Advisory Squawk Box – Weekly Highlights (Week of June 18th, 2012)

Each Squawk Box focuses on the outlined topics below, which should drive trading and investor awareness for the week.

Feel free to listen live every Monday at 11am ET: US Toll Free: 1-877-384-0533; Participant Passcode: 73518394 then #

…or enjoy the recorded podcast here: Squawk Box_06.18.12

Advisory Squawk Box – Weekly Highlights  (Week of June 18th, 2012)

Broader Market:

  • For the second consecutive week, the U.S. equity market continued to rebound after some heavy sell pressure throughout the majority of the second quarter.  Despite another round of weak U.S. economic data & rising bond yields across the Euro-Zone, we did some encouraging developments overseas, as Spain managed to secure a significant aid package to help recapitalize its banks and the highly anticipated Greek elections came back into focus.
  • However, the main drivers of this latest move to the upside in equities can be largely tied to the growing optimism among the investing community that central banks at home & abroad are becoming more willing to provide additional stimulus to prop up the global financial system.
  • For the previous week, the DJIA advanced 1.7%, the S&P 500 gained 1.3% and the NASDAQ gained 0.5%.
  • To begin the current week, the S&P 500 is up approx. 6.8% in the year-to-date period but is still down approx. 4.7% for 2Q12.

Technical Update:

  • The S&P 500 has continued to make a sustained moved above its current support band (1,290 – 1,300) and, as a result, is once again experiencing technical momentum at current levels, finishing out the latest week at the 1,342 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 – 1,340, 1,350, 1,365, 1,390 & 1,400 are the next major tops in range on the charts (50-day moving avg. = 1,338).
  • On the downside – 1,330, 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).
  • Reverse head-and-shoulders on the S&P 500 index

Economic Data: 

  • We are scheduled for a significant week on the economic data front, highlighted by Wednesday’s Fed decision on interest rates & policy statement.  See below for full list of weekly economic reports.

Earnings Season:  

  • The next round of U.S. corporate earnings begin hitting the wires this week, highlighted by FedEx Corp.’s report before the market opens on Tuesday (6/19).  See below for the major announcements of the week.

Crude Oil:

  • To begin the current week, NYMEX WTI Crude Oil is trading around $83 a barrel & Brent Crude is trading near $96 a barrel.  In reaction to the recent global growth concerns, NYMEX WTI Crude Oil has fallen over 20% & Brent Crude is down over 18% since May 1st, 2012.

FOMC Meeting This Week

  • FOMC Meeting June 19-20 – Market consensus is for more policy accommodation (extension of Operation Twist, possible QE3).

Equity Market Trends: (WSJ Article)

  • WSJ article providing statistics around low trading volumes and the added volatility brought on by lower liquidity.  Key figures: In Q2’12 through June 8th vs same time period last year, volumes are down on the Nasdaq (by 10%), NYSE (by 1%), U.S. Treasurys (by 6%) and Corporate Bonds (by 9%).  Link to article is here.

Asset Manager Fund-Flow Update (Week Ending June 13th):

  • Equity Funds (excluding ETFs) saw $1.5BN of net inflows vs. $1.4BN in net outflows from the previous week
  • Domestic equity funds saw $600MN in net outflows compared to $2.2BN in net outflows from the prior week.
  • Global equity funds saw $2.1BN of net sales compared to $800MN of net inflows from the previous week.
  • Excluding ETFs, Energy emerged as the strongest sector in terms of net inflows, while flows in the Technology sector continue to be weak
  • Including ETFs, Industrial/Consumer had the greatest capital inflows (approx. $1.63BN), while Healthcare/Biotech along with Energy were the weakest
  • Weekly asset manager fund returns were slightly lower on an average of 0.22% (-5.01% 2QTD)
  • Franklin Templeton, and Artio were among the best weekly MF return performers, while Janus and Prudential were among the weakest performers
  • The Latest Lipper Funds through June 13th showed that Wellington’s Hartford Funds pulled roughly $380MN out of the Equity Markets and Transamerica Funds shifted roughly 365MN out of equities. Conversely, InvescoPower Shares injected $2.1BN into Equities; JP Morgan and State Street Global Advisors had roughly $990MN and $800MN, respectively, flowing into equities.
  • Emerging Trends/Topics:
  • Money Funds seeing meaningful outflows for the second consecutive week ($8.3BN vs. $7BN from the previous week)
  • Long-Term Inflows and Fixed Income inflows remain strong, while ETF flows were modest in May, and equity flows were breakeven
  • Trends for asset mngrs. are mixed, with weaker QTD markets, jittery confidence, and sluggish equity flows, offset by healthy fixed income flows, seasonally lighter expenses, and healthy cash levels at some firms.

______

MONDAY (6/18)

– 10:00 AM ET – NAHB Housing Market Index – Jun – Expectations = 28

– Greek Election Results

– G20 Summit in Mexico

TUESDAY (6/19)

– 8:30 AM ET – Housing Starts – May – Expectations = 719K

– 8:30 AM ET – Building Permits – May – Expectations = 725K

– Barnes & Noble Earnings – BMO

– Discover Financial Services Earnings – BMO

– FedEx Corp. Earnings – BMO

WEDNESDAY (6/20)

– 12:30 PM ET – FOMC Rate Decision & Policy Statement – The FOMC ends its two-day meeting. Markets have risen on the expectation of more stimulus, amid dismal U.S. economic numbers and the European crisis. The equity market could be rattled if no additional stimulus is mentioned.

– Bed Bath & Beyond Earnings – AMC

– Goodrich Earnings

THURSDAY (6/21)

– 8:30 AM ET – Weekly Initial Jobless Claims – Expectations = 380K

– 10:00 AM ET – Existing Home Sales – May – Expectations = 4.56M

– 10:00 AM ET – Philadelphia Fed – Jun – Expectations = -0.2

– 10:00 AM ET – Leading Indicators – May – Expectations = 0.00%

– Oracle Earnings – AMC

– Spain Issues Bonds

FRIDAY (6/22)

– The leaders of France, Germany, Spain and Italy meet in Rome to discuss the euro-zone crisis.

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