Market Week in Review

S&P 500 1,631.89 +1.16%*




The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices

• S&P 500 1,631.89 +1.16%

• DJIA 15,135.83 +.74%

• NASDAQ 3,479.38 +2.28%

• Russell 2000 1,005.39 +2.60%

• S&P 500 High Beta 25.46 +1.80%

• Value Line Geometric(broad market) 428.04 +1.91%

• Russell 1000 Growth 743.50 +1.51%

• Russell 1000 Value 832.38 +1.0%

• Morgan Stanley Consumer 997.0 +.76%

• Morgan Stanley Cyclical 1,202.53 +1.24%

• Morgan Stanley Technology 757.10 +.96%

• Transports 6,289.96 +1.45%

• Utilities 476.94 -1.23%

• Bloomberg European Bank/Financial Services 91.02 +2.44%

• MSCI Emerging Markets 37.75 -.29%

• HFRX Equity Hedge 1,104.47 +2.10%

• HFRX Equity Market Neutral 938.78 +.07%

Sentiment/Internals

• NYSE Cumulative A/D Line 186,768 +.23%

• Bloomberg New Highs-Lows Index 4 +74

• Bloomberg Crude Oil % Bulls 33.33 n/a

• CFTC Oil Net Speculative Position 274,474 n/a

• CFTC Oil Total Open Interest 1,809,371 n/a

• Total Put/Call .94 unch.

• OEX Put/Call 1.76 +27.54%

• ISE Sentiment 97.0 +53.97%

• NYSE Arms .65 -43.48%

• Volatility(VIX) 14.89 -11.68%

• S&P 500 Implied Correlation 52.73 -11.11%

• G7 Currency Volatility (VXY) 10.97 -.45%

• Emerging Markets Currency Volatility (EM-VXY) 10.93 -.27%

• Smart Money Flow Index 11,415.12 -.86%

• Money Mkt Mutual Fund Assets $2.596 Trillion +.07%

• AAII % Bulls 42.0 +38.7%

• AAII % Bears 23.8 -32.2%

Futures Spot Prices

• CRB Index 280.72 +1.21%

• Crude Oil 103.22 +6.67%

• Reformulated Gasoline 289.68 +6.41%

• Natural Gas 3.62 +.50%

• Heating Oil 298.97 +3.68%

• Gold 1,212.70 +1.06%

• Bloomberg Base Metals Index 181.97 +.40%

• Copper 306.50 +.72%

• US No. 1 Heavy Melt Scrap Steel 337.0 USD/Ton unch.

• China Iron Ore Spot 122.60 USD/Ton +5.2%

• Lumber 309.50 +3.13%

• UBS-Bloomberg Agriculture 1,413.22 -1.89%

Economy

• ECRI Weekly Leading Economic Index Growth Rate 5.3% -50 basis points

• Philly Fed ADS Real-Time Business Conditions Index -.0848 +9.2%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 116.92 +.06%

• Citi US Economic Surprise Index -14.0 -5.0 points

• Citi Emerging Markets Economic Surprise Index -34.30 +2.8 points

• Fed Fund Futures imply 42.0% chance of no change, 58.0% chance of 25 basis point cut on 7/31

• US Dollar Index 84.45 +1.53%

• Euro/Yen Carry Return Index 135.39 +.68%

• Yield Curve 234.0 +21 basis points

• 10-Year US Treasury Yield 2.74% +25 basis points

• Federal Reserve's Balance Sheet $3.450 Trillion +.41%

• U.S. Sovereign Debt Credit Default Swap 28.56 +1.39%

• Illinois Municipal Debt Credit Default Swap 167.0 +1.21%

• Western Europe Sovereign Debt Credit Default Swap Index 96.0 +1.05%
  

• Emerging Markets Sovereign Debt CDS Index 248.13 -.24%
  

• Israel Sovereign Debt Credit Default Swap 120.50 -5.11%

• Egypt Sovereign Debt Credit Default Swap 773.82 -12.2%

• China Blended Corporate Spread Index 407.0 +1 basis point

• 10-Year TIPS Spread 2.07% +8 basis points

• TED Spread 23.25 -1 basis point

• 2-Year Swap Spread 17.75 +2.5 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -11.0 -.5 basis point

• N. America Investment Grade Credit Default Swap Index 86.11 -.03%
  

• European Financial Sector Credit Default Swap Index 165.42 -.86%
  

• Emerging Markets Credit Default Swap Index 346.66 +8.32%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 130.0 -5 basis points

• M1 Money Supply $2.509 Trillion +.60%

• Commercial Paper Outstanding 1,035.70 -.40%

• 4-Week Moving Average of Jobless Claims 345,500 -300

• Continuing Claims Unemployment Rate 2.3% unch.

• Average 30-Year Mortgage Rate 4.29% -17 basis points

• Weekly Mortgage Applications 555.50 -11.7%

• Bloomberg Consumer Comfort -27.5 +.8 point

• Weekly Retail Sales +2.80% unch.

• Nationwide Gas $3.48/gallon -.03/gallon

• Baltic Dry Index 1,099 -6.15%

• China (Export) Containerized Freight Index 1,034.91 +2.14%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 25.0 +25.0%

• Rail Freight Carloads 249,673 -1.24%

Best Performing Style

• Small-Cap Growth +2.8%

Worst Performing Style

• Mid-Cap Value +.9%

Leading Sectors

• Biotech +4.5%

• Alt Energy +4.0%

• I-Banks +3.5%

• Banks +3.5%

• Education +3.4%

Lagging Sectors

• Utilities -1.2% 

• Coal -1.9%

• Steel -2.2%

• Hospitals -2.6%

• Homebuilders -5.6%

Weekly High-Volume Stock Gainers (44)

• ONXX, PBYI, WGO, LVB, CVC, LGF, AMRI, BRSS, CBST, FFIN, ABCB, ACRX, SGEN, PCYC, DAN, EZPW, EPZM, BNCN, GPOR, GCOM, GEVA, SRDX, LNDC, PLOW, GPC, SMCI, SHEN, UTI, EEFT, INSY, TR, RUSHA, SPLK, RECN, COHR, WWWW, MYE, UHAL, EXAR, GNC, VCBI, PRGS, ODFL and STML

Weekly High-Volume Stock Losers (14)

• DVA, AMED, AZZ, BRY, CCXI, DYN, RCPT, WBMD, HWAY, MJN, IDCC, INSM, ZEP and LNCO

Weekly Charts
ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Higher into Afternoon on Jobs Report, Yen Weakness, Short-Covering, Financial/Biotech Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Mixed
  

• Volume: Light

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.58 -3.83%

• Euro/Yen Carry Return Index 135.21 +.39%

• Emerging Markets Currency Volatility(VXY) 10.92 +.55%

• S&P 500 Implied Correlation 53.76 -4.60%

• ISE Sentiment Index 97.0 unch.

• Total Put/Call .97 -14.91%

• NYSE Arms .76 +4.25% 

Credit Investor Angst:

• North American Investment Grade CDS Index 86.81 +3.42%

• European Financial Sector CDS Index 165.41 +.55%

• Western Europe Sovereign Debt CDS Index 96.0 -4.20%

• Emerging Market CDS Index 346.80 +4.38%

• 2-Year Swap Spread 17.75 -.25 bp

• TED Spread 23.25 -.75 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -11.0 unch.

Economic Gauges:

• 3-Month T-Bill Yield .04% unch.

• Yield Curve 232.0 +19 bps

• China Import Iron Ore Spot $122.60/Metric Tonne +.49%

• Citi US Economic Surprise Index -14.0 -.8 point

• Citi Emerging Markets Economic Surprise Index -34.30 +.5 point

• 10-Year TIPS Spread 2.07 +3 bps

Overseas Futures:

• Nikkei Futures: Indicating +175 open in Japan

• DAX Futures: Indicating +35 open in Germany

Portfolio: 

• Higher: On gains in my tech/biotech/medical/retail sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.04%

Sector Underperformers:

• 1) Gold & Silver -4.45% 2) Homebuilders -3.41% 3) REITs -1.91%

Stocks Falling on Unusual Volume:

• LEN, KBH, REM, NEM, MITT, ARNA, BBVA, CLMT, BBEP, ELP, BSBR, TD, LINE, WRLD, QRE, ARP, FMS, LNCO, VNR, SIR, MTGE, RYAAY, NLY, PWE, WMC, ATLS, CMO, AU, PKO, AMTG, HTS, CLNY, SI, PBR, IVR, AGNC, AMTG and VNR

Stocks With Unusual Put Option Activity:

• 1) FXB 2) KRE 3) ESRX 4) LEN 5) DKS
  

Stocks With Most Negative News Mentions:

• 1) MPC 2) CLMT 3) SCCO 4) ABX 5) ADSK
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Growth +.28%

Sector Outperformers:

• Banks +1.31% 2) Biotech +.96% 3) Defense +.89%
  

Stocks Rising on Unusual Volume:

• JASO and CLDX

Stocks With Unusual Call Option Activity:

• 1) EUO 2) JBLU 3) SSYS 4) BPI 5) OPTR
  

Stocks With Most Positive News Mentions:

• 1) BWLD 2) APA 3) ZTS 4) DSX 5) NWSA
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg: 

• China Suspends PMI Details in New Hurdle for Analysis: Economy. China suspended the release of industry-specific data from a monthly survey of manufacturing purchasing managers, with an official saying there’s limited time to analyze the large volume of responses. “We now have 3,000 samples in the survey, and from a technical point of view, time is very limited -- there are many industries, you know,” Cai Jin, vice president of the China Federation of Logistics & Purchasing, which compiles the data with the National Bureau of Statistics, told reporters yesterday in Beijing. The disappearance of data on industries including steel adds to issues hampering analysis of the world’s second-biggest economy, after fake invoices inflated trade numbers this year. Neither the federation’s nor the statistics bureau’s statement on the manufacturing Purchasing Managers’ Index this week gave readings on export orders, imports and finished-goods inventories or an explanation for the omissions. “Suspension of the monthly data, without prior notice, makes the research work difficult for us,” Xu Xiangchun, a steel researcher and chief analyst at Mysteel.com, said by phone from Beijing. “The random absence of official data is disorienting.”    

• China Enters Nomura Danger Zone as Fed Tapers: Cutting Research. China, Hong Kong and India are in a “high-risk danger zone” because their monetary policies have stayed too loose over the past four years, according to Nomura Holdings Inc. A June 28 report by the bank’s economists and strategists showed the average ratio of domestic private debt to gross domestic product across Asia had ballooned to 167 percent in 2012 and most of the region’s property markets are “frothy.” The debt ratio has increased by over 50 percentage points in Hong Kong and Singapore and between 30 and 40 points in Malaysia, South Korea, China and Thailand. A measure of monetary policy based on output gaps and inflation shows that interest rates have also been persistently below what economic models suggest, and even more so if the financial cycle is accounted for, the report said. That leaves countries financially vulnerable. Indonesia is at the lower end of the high-risk zone, while South Korea, Malaysia, Singapore and Thailand are in the middle-risk range, ahead of Japan. The Philippines and Taiwan seem the least prone to any economic crisis. Hong Kong is a Special Administration Region of China although it pegs its currency to the dollar.

• PBOC to Extend Cash Crunch as Zhou Discovers Flaws: China Credit. China’s finance companies predict central bank Governor Zhou Xiaochuan will extend a cash crunch, albeit without June’s dramatic swings, as he calls for the market to “discover and correct” excessive lending. The seven-day repurchase rate, which measures interbank funding availability, may average 4 percent in the third quarter, compared with 3.62 percent in the past year, according to the median estimate in a Bloomberg survey of eight analysts. The rate surged to a record 10.8 percent on June 20, and averaged 4.49 percent last quarter, the highest since the National Interbank Funding Center started compiling the data in 2003. “While inflation remains controlled, the central bank may want to keep money-market rates elevated to reduce banks’ off-balance-sheet assets,” said Huang Wentao, a bond analyst at China Securities Co. in Beijing, the country’s second-biggest brokerage underwriter of bonds. “We probably won’t see a return of the extreme tightness in June, but a 4 percent repo rate is still very high.” 

• One-Third of China Shipyards Face Closure as Orders Slump. China, the world’s biggest shipbuilding nation, may see a third of its yards shut down in about five years as they struggle to win orders amid a global vessel glut, an industry group said. The yards in peril of closure have failed to get any orders “for a very long period of time,” Wang Jinlian, secretary general of the China Association of National Shipbuilding Industry, said in an interview yesterday. They may end operations in three to five years if the “gloomy market persists.” The nation has more than 1,600 shipyards. 

• China Probes 60 Drugmakers in Effort to Curb Drug Prices. China’s top economic planning agency is investigating the costs and prices of drugmakers including GlaxoSmithKline Plc (GSK), Merck & Co., Novartis AG (NOVN) and Baxter International Inc. (BAX) to improve the pricing system for medicines.

• Hong Kong Builders Seen Slowing Home Sales to Control Prices. Hong Kong builders will put the brakes on home sales for the rest of the year after government curbs to rein in prices sapped demand, according to Bocom International Holdings Co. and Centaline Property Agency Ltd.

• Christmas Candy Stockpiled in July as Aussie Slump Looms. The weakening Aussie, which on July 3 fell below 91 U.S. cents for the first time since 2010, will push up import costs about five percent even if it ends the year at 96 U.S. cents, according to Bank of America Corp.’s Merrill Lynch unit. Retailers must choose whether to swallow higher prices and lose profits, or try to pass them on to customers and risk sales amid weak consumer confidence, the bank said. “A fall in the dollar can make it pretty expensive” for retailers, Tim Samway, managing director of Hyperion Asset Management Ltd., said by phone from Sydney. “The effect is reasonably predictable: import costs go through the roof.” 

• Asian Stocks Climb With Dollar Before U.S. Jobs Data. Asian stocks rose, poised for a second weekly gain, and the dollar strengthened before data that may show the U.S. jobs market improved and after European policy makers signaled borrowing costs will be kept low. Asian bond risk slid, while copper and silver fell. The MSCI Asia Pacific Index climbed 0.7 percent to 131.60 as of 12:49 p.m. in Tokyo, taking its weekly gain to 0.8 percent. The Dollar Index, which tracks the currency against six major peers, rose 0.8 percent, the most since June 19. Standard & Poor’s 500 Index (SPX) futures jumped 0.9 percent after U.S. markets were closed yesterday for Independence Day. The Markit iTraxx Asia index, which measures the cost of insuring bonds against default, sank 5 basis points. Copper futures lost 1.2 percent and silver dropped 1 percent.

• Italy’s Economic Recovery Still Faces Headwinds, IMF Review Says. Italian prime Minister Enrico Letta still faces an uphill battle in helping his country exit its longest recession in more than two decades, the International Monetary Fund said. “Growth prospects remain weak, unemployment is unacceptably high, and market sentiment is still fragile.” The IMF downgraded its growth outlook for Italy this year, saying gross domestic product will shrink 1.8 percent, compared with its April forecast of 1.5 percent.

Wall Street Journal: 

• Egypt Crisis: Live.  

• ECB, BOE Signal Low Rates to Remain. Low Interest Rates Promised as Crisis in Europe Rekindles.

• BOJ Will Discuss China Risk to Japan's Recovery in Meeting. The Bank of Japan is worried it still may not be strong enough to withstand sudden shocks from overseas, citing people familiar with the BOJ's thinking. Concern over whether China can achieve a soft landing likely put it near the top of the agenda of next week's BOJ policy-board meeting, the people said.

• Economies Face Oil and Rate Headwinds.

CNBC: 

• Second Wind for Regulators Leaves Banks Feeling Bruised. The past fortnight has been a potentially expensive one for banks on both sides of the Atlantic. This week, the Federal Reserve unveiled details of the U.S. implementation of the international Basel III rule book on capital. Two weeks ago, the top eight UK banks were told how much additional capital they must find over the coming months.

Zero Hedge: 

• Kyle Bass Hunkers Down: "We Dramatically Reduce Portfolio Risk".

• Clashes Between Foes, Supporters Of Mursi In Cairo Caught On Tape. (video)

• The Diminishing Effects Of QE Programs.

• The World Reacts To Egypt's Coup.

• What The ECB's "Unprecedented" Forward Guidance Means.

• The Risk Of European Centralization.

Business Insider: 

• Thousands Demonstrated Against Government Spying On July 4th.

• A Huge Chunk Of Egypt Is Angry That Their Democratically-Elected President Was Overthrown.

• BASHAR ASSAD: IT'S OVER, I WIN.

• DEAR AMERICA: Here's Why We Need To Stop PRISM.

• The Commodities Supercycle Is Over — Here's What's Next.

• LIVE FROM CAIRO: Egyptians Denounce Obama For Supporting Morsi.

• The Latest Delay Is A Bad Omen For Obamacare.

AP:

• Samsung estimates disappointing Q2 profit. Even after setting a record high profit, Samsung Electronics disappointed investors who increasingly doubt its mainstay smartphone business can maintain rapid growth.

Reuters: 

• Moody's fears Brazil economic weakness could extend into 2014. Brazil's current economic weakness could extend into 2014, hurting investor and consumer confidence and eventually the country's tight jobs market, Moody's analyst Mauro Leos said on Thursday. An extended period of poor economic performance would raise questions about Brazil's growth potential and its ability to keep reducing debt ratios, said Leos, adding that Moody's intends to decide whether to remove its positive outlook on Brazil's credit rating by the end of the year. Moody's, Standard & Poor's and Fitch currently rate Brazil at the second-lowest investment grade rating, but Moody's is the only one with a positive outlook on that rating. S&P last month revised its Brazil rating outlook to negative, saying there was a one-in-three chance of a downgrade in the next two years.

• U.S. stimulus curbs may spark European property price falls. European commercial property prices may fall as much as 5 percent in response to last month's signals that the U.S. Federal Reserve is likely to rein in its support for the economy later this year, real estate experts said. Fed chief Ben Bernanke's declaration that it could end its programme of bond-buying next year was a watershed moment for financial markets grown used to a steady drip of support from central banks. For European property markets it will slow what was already a patchy recovery as the sovereign debt crisis continues to depress business sentiment and tenant demand. "Property is priced for sustained stimulus," said Jefferies analyst Mike Prew, who downgraded six British property stocks including British Land, Hammerson and Land Securities on Wednesday for this reason. "Ending QE is like passing the baton to the last runner in an Olympic relay race and in this case it will be dropped."

The Guardian: 

• France 'runs vast electronic spying operation using NSA-style methods'. Intelligence agency has spied on French public's phone calls, emails and internet activity, says Le Monde newspaper.

Handelsblatt:

• ECB Policy Results Lack Legitimacy, Buch Says. Many measures takes by ECB have had asymmetric results on euro-region members, causing redistribution of wealth, Claudia Buch, head of IWH economic institute and member of German govt's council of economic advisers, says. The ECB isn't mandated for such redistribution, she said. Buch sees danger that Europe faces situation like Japan, where "zombie banks" have financed "zombie companies".

El Confidencial: 

• Spain Banks Hold $73.4b of Portugal Debt. Spanish banks' exposure to Portuguese sovereign debt represents 52% of total European banks' exposure, citing Bank For International Settlement Data.

Liquidity crunch a catalyst for big China slowdown – analysts The mini liquidity crunch is the early warning sign of a substantial economic correction long overdue, amid rising leverage and a broken growth model, say bearish analysts.


While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3222433/Liquidity-crunch-a-catalyst-for-big-China-slowdownanalysts.html?copyrightInfo=true

China Securities Journal:

• Some Chinese companies awaiting IPOs may obtain regulatory permission at end-July or early-August, citing investment bankers and company officials.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are +.25% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 158.50 +6.0 basis points.

• Asia Pacific Sovereign CDS Index 118.75 +9.0 basis points.

• FTSE-100 futures +.23%.

• S&P 500 futures +.98%.

• NASDAQ 100 futures +1.02%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (TECD)/1.02

Economic Releases
8:30 am EST

• The Change in Non-Farm Payrolls for June is estimated to fall to 165K versus 175K in May.

• The Unemployment Rate for June is estimated to fall to 7.5% versus 7.6% in May.

• Average Hourly Earnings for June are estimated to rise +.2% versus unch. in May.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed deadline for stress test results, Japan Leading Indicators and the German Factory Orders report could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the day.