Highlights of the Prior Week
Markets Take The Week Off To Watch The Olympics
The Olympic Games are of course well under way marking the quadrennial time where we collectively become a whole lot more interested in swimming, gymnastics and team handball (check it out if you are unfamiliar). Rio's time zone proximity makes it very easy to watch the games during the day which might contribute to the very flat week for markets.
The Dow Jones Industrial Average added 16 basis points, the S&P 500 inched ahead by four basis points, the NASDAQ was the big big winner with a 22 basis point advance and the Russell 2000 down ticked by 13 basis points.
The foreign equity markets we regularly follow for this report were not as docile, with large moves almost across the board, maybe it has something to do with winning fewer medal thus far. The DAX was up 3.34%, the CAC 40 gained 2.03% and the FTSE 100 was better by 1.8%. In Asia the Shanghai Composite rallied 2.46%, the Hang Seng jumped 2.8%, the Nikkei 225 saw a 2.09% rise and bringing up the rear was the ASX 200 which tacked on 61 basis points.
The US had to confront some ugly data last Friday with a negative PPI print (both core and headline) and flat retail sales. While some data, most notably related to jobs, appears to give the FOMC the green light to hike, other data like this is at best a flashing yellow light. Ever since the Fed "missed the opportunity" to hike 14 months ago we have been skeptical in this report as to how a rate hike could be justified given not only the mixed data but also the aggressive attempts (both successful and unsuccessful) on the part of other central banks to weaken their currencies. Everything else being equal higher rates tends to make a currency stronger. At some point a currency that is too strong makes exports too expensive for foreign buyers.
Speaking of currencies, the euro rose 0.63% against the US dollar last week while the dollar fell 0.86% against the yen moving ever closer 100. West Texas Intermediate Crude did not have a quiet week, it ripped higher by more than 6% thanks mostly to news that Saudi Arabia and OPEC might discuss ways to "support" oil prices.
The price of crude has of course been stubbornly low for months now. The expected "tax cut" benefit appears to have never materialized as evidenced by plenty of data points including the ones mentioned above. While many point to low prices as being a supply issue, there is an argument for weak demand and subdued economic activity contributing to the low price as well.
The Ten Year US Treasury Note saw its yield dip slightly on the week to 1.51%. Rounding up the other yields we track here, the German bund fell to -0.10%, the UK gilt dropped 16 basis points to 0.51%, the Swiss ten-year now charges 0.54% and the JGB was mostly steady at -0.10%. The French OAT fell to 0.11% which has to make one wonder whether all of the ongoing asset purchases by the ECB will push the French note into negative territory as well.
ETF.com reported that Fidelity is planning to offer a variation on the ETF wrapper that it hopes will alleviate liquidity concerns by only offering redemptions once a week. ETF.com says it will be akin to a closed end fund but with creations. Fidelity is a big enough name that will ensure plenty of news coverage to learn more.
As summer winds down, there is still plenty of traffic at national parks, Grand Canyon News offers a behind the scenes look at emergency operations with Busy Above Grand Canyon, A Look At Grand Canyon Helitack;
"(This base) is not the busiest when it comes to number of wildland fires and initial attack but we are the busiest in regards to medical evacuations, SAR evacuations and slinging loads into unique locations," said Matt Walls, assistant helicopter program manager. "On average we fly with both of our helicopters and other helicopters anywhere from six to seven hundred hours per year."
One fun story related to the Olympics is that the Ravens, Panthers Stop Game To Watch Michael Phelps Win 22nd Gold Medal. From CBS Sports;
Phelps is, of course, from Baltimore, which is why the Ravens stopped the game. It's why Phelps ended up laughing during the national anthem on Tuesday. It's why Ravens coach John Harbaugh congratulated Phelps at his postgame press conference, per the Ravens' Twitter account.
Source: Google Finance, Yahoo Finance, Wall Street Journal, SeekingAlpha, Bloomberg, Reuters, Barrons, ETF.com, XTF.com, Bespoke Investment Group, Economiccalendar.com, Grand Canyon News, CBS Sports
For August 8th, 2016 to August 12th, 2016
S&P Sector Analysis
As for the sectors of the S&P 500, seven outperformed the broad benchmark - Energy, Staples, Discretionary, Industrials, Utilities, Telecom, and Technology. The remaining three -Financials, Healthcare, and Materials - each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 2.22% for the week ending 8/12/16, with Energy outperforming all, and Materials coming in last.
For August 8th, 2016 to August 12th, 2016
As measured by the S&P 500 sector indices, respective performances were:
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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