddly this was the third week in a row that the German bund closed at 0.66%.
The euro rallied 1.3% against the US dollar, the British pound gained almost 1% greenback while the dollar was flat against the yen. We mentioned the Chinese yuan’s decline against the US dollar above. The yuan gave up more than 4% to the euro, 2.62% to the Australian dollar and 1.7% to the New Zealand dollar. We mention those as the euro is obviously a major currency while Australia and New Zealand are active trade partners with China.
ETF News & Data
There were six new funds launched last week including four equity funds from Deutsche Bank that target international dividend stocks while also hedging the currency exposure.
Four of the top funds on the creations leaderboard were foreign equity funds along with a large asset flow into an oil and gas exploration fund but that flow appeared to not be to meet short seller demand as has been the case in the last couple of months for other energy ETFs.
There were large outflows from biotech, technology and high yield bonds.
Human interest website The Plaid Zebra invites us to Meet The Guy Who Visited Every Single Country In The World Before Turning 40;
“What constitutes a visit to a country? I must have done something there and have a story to tell,” published Garfors on his blog. He says that “it isn’t necessary to stay overnight, but I have to leave the airport or train/bus station. To merely step across the border doesn’t count.”
ESPN reported that James Harrison Of Pittsburgh Steelers Takes Away Kids’ Participation Trophies. Sports are great for kids for teaching teamwork, building self-confidence, developing hand-eye coordination and learning about competition. But not every kid can finish first and no team can always win. From Harrison’s point of view;
Harrison’s football background might provide insight into why he feels this way. Harrison was a Kent State walk-on who went undrafted in 2002, played a season in NFL Europe and was cut by the Baltimore Ravens before latching on with the Steelers and becoming a force. That all drove him to “do better.”
Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, ESPN
Weekly ETF Flows
For August 10th, 2015 to August 14th, 2015
S&P Sector Analysis
As for the sectors of the S&P 500, five outperformed the broad benchmark – Energy, Utilities, Industrials, Materials, and Telecom. The remaining five – Technology, Financials, Discretionary, Healthcare, and Staples – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 3.45% this week, with Energy outperforming all, and Staples coming in last.
For August 10th, 2015 to August 14th, 2015
As measured by the S&P 500 sector indices, respective performances were: