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Squawk Box Topics (Week of July 30th, 2012)
- Very big week ahead for traders, following last week’s rally on hopes that central bankers in the United States and Europe will take action to kick-start the sputtering American economy and address the euro zone debt crisis.
- Last week, the Dow finished last week up nearly 2% at 13,075, topping 13,000 for the first time since May. The S&P 500 gained 1.7% to 1,385, its highest level since May 3. The Nasdaq rose 1.1% to 2,958.
- To begin the current week, the S&P 500 is up approx. 11% in the year-to-date period and is poised to finish July up 2% with tomorrow as the last trading day of the month
- The S&P 500 has continued to make a sustained moved above its current support band (1,300 – 1,375), currently at 1,390.
- A slew of economic data will be provided this week, with investors keeping a close interest in statements from the FOMC meeting tomorrow (BMO). Initial Claims will be released BMO on Thursday and the ECB and BofE will issue decision on interest rates on Thursday as well. See outline below.
- About a fifth of S&P 500 companies report quarterly earnings this week, and big names such as General Motors, Procter and Gamble, Kraft and U.S. Steel offer their outlooks. See summary below.
- To begin the current week, NYMEX WTI Crude Oil is trading above the critical $90 a barrel & Brent Crude is trading near $106 a barrel.
Central Banks in Focus: Policy statements this week from the Bank of England, the European Central Bank, and the Fed’s FOMC.
Asset Manager Fund-Flow Update (Week Ending July 25h):
- Equity Funds (excluding ETFs) saw $750MN of net outflows vs. $100MN in net outflows from the prior week
- Domestic equity funds saw $650MN in net outflows compared to $250MN of net inflows from the previous week.
- Global equity funds saw $100MN of net redemptions compared to $350MN of net outflows from the previous week.
- Excluding ETFs, Real Estate emerged as the strongest sector, while flows within the Consumer Goods sector were the weakest.
- Including ETFs, the Real Estate sector and Healthcare/Biotech emerged as the best performers, while Industrial/Consumer and Technology sector saw heavy outflows
- The latest Lipper data showed that BlackRock Fund Advisors inserted roughly $3.7BN into equities. Passive and ETF managed names in general were shifting capital into equities. Meanwhile, Frantham Mayo and SSGA trimmed a little over $1BN out of equities and shifted into money markets and bonds.
- Weekly asset manager fund returns were down by an average of 1.65% (-0.94% 3QTD)
- Nuveen emerged as the best performers on the MF return end, while Janus’s weekly returns were down a little over 2.4%
- Emerging Trends/Topics:
- Window Dressing
- FOMC Statements/Potential Stimulus Guidance likely will dictate institutional money flows
- High Yield Funds and Long-Term Muni’s have been the popular plays as of late; High Yield Funds posted inflows of $1BN in the most recent week
– Spain releases figures for 2Q economic growth—Spanish recession deepens in Q2
– TSY Borrowing Requirements Q3
– Employment Cost Index 2Q- BMO
– 8:30AM EST- FOMC Meeting
– Personal Income & Outlays for June- BMO- Consensus for Income 0.4%
– 9:45AM EST- Chicago PMI July
– 10AM EST- Consumer Confidence Jul
– 2:15 PM EST- FOMC Statement-
– Pfizer Earnings- BMO
– U.S. Steel Earnings- BMO
– Aetna Earnings- BMO
– Chrysler Earrings- BMO
– ADP Employment Report- BMO- Consensus Change 125k
– 10AM EST- Construction Spending- Consensus 0.5%
– 10AM EST- ISM Mfg. Index July
– Harley Davidson Earnings- BMO
– MasterCard Earnings- BMO
– Time Warner Earnings- BMO
– ECB and BofE will issue decision on interest rates
– 7:30 AM ET – Challenger Job Cuts
– 8:30 AM ET – Initial Claims– Expectations- 365K
– 10:00 AM ET – Factory Orders
– ICSC Chain Stores Sales Jul
– The House Oversight and Government Reform Committee will conduct a hearing about the I.R.S.’s enforcement of new rules and taxes under the Health Care Law
– General Motors Earnings- BMO
– Kraft Foods Earnings- AMC
– Monster Employment Index Jul
– 8:30 AM ET – Employment Report- Unemployment Rate Consensus- 8.2%
– 10 AM EST ISM Non Manufacturing Index
– Procter & Gamble Earnings- BMO
– Viacom Earnings- BMO
– Toyota Earnings- BMO