ADVISORY SQUAWK BOX – WEEKLY HIGHLIGHTS (Week of August 13th, 2012)

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Squawk Box Topics (Week of August 13th, 2012)

Broader Market Recap:

  • Monday (8/6) – Stocks closed at three-month highs for the second session in a row, extending last week’s rally on the hope for more assistance for the troubled euro zone.  (S&P 500 +0.2%)
  • Tuesday (8/7) – Stocks rose for a third straight day, pushing the S&P above 1,400 for the first time since early May, as comments by U.S. Fed members increased speculation that the central bank would act sooner than later.  (S&P 500 +0.5%)
  • Wednesday (8/8) – Despite a weak round of U.S. corporate earnings and sales releases, stocks managed to just barely extended a streak of gains to a fourth day, with the S&P 500 ending above 1,400 in another thinly traded session.  (S&P 500 +0.1%)
  • Thursday (8/9) – The S&P 500 extended its winning streak for a fifth day, again notching only slight gains, as better-than-expected U.S. jobs & trade data was off-set by weak economic numbers out of China.  (S&P 500 +0.1%)
  • Friday (8/10) – Despite another light volume session and a lack of market moving news, the S&P 500 managed to once again close in positive territory for the sixth day in a row.  (S&P 500 +0.2%)
  • For the week, the DJIA rose 0.9%, the S&P 500 increased 1.1% while the NASDAQ closed up 1.8%.
  • To begin the current week, the S&P 500 is up approx. 11.8% in the year-to-date period.

Technical Update:

  • In the latest week, the S&P 500 has moved above the technically & psychologically significant 1,400 level for the first time since May of this year (previous move above 1,400 – June 2008).  As a result, we have seen a notable increase around technical trading from short-term, aggressive, fast-money traders & electronic algorithms.  At the moment, the market has been stuck trading around this mark and institutional investors appear to be waiting for a sustained move above or below this 1,400 level on the S&P 500 before re-entering equities in any significant size.
  • Key Technical Levels (S&P 500): On the upside (resistance) – 1,422, 1,415, 1,405 are the next major levels in range on the charts.
  • On the downside (support) – 1,400, 1,390, 1,375, 1,365 & 1,350 are the major marks in range on the charts (50-day moving avg. = 1,364; 200-day moving avg. = 1,338).

Economic Data:

  • We are scheduled for a fairly heavy week on the economic data front, highlighted by Tuesday’s Retail Sales & Business Inventories reports and Thursday’s Weekly Jobless Claims reading.  See below for full list of weekly economic reports.

Corporate Earnings:

  • Despite U.S. corporate earnings season winding down, we do have some notable reports due out this week from the retail sector. According to S&P, of the 453 companies that have reported earnings results through 8/9/12, 64% have beaten estimates, 24% have missed & 12% met expectations.  See below for breakdown of major earnings announcements scheduled for release.   

Crude Oil:

  • To begin the week, NYMEX WTI Crude Oil is trading above the critical $90 a barrel level & Brent Crude is trading just over $114 a barrel. Since June 29th, 2012, NYMEX WTI Crude Oil is up approx. 20% while Brent Crude is up approx. 25%.

Commodity rally, and G20 plans response to rising food prices

 Asset Manager Fund-Flow Update (Week Ending August 8th):

  • Equity Funds (excluding ETFs) saw $250MN of net outflows vs. $2.3BN of net outflows from the prior week
  • Domestic equity funds saw $650MN in net outflows compared to $2.4BN of net outflows from the previous week.
  • Global equity funds saw $400MN of net sales compared to $100MN of net inflows from the previous week.
  • Excluding ETFs, Real Estate emerged as the strongest sector, while flows within the Technology sector remained the weakest.
  • Including ETFs, the Industrial/Consumer industry and Technology emerged as the best performers, while Healthcare/Biotech and Utilities saw net selling.
  • The latest Lipper data showed that JP Morgan Funds, Dimensional, and Invesco Powershares displayed the largest inflows into equity markets, while PDR Services, ProFunds, and BlackRock Fund Advisors were pulling money out of equities. In particular, PDR saw net redemptions of a little over $4BN.
  • Of note, Federated and Fidelity inserted approx. $4.28BN and $2.15BN, respectively, into Money Markets as these firms were seeing better buying in their Money Market Funds than Equity.
  • Weekly asset manager fund returns were up by an average of 1.49% (+2.34% 3QTD)
  • Janus and Waddell & Reed were among the leading weekly performers, while Nuveen and Cohen & Steers were among the laggards of the Asset Manager group
  • Emerging Trends/Topics:
  • Long-Term Mutual Funds recorded $24.6BN in total net inflows for the month of July. The overall flows have bounced back nicely after two soft months.
  • Overall ETF flows slowed sequentially from a robust June. Total ETF inflows were $13BN vs. $21BN from the previous month

_________

MAIN EVENTS OF THE WEEK

MONDAY (8/13)

– Italy auctions eight billion euros ($9.83 billion) of 12-month bills

– Greece issues estimates for second-quarter GDP

TUESDAY (8/14)

– 8:30 AM ET – Retails Sales- Jul – Expectations = 0.2%

– 8:30 AM ET – PPI- Jul – Expectations = 0.2%

– 10:00 AM ET – Business Inventories- Jun – Expectations = 0.2%

– Home Depot Earnings – BMO

– TJX Earnings – BMO

WEDNESDAY (8/15)

– 8:30 AM ET – CPI- Jul – Expectations = 0.2%

– 8:30 AM ET – Empire Manufacturing – Aug – Expectations = 5

– 9:15 AM ET – Industrial Production – Jul – Expectations = 0.6%

– 10:00 AM ET – NAHB Housing Market Index- Aug – Expectations = 35

– Abercrombie & Fitch Earnings – BMO

– Applied Materials Earnings – AMC

– Cisco Earnings – AMC

– Deere Earnings – BMO

– Staples Earnings – BMO

– Target Earnings – BMO

– Commemorations of various holidays close markets in India, Chile, Italy, and South Korea, among others

THURSDAY (8/16)

– 8:30 AM ET – Weekly Jobless Claims – Expectations = 368k

– 8:30 AM ET – Housing Starts- Jul – Expectations = 763k

– 8:30 AM ET – Building Permits- Jul – Expectations = 770k

– 10:00 AM ET – Philadelphia Fed Manufacturing – Aug- Expectations = -5

– Dollar Tree Earnings – BMO

– GameStop Earnings – BMO

– Gap Earnings – AMC

– Sears Holdings Earnings – BMC

– Wal-Mart Earnings – BMO

FRIDAY (8/17)

 – 9:55 AM ET – Mich Sentiment – Aug- Expectations = 72.2

– 10:00 AM ET – Leading Indicators – Jul – Expectations = 0.2%

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