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

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

 Broader Market Recap & Previous Week Re-Cap:

PREVIOUS WEEK RE-CAP:  (3/18 – 3/22)

  • Monday (3/18) – Stocks dropped, after a plan to tax bank accounts in Cyprus to help pay for the country’s bailout stoked worries that it could threaten the stability of financial institutions in the euro zone. (S&P 500 -0.6%)
  • Tuesday (3/19) – The S&P 500 fell for a third day, but pared losses late in the day after lawmakers in Cyprus rejected a proposed tax on bank deposits. (S&P 500 -0.2%)
  • Wednesday (3/20) – Stocks climbed and snapped a three-day losing streak for the S&P 500 as the Federal Reserve reassured investors that it would keep supporting the economy. (S&P 500 +0.7%)
  • Thursday (3/21) – U.S. stocks fell after Oracle Corp fell short of revenue expectations and worries about Cyprus’s effect on the euro zone intensified. (S&P 500 -0.8%)
  • Friday (3/22) – Stocks rose on optimism that a deal to bail out Cyprus could be reached and as Nike shares rallied after stronger-than-expected results. (S&P 500 +0.7%)
  • For the previous week, the DJIA closed flat, while the S&P 500 declined 0.2%, and the NASDAQ pared 0.1%.
  • To begin the current week, the S&P 500 is up approx. 9.2% in the year-to-date period.

 Technical Update:

  • The S&P 500 pushed back last week after testing its all-time highs set back in October 2007 (closing high = 1,565, intra-day high = 1,576) ending the week at the 1,556 level.
  • To begin the current week, traders will continue to anticipate some resistance at these all-time highs.  If these historic highs hold, traders will be looking for a minor correction with the market pulling back into its next major support band in the 1,540 – 1,550 range.  Below these levels, the next notable support marks for the S&P 500 fall in the 1,525 – 1,530 range.  However, if the market manages to push through its all-time closing and intra-day highs expect a significant extension of the market’s upward bullish momentum to continue.
  • Key Technical Levels (S&P 500):
  • On the upside (resistance) – 1,565 (all-time closing high), 1,576 (all-time intra-day high) are the next major level in range on the charts.
  • On the downside (support) – 1,550, 1,540, 1,525-1,530, 1,500, are the next major marks in range on the charts.
  • 50-day moving avg. = 1,518 & 200-day moving avg. = 1,443

Economic Data:

  • We are scheduled for a fairly heavy week on the economic data front, highlighted by Tuesday’s New Home Sales, Consumer Confidence & Durable Orders; Wednesday’s Pending Home Sales; Thursday’s Weekly Jobless Claims Data & 4Q GDP third estimate; and Friday’s Personal Income & Personal Spending data.  See below for full list of weekly economic reports.

 Corporate Earnings:

  • Corporate earnings continue to trickle in with only a handful of S&P companies scheduled to report this week.  As of 3/22/13, of the 490 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 $94.75 a barrel level & Brent Crude is trading near $108.50 a barrel.  In the 2013 YTD period, NYMEX WTI Crude Oil is up over 1% while Brent Crude is basically flat.

Global Macro Developments:

  • All eyes on Cyprus, but other economic and growth concerns out of Europe and Asia loom – Spain, Northern Europe, South Korea, Vietnam.

 Asset Manager Fund-Flow Updates (Week Ending Mar 20th):

  • Equity Funds (excluding ETFs) saw $1.4BN of net inflows vs. $3BN of net inflows from the prior week.
  • Domestic equity funds posted net sales of $1.6BN in net inflows vs. 1.4BN from the previous week.
  • Global equity funds had net outflows of $200MN vs. $1.6BN of net inflows from the week before.
  • Weekly asset manager fund returns were slightly higher by 0.08% (up 5.19% 1QTD)
  • Including ETFs & Asset Managers, the Utilities, Energy, and Healthcare/Biotech saw the greatest among of net inflows, while net outflows were seen in the Industrials/Consumer and technology sectors.
  • If we exclude ETFs. Real Estate was the strongest while the Healthcare sector saw net outflows.
  • The latest Lipper data showed that State Street Global Advisors remains one of the most active equity contributors, inserting approx. $6.4BN into its equity portfolio. Dimensional and Invesco Powershares were among the other active equity contributors. Conversely, Wells Fargo, BlackRock Fund Advisors, and the Columbia Funds were the top decliners, in terms of equity outflows. BlackRock Fund Advisors display more of a rotation into Taxable Bonds from Equities, while Wells and Columbia looked to be seeing more redemption pressure.
  • Notable Trends & Highlights for This Week:
  • Equity inflows have slowed since the beginning of 2013, but remain positive.
  • Meanwhile, flows into bonds remain strong, although they have declined in recent weeks. However, as bond flows have remained positive in 2013, with inflows of roughly $50BN, there is no empirical evidence of fund investors shifting funds from bonds to equities at this point.
  • As of 3/20, the Asset Managers (Active) with the greatest exposure to equities include Fidelity ($651.5BN), Capital World’s American Funds ($636.3BN), and T.Rowe ($252.9BN).
  • Lastly, a reminder that this Thursday marks the last day of 1Q13—expect window dressing to occur.  
  • Top 5 Equity Fund Flows for March (As of 3/20/13):

 

Distributor

Equity Flow Change (Bil)

Equity Assets (Bil)

State Street Bank and Trust Co

$6.401

$321.9

Dimensional Fund Advisors LP

$2.862

$154.8

Invesco Powershares Capital Mg

$1.449

$53.0

JPMorgan Funds

$1.190

$89.6

WisdomTree Asset Management

$1.161

$21.2

 

 

Distributor

Equity Flow Change (Bil)

Equity Assets (Bil)

Wells Fargo Funds Management L

($0.807)

$40.9

BlackRock Fund Advisors

($0.787)

$446.3

Columbia Funds

($0.599)

$107.0

Davis Selected Advisers LP

($0.416)

$27.3

Pioneer Investment Management

($0.246)

$16.2

 

 _________

MAIN EVENTS OF THE UPCOMING WEEK:  (3/25 – 3/29)

MONDAY (3/25)

– Fed Chairman Ben Bernanke speaks at midday on financial-crisis lessons at the London School of Economics

– Passover begins at sundown – Markets in Israel close through Thursday

– Apollo Group Earnings – BMO

– Dollar General Earnings – BMO

TUESDAY (3/26)

  8:30 AM ET – Durable Goods Orders – Feb – Expectations = 3.8%

– 9:00 AM ET – Case-Shiller 20-city Index – Jan – Expectations = 7.5%

– 10:00 AM – Consumer Confidence – Mar – Expectations = 66.9

– 10:00 AM ET – New Home Sales – Feb – Expectations = 426K

– Dallas Fed President Richard Fisher speaks about the U.S. monetary policy.

– SAIC Inc Earnings – AMC

WEDNESDAY (3/27)

 – 10:00 AM ET – Pending Home Sales – Feb – Expectations = 2.0%

– Markets in India are closed

Paychex Inc Earnings – AMC

– Red Hat Inc Earnings – AMC

THURSDAY (3/28)

 – The U.S. bond market closes early, in advance of the Good Friday holiday

– A number of markets are closed for Holy Thursday, including Mexico’s and Venezuela’s

– 8:30 AM ET – Weekly Jobless Claims – Expectations = 338K

– 8:30 AM ET – GDP – Third Estimate Q4 – Expectations = 0.3%

– 9:45 AM ET – Chicago PMI – Mar – Expectations = 56.5

GameStop Corp Earnings – BMO

– Mosaic Co Earnings – BMO

– Accenture PLC Earnings – AMC

FRIDAY (3/29)

 – All financial markets are closed in the U.S. for Good Friday

– Markets in Australia, Brazil, Canada, Hong Kong, Singapore and the U.K., among others are also closed.

– 8:30 AM ET – Personal Income – Feb – Expectations = 0.8%

– 8:30 AM ET – Personal Spending – Feb – Expectations = 0.6%

– 9:55 AM ET – Univ. of Michigan Sentiment – Mar – Expectations = 72.4

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