TODAY’S S&P 500 SET-UP - December 27, 2010
As we look at today’s set up for the S&P 500, the range is 16 points or -0.86% downside to 1246 and 0.42% upside to 1262. Equity futures continue to trend below fair value as the rate increases out of China over the weekend are contributing to heightened tightening concerns following a similar move by Russia (only deposit rates) on the 24th.
Commodities are showing a mixed reaction to the hikes as the prospect of slower economic growth weighs against the likelihood that the rate increases will continue to pressure the dollar - gold has reversed modest early weakness and is slightly higher, while crude has given back early gains and is now slightly lower.
Little activity on the corporate and economic calendars and little is anticipated throughout the week.
- Amkor Technology (AMKR) will redeem all $100m of its 6.25% convertible notes from Chairman James J. Kim and his family.
- Chipotle Mexican Grill (CMG), BJ’s Restaurants (BJRI), Panera Bread (PNRA) and Red Robin Gourmet Burgers (RRGB), may be poised to decline 20% or more if “aggressive” 2011 earnings expectations aren’t met, Barron’s reported, citing analysts.
- Cisco Systems (CSCO) may gain as demand for the equipment grows and the company initiates a dividend, Barron’s reported.
- Dean Foods (DF) settled an antitrust lawsuit with Northeast Dairy Farmers
- Goldman Sachs (GS) said it may grant bonuses that depend on future earnings in addition to stock performance amid pressure from regulators to design pay packages for top employees that would discourage excessive risk-taking.
- Mylan (MYL) agreed to pay $65m to settle a lawsuit from the U.S. government and Texas related to Medicaid reimbursements
- Netflix (NFLX) may fall as higher charges for acquiring movies hurts profitability, Barron’s reported.
- Sierra Wireless (SWIR) may rise as growth in 4G and other mobile devices boosts demand for its technology, Barron’s said
- WSJ is negative on MCD
- One day: Dow +0.12%, S&P (0.16%), Nasdaq (0.22%), Russell (0.21%)
- Last Week: Dow +0.72%, S&P +0.28%, Nasdaq +0.21%, Russell +0.34%
- Month-to-date: Dow +5.16%, S&P +6.46%, Nasdaq +6.70%, Russell +8.52%
- Quarter-to-date: Dow +7.28%, S&P +10.13%, Nasdaq +12.54%, Russell +16.69%
- Year-to-date: Dow +10.98%, S&P +12.70%, Nasdaq +17.47%, Russell +26.15%
- Sector Performance: Materials +0.36%, Energy +0.28%, Utilities +0.06%, Healthcare +0.00%, Consumer Staples +0.04%, Tech (0.17%), Industrials (0.22%), Consumer Discretionary (0.42%), and Financials (0.72%)
- ADVANCE/DECLINE LINE: -119 (-797)
- VOLUME: NYSE 615.47 (-21.52%)
- VIX: 16.47 +6.60% YTD PERFORMANCE: -24.03%
- SPX PUT/CALL RATIO: 2.75 from 1.54 (+78.64%)
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 17.30 0.203 (1.187%)
- 3-MONTH T-BILL YIELD: 0.14%
- YIELD CURVE: 2.74 from 2.75
- CRB: 329.38 +0.39% (up 1.81% last week)
- Oil: 91.51 +1.14% (up 3.28% last week)
- COPPER: 425.85 -0.39% (up +2.39% last week)
- GOLD: 1,383.72 +0.32% (up +0.88% last week)
- EURO: 1.3122 +0.10% (down -0.50% last week)
- DOLLAR: 80.474 -0.03% ( up +0.13% last week)
- European Markets: FTSE 100: closed; DAX: (1.28%); CAC 40: (1.11%)
- In thin trading, Europe is weaker this morning, following declines in Asia; following the December 25th surprise rate hike in China.
- Also on December 24th Russia’s decision to charge more on ruble deposits, another move to cool inflation, also damped market sentiment.
- The UK is closed until 29-Dec.
- On fears of tightening policies, car-makers are trading lower as people take profits for 2010
- Asian Markets: Nikkei +0.75%; Hang Seng (closed); Shanghai Composite (1.9%)
- Asian markets started higher today, as participants felt China’s raising interest rates had already been priced in, but they finished mixed.
- Commodities fell on the rate hike, but quickly pared their losses.
- In the lowest trading value since the first trading day of the year, export-linked shares led Japan to a modest gain up 0.75%.
- Taiwan edged up 0.35%. Shin Kong Financial jumped 6% on expectations, leading financials higher on expectations that Taiwan’s central bank will follow China’s rate hike with one of its own.
- South Korea fell 0.37% - car-makers fell 3-4% on Beijing’s limits for new car registrations announced last week, as well as the fear that China’s higher interest rates will reduce demand for new cars. Shippers fell 2-5% on a lower Baltic Dry Index. Banks rose, since China’s rate increase means South Korea may follow suit to combat inflation.
- China rose in the morning on the thought that uncertainty about policymakers’ next move had now been cleared up, but dropped in afternoon trading as property, financial, and energy shares got dumped.
- Hong Kong, Australia, and New Zealand were closed for Christmas/Boxing Day.
- Japan November corporate services price index (1.1%) y/y, +0.1% m/m. November housing starts +6.8% y/y vs cons +4.9%.