Archive | Investing RSS feed for this section

Investors Pile Into Bonds Through AGG

12 Oct

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares Barclays Aggregate Bond Fund (AMEX: AGG) where we have detected an approximate $184.9 million dollar inflow — that’s a 1.4% increase week over week in outstanding units (from 121,200,000 to 122,900,000).

The chart below shows the one year price performance of AGG, versus its 200 day moving average:

Looking at the chart above, AGG’s low point in its 52 week range is $103.85 per share, with $111.03 as the 52 week high point — that compares with a last trade of $109.11. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique — learn more about the 200 day moving average ».


Special Offer: Find out what Dave Moenning is holding in the ETF Channel Flexible Growth Investment Portfolio with a special 20% off coupon from Forbes and 30 Days Free.


 

Exchange traded funds (ETFs) trade just like stocks, but instead of ”shares” investors are actually buying and selling ”units”. These ”units” can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.


 

 

Advertisements

IVV, XOM, PG, JNJ: Large Inflows Detected at ETF

12 Oct

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares S&P 500 Index Fund (AMEX: IVV) where we have detected an approximate $78.0 million dollar inflow — that’s a 0.3% increase week over week in outstanding units (from 210,300,000 to 210,950,000). Among the largest underlying components of IVV, in trading today Exxon Mobil Corporation (NYSE: XOM) is up about 0.9%, Procter & Gamble Company (NYSE: PG) is up about 0.5%, and Johnson & Johnson (NYSE: JNJ) is higher by about 0.8%. For a complete list of holdings, visit the IVV Holdings page »

The chart below shows the one year price performance of IVV, versus its 200 day moving average:

Looking at the chart above, IVV’s low point in its 52 week range is $107.80 per share, with $137.64 as the 52 week high point — that compares with a last trade of $121.59. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique — learn more about the 200 day moving average ».


Special Offer: Find out what Dave Moenning is holding in the ETF Channel Flexible Growth Investment Portfolio with a special 20% off coupon from Forbes and 30 Days Free.


 

Exchange traded funds (ETFs) trade just like stocks, but instead of ”shares” investors are actually buying and selling ”units”. These ”units” can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.

Stocks Blow Off Bad Alcoa Earnings Giving Credence To Bull Market

12 Oct

U.S. stocks are opening sharply higher open on Wall Street, following gains in European markets. S&P futures are up more than 10 handles. We are once again seeing investors shrug off bad news and continue buying, a tell-tale sign of a bull market. Last night Slovakian parliament was unable to pass approval of an EFSF expansion, although it is expected to pass in later votes. Alcoa (AA) also disappointed with its earnings report, and is trading off nearly 4%.

European officials continue to strike a firmer tone when discussing measures to lift the region out of its current debt woes. Back in the U.S., despite Alcoa’s disappointing kick-off, investors continue to be optimistic about earnings season.

PITTSBURGH, PA - JANUARY 7: (FILE PHOTO) Alcoa...
Alcoa whiffed

Since coming off of the bear market bottom on March 9, 2009, earnings season has been a boon for stocks. Watch to see if companies can maintain the upward momentum this quarter, especially with future guidance.

Investors will also be on the lookout for FOMC minutes from the September 20-21 meeting. As a result of that meeting, the Fed announced Operation Twist, a plan to swap shorter-maturity bonds for longer-dated instruments. The plan had three dissenters, and the market reacted very negatively to its introduction, so it will be interesting to see the discussion that went on, reflected in the minutes.

With a heavy short interest in the market, stocks are hardly taking the time to pause before breaking multi-month downtrends. Yesterday was a healthy digestion day, and a sign that bulls remain in control. Shorts are getting squeezed, adding fuel to the rally. Some stocks are starting to make new highs, making tremendous moves off the lows. Technically, the SPY will be knocking on the door of bigger resistance very soon. There is a small point of resistance at 1204-1206, and then the major zone is really 1220-1230.

*Disclosures: Scott Redler is long SNDK, SINA, JPM, XOM. Short SPY.

Slovak Parliament Rejects EFSF Vote, Government Falls

12 Oct

Slovakia’s Parliament rejected an initial vote to ratify the extended EFSF, toppling the government which lost a confidence vote, and putting pressure on Eurozone leaders looking to avert a new financial crisis.

Prime Minister Iveka Radicova had put her government on the line, trying the EFSF ratification to a confidence vote on her cabinet, Reuters reported.  Radicova failed to win the vote, forcing the ruling party to reach to opposition parties to secure the needed votes.

A second vote is expected to come later this week, where Radicova will need to count with the support of leftist opposition party Smer, whose leaders said would be receptive to the vote given major concessions.

Regardless, Radicova said she was personally committed to passing the EFSF before a key meeting of Eurozone leaders originally scheduled for October 14, now delayed to October 23.

Slovakia has been pushed to the center of Euro politics and became a focal point for markets, still on edge as Europe struggles to find a solution to its sovereign debt woes.  In contention is an extended EFSF or European Financial Stability Facility.  The new EFSF is designed to reduce systemic risk by having both greater flexibility in its operations and a larger guarantees from which to operate.  These guarantees are provided by EU members, with Germany the main contributor.

German Chancellor Angela Merkel staked her reputation in the Euro rescue, getting the extended EFSF ratified by the Bundestag.  But given the nature of the EU, the EFSF must be ratified unanimously by all members.

Slovakia, one of the poorest members of the EU, is expected to ratify the EFSF.  Adding his voice to that of PM Radicova, Finance Minister Ivan Miklos said the EFSF would pass one way or another.  A failure to pass win the EFSF vote would rattle markets and force Euro leaders and the ECB to find alternative solutions.

 

OPEC Cuts Global Oil Demand Forecast, Sees U.S. Growing 1.8% In 2012

12 Oct

Estimates for crude oil demand in 2011 and 2012 were once again downgraded by the world’s largest oil cartel, the Organization of Petroleum Producing Countries (OPEC).  In their latest oil market report, OPEC lowered its forecasts for the global economy and the U.S., while they expect softness in 2012 oil demand to outpace the slowdown in supplies, putting further pressure on prices.

Global oil demand in 2011 will average 87.7 million barrels per day, OPEC announced Tuesday, up 0.88 million barrels per day from previous estimates, which had already suffered various downward revisions.

Oil prices have already broken down this year, as the specter of a global economic recession grapples markets.  Despite a recent rally, Brent crude is down more than 10% in the last 6 months while WTI has tumbled almost 20% in the same time period.

OPEC’s revised numbers reflect the cartel’s concern with the global economy.  They expect the U.S. to grow at an average 1.6% this year, inching up to 1.8% in 2012.  While they see some sort of stability in relation to labor markets and manufacturing, OPEC still thinks the U.S. is suffering the consequences of the Great Recession.  “Growth seems only to be possible with the backing of the government or the Federal Reserve Board (FED), providing supportive monetary measures,” they note. (Read U.S. Economy Is Five Years Into Its Own Lost Decade).

Going forward, OPEC sees the global economy growing 3.7% in 2012 (up from 3.6% in 2011).  Global oil demand is expected to increase by 1.19 million daily barrels, or 1.36%, to 89.01 million barrels per day.  Interestingly, OPEC sees U.S. oil demand as playing a major role in total world demand next year, with retail petroleum prices being one of the major catalysts.

China will be another big player.  Their demand is expected to be less solid than in other years due to government policy, both in slowing inflation and avoiding overheating, and putting a cap on the use of transport fuel by the Chinese government.  Demand in 2011 is expected to average 9.43 million barrels a day, and is estimated to grow 0.48 million barrels or 5.13% to 9.92 million barrels per day. (Read China Buys Shares In Major Banks As Shadow Banking Credit Grows).

What matters the most for markets, though, are oil prices.  These are a consequence of the balance between supply and demand.   In a piece I wrote last week, I explained that producers’ capacity to manage the supply-demand balance would keep the market tight, and prices volatile and high.

Demand for OPEC oil will remain unchanged in 2012, according to their oil market review, at 26.89 million barrels per day, as the downward adjustment in global demand outpaced the downward revision in non-OPEC supply (forecasted at 53.46 million barrels per day).  Thus, markets will remain tight through the year, despite substantially lower demand growth than expected.

While oil prices tumbled more than 15% in the third quarter, prices can remain high next year.  If indeed supply-demand balances remain tight, JPMorgan’s commodities research team estimates Brent crude will average $115 through 2012.

According to RBC Capital Markets, large caps like BP, Exxon Mobil, andChevron are discounting a long-term WTI equivalent of $61 per barrel of oil equivalent.  If the Brent-WTI spread remains at $24.30, like it did through September (its sixth consecutive month of widening spread), that would translate to Brent at $85.30, suggesting large caps are set to thrive in the current environment. (Read Crude Oil Will Average $115 Through 2012).

Pepsi Beats By A Penny, CEO Rebuffs Breakup Talk

12 Oct

Beverage and snacks company PepsiCo reported third-quarter earnings of $1.31 per share Wednesday morning, narrowly topping the consensus analyst estimate of $1.30.

Pepsi recorded revenue of $17.6 billion, up 13% from a year ago (9% excluding the acquisition of Russian dairy and juice company Wimm-Bill-Dann. Worldwide snack volume from the company’s Frito-Lay business, which houses brands like Doritos and Cheetos, was up 8% in the third quarter, while beverage volume was up 4%. Before excluding certain items, like merger and acquisition costs, Pepsi’s earnings came in at $1.25 per share.

Regionally, said its Latin American food volume grew 3.5%, thanks to increases in Mexico and Brazil, while North American Frito-Lay volumes were up just 1%, though revenue and margins were also higher. China, the Middle East and Africa continued to be a growth engine for Pepsi, growing 16% in Q3 with solid double-digit snack volume gains in China, India and Thailand. Beverage volume was up double digits in India and Saudi Arabia.

Europe is a major concern this earnings season, with investors worried that the ongoing debt crisis in the Euro zone may stifle economic growth in the region for some time to come. The Wimm-Bill-Dann acquisition helped drive double-digit volume gains in both snacks and businesses, but snack volume was still up 4% excluding the new addition thanks to strength in Turkey and France. Beverage volume, excluding Wimm-Bill-Dann, was down in the mid-single digits.

Tuesday, Alcoa kicked off earnings season with a disappointing report that also noted weakness in Europe.

On the conference call following Wednesday morning’s report, Pepsi Chief Executive Indra Nooyi reiterated that the company believes its snacks and drinks units will be most successful by remaining integrated. It has been suggested that Pepsi could be the latest company to break up its businesses in the wake of a decision earlier this year by Kraft Foods to divide its grocery and snack businesses.

Nooyi also said that there is still too much uncertainty to offer any firm forecasts for 2012, according to TradeTheNews.com.

Citigroup analyst Wendy Nicholson noted sequential slowing in snacks and beverages in a note Wednesday morning, with developed markets a drag, but said the quarter was mostly in line with estimates and featured “no real bad news.” she expects the stock to tread water though, largely due to concerns about North American market share and the lack of visibility into 2012 earnings, particularly in terms of currency and commodity impact.

Pepsi shares gained 3.2% to $62.87 Wednesday morning, while rival Coca-Cola, due to report earnings Oct. 18, was up 0.4% to $67.06. The major indexes made cautious gains, on hopes that Slovakia’s government will eventually clear an expanded loan facility for debt-choked European countries after rejecting the deal Tuesday.