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TODAY’S S&P 500 SET-UP - January 13, 2011


Equity futures remain close to fair value in what has been a quiet morning as we await fresh MACRO catalysts ahead of the earnings season.

MACRO DATA POINTS:

  • 8:30 a.m.: Initial jobless claims, January 8, est. 410k, continuing claims est. 4088k
  • 8:30 a.m.: Producer price index, December, M/m est. 0.8%, ex. food and energy est. 0.2%
  • 8:30 a.m.: U.S. trade balance, November, est. -$40.5b
  • Net export sales (cotton, corn, soy meal, soybeans, soy oil, wheat), Jan. 6
  • 10:30 a.m.: EIA Natural gas storage change, Jan. 7, est. -149
  • 1 p.m.: U.S. sells $13b 30-yr bonds
  • 1 p.m.: Fed Chairman Ben Bernanke speaks at FDIC panel on small business lending

TODAY’S WHAT TO WATCH:

  • Jury selection begins for Mattel vs MGA Entertainment trial over the origins of its rival’s Bratz dolls.  Mattel’s $100m verdict was thrown out on appeal last year
  • Drug makers, led by Pfizer, pushing for U.S. guidelines to let them post more tweets and online videos without violating marketing rules for print, radio and television
  • AIG said it is set to issue 75m warrants to shareholders by Jan. 19 as it works to repay the $182.3b U.S. rescue
  • U.S., France, Germany and the U.K. need to control their spending on pensions and health care to keep their debt burdens stable over the long term - according to Moody’s
  • Alliance Bernstein Holding LP (AB) CFO John Howard to leave.  Edward Farrell named interim CFO
  • American Capital Agency (AGNC) filed for 18m-Shr secondary; sees EPS for Qtr ex items >$1.20 vs est. $1.21
  • Blackboard (BBBB) completed acquisition of Presidium; sees 1Q adj. EPS 24c, unclear how compares with est. 34c
  • Mercury Computer Systems (MRCY) acquired RF Maker LNX for $31m upfront
  • Universal American Financial (UAM) sees year sales $5.65b vs est. $5.68b

PERFORMANCE:

  • One day: Dow +0.72%, S&P +0.90%, Nasdaq +0.75%, Russell 2000 +0.83%
  • Last Week: Dow +0.84%, S&P +1.10%, Nasdaq 1.90%, Russell +0.53%
  • Month-to-date: Dow +1.54%, S&P +2.25%, Nasdaq +3.18%, Russell +2.26%
  • Sector Performance - BULLISH (EVERY SECTOR IS POSITIVE) - Financials +1.7%, Energy +1.2%, Tech +0.9%, Materials +0.9%, Industrials +0.9%, Consumer Spls +0.8%, Utilities +0.5%, Healthcare +0.5%,Telecom +0.5%, Consumer Disc +0.3%   

 EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 1274 (+722)  
  • VOLUME: NYSE 963.60 (+2.09%)
  • VIX:  16.24 -3.85% YTD PERFORMANCE: -8.51%
  • SPX PUT/CALL RATIO: 1.29 from 1.90 (-32.30%)  

CREDIT/ECONOMIC MARKET LOOK:


Treasuries were weaker today with the pickup in risk appetite. However, some support came from a strong $21B auction of 10-year notes.

  • TED SPREAD: 16.32 0.203 (1.260%)
  • 3-MONTH T-BILL YIELD: 0.15%     
  • YIELD CURVE: 2.79 from 2.73

COMMODITY/GROWTH EXPECTATION:  

  • CRB: 334.88 +1.03%  - up over 3% so far this week
  • Oil: 91.86 +0.82% - trading -0.28% in the AM
  •  Oil rose for a second day, as investors’ demand for riskier assets gained with advancing equity markets.
  • COPPER: 441.15 +1.44% - trading -0.82% in the AM
  • Copper Slides as World Bank Predicts Weakening of Chinese Economic Growth
  • GOLD: 1,383.70 +0.10% - trading -0.36% in the AM
  • Gold Buying Shows RBI Losing `Never Ending' Inflation Battle: India Credit

OTHER COMMODITY NEWS:

  • Corn Surges to 30-Month High After USDA Cuts Supply Estimates; Wheat Gains
  • Rio Tinto Declares Force Majeure at Australia Aluminum Smelter on Flooding
  • Oil Trades Near 27-Month High on U.S. Stockpile Decline, Alaska Pipe Plans
  • Cocoa Slides for First Day in Five on ICCO Forecast for Increased Supply
  • Steel Output in India May Decline as Australia Floods Reduce Coal Supplies
  • Nickel Supply to Swing Back to Surplus in 2011, Sumitomo Metal Mining Says
  • Lundin Agrees to Combine With Inmet in $9.1 Billion Canadian Mining Deal
  • Cotton Outlook Cut 10% by National Australian Bank After Deadly Flooding
  • India Must `Copy' China, Build Food Stockpiles to Cool Prices, Adani Says
  • Sri Trang Refiles Plan to Sell Shares in Singapore With Rubber at Record
  • Coal at 28-Month High to Beat Oil, Gas on Australia FloodS

CURRENCIES:

  • EURO: 1.3083 +0.88% - trading +0.44 in the AM
  • DOLLAR: 80.031 -1.01% - trading +0.01% in the AM

EUROPEAN MARKETS:

  • FTSE 100: (0.17%); DAX: +0.02%; CAC 40: +0.41% (as of 7:30 EST)
  • European markets trade mixed with peripheral European markets again leading gains ahead of more peripheral debt sales and the uneventful interest rate decisions at both the BOE and ECB.
  • Spain up 2.6% announced a successful 5-year auction, with yields significantly above the previous auction and market participants await the results of Italy's debt auction.
  • Advancing and declining sectors are even at 9-9, with banks +3% the best performers while basic resources down 2% are leading the decliners.
  • France Dec final CPI +2% y/y vs con +1.9%
  • UK Nov Ind Prod +3.3% y/y and con +3.4%
  • UK Nov Manf Prod +5.6% y/y vs con +5.3%

ASIAN MARKTES:

  • Asian markets rose today on gains overseas and a successful bond auction in Portugal.
  • Australia rose 1.5%, as the Queensland floods’ impact was less damaging than feared for major insurers.
  • Megabanks followed their American peers higher, leading Japan to up 0.73%. But the rise was limited when core machinery orders came in well below expectations. Japan November core machinery orders (3.0%) m/m vs survey +1.6%.  Sumitomo Trust & Banking and Chuo Mitsui Trust Holdings rose 5% each when an executive said the combined entity may offer a higher dividend payout ratio than the individual banks do.
  • HSBC was the biggest lift for Hong Kong for the second day in a row. Tsingtao Brewery, seen as having margins that will be hurt as food prices go up, fell 3%.
  • China increased slightly on strength in oil stocks. Sinopec and Petrochina put on 2% and 1%, respectively. Software companies did well when China’s state council confirmed long-held expectations that it will promote the software and integrated circuit industries.
  • South Korea ended with a small loss when the Bank of Korea surprised people by raising rates 25 bp to 2.75% in a bid to fight inflation. Financials rose.