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AdvisorShares Weekly Market Review – Week Ending 2/5/2016

Feb. 08, 2016 1:04 PM ET
Roger Nusbaum profile picture
Roger Nusbaum's Blog
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Highlights of the Prior Week

A Mostly Positive (?) Jobs Report Can't Help Markets

Macro

Was it a good jobs report or not? It is tough to tell. The number of jobs created last month was 151,000 which was well below expectations. The headline unemployment rate dropped a tick to 4.9% when it was expected to stay flat. The broader U6 number was flat at 9.9%, in line with expectations. The labor force participation rate inched up to 62.7% and while that is a very low number, higher in this case is better. Wages surprised to the upside with a 0.5% pop.

Most, but not all, of those data points seem favorable and while a decline for equities can come from anywhere for any reason it is difficult to draw a positive conclusion about the continued drop in the ten year bond yield. The trend since the Fed hike in December has been for lower rates and a curve flattening which does not bode well for economic growth.

An additional source of concern is the extent to which companies who've disappointed with their earnings reports (either with results or guidance) have been punished. This includes, social media, large internet retailers and the cloud space. While we can't know until after the fact, the odds that we are now in a bear market have increased.

It was a very choppy week but equities markets were lower as the Dow Jones Industrial Average fell 1.60%, the S&P 500 dropped 3.10%, the NASDAQ was down 5.42% and the Russell 2000 gave up 4.76%.

Europe took it on the chin with the DAX giving up 5.13%, the CAC 40 was down 4.85% and the FTSE 100 shed 3.86%. Asian markets were mostly lower except for the Shanghai Composite which gained 97 basis points. The Nikkei 225 fell 3.98%, the Hang Seng gave up 2.05% and the ASX 200 slid 61 basis points.

The Ten Year US Treasury Note finished the week at 1.84%. The German bund traded down to 0.29%, the French OAT was slightly lower at 0.62%, the Swiss ten year dropped to -0.28%, Spain's yield went up ten basis points to 1.61% while Italy too saw its yield rise, closing out at 1.51%.

If equities were down then that must mean West Texas Intermediate Crude also fell, and it did, giving up 6.2% while gold lifted 4.6%. As equities have fallen this year, not surprisingly gold has rallied as have the shares of gold mining companies, one of the larger ETFs tracking the mining space is up 24% in 2016.

ETF News & Data

Fund flows showed a risk-off trend last week with inflows into low volatility equity funds, utilities, gold and US treasuries. There were large outflows from funds tracking the S&P 500, domestic small caps and to a lesser extent the energy sector.

There were no new funds listed last week. There was a flurry of new funds in the middle of January but only one new fund in the last two weeks.

Interesting Reads

Like something out of the X-Files, many news outlets are reporting stories like this one from the Mirror in the UK; Horrified Cabbies Pick Up "Ghost Passengers" In Area Devastated By 2011 Japan Tsunami.

In each instance, the story is similar. A taxi driver in north-east Japan picks up a passenger in an area devastated by the 2011 earthquake and tsunami. They start the meter and ask for the destination, to which the customer gives a strange response. Either then, or sometime later, the driver turns around to address the man or woman - but they have vanished. This is because, it is claimed, they were a 'ghost passenger' who was, in fact, killed in the disaster five years ago.

Sports

The New York Times reports Willie Wood Made the Most Memorable Play of Super Bowl I. He Has No Recollection. This article is part of a growing awareness that retired NFL players suffer long term consequences from concussions and that retired NBA players die young from heart problems.

From the Times on Wood;

Wood's interception is one of the most famous plays in Super Bowl history. Fifty football seasons later, (Kansas City Chiefs Quarterback Len) Dawson, who played 19 years of pro football, recalls it well. "Maybe the No. 1 play I wish I could have back," he said. Wood remembers nothing of the play. He does not even recollect playing in the first Super Bowl, on Jan. 15, 1967, or ever being on an N.F.L. roster.

Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, New York Times, Mirror UK

2016.02.08_Table1

Weekly ETF Flows

For February 1st, 2016 to February 5th, 2016

2016.02.08_Table2

S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark - Materials, Utilities, Telecom, Industrials, and Staples. The remaining five - Healthcare, Energy, Financials, Technology, and Discretionary - each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 10.18% this week, with Materials outperforming all, and Discretionary coming in last.

For February 1st, 2016 to February 5th, 2016

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

2016.02.08_Table3

Analyst's Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

To the extent that this content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security. AdvisorShares is a sponsor of actively managed exchange-traded funds (ETFs) and holds positions in all of its ETFs. This document should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any products mentioned. Investment in securities carries a high degree of risk which may result in investors losing all of their invested capital. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results. To learn more about the risks with actively managed ETFs visit our website http://AdvisorShares.com . AdvisorShares is an SEC registered RIA, which advises to actively managed exchange traded funds (Active ETFs). The article has been written by Roger Nusbaum, AdvisorShares ETF Strategist. We are not receiving compensation for this article, and have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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