ADVISORY SQUAWK BOX – WEEKLY HIGHLIGHTS (Week of September 10th, 2012)

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Squawk Box Topics (Week of September 10th, 2012)

 Broader Market Recap & Previous Week Re-Cap:

  • Monday (9/3) – U.S. financial markets closed for Labor Day holiday.
  • Tuesday (9/4) – Stocks closed flat as investors continued to await clarity on European Central Bank plans to shore up heavily indebted countries, but the market ended off its lows on strength in Apple.  (S&P 500 -0.1%)
  • Wednesday (9/5) – Stocks closed little changed, with investors reluctant to make big bets ahead of a much-anticipated meeting of the European Central Bank, which could announce new policies to help contain the euro zone’s debt crisis.  (S&P 500 -0.1%)
  • Thursday (9/6) – Stocks closed at multi-year highs, with the S&P 500 ending at its highest level since before the collapse of Lehman Brothers as investors hailed a new European bond-buying program aimed at stemming the region’s debt crisis and a round of encouraging U.S. jobs data ahead of tomorrow’s highly anticipated August Non-Farm Payrolls Report.  (S&P 500 +2.0%)
  • Friday (9/7) – Stocks held steady at four-year highs, closing out their best week since June as a disappointing jobs report only fueled expectations that the Federal Reserve would act to stimulate the economy next week.  (S&P 500 +0.4%)
  • For the previous week, the DJIA rose 1.7%, the S&P 500 gained 2.2% and the Nasdaq added 2.3%.
  • To begin the current week, the S&P 500 is up approx. 14.3% in the year-to-date period.

 Technical Update:

  • On 9/6/12, the S&P 500 posted a new 4 & ½ year closing high of 1,432.  As a result, we continue to seen a heavy amount of technical trading from short-term, aggressive, fast-money traders & electronic algorithms.  For the last five weeks, the market has been trading in a range of 1,400 – 1,437.  We continue to expect to see technical sell pressure market-wide at the top end of this range until a sustained move above 1,426 is confirmed.  Please note that the next upside level in range on the charts is 1,440.
  • Key Technical Levels (S&P 500): On the upside (resistance) – 1,440, 1,471 & 1,500 are the next major levels in range on the charts.
  • On the downside (support) – 1,426, 1,415, 1,405, 1,400, 1,390 & 1,375 are the major marks in range on the charts (50-day moving avg. = 1,391; 200-day moving avg. = 1,346).

 Economic Data:

  • We are scheduled for a fairly heavy week on the economic data front, highlighted by Thursday’s FOMC rate decision/policy statement & weekly jobless claims as well as Friday’s retail sales & business inventories releases.  See below for full list of weekly economic reports.

 Corporate Earnings:

  • U.S. corporate earnings virtually comes to an end, as we have no market moving releases due out this week.  According to S&P, of the 498 companies in the S&P 500 that have reported quarterly earnings results through 9/6/12, 65% have beaten estimates, 24% have missed & 11% met expectations.  See below for breakdown of major earnings announcements scheduled for release.

Crude Oil:

  • To begin the week, NYMEX WTI Crude Oil is still trading around the $95 a barrel level & Brent Crude is still trading just over $114 a barrel.  Since June 29th, 2012, NYMEX WTI Crude Oil is up approx. 13% while Brent Crude is up approx. 17%.

 Global stimulus programs being announced – Europe, Asia, U.S. – gold prices surging.

 Asset Manager Fund-Flow Updates (Week Ending Sept. 5th):

  • Equity Funds (excluding ETFs) saw $1.6BN of net outflows vs. $1.9BN of net outflows from the prior week.
  • Domestic equity funds saw $1.5BN in net outflows compared to $2BN of net outflows from the previous week.
  • Global equity funds saw $100MN of net outflows compared to $100MN of net inflows from the prior week.
  • Excluding ETFs, Real Estate emerged as the strongest sector, while flows within the Technology sector remained the weakest.
  • Including ETFs, the Financial/Banking emerged as the best performing sector followed by Healthcare/Biotech and Real Estate, while the Energy sector saw the largest capital out-flows.
  • The latest Lipper data showed that Dimensional and JP Morgan Funds displayed the largest inflows into equity markets, while State Street Global Advisors and Columbia Funds displayed the largest equity outflows. Specifically, SSGA extracted a little over $6BN out of equities, as the firm was shifting into mostly cash.
  • Weekly asset manager fund returns were down slightly by an average of 0.09% (+2.72% YTD)
  • Nuveen and Cohen and Steers emerged as the top weekly performers, while Waddell & Reed and Lazard lagged behind its peers.
  • Emerging Trends/Topics:
  • Investors continue to pour money into fixed income mutual funds, with all three major bond categories drawing inflows for the 5th week in a row.
  • Equity mutual fund (especially domestic fund) attrition continues despite the S&P 500 reaching its highest level since January 2008 this week
  • The recent fund-flow data reinforce: 1) the bulk of industry volumes continue to be centered toward FI; 2) investors are reluctant to re-risk into equities; while, 3) 2012 remains a flow transition year, pushing out a potential flow recovery. Investors continue to be primarily focused toward yield oriented products and equities may require a structural shift before any meaningful recovery in volumes

_________

MAIN EVENTS OF THE WEEK

MONDAY (9/10)

 – 3:00 PM ET – Consumer Credit – Jul – Expectations = $10.0B

– Markets are likely to respond to economic data (consumer prices, industrial production & trade balance) from China released over the weekend.

TUESDAY (9/11)

 – 8:30 AM ET – Trade Balance – Jul- Expectations = -$44.0B

– European Banking Union plans announced

WEDNESDAY (9/12)

 – 8:30 AM ET – Export Prices ex-ag. – Aug – Prior = -1.40%

– 8:30 AM ET – Import Prices ex-oil – Aug – Prior = -0.30%

– 10:00 AM ET – Wholesale Inventories – Jul – Expectations = 0.30%         

– Germany’s constitutional court is seen ruling in favor of the permanent euro-zone bailout plan and the fiscal accord for budget discipline.

– The European Commission presents a plan for a single banking supervisor.

THURSDAY (9/13)

– 8:30 AM ET – Weekly Jobless Claims – Expectations = 369K

– 8:30 AM ET – PPI – Aug – Expectations = 1.20%

– 12:30 PM ET – FOMC Rate Decision & Policy Statement – Sep – After the disappointing U.S. Jobs Report for August, most market participants believe that the Fed will announce new quantitative easing measures.  At a minimum, the Street expects the central bank to extend its near-zero interest rates until 2015.

FRIDAY (9/14)

 – 8:30 AM ET – Retail Sales – Aug – Expectations = 0.70%

– 8:30 AM ET – CPI – Aug – Expectations = 0.60%

– 9:15 AM ET – Industrial Production – Aug – Expectations = -0.20%

– 9:55 AM ET – Univ. of Mich Consumer Sentiment – Sep – Expectations = 73.5

– 10:00 AM ET – Business Inventories – Jul – Expectations = 0.40%

– European Union finance ministers meet in Greece over the debt situation.

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