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TODAY’S S&P 500 SET-UP - January 11, 2011


Equity futures are trading above fair value having extended early gains in response to a rebound on European markets after the WSJ reported Japan will join China in providing assistance to the Eurozone by buying EFSF bonds.

After the close Alcoa (AA) reported $0.21 vs. Reuters $0.19, though sales of $5.65B missed forecasts.

MACRO DATA POINTS:

  • 7:30 a.m.: NFIB small business optimism, December., est. 94.5
  • 8:30 a.m.: Fed’s Charles Plosser speaks on economic outlook in Philadelphia
  • 10 a.m.: Wholesale inventories, November. est. 1%
  • 11:30 a.m.: U.S. sells $22b 52-week bills; 1 p.m. sells $32b 3-yr notes
  • 12 p.m.: DOE outlook (crude, mogas, diesel, natgas), Jan.
  • 2 p.m.: Fed’s Narayana Kocherlakota speaks in Wisconsin
  • 4:30 p.m.: API inventories, January. 7
  • 5 p.m.: ABC consumer confidence, January. 9

TODAY’S WHAT TO WATCH:

  • Verizon Wireless will introduce its iPhone at an event in New York today
  • Presidential spill commission scheduled to release its final report at 10 am DC time 
  • Facebook will ask a court today to enforce a settlement which resolved claims that its founder Mark Zuckerberg stole the idea for the social-networking company from classmates at Harvard University
  • Autonation December 2010 Retail New Vehicle Unit Sales Up 12%
  • Tiffany Sees Year Adj EPS $2.83-$2.88, Saw $2.72-$2.77,Est $2.77
  • Advanced Micro Devices (AMD) said Dirk Meyer resigned
  • Alcoa (AA) posted 4Q sales that trailed est.
  • Apollo Group (APOL) posted 1Q EPS that exceded est.
  • J.C. Penney (JCP) names Michael Dastugue as CFO, replacing Robert Cavanaugh  
  • Nvidia (NVDA) made licensing pact with Intel
  • Spectrum Control (SPEC) missed 4Q forecast 
  • Stryker (SYK) 2010 prelim. adj. EPS toped ests.
  • WD-40 (WDFC) 1Q adj EPS, rev. below ests.; reiterated FY11 forecast

PERFORMANCE: Consumer Staples is BROKEN on TRADE

  • One day: Dow (0.32%), S&P (0.14%), Nasdaq +0.17%, Russell +0.48%
  • Last Week: Dow +0.84%, S&P +1.10%, Nasdaq 1.90%, Russell +0.53%
  • Month-to-date: Dow +0.52%, S&P +0.96%, Nasdaq +2.07%, Russell +1.01%
  • Sector Performance - (only 4 sectors positive) - Tech +0.14%, Industrials +0.14%, Materials +0.12%, Consumer Staples +0.02%, Consumer Discretionary (0.08%), Financials (0.25%), Healthcare (0.23%), Energy (0.41%), Utilities (0.55%)  

 EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 76 (+444)  
  • VOLUME: NYSE 955.35 (-12.31%)
  • VIX:  17.54 +2.33% YTD PERFORMANCE: -1.18%
  • SPX PUT/CALL RATIO: 1.59 from 1.79 (-11.15%)  

CREDIT/ECONOMIC MARKET LOOK:


Treasuries were stronger; curve was flattish

  • TED SPREAD: 115.81 -1.015 (-6.032%)
  • 3-MONTH T-BILL YIELD: 0.15% +0.01%    
  • YIELD CURVE: 2.73 from 2.74

COMMODITY/GROWTH EXPECTATION:  

  • CRB: 326.85 +0.90%
  • Oil: 89.25 +1.39% - trading +0.35% in the AM
  • Oil rose for a second day, as investors’ demand for riskier assets gained with advancing equity markets.
  • COPPER: 426.45 -0.42% - trading +1.61% in the AM
  • Copper Gains for First Day in three as Japan Plans to Buy Euro-Region Bonds
  • GOLD: 1,371.43 +0.26% - trading +0.93% in the AM
  • Russia may add to gold reserves

OTHER COMMODITY NEWS:

  • Gold Must Exceed $2,000 to Be Considered in a Bubble, Deutsche Bank Says
  • Sugar Rises for Third Day on Report Algeria Waived Duty; Coffee Advances
  • Alcoa Sees `Headwinds' in Growth in China Aluminum Use as Car Demand Slows
  • Rain in Victoria, New South Wales This Week Threatens Wheat Crop, ANZ Says
  • Australian Floods Push Coal Price to Two-Year High; Cotton, Sugar Crop Cut
  • Alaska Pipe Closure May Draw Oman, Russia Oil to U.S. West Coast Refiners
  • Asia Exports Cooling Damps Outlook for Commodity Shippers: Freight Markets
  • Australian Cotton Shippers Say Loss Estimate May Climb if Rain Continues
  • China's First Overseas Gold Fund Raises $483 Million, Lion Management Says
  • Corn Rises for Second Day as Dry Weather Hurts Argentine Crop; Wheat Gains
  • India Won't Import Sugar After Scrapping Tax Amid High Prices, Sucden Says
  • Rubber Advances to Record as 33% Jump in China Car Sales May Boost Demand

CURRENCIES:

  • EURO: 1.2941 +0.26% - trading +0.21 in the AM
  • DOLLAR: 80.881 -0.16%% - trading -0.01% in the AM

EUROPEAN MARKETS:

  • European Markets: FTSE 100: +1.31%; DAX: +0.82%; CAC 40: +1.16%
  • European markets trade higher as reports that Japan will buy Eurozone debt to be issued this month improved sentiment toward peripheral Europe.
  • Portugal is trading up +2.06% after the Finance Minister says country does not need a bailout and its Prime Minister has scheduled a news conference as investors await news ahead of a bond auction tomorrow.
  • Eastern Europe trading higher except Slovakia and Estonia

ASIAN MARKTES:

  • Asian Markets: Nikkei (0.3%); Hang Seng +1.0%; Shanghai Composite +0.4%
  • Asian markets were mixed today, with caution reigning ahead of government bond auctions in Europe.  Taiwan, China and South Korea were up on the day.
  • Hong Kong reversed two days of declines closing up 0.99%.
  • China rose 0.44% after falling in the morning on a report that banks plan to cut lending by 10% this year, anticipating reduced credit from the central bank. Property stocks ended higher despite a report that Shanghai is likely to impose a property tax on second home buyers during Q1.
  • South Korea managed a small rise of 0.36% despite caution ahead of a central bank policy rate decision 13-Jan. Samsung Engineering rose 4% on saying it had won a $410M order to build a chlorine production plant in the US. LG Electronics edged down on a report that it will build a white goods factory in Brazil to come online next year.
  • Australia bounced off of lows to finish flat, with a move to defensive stocks like Telstra and Woolworths helping the climb back. Australian insurers fall on speculation claims will increase as Queensland floods worsen.
  • Japan fell slightly -0.29% - exporters fell on a stronger yen.
  • Japan November composite index of coincident economic indicators +1.4 points m/m. November index of leading economic indicators +3.3 points m/m.
  • China 2010 new bank lending CNY7.95T vs target CNY7.50T.
  • China 2010 M2 +19.7% vs target +17%.