ADVISORY SQUAWK BOX – WEEKLY HIGHLIGHTS (Week of November 26th, 2012)

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Squawk Box Topics (Week of November 26th, 2012)

 Broader Market Recap & Previous Week Re-Cap:

  • PREVIOUS WEEK RE-CAP:  (11/19 – 11/23)
  • Monday (11/19) – Stocks bounced for a second consecutive session as investors were encouraged by the early atmosphere surrounding talks to tackle the fiscal crunch. Home re-sales rose in October and a gauge of homebuilder sentiment climbed to a six-year high in November, a sign slow improvements in the labor market are helping the housing sector recovery gain traction. (S&P 500 +2.0%)
  • Tuesday (11/20)– The markets closed mixed after Federal Reserve Chairman Ben Bernanke said the central bank lacks tools to cushion the U.S. economy from the impact of the “fiscal cliff.”   Meanwhile, U.S. housing starts rose to their highest rate in more than four years in October, suggesting the housing market recovery was gaining steam, even though permits for future construction fell. (S&P 500 +0.1%)
  • Wednesday (11/21) – Stocks rose, with the S&P 500 up for a fourth session, although trading volume was one of the year’s lowest on the day ahead of the Thanksgiving holiday.  (S&P 500 +0.2%)
  • Thursday (11/22) – U.S. trading markets closed for the Thanksgiving holiday.
  • Friday (11/23) – Stocks rose for a fifth day during a holiday-shortened, thin trading session, as investors bid up large technology stocks which had fallen to more attractive levels recently. (S&P 500 +1.3%)
  • For the previous week, the DJIA rose 3.3%, the S&P 500 climbed 3.6% and the NASDAQ added 4.0%.
  • To begin the current week, the S&P 500 is up approx. 12.1% in the year-to-date period.

 Technical Update:

  • After coming under significant technical sell pressure over the previous two weeks, the S&P 500 experienced a strong rebound that pushed the Index back above the important 1,400 technical level to close out the latest holiday shortened trading week.  Looking ahead, the market will be searching for support at this 1,400 mark, as a sustained move below this support line will lead to an increase in technically-related sell pressure market-wide.
  • Key Technical Levels (S&P 500):
  • On the upside (resistance) – 1,410, 1,430, 1,440, 1,460 & 1,475 are the next major levels in range on the charts.
  • On the downside (support) – 1,400, 1,390, 1,375, 1,360, 1,335 & 1,300 are the major marks in range on the charts.
  • 50-day moving avg. = 1,408 & 200-day moving avg. = 1,379

 Economic Data:

  • We are scheduled for a fairly notable week on the economic data front, highlighted by Tuesday’s durable goods & consumer confidence readings, Wednesday’s new home sales & Fed Beige Book reports and Thursday’s weekly jobless claims, 3Q GDP & pending homes sales results.  See below for full list of weekly economic reports.

 Corporate Earnings:

  • Corporate earnings season continues comes to a close with only a handful of S&P 500 companies scheduled to report results.  See below for breakdown of major earnings announcements scheduled for release.                                                                                                                             
  • Crude Oil:
  • To begin the week, NYMEX WTI Crude Oil is trading around the $88 a barrel level & Brent Crude is trading near $111 a barrel.  Since September 14th, 2012, NYMEX WTI Crude Oil is down approx. 12% while Brent Crude is down approx. 5%.  In the YTD period, NYMEX WTI Crude Oil is down approx. 11% while Brent Crude is up approx. 7%.

Operation Twist Update: Unintended consequences and distortions in the short-term lending markets as we come to the completion of Operation Twist:  overnight rates surging.

 Asset Manager Fund-Flow Updates (Week Ending Nov 21st):

  • Last week, through 11/21, Equity Funds (excluding ETFs) saw $8.4BN of net outflows vs. $1.8BN of net outflows from the prior week.
  • Domestic equity funds saw $6.6BN in net outflows compared to $2.1BN in outflows form the week prior.
  • Global equity funds saw $1.8BN of net inflows compared to $300MN of net outflows from the prior week.
  • Healthcare/Biotech saw the largest weekly inflows for the second straight week, followed by the Energy and Consumer sector. Meanwhile, Utilities and Financial stocks saw the largest capital outflows.
  • The latest Lipper data showed that ProFunds, MFS, and JP Morgan Funds were among the largest firms inserting money into equities, while State Street Global Advisors, Columbia Funds, and Artio were taking money out of equities and shifting into cash.
  • Weekly asset manager fund returns were up on an average of 1.67% (-1.26% 4QTD)

 Emerging Trends/Topics:

  • US government debt prices fell heading into the weekend and a reduction in safe haven demand for bonds as Wall Street stocks rallied on hopes lenders would soon release more cash to debt-laden Greece.
  • Taxable bond sales decreased, with inflowsof$5.4BN vs. $6.4BN from the previous week.
  • State Street Global Advisors and Capital Research’s American Funds have been among the largest firms pulling money out of equities since Oct 1st, while BlackRock Fund Advisors and Vanguard Group have inserted approx. $5.3BN and $4.6N into equities, respectively, since Oct 1st.
  • Retail Hopes: Hang from the Cliff-The WSJ recently reported that investors are facing a dilemma with retail stocks heading into yearend is the same they face with U.S. stocks generally: If the fiscal cliff doesn’t happen, they would like to own them, but if it does, they wouldn’t. (http://online.wsj.com/article/SB10001424127887324712504578137093609865474.html?mod=WSJ_Heard_LEFTTopNews)
  • Mary L. Schapiro is expected to announce that she is stepping down as chairwoman of the SEC
  • Equity Fund Flows from Oct 1st Through November 21st:

 

Distributor Equity Flow Change (Bil) Equity Assets (Bil)
BlackRock Fund Advisors $5.348 $376.6
Vanguard Group Inc $4.607 $1102.8
JPMorgan Funds $0.881 $75.4
MFS Investment Management $0.719 $70.5
Van Eck Associates Corporation $0.699 $31.0
Virtus Investment Partners Inc $0.462 $10.6
OppenheimerFunds Inc $0.410 $81.8

 

Distributor Equity Flow Change (Bil) Equity Assets (Bil)
State Street Bank and Trust Co ($9.578) $289.6
American Funds ($4.395) $599.5
Invesco Powershares Capital Mg ($2.017) $47.4
Fidelity Management & Research ($1.557) $605.7
Columbia Funds ($1.486) $100.0
PIMCO ($0.813) $48.9
Franklin Templeton Investments ($0.684) $121.7

 _________

MAIN EVENTS OF THE UPCOMING WEEK:  (11/26 – 11/30)

MONDAY (11/26)

 – 10:30 AM ET – Dallas Fed Manufacturing – Nov – Expectations = 4.7

– It’s Cyber Monday, traditionally a big online holiday-shopping day.

– Euro-zone finance ministers meet to discuss the debt situation in Greece.

TUESDAY (11/27)

– 8:30 AM ET – Durable Goods Orders – Oct – Expectations = -0.40%

– 9:00 AM ET – Case-Shiller 20-city Index – Sep – Expectations =  3.10%

– 10:00 AM ET – Consumer Confidence – Nov – Expectations = 73

– Several Fed presidents, including Richard Fisher and Dennis Lockhart, speak at a Levy Economics Institute confab on financial instability in Berlin.

– ADT Earnings – BMO

– Analog Devices Earnings – AMC

WEDNESDAY (11/28)

– 10:00 AM ET – New Home Sales – Oct – Expectations = 388K

– 2:00 PM ET – Fed’s Beige Book – Oct     

– Euro-zone finance ministers are expected to hold a news conference

THURSDAY (11/29)

– 8:30 AM ET – Initial Claims – Expectations = 395K

– 8:30 AM ET – GDP – 3Q Second Estimate – Expectations = 2.80%

– 10:00 AM ET – Pending Home Sales – Oct – Expectations = 1.00%

– Dallas Fed’s Fisher speaks at a conference on monetary and fiscal challenges in the U.S. and euro area in Frankfurt.

– Big retail chains post November same store sales results.

– The Kroger Co. Earnings – BMO

– Tiffany & Co. Earnings – BMO

FRIDAY (11/30)

– 8:30 AM ET – Personal Income – Oct – Expectations = 0.20%

– 8:30 AM ET – Personal Spending – Oct – Expectations = 0.10%

– 9:45 AM ET – Chicago PMI – Nov – Expectations = 50.7

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