THE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - November 16, 2010

As we look at today’s set up for the S&P 500, the range is 22 points or -0.65% downside to 1190 and 119.% upside to 1212.  Equity futures are trading below fair value as investors become increasingly skeptical about QE2's ability to address the major issues facing the US economy as evidenced by the rise in the yield curve towards the end of yesterday's session. Heavy falls in China have also hit sentiment which has seeped into European markets. Today sees several macro releases including PPI, Industrial Production, Capacity Utilization, and NAHB Housing Market Index.

  • Abraxas Petroleum (AXAS) reported 3Q adj. EPS 2c loss vs. est. 2c profit
  • Aeropostale (ARO) boosted share-repurchase program by $300m, bringing total to $1.15b
  • Bank of New York Mellon (BK): Berkshire Hathaway disclosed stake of 1.99m shrs as of Sept. 30
  • Nordstrom (JWN) sees fiscal 2010 EPS $2.60-$2.65-shr, had seen $2.50-$2.65 Aug 12, vs est. $2.65
  • RightNow Technologies (RNOW) plans offering of $125m 20-year convertible senior notes
  • TD Ameritrade Holding (AMTD) said client trades per day in Oct. were up 14% from the previous month, down 14% Y/y
  • Urban Outfitters (URBN) sees 4Q comps consistent with 3Q, reported 3Q rev. $573.6m vs est. $578.3m

 PERFORMANCE

  • One day: Dow +0.08%, S&P (0.12%), Nasdaq (0.17%), Russell +0.09%
  • Month-to-date: Dow +0.75%, S&P +1.22%, Nasdaq +0.26%, Russell +2.36%
  • Quarter-to-date: Dow +3.84%, S&P +4.96%, Nasdaq +6.13%, Russell +6.48%
  • Year-to-date: Dow +7.42%, S&P +7.41%, Nasdaq +10.78%, Russell +15.12%
  • Sector Performance: Financials +0.44%, Utilities +0.34%, Industrials +0.31%, Consumer Staples 0.03%, Healthcare 0.03%, Consumer Discretionary (0.19%), Tech (0.29%), Energy (0.51%), and Materials (0.79%)
  • MARKET LEADING/LAGGING STOCKS YESTERDAY: Ford +4.29%, EK +3.46% and Colgate Palmoliv +2.34%/Pulte -5.47%, Akami -5.08% and Sprint -4.96%.

 EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 185 (+1792)  
  • VOLUME: NYSE: 879.52 (-13.18%)
  • VIX: 20.20 -1.99% - YTD PERFORMANCE: (-6.94%) - BEARISH TREND
  • SPX PUT/CALL RATIO: 1.46 from 1.22 +19.43%  

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 15.05 -0.710 (-4.508%)
  • 3-MONTH T-BILL YIELD: 0.14% +0.01%
  • YIELD CURVE: 2.39 from 2.25

COMMODITY/GROWTH EXPECTATION:

  • CRB: 306.02 +0.80%
  • Oil: 84.86 -0.02% - BULLISH
  • COPPER: 391.80 +0.51% - BULLISH
  • GOLD: 1,371.75 +0.48% - BULLISH

CURRENCIES:

  • EURO: 1.3614 -0.56% - BEARISH
  • DOLLAR: 78.518 +0.56%  - BULLISH

OVERSEAS MARKETS:

 

European markets:

  • FTSE 100: (1.14%); DAX (0.34%); CAC 40 (1.12%)
  • Major indices are broadly lower in response to steep declines in China with Basic Resources, Construction, Industrial Goods and Banks hardest hit.
  • Pressure on Ireland to accept some form of EU bailout continues to unsettle investors with spreads on peripheral European soverign debt pushing wider again.
  • EU Finance Minister set to meet at 16:00 London time. Before that, Ireland's cabinet is set to discuss its 4-year fiscal plan. Spain and Greece tap bond markets.
  • Germany Nov ZEW current situation +81.5 vs cons +75 and prior +72.6
  • Eurozone Oct Inflation +1.9% y/y vs cons +1.9%
  • UK Oct CPI 3.2% y/y vs cons 3.1% and prior 3.1%, RPI +4.5% y/y vs cons +4.6% and prior +4.6%  

Asian markets:

  • Asian Markets: Nikkei (0.31%); Hang Seng (1.39%); Shanghai Composite (3.98%)
  • Worries about speculation of Chinese monetary policy tightening and European sovereign debt caused caution to reign in Asian markets, which mostly fell today.
  • Energy shares fell on lower crude-oil prices.
  • Banks and BHP Billiton led Australia to a small gain. Australia & New Zealand Banking Group rose on a report that someone else would buy Lone Star Funds’s 51% stake in Korea Exchange Bank , though it pared its gains to 1% when it said it is still in due diligence.
  • Japan declined slightly, having been boosted by a weaker yen, but pressured by profit-taking and heavy selling in futures contracts. All Nippon Airways fell 2% on a report that passengers to China are falling even as ticket prices plummet.
  • South Korea fell after a 25-bp interest-rate increase.
  • Hong Kong fell on China’s afternoon drop. China property stocks fell on new restrictions on foreigners’ ability to buy property in the country.  Large-cap banks and energy shares took the brunt of the hit as China dropped fairly sharply again on worries about further monetary tightening and a report that the country would unveil food price controls.
  • Coal and metal stocks fell.
  • China Oct foreign direct investment +7.9% y/y.

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



Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more