Hedgeye - THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - January 7, 2011

As we look at today’s set up for the S&P 500, the range is 16 points or -0.77% downside to 1264 and 0.48% upside to 1280. Equity futures are trading below fair value in a continuation of Thursday's retreat prompted by disappointing Dec retail sales data and ahead of today's employment data and Bernanke testimony to the Senate Budget Committee.

MACRO DATA POINTS:

8.30am, Payroll figures: Change in nonfarm payrolls, est. 150k, prior 39k Change in private payrolls, est. 175k, prior 50k Change in manufacturing payrolls, est. 5k, prior (-13k)
Unemployment rate, est. 9.7%, prior 9.8%
9.15am, NY Fed’s Tracy to speak in Hartford, Conn.
9.30am, Fed’s Bernanke to Testify Before Senate Budget Panel
11am, Fed to purchase $6b-$8b notes/bonds
3pm, Consumer Credit, Nov., est. $0.5b
4.30pm, Fed’s Evans Speaks on Monetary Policy in Denver
4.30pm, NY Fed’s McAndrews Speaks on Panel in Denver

TODAY’S WHAT TO WATCH:

Best Buy will offer its take on the holiday season with a sales release pre-mkt
Blackstone in exclusive talks to buy London’s Chiswick Park office complex for ~$740m including debt, the Financial Times reports, without saying where it got the information
Obama names William Daley as his White House chief of staff as part of a series of moves to keep the administration’s focus on the economy, improve relations with business and deal with a divided government.
Today Obama will name Gene Sperling to lead National Economic Council.
KB Home will provide a window into the housing market as it reports 4Q results.
Amgen (AMGN) and Xencor will collaborate to develop an
autoimmune disease antibody
Borders Group (BGP) US in talks with Jefferies on restructuring, CNBC says, citing WSJ
Immucor (BLUD) 2Q profit, rev. beat ests
Liz Claiborne (LIZ) preliminary 2H profit missed goal
Schnitzer Steel Industries Inc. (SCHN) 1Q rev. missed est.
Shaw Group (SHAW) 1Q rev. missed est.
Volcano (VOLC) rated new outperform at William Blair
Volterra Semiconductor (VLTR) preliminary 4Q EPS below ests., forecast, est. -131

PERFORMANCE: ALL 9 SECTORS BULLISH ON TRADE & TREND

One day: Dow (0.22%), S&P (0.21%), Nasdaq +0.28%, Russell 2000 (0.46%)
Last Week: Dow +0.03%, S&P +0.07%, Nasdaq (-0.48%), Russell (-0.67%)
Month/Quarter/Year-to-date: Dow +1.03%, S&P +1.29%, Nasdaq +2.15%, Russell +0.99%
Sector Performance - BEARISH (Only 3 sectors positive) - Energy (0.95%), Cons. Disc (0.61%), Financials (0.66%), Materials (0.52%), Cons. Spls (0.34%), Industrials (0.17%), Utilities +0.10%, Healthcare +0.41%, Tech +0.58%

EQUITY SENTIMENT: MIXED

ADVANCE/DECLINE LINE: -657 (-1283)
VOLUME: NYSE 1093.30 (+4.83%)
VIX: 17.40 +2.23% YTD PERFORMANCE: -1.97%
SPX PUT/CALL RATIO: 0.86 from 1.81 (-52.57%)

CREDIT/ECONOMIC MARKET LOOK:

Treasuries were stronger yesterday

TED SPREAD: 16.62 0.304 (1.866%)
3-MONTH T-BILL YIELD: 0.15% +.01%
YIELD CURVE: 2.76 from 2.79

COMMODITY/GROWTH EXPECTATION:

CRB: 325.07 -1.25%
Oil: 88.38 -2.13% - trading +0.37% in the AM
In early trading crude oil rebounds from lowest in three weeks
COPPER: 432.95 -1.78% - trading -1.49% in the AM
copper falls in London on speculation of more tightening
GOLD: 1,373.15 -0.22% - trading -1.1% in the AM
Gold is right down to our intermediate term TREND line of support this morning

OTHER COMMODITY NEWS:

India to Boost Oil-Palm Plantation Area to Reduce $8.4 Billion Import Bill
Gold in Euros to Outperform Gold in Dollars, ABN Says: Technical Analysis
Queensland Towns Watch Rivers Rise as Waters Threaten Livestock, Property
Wheat Heads for Weekly Drop on Speculation USDA May Lower Exports Estimate
Germany Blocks Farms' Meat, Egg Sales After Finding Dioxin in Animal Feed
Hainan Rubber Doubles in Shanghai Debut on Strong Demand, Growth Outlook
Palm Oil Declines as Rally to 34-Month High Increases Soybean Oil Appeal
Japan Minister Urges Lower Rice Tariff, Free Trade, Talks With North Korea
Cotton Output in Australia May Be Cut 500,000 Bales on Flood, FCStone Says
Copper Stockpiles in Shanghai Advance to Six-Month High; Zinc at Record
Sugar May Rise Next Week on Speculation Demand Will Increase, Survey Shows

CURRENCIES:

EURO: 1.3028 -1.18% - trading -0.38% in the AM
DOLLAR: 80.847 +0.73% - trading +0.17% in the AM

EUROPEAN MARKETS:

European Markets: FTSE 100: (0.29%); DAX: 0.17%; CAC 40: (0.43%)
European markets mainly trade lower with major indices reversing modest opening gains as investors focus on US Dec nonfarm payrolls data due later in the session.
Peripheral European debt worries persist and weighed on bond spreads and the euro. Spain and Portugal down 1.30% and 1.14%, respectively
Declining sectors lead advancers 16-2 with oil & gas and banks leading fallers down close to (1%) and auto's up +0.3%, leading gainers.
Germany Nov preliminary retail sales +2.0% y/y vs consensus +3.2%, (2.4%) m/m vs consensus +0.1%
UK SMMT Dec new car registrations (18.0%) y/y, to 123,817 units, forecasts market to decline by (5%) in 2011 to 1.93M units
Eurozone Q3 GDP 1.9% y/y vs consensus 1.9% and prior 1.9% Eurozone Q3 GDP 0.3% q/q vs consensus 0.4% and prior 0.4%
Germany Nov Industrial Output (0.7%) m/m vs consensus (0.2%) and prior revised +3.0%
Eurozone Nov Unemployment 10.1% vs consensus 10.1% and prior 10.1%

ASIAN MARKTES:

Asian Markets: Nikkei +0.1%; Hang Seng (0.4%); Shanghai Composite +0.52%
More Asian markets fell than rose today as investors awaited US non-farms payrolls data coming later.
Banks led China up 0.52%, though it finished well of its intraday high. But metals stocks fell late in the day on renewed tightening fears.
South Korea rose 0.41%, but Samsung Electronics lost 1% on saying its Q4 profit probably fell.
Japan +0.11 traded in a very tight range all day. Carmakers rose on recovering sales in the US and a weaker yen.
Australia declined -0.42%, with miners and banks going down, partially offset by higher industrial and consumer issues.
Hong Kong traded -0.42%.
Indonesia’s stocks fell 2.81%, driving the benchmark index to its biggest two-day loss in more than seven months. Concerns the central bank has fallen behind regional neighbors in taking action to curb inflation.
India down 2.44%