THE HEDGEYE DAILY OUTLOOK

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. 

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more