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Posted by on Sep 18, 2017 in ETF Strategist, Featured, Market Insight

AdvisorShares Weekly Market Review – Week Ending 9/15/2017

AdvisorShares Weekly Market Review – Week Ending 9/15/2017

Highlights of the Prior Week

“You’ll Be Stone Dead In A Moment”  

Macro

Hurricane fallout, another missile over Japan nor ongoing sensational political news were enough to hold back markets, quite the contrary, the Dow Jones Industrial Average gained 2.16%, the S&P 500 rallied 1.56%, the NASDAQ was up 1.37% and the Russell 2000 jumped 2.27%.

Speaking of hurricane fallout, there will of course need to be a lot of rebuilding that occurs. Barron’s noted the recent lift in lumber futures and the outperformance of timber ETFs. Interestingly, the cement stocks we looked at did not get a corresponding lift yet those same cement companies rallied far ahead of the market in the aftermath of Katrina in 2005.

The title of this week’s update is a play on Monty Python and the Holy Grail describing the retail group which had been given up for dead. But when measured by one of the large industry ETFs,  it has actually done quite while over the last month gaining 450 basis points more than the S&P 500. Last week the space got something of nudge when it was announced that one of the large, high end retailers was considering going private. We’ve gone over the creative destruction underway in the space and while the digital e-tailers appear to have the upper hand, it makes sense to think there will be at least a few “old line” retailers that figure out the internet to the point of being very competitive.

The FOMC will be meeting this week and while the market has ruled out a rate hike anytime soon, the question of how it will reduce its balance sheet is on the the table with expectations for some sort of announcement. After years of US dollar strength despite the printing of money, this year the dollar has of course been weaker despite the gradual tightening cycle under way now, slowwwwly under way. We will be curious to see if any news of balance sheet will have any impact on the dollar and for that matter, interest rates. Whatever or whenever, we would expect that the word gradual might end up being too aggressive to describe the actual pace of reduction.

Interest rates rallied last week, popping up to 2.20% as measured by the US Ten Year Treasury Note, after kind of, sort of threatening to go below 2.00% a couple of weeks ago. While there haven’t been any dramatic changes there was a strong CPI report at 0.4%, the government will not shut down in a couple of weeks, however bad the economic fallout from Irma it is looking not as bad as originally thought and as mentioned above we may start to learn about balance sheet reduction. Despite the two week swing in interest rates, the ten year is at the lower end of the range for 2017.

And the US Dollar continues to trade in the low 90s as measured by the DXY Index. A relatively low dollar has pros and cons of course but Brad Setser from The Council on Foreign Relations believes the decline this year in the greenback is a positive for US GDP by way of products manufactured in the US and sold abroad adding to GDP growth.

ETF News

ETF.com reports that 42 ETFs will be closing in September. The idea that investors vote with their dollars in determining which funds make it and which ones don’t makes the space very democratic and while some funds that come may seem silly, some of the “silly” ones have of course gained more than enough traction to be viable and profitable. But who won’t miss great symbols like DULL, SICK and CLAW (real symbols of closed funds).

Interesting Reads

Bloomberg provided some eye candy of the concept cars from the Frankfurt Auto Show including an updated VW Micro Bus, gullwing Mercedes and:

Renault shows its Symbioz concept car during the first media preview day of the Frankfurt Motor Show. Internet-connected, autonomous, and electric, the Symbioz is meant to integrate itself (get it?) into the driver’s home when not in use, functioning as an additional room to the house when it’s not being driven. According to Renault, it can go 310 miles (500 kilometers), with 661 brake horsepower and 487 lb.-ft. of torque and can hit 60 mph in fewer than six seconds. The 72-kilowatt-hour battery will charge to 80 percent full in 20 minutes.  

Sports

Because of Hurricane Irma, this past weekend’s Brewers at Marlins series was moved to Milwaukee but in support of Miami’s recovery, the Brewers tried to help the Marlins feel at home:

The Brewers covered the stadium in decorations such as palm trees, shells and fish, as they hope to make it more familiar for the Marlins. Weather.com predicts highs at or near 80 degrees this weekend, helping to keep up the appearance of a more southern locale.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Ycharts.com, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, CME Group, Council on Foreign Relations, ESPN