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Squawk Box Topics (Week of August 6th, 2012)
Broader Market Recap:
- Monday (7/30) – U.S. equities closed mostly flat with investors taking a pause following the best two-day run this year, as central bank meetings and a full load of U.S. economic data were looming. (S&P 500 -0.1%)
- Tuesday (7/31) – Stocks edged lower, as investors remained on the sidelines ahead of the upcoming Federal Reserve policy statement, in which, the market was hoping for any indications of further stimulus measures. (S&P 500 -0.4%)
- Wednesday (8/1) – Equities fell on disappointment over the latest U.S. Federal Reserve policy statement that offered no new measures to stimulate the economy. In addition, a computer glitch at the largest U.S. market maker, Knight Capital Group, triggered volatility and undermined investor confidence shortly after the open. (S&P 500 -0.3%)
- Thursday (8/2) – Stocks fell for a fourth day after the latest European Central Bank policy statement disappointed investors hoping for immediate action to contain the euro zone debt crisis. (S&P 500 -0.7%)
- Friday (8/3) – Wall Street rallied to its highest level since early May in reaction to a stronger-than-expected U.S. jobs report and renewed hope that European authorities would act to contain the euro zone debt crisis. (S&P 500 +1.9%)
- For the week, the DJIA advanced 0.2%, the S&P 500 gained 0.4% and the NASDAQ gained 0.3%.
- To begin the current week, the S&P 500 is up approx. 10.6% in the year-to-date period.
- The S&P 500 has continued to trade above its current major support band (1,310 – 1,375), finishing out the latest week at the 1,390 mark. The market will need to hold this range in order to maintain its current bullish technical stance. The next major support band sits in the 1,290 – 1,300 range. Since May 18th 2012, the S&P 500 has moved within a fairly large trading range of 1,265 to 1,395.
- Key Technical Levels (S&P 500): On the upside (resistance) – 1,422, 1,415, 1,405, 1,400 are the next major levels in range on the charts.
- On the downside (support) – 1,390, 1,375, 1,365, 1,350,340, 1,330, 1,310, 1,300, 1,290 & 1,265 are the major marks in range on the charts (50-day moving avg. = 1,355; 200-day moving avg. = 1,325).
- We are scheduled for a fairly quiet week on the economic data front, highlighted by Thursday’s Weekly Jobless Claims & Wholesale Inventories readings. See below for full list of weekly economic reports.
- U.S. corporate earnings season winds down this week, with only a handful of market moving S&P 500 companies reporting results. According to S&P, of the 406 companies that have reported earnings results through 8/2/12, 66% have beaten estimates, 22% have missed & 12% met expectations. See below for breakdown of major earnings announcements scheduled for release.
2Q earnings season almost complete
- Nearly 90% companies reporting – 60% of S&P members have missed on the top line thus far.
- To begin the week, NYMEX WTI Crude Oil is trading above the critical $90 a barrel level & Brent Crude is trading just over $108 a barrel. Since May 1st, 2012, NYMEX WTI Crude Oil is down approx. 14% while Brent Crude is down approx. 9%.
Fed’s Jackson Hole conference starting on 30 August
Asset Manager Fund-Flow Update (Week Ending August 1st):
- Equity Funds (excluding ETFs) saw $2.3BN of net outflows vs. $750MN in net outflows from the prior week
- Domestic equity funds saw $2.4BN in net outflows compared to $650MN of net outflows from the previous week.
- Global equity funds saw $100MN of net sales compared to $100MN of net redemptions from the previous week.
- Excluding ETFs, Financials emerged as the strongest sector, while flows within the Technology sector were the weakest.
- Including ETFs, the Industrial/Consumer industry and Healthcare emerged as the best performers, while Real Estate names saw heavy outflows.
- The latest Lipper data showed that BlackRock Fund Advisors continued to increase its capital holdings in equities, inserting roughly $4.4BN through August 1st. Meanwhile, we saw equity outflows of over $1BN from the likes of Fidelity (outflows of approx. $1.7BN), Grantham Mayo Van Otterloo, and Pioneer Invst. Mng, as these investors were shifting into a combination of Money Markets and Fixed Income Securities.
- Weekly asset manager fund returns were up by an average of 1.86% (+0.83% 3QTD)
- Lazard and Cohen & Steers emerged as the best performers, while Nuveen and Federated lagged.
- Emerging Trends/Topics:
- Long-Term Muni’s and High Yield Funds see net sales
- Overall ETF flows remain choppy in 3Q, as weekly volatility in equity dominated steady fixed income growth
MAIN EVENTS OF THE WEEK
– Berkshire Hathaway Earnings – BMO
– Chesapeake Energy Corp. Earnings – AMC
– 3:00 PM ET – Consumer Credit – Jun – Expectations = $10.0B
– CVS Caremark Earnings – BMO
– Emerson Electric Earnings – BMO
– Express Scripts Earnings – AMC
– Walt Disney Earnings – AMC
– 8:30 AM ET – Productivity – Q2 Preliminary – Expectations = 1.50%
– Macy’s Earnings – BMO
– Polo Ralph Lauren Earnings – BMO
– 8:30 AM ET – Weekly Jobless Claims – Expectations = 375k
– 8:30 AM ET – Trade Balance – Jun – Expectations = -$47.5B
– 10:00 AM ET – Wholesale Inventories – Jun – Expectations = 0.30%
– Kohl’s Earnings – BMO
– Nordstrom Earnings – AMC
– The Bank of Japan announces its monetary policy, after a two-day meeting
– 8:30 AM ET – Export Prices ex-ag. – Jul – Prior = -1.40%
– 8:30 AM ET – Import Prices ex-oil – Jul – Prior = -0.30%
– 2:00 PM ET – Treasury Budget – Jul – Prior = -$129.4B
– J.C. Penney Earnings – BMO
– Greece gives details on its auction of 26-week T-bills, planned for Aug. 14th