ADVISORY SQUAWK BOX – WEEKLY HIGHLIGHTS (Week of June 25th, 2012)

For audio, click here:  Squawk Box_06.25.12

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Squawk Box Topics (Week of June 25th, 2012)

Broader Market:

  • After a solid two week rebound, the U.S. equity market took a breather in the latest week with traders reacting to a heavy round of global news flow.
  • More specifically, the week began with an encouraging outcome from the latest Greek elections, although investor enthusiasm was minor as bond yields throughout the Euro-Zone continued to move steadily higher.
  • As the week progressed, the world turned their attention to the U.S. Fed meeting, which resulted in no change to the current interest rate environment but did see an extension of the Fed’s latest stimulus program Operation Twist.
  • Finally, a heavy round of weak U.S. economic data from the manufacturing, jobs & housing segments of the economy and a bearish trading call from Goldman Sachs sent the market notably lower throughout Thursday’s trading period, pushing the S&P 500 into the red for the week.
  • For the previous week, the DJIA finished the week down 0.99%, the S&P 500 was lower by 0.58%, and the NASDAQ gained 0.68%.
  • To begin the current week, the S&P 500 is up approx. 6.2% in the year-to-date period but is still down approx. 5.2% for 2Q12.

Technical Update:

  • The S&P 500 has continued to trade above its current major support band (1,290 – 1,300), finishing out the latest week at the 1,335 mark.
  • The market will need to hold this 1,290 – 1,300 support range in order to maintain its current bullish technical stance.
  • Key Technical Levels (S&P 500): On the upside – 1,330, 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 – 1,310, 1,300, 1,290 & 1,265 are the next major support levels in range on the charts (200-day moving avg. = 1,317).

Economic Data: 

  • We are scheduled for another fairly significant week on the economic data front, highlighted by Wednesday’s Pending Home Sales and Thursday’s Weekly Jobless Claims & 1Q GDP.  See below for full list of weekly economic reports.

Earnings Season:  

  • We have another light week of earnings on tap – highlighted by Paychex on Wednesday & Nike on Thursday.  See below for the major announcements of the week.

Crude Oil:

  • To begin the current week, Crude Oil continues its free fall in reaction to global growth concerns – NYMEX WTI Crude Oil is trading around $78 a barrel & Brent Crude is trading near $90 a barrel.  NYMEX WTI Crude Oil has fallen over 25% & Brent Crude is down over 24% since May 1st, 2012.

BRICs currencies and Euro depreciation have U.S. businesses readying for the worst

Asset Manager Fund-Flow Update (Week Ending June 20th):

  • Equity Funds (excluding ETFs) saw $700MN of net outflows vs. $1.5BN in net outflows from the prior week
  • Domestic equity funds saw $600MN in net outflows; same as prior week.
  • Global equity funds saw $100MN of redemptions compared to $2.1BN of net inflows from the previous week.
  • Excluding ETFs, Healthcare emerged as the strongest sector, while capital flows in the Technology sector remained the weakest
  • Including ETFs, all major sectors experienced net inflows, with the Industrial/Consumer Sector, Healthcare/Biotech, and Financial/Banking emerging as the top 3.
  • Weekly asset manager fund returns were up by an average of 2.23% (-3.12% 2QTD)
  • Lazard and Morgan Stanley were among the best weekly MF return performers.
  • For 2012, Nuveen and Cohen & Steers have been among the best MF return performers, while Lazard and Janus have lagged.
  • The Latest Lipper Funds through June 20th showed aggressive inflows into equities from most of the major Index/ETF players, particularly SSGA and Invesco Powershares, while Wellington’s Hartford Funds continued shift assets out of equities into Money Market and Fixed income securities.

Emerging Trends/Topics:

  • Despite a second consecutive week of net outflows into equities, investors are taking money out of Money Market Funds and putting them into Fixed Income and various sectors in the equity markets, via the form of ETFs
  • Over the last two weeks, there has been roughly $27BN shifted out of Money Market Funds
  • Latest Lipper Weekly Sector Flow reported inflows of $1.823 billion (includes ETFs), which was the second consecutive weekly inflow into domestic equities and the third reported inflow in the last four weeks.
  • “Window Dressing” will be a factor towards the end of the week with 2Q12 ending on Friday, June 29th.

_________

MONDAY (6/25)

– 10:00 AM ET – New Home Sales – May – Expectations = 350K

– 10:30 AM ET – Dallas Fed Business Activity Index – Expectations = 0

TUESDAY (6/26)

– 9:00 AM ET – Case-Shiller 20-city Index – Apr – Expectations = -2.50%

– 10:00 AM ET – Consumer Confidence – Jun – Expectations = 64

– ObamaCare – Supreme Court Ruling Deadline

WEDNESDAY (6/27)

– 8:30 AM ET – Durable Goods Orders – May – Expectations = 0.50%

– 10:00 AM ET – Pending Home Sales – May – Expectations = 0.50%

– General Mills Earnings

– Paychex Earnings – AMC

THURSDAY (6/28)

– 8:30 AM ET – Weekly Initial Claims – Expectations = 385K

– 8:30 AM ET – 1Q GDP – Third Estimate – Expectations = 1.90%

– European Union leaders begin two-day summit in Brussels, amid low expectations

– Family Dollar Earnings – BMO

– Nike Earnings – AMC

– Research In Motion Earnings – AMC

FRIDAY (6/29)

– 8:30 AM ET – Personal Income – May – Expectations = 0.10%

– 8:30 AM ET – Personal Spending – May – Expectations = 0.10%

– 9:45 AM ET – Chicago PMI – Jun – Expectations = 53

– 9:55 AM ET – Michigan Sentiment – Jun – Expectations = 74.1

– Last Trading Day of Second Quarter

– Constellation Brands Earnings – BMO

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