No Contest (TWTW – May 1-5, 2017)

No Contest – The pollsters had all along predicted Marine Le Pen would fall short in a contest with Emmanuel Macron, and they were right , as in the event, Macron’s victory came in at 66/34 (almost like the balanced portfolio-like 60/40 the latest predictions stood at Friday). It looks like it is as good as it gets for the moment, as both the EUR and French stocks are giving back some ground in the aftermath of the results.

Latest Developments:

  •  The MSCI all-Country World Index – Reaching record
  • ECB President Mario Draghi – Broad and Solid is now apparently how Draghi characterizes the Eurozone recovery. A definite improvement over the former fragile and uneven that has ruled for several years now … the question now is when do extraordinary stimulus measures end?
  • Apple earnings – disappointed – leading to several of their suppliers’ stocks getting hit …
  • 15-25bps – With the US looking at Ultra Long Bonds, Wall Street dealers expect the US government to have to pay up an extra 15 to 25 bps for the privilege to extend, relative to 30 yrs bond yields
  • The zinger – last week in terms of the French debate she lost, was Marine Le Pen stating that one way or another, France was going to be led by a woman, either she was to be that leader … or Mrs Merkel would. Nice zinger – but thankfully, it failed to carry the day for her on Sunder…
  • Meanwhile on the BREXIT front – Apparently the UK isn’t keen at all on paying their exit bill, pegged at around EUR 100 Billion…
  • Believe it or not … The US SEC has given its approval to … 4X leveraged ETFs…
  • US NFP – Bounced back strongly from the disappointing numbers of the prior month.

Latest market numbers as seen through the ETFs providing exposure to the most commonly referred to benchmarks:

ticker name change ticker name change ticker name change
XIU S&P/TSX 60 0.17% PXG RAFI Global Fundamental 1.51% VCN FTSE Canada All Cap Index ETF -0.06%
XIC S&P/TSX Capped Composite -0.06% PXS RAFI US Fundamental Index 0.45% VCE FTSE Canada Index ETF -0.06%
CRQ RAFI CDN Fundamental -0.33% QQC/F NASDAQ 100 CAD Hedged 1.07% VUN CRSP US Total Market Index Unhedged 0.62%
XSP S&P 500 CAD Hedged 0.62% PZC RAFI CDN Small-Mid Fundam -1.35% VSP S&P 500 CAD Hedged 0.66%
XUS S&P500 0.74% VXC FTSE All-World Ex Canada Index ETF 1.16%
XMU MSCI Min Vol US 0.31% XXM/b Morningstar US Value (Unh) -0.84% VEF FTSE Developed ex North-Am CAD H 2.19%
CLU RAFI US Fund 1000 CAD H 0.26% YXM/b Morningstar US Momentum (Unh) -0.20% VDU FTSE Developed ex North-America 2.29%
XSU Russell 2000 CAD Hedged -0.10% FXM Morningstar CDN Value 0.05% VE FTSE Developed Europe 3.86%
XIN MSCI EAFE CAD Hedged 2.60% WXM Morningstar CDN Momentum 0.60% VA FTSE Developed Asia Pacific 1.28%
XEH MSCI Europe IMI CAD H 2.97% VXM/b Morningstar Intl Value (Unh) 2.58% VEE FTSE Emerging Mkts -0.24%
XEC MSCI EM IMI 0.27% ZXM/b Morningstar Intl Momentum (Unh) 2.27% HAZ Active Global Dividends 0.77%
XMM MSCI Min Vol Emerging 0.52% RWE MSCI Europe Low Risk Weighted (H) 2.96% HHF Morningstar Hedge Fund Index -0.43%
CWO RAFI Broad Emerging -1.19% HMF Auspice Managed Futures -2.41%
CJP RAFI Fundam Japan CAD H 3.12% ZDJ Dow Jones CAD Hedged 0.22% HAC Seasonal Rotation 0.11%
CDZ CDN Div Aristocrats -0.30% ZEQ MSCI Europe High Quality CAD H 2.59% HPR Active Preferred Shares -0.86%
week of: May 1-5, 2017 Source: ETFinsight/Bloomberg

 

Weekly Volumes for the week of May 1-5, 2017:

weekly volume data:
Total Volume non-leveraged $6,294,691,318
top 10 Volume non leveraged $2,992,278,279
Total Volume leveraged $1,770,561,313
top 5 Volume leveraged $1,259,124,300
Total Volumes overall: $8,065,252,630
Top 10 + Top 5: $4,251,402,579
top 10 non leveraged % of total nl: 47.5%
top 5 leveraged % of total leveraged 71.1%
Top 10 + Top 5 as % of total traded: 52.7%

iShares – Koesterich: “Preventive medicine: Playing Defense with Healthcare

Vanguard – Bennyhoff: “The behavioural challenges of investing: grizzlies frequent the area” 

Horizons – Conversion details re: Advisors’ Series conversion into common units => click HERE!

First Asset – Value marginally ahead on the International front last week, Momentum leading in Canada (slightly in the +); and in the US (slightly in the -)… Update on Advisor class Units => click HERE!

Other –

Investment Executive – ETF guide => Click HERE! Sparking a Revolution: Click HERE!

ETFinsight – Against all Odds (Perspectives – May 2017) => click HERE!

Caroline Escott – What is happening in the Oil Market?

The price of oil has been trending lower over the past few weeks, with WTI falling from around $53.50/bbl in mid April to below $44/bbl in overnight trading on Thursday/Friday. The press is highlighting the weakness in overnight trading as a ‘mini-crash’ in the oil market. The price is back to where it was in November when OPEC agreed to production cuts in order to provide upside support to the price.  So now what? There are a number of factors being cited for the weakness:

  1. increasing supply in the U.S. as U.S. production data shows growth for the 11th straight week,
  2. Production growth in Libya, to levels not seen since 2014,
  3. comments from Saudi Arabia’s Deputy Crown Prince earlier in the week where he confirmed that Saudi Arabia is faring reasonably well financially and has seen its budget deficit narrow in Q1 as non-oil revenues exceeded expectations,
  4. and this is all being exacerbated by a negative technical profile as the weakness triggers various sell programs. 

 The question for investors now is whether this weakness has created an opportunity to buy some oil exposure?  Or, is it the start of additional weakness? 

We have all heard the old adage ‘sell in May and go away’, as the summer months tend to be the weakest ones for equities.  However, many strategists have largely debunked this theory suggesting that it is a bit of a coin flip and not a strategy that is easy to deploy.  But let’s not get sidetracked, the summer months tend to be somewhat more positive for energy markets as the summer driving season often results in inventory drawdowns, which tends to have a positive effect on the commodity price.  As well as the positive seasonal aspect, OPEC’s next meeting is scheduled for May 25th and traders will be watching this date for any suggestion that OPEC will extend the production cuts that were agreed to in November.

ETFs providing exposure to Oil (and some gas) stocks –  XEG; ZEO; HXE; FHE, with of course direct (though not spot!) access to crude itself via the likes of CCX; HUC; and leveraged HOU /HOD (Bull and Bear respectively)

Top and Bottom performing ETFs for the week of May 1-5, 2017:

Ticker Name % Change Avg Price Weekly Volume $ Volume traded
Top Performers week of May 1-5, 2017
FHB CN Equity First Asset European Bank ETF 4.89% $9.16 101,688 $940,872
HXX CN Equity Horizons Euro Stoxx 50 R Index Etf 4.83% $30.94 160,091 $4,915,302
RWE/B CN Equity First Asset MSCI Europe Low Risk Weighted ETF 4.03% $26.55 26,240 $701,066
EHE CN Equity Wisdomtree Europe Hedged Equity Index ETF 3.98% $26.13 38,502 $992,100
VE CN Equity Vanguard FTSE Developed Europe All Cap Index ETF 3.86% $29.31 562,078 $16,466,120
SHE CN Equity Sphere FTSE Europe Sustainable Yield Index ETF 3.79% $11.59 17,311 $201,038
RIE CN Equity RBC Quant Eafe Equity Leaders Etf 3.78% $22.60 10,275 $232,807
ZDI CN Equity BMO International Dividend ETF 3.54% $23.00 461,280 $10,547,709
XEU CN Equity iShares MSCI Europe IMI Index ETF 3.49% $24.24 677,057 $16,406,515
ZLI CN Equity BMO Low Volatility International Equity ETF 3.20% $23.46 122,756 $2,850,739
Bottom Performers
MXF CN Equity First Asset Can-Materials Covered Call ETF -3.72% $14.94 19,727 $293,172
ZGD CN Equity BMO S&P/TSX Equal Weight Global Gold Index ETF -4.37% $9.75 432,343 $4,134,044
ZMT CN Equity BMO S&P/TSX Equal Weight Global Base Metals Hedged to CAD Index ETF -4.83% $9.51 164,643 $1,540,038
SVR CN Equity iShares Silver Bullion ETF -4.90% $9.28 177,770 $1,640,371
HUC CN Equity Horizons Crude Oil ETF -5.00% $11.08 287,022 $3,197,824
XBM CN Equity iShares S&P/TSX Global Base Metals Index ETF -5.66% $11.51 734,262 $8,308,987
HUZ CN Equity Horizons Silver ETF -5.72% $9.44 23,748 $221,780
SBT/B CN Equity Silver Bullion Trust -5.81% $12.63 15,623 $196,740
ZJG CN Equity BMO Junior Gold Index ETF -6.14% $7.96 941,173 $7,461,281
CCX CN Equity Auspice Canadian Crude Oil Index ETF -6.96% $8.08 150,657 $1,218,597

Top Performing ETFs – Seeing how ETFs providing European exposure have led the way up lately … it it any surprise to see some “buy the rumour/sell the news” price action post Macron win?

Bottom Performing ETFs – Less one off, an possibly therefore more relevant and now … worrisome (?), Oil has gotten hammered of late, as has Iron Ore, for that matter. For Canada – another (renewed) worry on the list alongside real estate and indebtedness …

Last week’s Sector Performance:

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