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

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

  • Broader Market Recap & Previous Week Re-Cap:
  •  PREVIOUS WEEK RE-CAP:  (12/3 – 12/7)
  • Monday (12/3) – Stocks struggled to extend the previous week’s gains, dropping as disappointing U.S. factory numbers curbed optimism over China’s economic growth. (S&P 500 -0.5%)
  • Tuesday (12/4) – Stocks finished slightly lower in a quiet session as the back-and-forth wrangling over the “fiscal cliff” gave investors little reason to act. (S&P 500 -0.2%)
  • Wednesday (12/5) – A volatile trading session ended with U.S. stocks mostly higher, even as Apple, the most valuable U.S. company, suffered its worst day of losses in nearly four years. (S&P 500 +0.2%)
  • Thursday (12/6) – Stocks edged higher a day ahead of the key monthly jobs report, with a rebound in shares of Apple helping to boost the Nasdaq. (S&P 500 +0.3%)
  • Friday (12/7) – The markets closed mixed with another sell-off in Apple depressing technology shares, overshadowing a sharply better-than-expected jobs report. (S&P 500 +0.3%)
  • For the previous week, the DJIA rose 1.0%, the S&P 500 gained 0.1%, while the NASDAQ lost 1.1%.
  • To begin the current week, the S&P 500 is up approx. 12.8% in the year-to-date period.

Technical Update:

  • The S&P 500 moved sideways in the latest week after its latest two week rebound, which has left the Index comfortably above the important 1,400 technical level for the third week in a row.  As a result, the market has settled into a new trading range of 1,400 – 1, 425.  Looking ahead, traders will continue to expect support at this 1,400 mark, as a sustained move below this level on the charts will lead to an increase in technically-related sell pressure market-wide.  On the upside, look for the 1,430 resistance ceiling to come back into play if we continue to push higher throughout the upcoming week.
  • Key Technical Levels (S&P 500):
  • On the upside (resistance) – 1,425, 1,430, 1,440, 1,460, 1,475 & 1,500 are the next major levels in range on the charts
  • On the downside (support) – 1,410, 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. = 1,409 & 200-day moving avg. = 1,383

Economic Data: We are scheduled for a fairly notable week on the economic data front, highlighted by Tuesday’s wholesale inventories, Wednesday’s FOMC decision on interest rates & policy statement and Thursday’s weekly jobless claims, retail sales & business inventories data.  See below for full list of weekly economic reports.

  • Corporate Earnings: We are scheduled for only a handful of corporate earnings releases from S&P 500 companies this week.  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 $86 a barrel level & Brent Crude is trading near $107 a barrel.  In the YTD period, NYMEX WTI Crude Oil is down approx. 13% while Brent Crude is up approx. 3%.

  • European markets recent outperformance- Ready to stall out on economic weakness and political uncertainty, while the U.S. Fed readies itself for additional QE.

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

  • Equity Funds (excluding ETFs) saw $500MN of net outflows vs. $8.8BN of net outflows from the prior week.
  • Domestic equity funds saw $500MN in net outflows compared to $7.5BN in outflows form the week prior.
  • Global equity funds saw flat sales compared to $1.3BN of net outflows from the prior week.
  • Weekly asset manager fund returns were up by an average of 0.46% (up 0.23% 4QTD)
  • Financial/Banking and Healthcare/Biotech sectors reversed course from the previous week and saw capital net inflows, while the Utilities sector had weekly capital outflows of over 1.6%.
  • The latest Lipper data showed that State Street, BlackRock Fund Adv., and Invesco Powershares were among the greatest equity contributors, in terms of capital inflows, while Goldman Sachs AM, Federated, and Grantham were taking money out of equities. In particular, Federated was shifting its equity assets into its Money Market funds.
  • Recent Topics:
  • US consolidated equity volumes rebounded from the holiday slowdown, rising a little over 25% w/w to 6.4B. QTD volumes are averaging 6.1B, which is approx. 2% above last quarter’s levels.
  • Special Dividends- Most recently, T.Rowe announced a $250MN Special Dividend ($1/share). In general, the influx of companies announcing special dividends has been viewed by investors as a one time bonus payout to shareholders ahead of the fiscal cliff.
  • SEC Now Accepting Applications for Active ETFs that Use Derivatives – The SEC has lifted its moratorium on applications for new actively managed ETFs that use derivatives. The ban was originally put in place in March 2010 as part of a study (still underway) on the use of derivatives by mutual funds and ETFs and the resulting risks posed to investors. However, the SEC will still not approve such applications until it has completed its study. The main concerns expressed by the SEC remain the risk posed to the fund by the derivatives and the need for increased disclosure to investors that expressly identifies the funds’ use of derivatives.
  • Equity Fund Flows from Nov1st Through Dec 5th:

 

Distributor

Equity Flow Change (Bil)

Equity Assets (Bil)

BlackRock Fund Advisors

$3.878

$381.1

ProFunds Group

$0.833

$9.1

MFS Investment Management

$0.704

$71.6

JPMorgan Funds

$0.683

$76.6

TIAA-CREF

$0.622

$37.0

  

Distributor

Equity Flow Change (Bil)

Equity Assets (Bil)

Fidelity Management & Research

($2.785)

$610.9

Columbia Funds

($1.337)

$99.4

Artio Global Management LLC

($0.741)

$2.4

Guggenheim Investments Funds

($0.725)

$9.9

Royce & Associates LLC

($0.613)

$30.2

 _________

EVENTS OF THE UPCOMING WEEK:  (12/10 – 12/14)

MONDAY (12/10)

 – No significant releases or events scheduled

TUESDAY (12/11)

– 8:30 AM ET – Trade Balance – Oct – Expectations = -$42.8B

– 10:00 AM ET – Wholesale Inventories – Oct – Expectations = 0.40%

– Dollar General Earnings – BMO

WEDNESDAY (12/12)

 – 8:30 AM ET – Export Prices ex-ag. – Nov – Prior = 0.20%

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

– 12:30 PM ET – FOMC Rate Decision – Dec – Expectations = 0.25% – The Federal Open Market Committee is largely expected to announce a sizeable asset-purchase plan to take the place of the soon ending Operation Twist.

– 2:00 PM ET – Treasury Budget  Nov – Expectations = -$113.0B   

– Costco Wholesale Earnings – BMO

 THURSDAY (12/13)

– 8:30 AM ET – Weekly Jobless Claims – Expectations = 375K

– 8:30 AM ET – Retail Sales – Nov – Expectations = 0.40%

– 8:30 AM ET – PPI – Nov – Expectations = -0.50%

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

– Euro-zone banking reforms top the agenda at an European Union summit.

– Adobe Systems Earnings – AMC

FRIDAY (12/14)

 – 8:30 AM ET – CPI – Nov – Expectations = -0.20%

– 9:15 AM ET – Industrial Production – Nov – Expectations = 0.30%

– 9:15 AM ET – Capacity Utilization – Nov – Expectations = 78.00%

– Nasdaq announces the reconstitution of its Nasdaq 100 Index.  Among those that Deutsche Bank sees most likely to be added: Kraft Foods, Liberty Media and Equinix . Those seen falling off: Netflix, Green Mountain Coffee, Flextronics and Electronic Arts .

– 4.15 billion euros ($5.36 billion) of Greek T-bills come due.

– The Bank of Japan issues its December tankan business-sentiment survey.

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