ADVISORY SQUAWK BOX – WEEKLY HIGHLIGHTS (Week of March 11th, 2013)

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Squawk Box Topics (Week of March 11th, 2013)

Broader Market Recap & Previous Week Re-Cap:

  • PREVIOUS WEEK RE-CAP:  (3/4-3/8)
  • Monday (3/4) – Stocks closed higher as investors staged a late-day rebound, extending a recent trend of buying on dips and pushing major indexes near all-time highs despite concerns about growth and China’s housing market. (S&P 500 +0.5%)
  • Tuesday (3/5) – The Dow Jones Industrial Average soared to a record closing high, breaking through levels last seen in 2007 and as investors rushed in to join the party in anticipation of more gains. (S&P 500 +1.0%)
  • Wednesday (3/6) – The Dow closed modestly higher at another record as investors bet that favorable market conditions would continue, though the gains were slight on concerns the rally may run out of steam in the short term. (S&P 500 +0.1%)
  • Thursday (3/7) – Stocks closed modestly higher, with the Dow hitting its third straight record as jobless claims data pointed to a pick-up in the labor market’s recovery a day before the closely watched payrolls report. (S&P 500 +0.2%)
  • Friday (3/8) – Stocks closed out a historic week with another day of gains, as the Dow hit yet another closing high on a payrolls report that surpassed even the most optimistic forecasts. (S&P 500 +0.5%)
  • For the previous week, The Dow advanced 2.2%, while the S&P 500 increased 2.2% and the NASDAQ gained 2.4%.
  • To begin the current week, the S&P 500 is up approx. 8.8% in the year-to-date period.

Technical Update:

  • The S&P 500 finally broke through its 1525-1530 resistance band last week and is approaching all-time highs set back in October 2007.  Looking ahead, traders will be anticipating solid support for the market to now form in this 1,525-1,530 technical range. 
  • If we remain above 1,530, traders will be focusing in on the next major resistance ceiling for the S&P 500, which comes in around 1,550 with the 1,576 all-time high in focus.  If the upward trend does not hold, traders will be looking for a pullback into the 1,500 – 1,525 range, where we should see a significant amount of technical support.  Regardless, we expect near-term volatility to remain in play over the coming weeks as the broader averages trade near historic levels.
  • Key Technical Levels (S&P 500):
  • On the upside (resistance) – 1,550 & 1,576 (all-time high) are the next major levels in range on the charts.
  • On the downside (support) – 1,540, 1,525-1,530, 1,500, 1,485 & 1,475 are the major marks in range on the charts.
  • 50-day moving avg. = 1,500 & 200-day moving avg. = 1,432

 

  • Economic Data:
  • We are scheduled for a fairly notable week on the economic data front, highlighted by Wednesday’s Retails Sales & Business Inventories reports; Thursday’s Weekly Jobless Claims data & PPI; and Friday’s Empire Manufacturing Index & Consumer Sentiment numbers.  See below for full list of weekly economic reports.

 

  • Corporate Earnings:
  • Corporate earnings season continues to wind down with only a handful of S&P companies scheduled to report this week.  As of 3/8/13, of the 488 companies in the S&P 500 that have reported earnings to date for Q4 2012:  69% have reported earnings above analyst expectations, 10% reported earnings in line with analyst expectations and 21% 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 $91.00 a barrel level & Brent Crude is trading near $110 a barrel.  In the 2013 YTD period, NYMEX WTI Crude Oil is down approx. 1.5% while Brent Crude is down up approx 1.0%.

 Global Macro Highlights:

    • China economy slowing/inflation rising, while the Japanese Yen continues its slide – near a four-year low against the dollar.

 Asset Manager Fund-Flow Updates (Week Ending Mar 6th):

  • Equity Funds (excluding ETFs) saw $3.2BN of net inflows vs. $2.8BN of net inflows from the prior week.
  • Domestic equity funds posted net sales of $800MN in net inflows, same as the prior week.
  • Global equity funds had net inflows of $2.4BN vs. $2BN of net inflows from the week before
  • Weekly asset manager fund returns were up by an average of 1.03% (up 4.71% 1QTD)
  • Utilities and Healthcare/Biotech had the greatest amount of net inflows, while the Energy sector emerged as the worst performer.
  • The latest Lipper data showed that State Street Global Advisors reversed course from its previous selling trend and injected a little over $2.7BN into equities. Conversely, BlackRock Fund Advisors started the month of March on a selling trend, extracting close to $900MN from its equity holdings.
  • Notable Trends & Highlights for This Week:
  • In the week ended 03/06/2013, the Weekly Only reporting dataset of All Equity Funds (10130 Funds; $3.085 Tril, including ETFs) reported net investor inflows of $5.672 billion.
  • Long-term Mutual Fund Flows continue to show improvement into March, while seeing net outflows out of money markets. Global/international equity mutual funds and equity ETFs remain the primary beneficiaries of equity inflows, particularly in recent weeks.
  • Last Week, Legg Mason announced that it may trim the number of funds it offers and offices it operates, but does not expect major cost-cutting like that begun in 2010. The latest reviews come just after Joseph Sullivan was named Legg Mason’s permanent chief executive in February. The firm said that it is reviewing the total number of funds its sells through affiliates like its Western Asset Management bond unit and its ClearBridge Advisors equity division. Legg Mason will provide more details at investor presentations it plans to hold in June.
  • S&P Quarterly Index Rebalance– After the close on Friday (3/8), S&P announced constituent sharecount changes resulting from the 1Q13 index rebalance, and all changes will be effective after the close on Friday, 3/15. Coupled with the rebalance will be quadruple witching (future and option expirations).
  • Top 5 Equity Fund Flows for March (As of 3/6/13):

 

Distributor

Equity Flow Change (Bil)

Equity Assets (Bil)

State Street Bank and Trust Co

$2.718

$313.8

MFS Investment Management

$0.649

$81.9

Invesco Powershares Capital Mg

$0.623

$51.8

JPMorgan Funds

$0.423

$87.7

Oakmark Family of Funds

$0.294

$30.8

 

 

Distributor

Equity Flow Change (Bil)

Equity Assets (Bil)

BlackRock Fund Advisors

($0.894)

$444.5

Wells Fargo Funds Management L

($0.719)

$40.1

Columbia Funds

($0.324)

$106.1

ProFunds Group

($0.198)

$10.4

Van Eck Associates Corporation

($0.184)

$27.2

 

 

_________

MAIN EVENTS OF THE UPCOMING WEEK:  (3/11 – 3/15)

MONDAY (3/11)

– Dick’s Sporting Goods Earnings – BMO

– Urban Outfitters Inc Earnings – AMC

TUESDAY (3/12)

 – 2:00 PM ET – Treasury Budget – Feb- Expectations = -205.0B

– Senate lawmakers are set to grill Mary Jo White, nominee to head the SEC.

– February’s Treasury statement is released – The Congressional Budget Office estimates the monthly deficit narrowed to $205 billion from $232 billion a year earlier.

– Costco Wholesale Corp. – BMO

WEDNESDAY (3/13)

 – 8:30 AM ET – Retail Sales – Feb – Expectations = 0.5%

– 8:30 AM ET – Export/Import Prices – Feb – Prior = Exports: +0.5%, Imports: +0.2%

– 10:00 AM ET – Business Inventories – Jan – Expectations = 0.3%

THURSDAY (3/14)

– 8:30 AM ET – Weekly Jobless Claims – Expectations = 350K

– 8:30 AM ET – Producer Price Index (PPI) – Feb – Expectations = +0.6%

– 8:30 AM ET – Current Account Balance – Q4 – Expectations = -112.3B

Federal Reserve will release the results of its Comprehensive Capital Analysis and Review, which examines capital-planning processes of large banks and institutions.

FRIDAY (3/15)

 – 8:30 AM ET – Consumer Price Index (CPI) – Feb – Expectations = 0.5%

– 8:30 AM ET – Empire Manufacturing Index – Mar – Expectations = 6.5

– 9:15 AM ET – Industrial Production – Feb – Expectations = 0.4%

– 9:55 AM ET – Univ. Of Michigan Consumer Sentiment – Mar – Expectations = 77.6

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