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Posted by on Sep 30, 2014 in Market Insight

AdvisorShares Weekly Market Review – Week Ending 9/26/2014

AdvisorShares Weekly Market Review – Week Ending 9/26/2014

Highlights of the Prior Week

Macro

US capital markets had a good old fashioned, honest to goodness, legitimate black swan last week when the once (and future?) Bond King Bill Gross announced he was leaving PIMCO, the firm he started and made into a $2 trillion bond powerhouse, and headed over to Janus to a firm more known for its equity funds to take over a fund that as of last Friday had just under $13 million in it. That Gross would leave PIMCO was predictable in terms of his riding off into the sunset one day, his going off to a firm with essentially no footprint in the bond market was not reasonably predictable (the definition of a black swan).

The news had a ripple effect across markets that has rarely been seen from personnel matters. There were large moves up in the shares of publicly traded asset managers and ETF providers and large moves down in various PIMCO closed end bond funds. There was also speculation in many corners of the financial world about how much in the way of AUM would leave PIMCO as a result of Gross’ departure.

The Friday news may have been enough to help investors forget the kick in the stomach from Thursday’s big decline when the S&P 500 fell 1.25% and the Russell 2000 fell 1.73%.

For the week the S&P 500 fell 1.39 and the Russell 2000 continued to fare worse dropping 2.39%. The other major domestic benchmarks, the Dow 30 and NASDAQ fell 0.96% and 1.46% respectively.

Q2 GDP revised up to 4.6% which was in line with expectations but was up four tenths of a percent from the previous print. This coming week is of course a jobs-Friday. Barron’s gathered estimates that collectively call for a gain of 213,000 with the headline unemployment rate coming in at 6.1%. During the past week received one report calling for the rate to drop to 5.9% with only 200,000 jobs added. We’ll give them public credit in next week’s update if they turn out to be correct.

The yield on the Ten Year US Treasury Note fell five basis points to 2.53% and is viewed to be a value for bond investors when considered against the yields for sovereign debt from other countries which continues to remain at mult-century lows: Germany yields 0.97%, France at 1.31%, Italy 2.39% and Spain with its 26% unemployment rate yields 2.20%.

Recapping foreign markets; the Dax fell 3.15% and is below its 200 day moving average although that moving average is still sloping upwards. The FTSE 100 fell 2.73%, the CAC 40 was down 1.43%, the Nikkei 225 was up 1.77, the Shanghai Composite was up 0.82%, the Hang Seng fell 2.52% while Australia fell 2.18%.

In other markets, gold fell 0.69%, WTI crude rallied 1.31%, the VIX spiked 22% with most of that gain coming in Thursday’s sell off and the dollar showed strength against all major currencies.

ETF News & Data

There were two new ETFs launched, both from Exchange Traded Concepts. One fund tracks the Euro Stoxx 50 Index which is a European equity benchmark and the other new fund applies a deep value screen to the S&P 500.

The SPDR S&P 500 ETF had a massive $8.5 billion of inflows and was the only fund to crack the billion dollar mark. Three billion of that inflow occurred on Friday after the big dip Thursday. Outflow leaders covered most of the broad asset classes including NASDAQ stocks, emerging markets, long bonds and gold.

Interesting Reads

Over the weekend we learned thatAt CIA Starbucks, even the baristas are covert. Langley has its own Starbucks with baristas that go through a special screening process to work there. The article also talks about the unusual need for anonymity of the customers ranging from things you might expect to things that although not surprising you might never think of.

Speaking of coffee, Dwell Magazine looks at 10 Great Coffee Shops for Design Fans; interestingly half the list could be visited over a long weekend in the Bay Area.

Sports

Everyone is talking about Derek Jeter’s final game at Yankee Stadium which included his first “walk off” since 2007.

An interesting story that fewer people are talking about is Bill Simmons’ suspension for three weeks from ESPN for his rant about beleaguered NFL Commissioner Roger Goodell. Simmons called him a liar and dared his employer to do something about his comments which they did.

Bloomberg offers a detailed writeup on the extent to whichESPN Sacrifices Bill Simmons to Its NFL Overlords.

Source: Google Finance, Yahoo Finance, Wall Street Journal, Bloomberg, Barrons, ETF.com, XTF.com, Dwell, Washington Post

 

 Weekly ETF Flows

Table1

For September 22, 2014 to September 26, 2014

Table2

Shares outstanding include totals as of current day NAV.

Table3

S&P Sector Analysis

As for the sectors of the S&P 500, four outperformed the broad benchmark – Materials, Staples, Healthcare and Telecom. The remaining six – Technology, Financials, Discretionary, Utilities, Energy and Industrials – each underperformed.  The dispersion between the top-performing and bottom-performing sectors was roughly 1.88% this week, with Materials outperforming all, and Industrials coming in last.

For September 22, 2014 to September 26, 2014

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

Table4

 

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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