THE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - October 25, 2010

As we look at today’s set up for the S&P 500, the range is 23 points or -1.53% downside to 1165 and 0.42% upside to 1188.  Equity futures are trading above fair value in response to the tougher than expected rhetoric to come out of the weekend G20 meeting in South Korea. The G20’s communiqué stated that member countries will “refrain from competitive devaluation of currencies”, moving towards “more market determined exchange rate systems that reflect underlying economic fundamentals."

The US proposal to reduce trade imbalances by setting hard targets on current account balances was rejected at the meeting, though non-binding guidelines, monitored by the IMF, will be put in place.

  • Barron’s - Affiliated Managers Group (AMG) may rise on global growth through acquisition of smaller rivals and higher pension fund investment.
  • Applied Signal Technology (APSG) hired BofA to explore strategic options
  • Barron’s - Hewlett-Packard (HP), Cisco Systems (CSCO), Dell (DELL), IBM (IBM), Oracle (ORCL) may be challenged by the growth of cloud computing.
  • Barron’s - Las Vegas Sands (LVS) may be attractive long-term as the economy and gaming market expands in Singapore -
  • Barron’s - Nalco Holding (NLC) may rise 50% as growth in China boosts demand for pollution-control technologies.
  • Regis (RGS) is drawing interest from several PE bidders, Reuters reported, citing 3 sources familiar
  • Value Line (VALU) said it will pay a $2-a-share special div. vs regularly scheduled 20c-shr payout
  • Wynn Resorts (WYNN) filed with regulators to sell undisclosed amount of stock

 PERFORMANCE

  • One day: Dow (0.13%), S&P +0.24%, Nasdaq +0.80%, Russell +0.76%
  • Month/Quarter-to-date: Dow +3.19%, S&P +3.67%, Nasdaq +4.68%, Russell +4.04%
  • Year-to-date: Dow +6.76%, S&P +6.10%, Nasdaq +9.27%, Russell +12.48%
  • Sector Performance: Energy +0.66%, Consumer Discretionary +0.55%, Consumer Staples +0.35%, Technology +0.29%, Financials (0.03%), Healthcare +0.03%, Industrials (0.03%), (0.31%), Utilities (0.65%), and Materials (0.72%)

 EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 593 (+652)
  • VOLUME: NYSE - 773 (-26.79%)
  • MARKET LEADING/LAGGING STOCKS YESTERDAY: Compuware +12.70%, Anadarko +6.33% and Nvidia +6.31%/Leggett &Platt -8.61%, Allegheny -4.89% and Firstenergy -4.60%.
  • VIX: 19.27, -2.63% - YTD PERFORMANCE: (-11.12%)
  • SPX PUT/CALL RATIO: 1.06 from 1.70 -37.89%

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 16.57 -0.304 (-1.803%)
  • 3-MONTH T-BILL YIELD: 0.13%   
  • YIELD CURVE: 2.24 from 2.20

COMMODITY/GROWTH EXPECTATION:

  • CRB: 297.23 +0.57%
  • Oil: 81.69 +1.4% - BULLISH
  • COPPER: 379.70 +0.41% - OVERBOUGHT
  • GOLD: 1,324.00 -0.03% - BULLISH

CURRENCIES:

  • EURO: 1.3945 +0.59% - BULLISH
  • DOLLAR: 77.472 +0.07%  - BEARISH

OVERSEAS MARKETS:

European markets:

  • European markets opened higher as G20 finance ministers agreed to avoid competitive currency devaluations and continuing M&A activity buoyed sentiment.
  • Following the G20 meeting the US dollar resumed its slide, leading to higher metal prices.
  • Stock Exchange shares were aided by Singapore Stock Exchange's bid for the Australian Stock Exchange.
  • Luxury goods shares moved higher after LVMH's purchase of 14.2% stake in Hermes.
  • Auto's are also amongst the leading gainers extending Friday's gains post Volkswagen results.
  • Only the bank sector is trading lower on the day, led by Italian banks after Banco Popolare announces a capital raising and the FT reported that Italy's big banks prepare to slash dividends.

Asian markets:

  • Asian markets were mostly up today after the G20 promised this weekend that it would address global currency devaluations.
  • China moved up on the strength of metals stocks. 
  • Australia was focused on ASX which soared 19% after the Singapore Exchange offered A$8.4B in cash and stock to buy it.
  • Banking stocks rose, and Santos and Beach advanced 3% and 7%, respectively, when Santos addressed concerns that it would not have enough coal seam gas to support its LNG JV at Gladstone.
  • Carmakers and shipbuilders gained, but tech stocks were weak in South Korea.
  • On low volume, Japan declined as the yen continued to rise against the dollar.
  • Japan September trade surplus +54% y/y; exports rose 14.4%, and imports grew 9.9%. September restaurant sales +0.3% y/y, customer volume +3.9%, sales per customer (3.4%).
Howard Penney
Managing Director

THE DAILY OUTLOOK - levels and trends

THE DAILY OUTLOOK - S P

THE DAILY OUTLOOK - VIX

THE DAILY OUTLOOK - DOLLAR

THE DAILY OUTLOOK - OIL

THE DAILY OUTLOOK - GOLD

THE DAILY OUTLOOK - COPPER