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Squawk Box Topics (Week of December 17th, 2012)

 Broader Market Recap & Previous Week Re-Cap:

  • PREVIOUS WEEK RE-CAP:  (12/10 – 12/14)
  • Monday (12/10) – Stocks edged higher as technology shares bounced back after recent weakness and McDonald’s posted strong monthly sales. (S&P 500 +0.1%)
  • Tuesday (12/11) – Stocks rose, led by gains in technology companies, helping the S&P 500 end at its best level since Election Day.  U.S. House of Representatives Speaker John Boehner offered no concrete signs of progress on “fiscal cliff” talks but said he remained hopeful that both sides would reach an agreement by the end-of-year deadline. (S&P 500 +0.7%)
  • Wednesday (12/12) – Stocks closed mixed giving back earlier gains after comments from Federal Reserve Chairman Ben Bernanke, who reiterated that the Fed can only do so much to boost the economy, particularly with the “fiscal cliff” looming. In an unprecedented step, the Federal Reserve said it would hold interest rates near zero until the U.S. unemployment rate falls to 6.5 percent as it launched a new round of bond purchases to stimulate the economy. (S&P 500 +0.1%)
  • Thursday (12/13) – The markets closed lower and the S&P 500 ended its six-day winning streak, retreating as worries intensified that Washington’s “fiscal cliff” negotiations were dragging on with little progress. (S&P 500 -0.6%)
  • Friday (12/14) – U.S. stocks fell, hit by another slide in Apple shares and investors hesitated to buy due to ongoing uncertainty surrounding the “fiscal cliff” negotiations. (S&P 500 -0.4%)
  • For the previous week, the DJIA fell 0.2%, the S&P declined 0.3% and the Nasdaq pared 0.2%.
  • To begin the current week, the S&P 500 is up approx. 12.4% in the year-to-date period.

Technical Update:

  • Despite some recent volatility, the S&P 500 continued to move sideways in the latest week, which has left the Index still comfortably above the important 1,400 technical level for the fourth week in a row.
  • As a result, the market remains in its current trading range of 1,400 – 1, 430.  Please note that on Tuesday & Wednesday of last week, we did see the S&P 500 breach the 1,430 resistance ceiling.  However, the market quickly retreated pulling us back into the current range, signaling a false upside breakout.  In addition, it does appear that the S&P 500 has broken an upward trend line that it has been leaning on since the middle of November.  Looking ahead, traders will continue to expect support at the 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. = 1,411 & 200-day moving avg. = 1,384

Economic Data:

  • We are scheduled for a heavy week on the economic data front, highlighted by Wednesday’s housing starts, Thursday’s weekly jobless claims, 3Q GDP third estimate & existing home sales and Friday’s durable goods orders & consumer sentiment numbers.  See below for full list of weekly economic reports.

 Corporate Earnings:

  • The pace of corporate earnings begins to pick back up this week with roughly twenty S&P 500 companies scheduled to report.  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 $86 a barrel level & Brent Crude is still trading near $107 a barrel.  In the YTD period, NYMEX WTI Crude Oil is down approx. 13% while Brent Crude is up approx. 3%.

 Fed Developments & Foreign Market Updates:

    • Fed embarks on unprecedented policy, tying interest rates and QE to unemployment/inflation.
    • Japan’s landslide victory of Prime Minister Shinzo Abe – vows to undertake “unlimited” monetary easing to achieve 2% inflation.

 Asset Manager Fund-Flow Updates (Week Ending Dec 12th):

  • Equity Funds (excluding ETFs) saw $7.1BN of net outflows vs. $600MN of net outflows from the prior week.
  • Domestic equity funds saw $5.8BN in net outflows compared to $600MN in outflows from the prior week
  • Global equity funds had net outflows of $1.3BN vs. flat sales from the week before
  • Weekly asset manager fund returns were up by an average of 0.8% (up 1.12% 4QTD)
  • Energy emerged as the top sector for weekly capital flows, while Technology had the greatest capital outflows (includes ETFs/Index).
  • The latest Lipper data showed that State Street, BlackRock Fund Adv., and Invesco Powershares for the second straight week were among the largest asset managers injecting capital into equities. Conversely, Columbia Funds, Dimensional, and Invesco Funds were taking money out of equities.
  • Recent Topics:
  • In November, Equity MF’s suffered $10BN of net redemptions, which was down from essentially breakeven net flows in October. Specifically, domestic equity redemptions double from $7.1BN in October to $14.5BN in Nov. Bond funds sales slowed from the previous month (28.5BN in Nov vs. $38.7BN in Oct)
  • Mangers were seeing a greater shift of capital into money funds
  • Monthly sales decline for Invesco, T.Rowe and Franklin.
  • Janus, Artio redemptions accelerate
  • Equity Fund Flows from Nov1st Through Dec 12th:



Equity Flow Change (Bil)

Equity Assets (Bil)

Vanguard Group Inc



BlackRock Fund Advisors



ProFunds Group



MFS Investment Management



JPMorgan Funds





Equity Flow Change (Bil)

Equity Assets (Bil)

American Funds



Fidelity Management & Research



Columbia Funds



Franklin Templeton Investments



Janus Capital Management LLC





MONDAY (12/17)

 – 8:30 AM ET – Empire Manufacturing – Dec – Expectations = 2

– ECB President Mario Draghi testifies about economic and monetary affairs at the European Parliament.

TUESDAY (12/18)

– 8:30 AM ET – Current Account Balance – Q3 – Expectations = -$104.2B

– 10:00 AM ET – NAHB Housing Market Index – Dec – Expectations = 47

– Dallas Fed President Richard Fisher speaks on the economy.

– Oracle Corp. Earnings – AMC


– 8:30 AM ET – Housing Starts – Nov – Expectations = 875K

– 8:30 AM ET – Building Permits – Nov – Expectations = 876K

– FedEx Corp. Earnings – BMO

– General Mills Earnings – BMO

– Bed Bath & Beyond Earnings – AMC

– Paychex Earnings – AMC

THURSDAY (12/20)

– 8:30 AM ET – Weekly Jobless Claims – Expectations = 345K       

– 8:30 AM ET – GDP – Third Estimate Q3 – Expectations = 2.70%   

– 10:00 AM ET – Existing Home Sales – Nov – Expectations = 4.90M           

– 10:00 AM ET – Philadelphia Fed – Dec – Expectations = -1.3        

– 10:00 AM ET – Leading Indicators – Nov – Expectations = 0.20%

– 10:00 AM ET – FHFA Housing Price Index – Oct – Prior = 0.20%

– The Bank of Japan is expected to announce a rise in its asset purchase program to stimulate the economy.

– Carnival Corporation Earnings – BMO

– Discover Financial Services Earnings – BMO

– Cintas Corporation Earnings – AMC

– Micron Technology Earnings – AMC

– Nike Earnings – AMC

FRIDAY (12/21)

– 8:30 AM ET – Personal Income – Nov – Expectations = 0.30%

– 8:30 AM ET – Personal Spending – Nov – Expectations = 0.30%

– 8:30 AM ET – Durable Orders – Nov – Expectations = 0.20%

– 9:55 AM ET – Michigan Sentiment – Final – Dec – Expectations = 74.8

– Nasdaq replaces a number of stocks in its Nasdaq 100 index.

– Quadruple Witching Options Expiration Trading Session – Expect large blocks executed on the open & close.

– Walgreen Co. Earnings – BMO

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