Morning Review - 102610

8/8/2019 Morning Review - 102610

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Nicholas Colas (Chief Market Strategist): 212 448 6095 or [email protected] Clark: 212 448 6085 or [email protected]

Beth Reed: 212 448 6096 or [email protected]

In summary, if you just looked at the XLF you would be forgiven for thinking that absolutely nothing is going on in the financials. It is as if the XLF cant read thenewspaper. Well, it cant, but you get the idea. To the ETF world, the foreclosure mess is simply not an interesting or investible event.

This leads to two closing points: The big bank stocks are being sold by large institutional owners. There seems to be little-to-no pressure from ETF-based fast money traders. Volumes for

the XLF are down, and supply/demand looks to be well harmonized. Such has not been the case during past periods of financial turmoil. Macro players dont think the selling is over. One reason for the still-growing popularity of ETFs is their ability to let investors pinpoint macro themes and

leave actual stock selection to an index. The big investment wins in 2010 have, after all, had a strong macro flair to them: long industrials for a weak dollar play,long gold (same reason), long Treasuries, etc. The lack of any pickup in volume for the XLF is a signal that this constituency doesnt yet see a bottom in financial

stocks.

So well keep track of the trading volumes and share creation/redemption in the XLF as a sign that a new buyer base is warming up to the bank stocks.


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U.S. EQUITIES

In earnings news, RSH sank 8.8% after reporting an unexpected drop in quarterly gross margin thank to weakness in electronics accessories and higherdemand for lower-margin mobile handsets. AMGN (+0.7%) and TXN (+1.1%) advanced ahead of after-the-bell earnings announcements. Meanwhile,shares of cable and satellite companies strengthened after Barclays raised price targets on CMCSA (+1.6%), DTV (+1.2%), CVC (-0.2%) and TWC (+0.9%),while in financial land BAC fell 2.5% as a WSJ report revealed the bank admitted to some mistakes in foreclosure files while beginning the process ofresubmitting documents in more than 100K cases.

Important Conferences/Corporate Meetings Today:Security Research Associates Fall Growth Stock Conference San Francisco, CA

Important Earnings Today (with Estimates) From

Source: Thomson ONE

Three Day (High 1193.00; Low 1173.25):Prior Day SPX (High 1196.14; Low 1184.74; Close 1185.62):

S&P Futures

One Day (High 1193.00; Low 1180.50): AFL: $1.39 ARG: $0.81 AKS: $-0.34 ATI: $0.15 ANAT: $1.24 AVX: $0.34 BIIB: $1.20 BXP: $1.02 BMY: $0.53 MHP: $1.09 MCK: $1.08

BRCM: $0.56 CBT: $0.66 CSL: $0.68 CATY: $0.05 CBG: $0.17 CE: $0.74 CNC: $0.47 CHRW: $0.61 CIT: $0.50 MDP: $0.50 MYL: $0.42

PNRA: $0.74 QEP: $0.33 STR: $0.14 RYN: $0.58 RF: $-0.10 RFMD: $0.14 RCL: $1.56 SHW: $1.68 SKT: $0.65 AMTD: $0.23 TFX: $0.97

COH: $0.55 CMP: $0.77 DV: $0.95 DWA: $0.35 DEP: $0.37 DD: $0.34 EQIX: $0.27 FFIV: $0.55 FIS: $0.51 NBR: $0.23 NLC: $0.39

FISV: $1.00 F: $0.37 IBKC: $0.54 ILMN: $0.24JCI: $0.57JLL: $0.95 LII: $ 0.83 LIFE: $0.78 MEE: $-0.14 NOV: $0.90 NVLS: $0.84

TLAB: $0.14 UA: $0.60 UIS: $0.86 X: $0.22 VLO: $0.47 WLT: $2.59 WU: $0.34 WYN: $0.63Source: Bloomberg


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FIXED INCOME

Source: Bloomberg

Todays Important Economic Indicators/Events (with Consensus):Case-Shiller HPI (9:00am EST)Conference Board Consumer Confidence (10:00am EST): 50.0FHFA House Price IndexState Street Investor Confidence Index

Source: Bloomberg

The Treasurys $10 billion sale of 5-year TIPS drew a negative yield (-0.55%) for the first time, suggesting investors anticipate the central banks presumedQE2 strategy will spark inflation in the economy. Coverage at the auction was solid at 2.84 times, while indirect bidders accounted for 39.4% of thepurchases versus an average of 38.5%. Benchmark yields were little changed at 2.56% and the yield on the long bond closed 2 bps lower after tradingdown as much as 7 bps intraday. The Fed next meets November 2-3 after which it is widely expected to provide details about a second round ofmonetary easing.


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Morning Review - 102610

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