Highlights of the Prior Week

Macro

The monthly non farms jobs report hit on Friday and was a monster. The report  showed 321,000 new jobs with the headline (U3) unemployment rate holding steady at 5.8% while the broader U6 moved down one tick to 11.4%. Oddly the labor force participation rate remained at a 36 year low of 62.8%.

The blowout jobs number was not enough to move the needle for domestic equities which were generally up a little. The Dow Jones Industrial Average was up 0.73% for the week, the S&P 500 up 0.38% and the Russell 2000 added 0.78%, with only the NASDAQ finishing in the red, down 0.23%.

Running down the foreign markets, the seven equity markets we regularly follow were all higher, led by Shanghai’s shocking 9.51% rally, most of which occurred on Thursday. The Hang Seng added just 20 basis points while Japan was better by 2.64% and Australia rose by 1.1%. In Europe the Dax was up by 1.06%, the CAC 40 went up 74 basis points and 0.30% for the FTSE 100.

In our weekly deflation watch the German bund yield actually went up last week to 0.78%, the French OAT went back above 1% to 1.03%, Spain’s yield though continued to drop, down to 1.83% and Italy breached 2% now yielding 1.98%. These numbers compare to the US, which moved higher in yield to close the week above 2.30%.

Last week we looked at the selloff in the crude market and explored the idea of exhausted sellers or capitulation. While it is too early to know whether sellers truly are spent, they did take a breather last week as crude had a very bumpy ride to a 1.44% gain for the week. Gold also rallied on the week by 3.63%.

Energy stocks, as measured by large cap-dominated sector funds, managed to eek out small gains as well last week; but for the most part these ETFs are down mid to high single digits. Of course, smaller companies more leveraged to the various shale formations are down far more; this method of extraction usually has a relatively high breakeven level.

The euro hit new recent lows against the dollar falling below 1.23 against the US dollar, the British pound was also weaker and yen also it made new recent lows closing at 121.5 to the dollar. Anyone believing there is a race to the bottom for currencies would have to conclude the US is losing this battle.

ETF News & Data

The SPDR S&P 500 was by far the leader for inflows with $5.1 billion while sector funds targeting energy, retailers and materials all saw relatively large outflows. There were three new ETFs last week, the most unusual of which was a fund that invests in commercial paper from China.

Interesting Reads

It has been a while since we checked in on the tiny house theme. We found an article about a young couple living in a yellow school bus that has been overhauled to look like the inside of a log cabin.

These folks have chosen to pursue more leisure time thanks to their low financial overhead and while living in a bus and rock climbing everyday won’t be the solution for too many people the article does offer inspiration for living simpler and smaller.

Sports

ESPN had a fun look at the Hunter Pence sign mania from this past baseball season. Pence is, of course, the quirky (or perceived to be quirky) right fielder for the San Francisco Giants; and during the season signs that sort of made fun of him but sort of were laughing with him became very popular in ballparks all over the country wherever the Giants played.

To give you some idea, “Hunter Pence thinks Game of Thrones is just ok.” The article includes the origins of the signage from when his girlfriend posted a picture of him with the caption “these pretzels are making me thirsty” which most Seinfeld fans will recognize.

In news on the field, Ohio State, Florida State, Alabama and Oregon were voted into the college football playoff. Many may be scratching their head about TCU losing out to Ohio State, and while this process was destined for controversy, the Buckeye’s did put up 59 against Wisconsin.

Roger Nusbaum

AdvisorShares ETF Strategist

Source: Google Finance, Yahoo Finance, Wall Street Journal, Bloomberg, Barrons, ETF.com, XTF.com, New York Times, Convergex, ESPN, Tiny House Blog

Weekly ETF Flows

For December 1, 2014 to December 5, 2014

S&P Sector Analysis

As for the sectors of the S&P 500, five outperformed the broad benchmark – Financials, Healthcare, Energy, Materials and Industrials. The remaining five –Utilities, Discretionary, Technology, Staples and Telecom – each underperformed. The dispersion between the top-performing and bottom-performing sectors was roughly 5.67% this week, with Financials outperforming all, and Telecom coming in last.

For December 1, 2014 to December 5, 2014

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