Squawk Box Topics (Week of May 21st, 2012)
- For the third consecutive week, the U.S.equity market continued to give back ground, as we received another round of mixed U.S.economic data on top of increasing political & financial tensions across the Euro-Zone (Spain& Greece).
- In addition, the long awaited Facebook IPO turned into another black eye for Wall St., as shares of the social network showed a marginal, broker-assisted gain with huge order volume, which lead to significant technical problems across the NASDAQ marketplace.
- For the previous week, the DJIA fell 3.5%, the S&P 500 dropped 4.3% and the NASDAQ lost 5.3%.
- To begin the current week, the S&P 500 is up approx. 3% in the year-to-date period but now down approx. 8.0% for 2Q12 (-7.3% for May 2012).
- As of result of the latest pullback seen across the Street, the S&P 500 has broke numerous near-term support levels pushing the market down to the key 1,290 – 1,300 technical level.
- However, please be aware that a move below this area will lead to further technically-related sell pressure across theU.S.market with traders focusing in on 1,265 as the next major mark on the S&P 500 charts.
- On the upside – 1,300, 1,320 1,340, 1,350 are the major tops in range that traders will be keeping on their radar screens (50-day moving avg. = 1,362 & 200-day moving avg. = 1,316).
- On the downside – 1,290, 1,265, 1,225, 1,200 are the next major support levels in range on the charts.
- We are scheduled for a fairly light week on the economic data front, highlighted by home sales data on Tuesday & Wednesday and Weekly Jobless Claims & Durable Goods on Thursday. See below for full list of weekly economic reports.
- Earnings season continues to wind down with approx. 20 S&P 500 companies scheduled to report this week. Of the 479 index members to have posted quarterly results through May 17th, 66% have beaten analyst estimates for per-share profit, 10% met and 23% missed, according to data compiled by S&P. See below for weekly highlights
- To begin the current week, NYMEX WTI Crude Oil is trading around $92 a barrel & Brent Crude is trading near $107 a barrel. In-line with the recent equity market sell-off, in reaction to global growth concerns, NYMEX WTI Crude Oil has fallen 13.5% & Brent Crude is down approx. 10% since May 1st, 2012.
The US Dollar at 4-month highs – does Euro weakness signal QE3?
Asset Manager Fund-Flow Update (Week Ending May 16th):
- Equity Funds (excluding ETFs) saw $1.8BN of net outflows vs. $300MN in net outflows from the previous week
- Domestic equity funds recorded $1BN in net outflows, compared to $600MN of redemptions from the previous week.
- Global equity funds saw $800MN of redemptions, compared to $300MN of inflows from the previous week.
- Weekly asset manager fund returns were down on an average of 2% (-4.24% 1QTD)
- In terms of sector inflows/outflows, excluding ETFs, Real Estate was the strongest sector, while flows in the Energy were the weakest.
- Including ETF’s, Healthcare/Biotech rallied from the previous week’s decline, while flows in the Financial/Banking industry were the weakest
- Nuveen and Cohen & Steers are among the best performers 1QTD in terms of asset weighted mutual fund retunes, while Lazard AM and Janus have seen the largest declines in the AM community
- Flight to fixed income gaining speed. Taxable bond funds sales accelerated with $4.1BN in net inflows last week.
- According to UBS, long-term MF’s are growing at roughly 3% on an annualized basis
- T.Rowe has been a lone exception to negative fund returns, as the firm has posted ~10% organic growth in April in is U.S.mutual fund complex
– 10AM ET – Chicago Fed National Activity Index – April – Expectations = N/A
– Markets are closed inCanada
– Lowe’s Companies Inc. (LOW) – Q1 – BMO
– 10AM ET – Existing Home Sales – Apr – Expectations = 4.65M
– Best Buy Co., Inc. (BBY) – Q1 – BMO
– Dell Inc. (DELL) – Q1 – AMC
– Medtronic Inc. (MDT) – Q4 – BMO
– Ralph Lauren Corporation (RL) – Q4 – BMO
– 10AM ET – New Home Sales – Apr- Expectations = 339K
– An informal summit of European heads of state occurs inBrussels
– Toll Brothers Inc. (TOL) – BMO
– Hewlett Packard Co. (HPQ) – Q2 – AMC
– 8:30AM ET – Weekly Jobless Claims – Expectations = 365K
– 8:30AM ET – Durable Goods Orders – Apr – Expectations = 0.30%
-Germanyissues its April Ifo business-climate index
– Costco Wholesale Corp. (COST) – Q3 – BMO
– Tiffany & Co. (TIF) – Q1 – BMO
– 9:55AM ET – Univ. of Michigan Consumer Sentiment – May – Expectations = 77.5
– The bond market closes at 2 p.m. ahead of the Memorial Day weekend