THE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - December 21, 2010

As we look at today’s set up for the S&P 500, the range is 11 points or -0.65% downside to 1239 and 0.23% upside to 1250.  Equity futures remain range bound in what is expected to be a positive start to trading as the pre-Christmas rally finds further strength.  A reduction in tension on the Korean peninsula and supportive comments for the Euro from the Chinese Vice-Premier Wang Qishan looks to be the main catalyst behind today's positive tone.  With little in the way of macro headlines expected this session, activity is expected to remain light.

  • Adobe Systems (ADBE) sees 2011 rev. at least $4.18b, vs est. $4.08b
  • AOL (AOL) agrees to buy social identity site about me Inc., terms not disclosed
  • Biogen Idec (BIIB) says it has acquired a unit of Neurimmune, which includes worldwide rights to three preclinical immunotherapy programs
  • Darden Restaurants (DRI) sees year sales up 5%-6%, had seen up 5.5%-6.5%; implies rev. $7.47b-$7.54b vs est. $7.50b
  • HCP (HCP) cut FY adj. FFO forecast to $2.17-$2.23 from $2.18-$2.24, vs est. $2.19
  • Jabil Circuit (JBL) sees 2Q core EPS 49c-53c, vs est. 45c
  • Paychex (PAYX) reported 2Q EPS 37c vs est. 35c
  • Pepco Holdings (POM) sees FY 2011 capex $1.09b, FY 2012 $1.18b

PERFORMANCE

  • One day: Dow (0.12%), S&P +0.25%, Nasdaq +0.25%, Russell +0.36%
  • Month-to-date: Dow +4.29%, S&P +5.64%, Nasdaq +6.06%, Russell +7.61%
  • Quarter-to-date: Dow +6.4%, S&P +9.28%, Nasdaq +11.86%, Russell +15.7%
  • Year-to-date: Dow +10.07%, S&P +11.84%, Nasdaq +16.76%, Russell +25.09%
  • Sector Performance: Energy +0.71%, Consumer Discretionary +0.61%, Telecom +0.49%, Materials +0.42%, Financials +0.37%, Utilities +0.37%, Tech +0.07%, Healthcare +0.06%, Industrials +0.01%, and Consumer Staples (0.14%)    

 EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -45 (-391)  
  • VOLUME: NYSE 829.77 (-58.90%)
  • VIX:  16.41 +1.86% YTD PERFORMANCE: -24.31%
  • SPX PUT/CALL RATIO: 1.92 from 2.45%

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 18.62 -1.522 (-7.556%)
  • 3-MONTH T-BILL YIELD: 0.14% +0.03%  
  • YIELD CURVE: 2.74 from 2.72

COMMODITY/GROWTH EXPECTATION:

  • CRB: 324.27 +1.14%
  • Oil: 89.37 +0.87%
  • COPPER: 420.60 +1.13%
  • GOLD: 1,386.50 +1.08%

CURRENCIES:

  • EURO: 1.3122 -0.50%
  • DOLLAR: 80.628 +0.32%

OVERSEAS MARKETS:

EUROPEAN MARKETS:

  • European equity markets moved higher despite Moody's placing Portugal's A1/P-1 ratings on review for possible downgrade as comments from Chinese officials backing European actions so far to tackle its debt crisis and the easing of tensions on the Korean peninsula helped sentiment.
  • M&A activity was again a focus with little other significant corporate or economic news.
  • Peripheral debt spreads were pressured by Moody's action and ahead of a Spanish T-bill auction whilst disappointing UK government borrowing data weighed on gilts.
  • All sectors trade higher led by basic resources +1.4% and autos +1.0%.
  • UK Dec GfK Consumer Confidence (21) vs consensus (22) and prior (21)
  • Germany Jan GfK Index +5.4 vs consensus +5.7 and prior +5.5
  • The highest UK public sector net borrowing requirement on record in Nov of £22.8B weighed on the pound

ASIAN MARKTES:

  • In thin trade, Asian markets rose today on eased concern about the situation on the Korean peninsula.
  • Property stocks led China higher (+1.79%), jumping 5% on a report forecasting that urban housing prices could rise 20% next year.
  • Hong Kong followed China up +1.57% on bargain-hunting, but turnover was low.
  • Japan rose 1.51%. Fuji Heavy went up 1% on a report it may build a JV factory with Chery Automobile in China.
  • South Korea moved up 0.83% to a high for the year after North Korea did not retaliate for yesterday’s military exercises.
  • On higher commodity prices, materials stocks led Australia up 0.75%.

Howard Penney

Managing Director

THE DAILY OUTLOOK - S P 1221