ADVISORY SQUAWK BOX – WEEKLY HIGHLIGHTS (Week of July 23rd, 2012)

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Squawk Box Topics (Week of July 23rd, 2012)

Broader Market:

  • Monday (7/16) – Stocks moved slightly lower, as investors were forced to weigh a mixed round of economic data (retail sales third straight monthly decline) versus an encouraging earnings release from Citigroup.
  • Tuesday (7/17) – Fed Chairman Bernanke testified before the Senate Banking Committee – He offered no clues on whether the U.S. central bank was moving closer to a fresh round of monetary stimulus.  However, stocks move higher in reaction to a positive round of U.S. corporate earnings, highlighted by Goldman Sachs.
  • Wednesday (7/18) – Equities move higher, as traders covered shorts market-wide, in reaction to another positive round of U.S. corporate earnings, highlighted by Honeywell, Yahoo & Intel.
  • Thursday (7/19) – Stocks rose for a third straight day, with the S&P 500 at a 2-1/2 month high as earnings from technology companies as well as hopes for more monetary stimulus outweighed weak economic data.
  • Friday (7/20) – Equities sold-off heading into the weekend, as rising Spanish bond yields and mixed earnings from GE & Microsoft kept investors on the sidelines.
  • For the previous week, the DJIA finished up 0.4%, the S&P 500 was higher by 0.4%, while the NASDAQ closed up 0.6%.
  • To begin the current week, the S&P 500 is up approx. 8.3% in the year-to-date period.

 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 1,362 mark.  The market will need to hold this 1,290 – 1,300 support range in order to maintain its current bullish technical stance.  Since May 18th 2012, the S&P 500 has moved within a fairly large trading range of 1,265 to 1,375.
  • Key Technical Levels (S&P 500): On the upside (resistance) – 1,350, 1,365, 1,375, 1,390 & 1,400 are the next major levels in range on the charts.
  • On the downside (support) – 1,340, 1,330, 1,310, 1,300, 1,290 & 1,265 are the next major marks in range on the charts (50-day moving avg. = 1,346; 200-day moving avg. = 1,314).

 Economic Data:

  • We are scheduled for a fairly quiet week on the economic data front, highlighted by Thursday’s Weekly Jobless Claims  and Friday’s 2Q Advanced GDP reading.  See below for full list of weekly economic reports.

 Earnings Season:

  • U.S. corporate earnings season continues this week, with over 60 S&P 500 companies reporting results.  According to S&P, of the 120 companies that have reported earnings results through 7/19/12, 68% have beaten estimates, 18% have missed & 14% met expectations.  See below for breakdown of major announcements scheduled for release.

 Crude Oil:

  • To begin the week, Crude Oil continues to trade at depressed levels…Currently, NYMEX WTI Crude Oil is trading around $88 a barrel & Brent Crude is trading near $103 a barrel.  Since May 1st, 2012, NYMEX WTI Crude Oil is down approx. 18% while Brent Crude is down approx. 14%.

 Latest in Euro’s Debt Crisis

  • Spanish stocks crashing and Greece unlikely to meet its bail-out commitments, while the Euro in a slow-speed meltdown – trading below its all-time average price vs. the Dollar.

 Asset Manager Fund-Flow Update (Week Ending July 18h):

  • Equity Funds (excluding ETFs) saw $100MN of net outflows vs. $1.3BN in net inflows from the prior week
  • Domestic equity funds saw $250MN in net inflows compared to $900MN of net inflows from the previous week.
  • Global equity funds saw $350MN of net redemptions compared to $350MN of net inflows form the previous week.
  • Excluding ETFs, Healthcare emerged as the strongest sector, while flows within the Technology sector were the weakest.
  • Including ETFs, the Real Estate sector emerged as the best performer, while Industrial/Consumer saw heavy outflows for the second week in a row
  • The latest Lipper data showed that equity fund inflows were largely supported by Passive and ETF managed investors such as BlackRock Fund, InvescoPowershares, and ProFunds, while Eaton Vance and Pioneer Investment Management were shifting out of equities into mostly cash and taxable bonds.
  • Weekly asset manager fund returns were up by an average of 0.66% (+0.66% 3QTD; -2.41% 2Q12)
  • Cohen& Steers and Sun Life (MFS) emerged as the best performers on the MF return end, while Lazard and Artio lagged
  • Emerging Trends/Topics:
  • U.S. Equity and Options Volume continues to struggle– for the 2nd week in a row, matched consolidated equity vol. were below 6BN
  • Money Market Reform getting closer– Last week the Federal Reserve Bank of NY issued a report on recommendations for Money Market reform. The focus is on reducing the systematic risk money market funds by limiting the redemption risk or “run” on a fund. The proposal would require a small fraction of balances (<5%) to have a delayed redemption feature (called Minimum Balance at Risk, or MBR), suggested to be 30 days. This would allow for a more equal sharing in any losses if a fund were to go below its NAV. The report suggests the delayed redemption approach would likely be more effective than other potential reforms such as a floating NAV or capital charges that have been discussed previously. Many analyst and investors expect the SEC’s proposal to be forthcoming in the next few weeks.

_________

MONDAY (7/23)

– Halliburton Company Earnings – BMO

– McDonald’s Corporation Earnings -BMO

– Texas Instruments Earnings – AMC

TUESDAY (7/24)

– Apple Earnings – AMC

– AT&T Earnings – BMO

– Lockheed Martin Corp. Earnings – BMO

– United Parcel Service Earnings – BMO

WEDNESDAY (7/25)

 – 10:00 AM ET – New Home Sales – Jun – Expectations = 373K

– The Boeing Company Earnings – BMO

– Bristol-Myers Squibb Co. Earnings -BMO

– Caterpillar Earnings – BMO

– ConocoPhillips Earnings – BMO

– Eli Lilly and Co. Earnings – BMO

– Ford Motor Company Earnings – BMO

– Visa Earnings – AMC

THURSDAY (7/26)

– 8:30 AM ET – Weekly Jobless Claims – Expectations = 381K

– 8:30 AM ET – Durable Orders –Jun – Expectations = 30%

– 10:00 AM ET – Pending Home Sales- Jun – Expectations= 0.90%

– 3M Company Earnings – BMO

– Amazon.com Earnings – AMC

– The Dow Chemical Company Earnings – BMO

– Exxon Mobil Corporation Earnings – BMO

– Starbucks Corp. Earnings – AMC

– United Technologies Corp. Earnings – BMO

FRIDAY (7/27)

 – 8:30 AM ET – GDP-Adv. – Q2 – Expectations – 1.30%

– 9:55 AM ET – Michigan Consumer Sentiment – Jul – Expectations = 72

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