SQUAWK BOX TOPICS (WEEK OF June 11th, 2012)

Squawk Box Topics (Week of June 11th, 2012): Click Here for Audio Podcast: Squawk Box Audio June 11, 2012

Broader Market:

  • The U.S. equity market experienced a very impressive upside reversal in the latest week, pushing the broader averages back above some key technical levels
  • The main drivers of this positive action stemmed largely from developments overseas, as a surprise interest rate cut by China’s central bank and rumors of a Spanish aid package increased investor sentiment across the globe.  In addition, these latest economic developments have significantly increased investor optimism over the possibility for additional central bank stimulus action in the near-term
  • For the previous week, the DJIA advanced 3.6%, the S&P 500 gained 3.7% and the NASDAQ gained 4.0%.
  • To begin the current week, the S&P 500 is up approx. 5.4% in the year-to-date period but is still down approx. 5.9% for 2Q12.

Technical Update:

  • The S&P 500 has made a sustained moved back above its near-term support band (1,290 – 1,300) and, as a result, is experiencing some technical momentum at current levels, finishing out the latest week at the 1,325 mark.  The market will need to hold this 1,290 – 1,300 support range in order to maintain this bullish stance.
  • Key Technical Levels (S&P 500): On the upside – 1,330, 1,340 & 1,350 are the next major tops in range on the charts (50-day moving avg. = 1,340).
  • On the downside – 1,310, 1,300, 1,290 & 1,265 are the next major support levels in range on the charts (200-day moving avg. = 1,316).

Economic Data: 

  • We are scheduled for a fairly heavy week on the economic data front, highlighted by Wednesday’s Retail Sales, Thursday’s Weekly Jobless Claims and Friday’s New York State Manufacturing & Industrial Production reports.  See below for full list of weekly economic reports

Earnings Season:  

  • Once again, we have virtually no S&P 500 companies scheduled to report earnings this week.

Crude Oil:

  • To begin the current week, NYMEX WTI Crude Oil is trading around $84 a barrel & Brent Crude is trading near $99 a barrel.  In reaction to the recent global growth concerns, NYMEX WTI Crude Oil has fallen over 20% & Brent Crude is down over. 16% since May 1st, 2012.

Latest in Global Economics- Barron’s Midyear Roundtable:

  • Barron’s Midyear Roundtable of 10 distinguished investment members give predictions including: a fiscal cliff, Europe woes, a slowdown in Chinese economic growth, and QE3, which they believe won’t have an impact.  Link here: Barron’s Midyear Roundtable

Fed Strategies & QE3:

Asset Manager Fund-Flow Update (Week Ending June 6th):

  • Equity Funds (excluding ETFs) saw $1.4BN of net outflows vs. $100MN in net inflows from the previous week
  • Domestic equity funds saw $2.2BN in net outflows compared flat sales in the prior week.
  • Global equity funds saw $800MN of net sales compared to $100MN of net inflows from the previous week.
  • Excluding ETFs, Utilities emerged as the strongest sector in terms of net inflows, while flows in the Technology sector were the weakest
  • Including ETFs, Energy continued to see large capital inflows from the previous week, while the Industrial/Consumer Industry saw the greatest capital net outflows
  • Weekly asset manager fund returns were slightly higher on an average of 0.24% (-5.20% 2QTD)
  • Lazard and Cohen & Steers were among the best weekly performers on MF returns, while Waddell & Reed and Manulife (John Hancock) emerged as the biggest laggards
  • The Latest Lipper Funds through June 6th showed that Columbia Funds pulled close to $500MN out of the Equity Markets and was shifting mostly into cash
  • Struggle between active and passive investors and domestic to global
  • SEC Proposal likely now in September/Oct. time frame vs. May/June- There is increasing talks that the Federal Reserve may become the new regulator for money market funds-which would impose capital and product requirements and could group money market managers as non-bank SIFIs. While the proposal is likely not expected until 3Q2, such changes could pressure Asset Managers that are heavily concentrated in Money-Market funds, such as Federated
  • Russell Reconstitution (Adds/Deletions were announced on Friday-Further update on June 15th, June 22nd, and final membership posting on June 25th)

______

 MONDAY (6/11)

– IMF reports on Spain’s banks, and the size of their needed recapitalization

– China announces lending volume for May, after issuing weekend economic reports that could affect global markets

TUESDAY (6/12)

– 8:30 AM – Export Prices (ex-ag.) – May – Prior = 0.20%

– 8:30 AM – Import Prices (ex-oil) – May – Prior = 0.10%

– 2:00 PM – Treasury Budget – May – Expectations = -$125.0B

WEDNESDAY (6/13)

– 8:30 AM ET – Retail Sales – May – Expectations = -0.20%

– 8:30 AM ET – PPI – May – Expectations = -0.70%

– 10:00 AM ET – Business Inventories – Apr – Expectations = 0.20%

– Italy and Germany auction bonds

– JP Morgan & Chase Co. CEO Jamie Dimon testifies before the U.S. Senate

THURSDAY (6/14)

– 8:30 AM ET – Weekly Initial Jobless Claims – Expectations = 375K

– 8:30 AM ET – CPI – May – Expectations = -0.20%

– 8:30 AM ET – Current Account Balance – Q1 – Expectations = -$130.9B

FRIDAY (6/15)

– 8:30 AM ET – Empire Manufacturing -Jun – Expectations = 13.5

– 9:15 AM ET – Industrial Production – May – Expectations = 0.10%

– 9:55 AM ET – Univ. of Michigan Consumer Sentiment – Jun – Expectations = 77

– Bank of Japan Rate Meeting – The bank is expected to hold interest rates steady

– G20 Summit Meeting in Mexico

SUNDAY (6/17)

– Greece Votes To Elect a Government – This election will likely decide whether the country will stay within the Euro-Zone or exit

– France Holds Parliamentary Elections – The success of the Socialist president’s agenda depends on the support he wins in Parliament

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