ADVISORY SQUAWK BOX – WEEKLY HIGHLIGHTS (Week of February 25th, 2013)

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Squawk Box Topics (Week of February 25th, 2013)

Broader Market Recap & Previous Week Re-Cap:

PREVIOUS WEEK RE-CAP:  (2/18 – 2/22)

  • Monday (2/18) – Presidents Day in the U.S. and all financial markets were closed.
  • Tuesday (2/19) – Stocks rose as this year’s ongoing surge in merger activity suggested investors were still finding value in the market even as indexes hovered near five-year highs. (S&P 500 +0.7%)
  • Wednesday (2/20) – The S&P 500 posted its worst daily percentage decline since mid-November after minutes from the U.S. Federal Reserve suggested the central bank may slow or stop buying assets sooner than expected. (S&P 500 -1.2%)
  • Thursday (2/21) – Stocks fell for a second day and the S&P 500 posted its worst 2-day loss since November after reports cast doubt over the health of the U.S. and euro-zone economies. (S&P 500 -0.6%)
  • Friday (2/22) – Stocks rose as Dow component Hewlett-Packard surged on strong results and reported comments from Ben Bernanke allayed fears the Fed would curtail is stimulus measures. (S&P 500 +0.9%)
  • For the previous week, the DJIA increased fractionally by 0.1%, the S&P 500 fell 0.3% while the NASDAQ fell 0.9%.
  • To begin the current week, the S&P 500 is up approx. 6.3% in the year-to-date period.
  • After seven straight weeks of gains, the S&P 500 experienced its first weekly pullback with a minor 0.3% decline.  However, the Index remained comfortably above the significant 1,500 level for the fifth week in a row. 
  • Looking ahead, chart watchers will continue to expect volatility in the near-term as we continue to trade near historic levels.  In addition, traders will be closely monitoring activity around this 1,500 mark, as a solid floor for the equity market has formed at this level. 
  • If we remain above 1,500, traders will be focusing in on the next major resistance ceiling for the S&P 500, which comes in around 1,525 – 1,530.  If 1,500 does not hold, the market will be looking for a deeper pullback into the 1,475 – 1,485 range, where we should see a significant amount of technical support.
  • Key Technical Levels (S&P 500):
  • On the upside (resistance) – 1,525-1,530, 1,550 & 1,576 (all-time high) are the next major levels in range on the charts
  • On the downside (support) – 1,500, 1,485, 1,475, 1,460, 1,440, 1,430, 1,410 & 1,400 are the major marks in range on the charts.
  • * 50-day moving avg. = 1,484 & 200-day moving avg. = 1,424
  • Technical Update:

 Economic Data:

 

  • We are scheduled for a fairly significant week on the economic data front, highlighted by Tuesday’s New Home Sales reading, Wednesday’s Durable Goods Orders report, Thursday’s Weekly Jobless Claims & 4Q GDP’s second estimate and Friday’s Consumer Sentiment, ISM & Construction Spending data.  See below for full list of weekly economic reports.

 

  • Corporate Earnings:
  • Corporate earnings season remains in full swing with over 40 S&P companies scheduled to report this week.  As of 2/22/13, of the 438 companies in the S&P 500 that have reported earnings to date for Q4 2012:  70% have reported earnings above analyst expectations, 10% reported earnings in line with analyst expectations and 20% reported earnings below analyst expectations, according to Thomson Reuters.  See below for full list of corporate earnings reports. 

 

  • Crude Oil:
  • To begin the week, NYMEX WTI Crude Oil is trading around the $93.50 a barrel level & Brent Crude is trading near $115 a barrel.  In the 2013 YTD period, NYMEX WTI Crude Oil is up approx. 1% while Brent Crude is up approx. 5%.

  • Yen dropping to weakest levels since May 2010; Ultra-dovish Haruhiko Kuroda expected to become next BOJ governor.

 

  • Asset Manager Fund-Flow Updates (Week Ending Feb 20th):
  • Equity Funds (excluding ETFs) saw $2.6BN of net inflows vs. $2.4BN of net inflows from the prior week.
  • Domestic equity funds saw net sales of $900MN in net inflows, compared to $600MN of net outflows from the previous week.
  • Global equity funds had net inflows of $1.7BN vs. $3BN of net inflows from the week before
  • Weekly asset manager fund returns were slightly lower up by an average of 0.4% (up 3.551% 1QTD)
  • Concerning weekly capital flows, every sector experienced capital inflows over the most recent week with the exception of Industrial/Consumer—likely in response to weaker than expected U.S Manufacturing data. Energy, Financial/Banking, and Healthcare/Biotech emerged as the top 3 performers, from a sector inflow level.
  • The latest Lipper data showed that BlackRock Advisors (+$4.04BN), Wisdom Tree (+$1.53BN), and JPMorgan Funds (+$1.07BN) were among the largest asset managers putting money into equities. Conversely, State Street Global Advisors continues to trim its equity portfolio, cutting back $5.7BN most recently, followed by Invesco Powershares (-$1.05BN), and Wellington’s Hartford Funds (-$778MN).

Notable Trends:

  • Domestic equities have maintained a steady inflow in 2013, while taxable bonds and muni bonds have continued to see inflows but at a slower pace than what we saw at the end of last year.
  • US consolidated equity volumes, after disappointing last week with a lackluster 5.83B ADV, experienced a strong rebound, up 17% to ADV of 6.83B. However, overall, QTD volumes of 6.42B remain below year-ago levels, down approx. 9% vs. the first half of 1Q12, when daily volumes averaged 7.00B.
  • For 1Q13 to date, GAMCO and Affiliated Managers Group have seen the best returns among the top mutual fund management group, while Federated and Lazard have lagged behind its peer group.
  • In 2013, Vanguard and BlackRock Fund Advisors have been among the top equity contributors. Meanwhile, State Street has conveyed a strong shift in decreasing its equity stake.
  • Additionally, Fidelity has seen a large outflow from its money market portfolio, approx. $8.275BN and has trimmed roughly $1.45BN from its equity portfolio, while displaying a better shift into taxable bonds (+$2.65BN) and Muni’s ($80MN).
  • Equity Fund Flows from Jan 1st Through Feb 20th:

 

Distributor

Equity Flow Change (Bil)

Equity Assets (Bil)

Vanguard Group Inc

$20.813

$1220.7

BlackRock Fund Advisors

$11.881

$437.6

American Funds

$2.694

$634.3

OppenheimerFunds Inc

$2.070

$90.4

Dimensional Fund Advisors LP

$1.984

$148.8

 

 

Distributor

Equity Flow Change (Bil)

Equity Assets (Bil)

State Street Bank and Trust Co

($3.076)

$318.6

Fidelity Management & Research

($1.457)

$641.0

Van Eck Associates Corporation

($0.585)

$28.6

Transamerica Funds

($0.459)

$5.6

Columbia Funds

($0.439)

$104.3

 _________

MAIN EVENTS OF THE UPCOMING WEEK:  (2/25 – 3/1)

MONDAY (2/25)

– Results of Italian elections announced

– Cooper Tire & Rubber Co Earnings – BMO

– Lowe’s Company Inc Earnings – BMO

– Big Lots Inc Earnings – AMC

TUESDAY (2/26)

 – 9:00 AM ET – Case-Shiller 20-city Index – Dec – Expectations = 6.50%

– 9:00 AM ET – FHFA Housing Price Index – Dec – Expectations = NA  

– 10:00 AM ET – New Home Sales – Jan – Expectations = 383K

– 10:00 AM ET- Consumer Confidence – Feb – Expectations = 62

– Fed Chairman Ben Bernanke begins two days of testimony before Congress on monetary policy and the economy.

Autozone Inc Earnings – BMO

– Home Depot Inc Earnings – BMO

– Macy’s Inc Earnings – BMO

– MetroPCS Communications Inc Earnings – BMO

– Saks Inc Earnings – BMO

– First Solar Inc Earnings – AMC

– Priceline.com Earnings – AMC

– Vornado Realty Trust Earnings – AMC

WEDNESDAY (2/27)

 – 8:30 AM ET – Durable Orders – Jan – Expectations = 3.50%

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

– Fed hawk Richard Fisher speaks at Columbia University

– Dollar Tree Earnings – BMO

– Target Corp. Earnings – BMO

– Groupon Inc Earnings – AMC

– JC Penny Company Inc Earnings – AMC

– Monster Beverage Corp Earnings – AMC

– Pall Corporation Earnings – AMC

THURSDAY (2/28)

 – 8:30 AM ET – Weekly Jobless Claims – Expectations = 360K

– 8:30 AM  ET – GDP – Second Estimate Q4 – Expectations = 0.50%

– 9:45 AM  ET –  Chicago PMI – Feb – Expectations = 54.0

– Kohl’s Corp Earnings – BMO

– Best Buy Incorporated Earnings – BMO

– Cablevision Systems Corp Earnings – BMO

– Iron Mountain Inc Earnings – BMO

– Salesforce.com Earnings – AMC

– Gap Inc Earnings – AMC

FRIDAY (3/1)

 – 8:30 AM ET – Personal Income – Jan- Expectations = -2.40%

– 8:30 AM ET – Personal Spending – Jan – Expectations =  0.20%

– 9:55 AM ET – Michigan Sentiment – Final – Feb – Expectations = 76.3

– 10:00 AM ET – ISM Index – Feb – Expectations = 52.4

– 10:00 AM ET – Construction Spending – Jan – Expectations = 0.50%

– 2:00 PM ET – Auto Sales – Feb

– The dreaded discretionary spending cuts required by sequestration begin, unless Congress acts to prevent them.

– Bernanke gives a speech on “Low Long-Term Interest Rates”

Markets close in South Korea

– Pepco Holdings Inc Earnings – BMO

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