TODAY’S S&P 500 SET-UP - January 20, 2011
Equity futures are trading just below fair value following Wednesday's retrenchment, with reaction to December quarter earnings results receiving much of the blame. Overnight, markets in Asia and Europe have continued to consolidate on the back of some strong Chinese data which raises the likelihood of further fiscal tightening by the Chinese authorities. As we look at today’s set up for the S&P 500, the range is 32 points or -1.48% downside to 1263 and +1.02% upside to 1295.
MACRO DATA POINTS:
- 8:30 a.m.: Initial jobless claims, Jan. 15, est. 420k, prior 445k
- 8:30 a.m.: Continuing claims, Jan 8, est. 3,985k, prior 3,879k
- 10 a.m.: Existing home sales, Dec, est. 4.87m, prior 4.68m
- 10 a.m.: Leading indicators, Dec, est. 0.6%, prior 1.1%
- 10 a.m.: Philadelphia Fed, Jan, est. 20.8 prior 24.3
- 10:30 a.m.: EIA natural gas storage change, Jan. 14, est. -228, prior -138
- 11 a.m.: DOE inventories, Jan. 14
- 1 p.m.: U.S. sells $13b 10-yr TIPS
TODAY’S WHAT TO WATCH:
- ArQule (ARQL) is offering 7m shares in secondary offering
- Dillards’s (DDS) says it will form a REIT unit
- EBay (EBAY) sees 2011 adj. EPS $1.90-$1.95 vs est. $1.86
- F5 Networks (FFIV) sees 2Q rev. $275m-$280m vs est. $281.1m
- Kinder Morgan Energy Partners (KMP) reported 4Q adj. earnings/unit 46c vs est. 43c
- Raymond James Financial (RJF) reported 1Q adj. EPS 65c vs est. 53c
- SLM (SLM) reported 4Q core EPS 75c vs est. 71c
- Xilinx (XLNX) reported 3Q adj. EPS 58c vs est. 52c
- MannKind’s 38% drop 5 hrs before it said it didn’t get approval for Afrezza diabetes treatment may draw attention from SEC, finance professors James Angel and Tamar Frankel say
- Emergency Medical Services has had offers from at least four PE firms as the sale process moves toward second- round bids early next month
- Wendy’s/Arby’s plans to put Arby’s sandwich business up for sale, WSJ says
- Life Partners is being investigated by SEC over life expectancy data, WSJ reports
- News Corp. has told U.K. govt it may be prepared to make concession to avoid an extended review of bid to take full control of BSkyB, FT reports
- China National Petroleum says it plans to “intensify” overseas acquisitions in next 5 yrs to meet Chinese demand
- Chinese investment in U.S. projects and acquisitions > doubled in 2010 to ~$4.9b
EARNINGS:
- Huntington Bancshares /OH (HBAN) 5:50 a.m., $0.08
- Knight Capital Group (KCG) 6 a.m., $0.20
- UnitedHealth Group (UNH) 6 a.m., $0.85
- Tyco Electronics (TEL) 6 a.m., $0.68
- PNC Financial Services Group (PNC) 6:30 a.m., $1.36
- Johnson Controls (JCI) 7 a.m., $0.54
- Marshall & Ilsley (MI) 7:27 a.m., $(0.24)
- ITT Educational Services (ESI) 7:30 a.m., $3.12
- Morgan Stanley (MS) 7:30 a.m., $0.28
- Parker Hannifin (PH) 7:30 a.m., $1.29
- Rockwell Collins (COL) 7:30 a.m., $0.88
- Fairchild Semiconductor International (FCS) 7:30 a.m., $0.39
- Southwest Airlines (LUV) 7:37 a.m., $0.15
- Freeport-McMoRan Copper & Gold (FCX) 8 a.m., $2.98
- Union Pacific (UNP) 8 a.m., $1.48
- PPG Industries (PPG) 8:11 a.m., $1.13
- Progressive (PGR) 8:15 a.m., $0.36
- Maxim Integrated Products (MXIM) 4 p.m., $0.41
- Google (GOOG) 4:01 p.m., $8.08
- Flextronics (FLEX) 4:01 p.m., $0.24
- Cubist Pharmaceuticals (CBST) 4:01 p.m., $0.33
- Capital One Financial (COF) 4:05 p.m., $1.37
- Intuitive Surgical (ISRG) 4:05 p.m., $2.25
- Polycom (PLCM) 4:05 p.m., $0.43
- Tempur-Pedic International (TPX) 4:05 p.m., $0.57
- People’s United Financial (PBCT) 4:10 p.m., $0.09
- Advanced Micro Devices (AMD) 4:15 p.m., $0.11
- International Game Technology (IGT) 4:15 p.m., $0.20
- Skyworks Solutions (SWKS) 4:30 p.m., $0.44$0.71
PERFORMANCE:
Yesterday, the XLB broke the HEDGEYE TRADE duration - 8 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND.
- One day: Dow (0.11%), S&P (1.01%), Nasdaq (1.46%), Russell 2000 (2.56%)
- Last Week: Dow +0.96%, S&P +1.71%, Nasdaq 1.93%, Russell +2.51%
- Year-to-date: Dow +2.14%, S&P +1.93%, Nasdaq +2.73%, Russell +0.41%
- Sector Performance - (All 9 sectors declined): - Materials (2.31%), Financials (2.23%), Energy (1.21%), Industrials (1.05%), Consumer Disc (1.00%), Tech (0.72%), Healthcare (0.68%), Consumer Spls (0.20%), Utilities (0.24%).
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: -1667 (-1917)
- VOLUME: NYSE 1088.87 (-11.31%)
- VIX: 17.31 +9.07% YTD PERFORMANCE: -2.48%
- SPX PUT/CALL RATIO: 2.28 from 1.48 (+53.93%)
CREDIT/ECONOMIC MARKET LOOK:
Treasuries were stronger today with the weakness in stocks and disappointing housing data. Fed buying was highlighted as another tailwind.
- TED SPREAD: 14.79 -0.507 (-3.315%)
- 3-MONTH T-BILL YIELD: 0.16%
- YIELD CURVE: 2.76 from 2.79
COMMODITY/GROWTH EXPECTATION:
- CRB: 333.43 -0.10%
- Oil: 91.38 -0.17% - trading +0.58% in the AM
- Oil Rally Sends Sweet Price to $100 for First Time Since '08
- COPPER: 442.80 +0.36% - trading +0.24% in the AM
- Copper Falls for Second Day on Concern China May Move Again to Curb Growth
- GOLD: 1,372.68 +0.49% - trading +0.36% in the AM
OTHER COMMODITY NEWS:
- Chalco Jumps Most in 4 Months on Report Parent Plans Rare Earth Expansion
- Silver May Decline 20% as Coin Sales Signal `Crowd'
- Corn, Soybeans Advance as Argentine Farmers Withhold Shipments on Taxes
- Sugar Climbs in London After Report Russia May Import Earlier; Cocoa Rises
- German $96 Billion Asia Trade Jeopardized by Shallow Elbe
- ANZ Raises Base Metals Forecasts Through 2013 on `Upbeat' Demand Outlook
- BHP Second-Quarter Iron Ore Gains to Record; Queensland Coal Hit By Floods
- Korean Meat Imports to Gain on Foot-and-Mouth Cull, Helping U.S. Exporters
- China Probe on U.S. Dried Distillers Grains to Boost Corn Imports
- Rubber Advances to Record on Accelerating China Growth, Tightening Supply
- Copper Shortage to Be Worst Since 2004 Amid Economic Recovery
- Flooding in Australia May Propel Wheat Crop to Record
CURRENCIES:
- EURO: 1.3480 +0.90% - trading +0.05% in the AM
- DOLLAR: 78.640 -0.41% - trading -0.08% in the AM
EUROPEAN MARKETS:
- FTSE 100: (1.54%); DAX: (0.96%); CAC 40: (0.62%) (as of 6:30 ET)
- European markets trade mixed but peripheral markets trading better Spain up +0.7% on rumors the country plans to ratchet up aid to cajas in bid to stave off international bailout.
- Sentiment was influenced by disappointing earnings, while strong economic data from China increased the likelihood of Chinese fiscal tightening.
- Bond yields were pressured by supply from France which is due to issue €12B of bonds later today and peripheral yield spreads are little changed.
- Spanish bonds rise; Portuguese bonds fall
- Declining sectors lead advancers 11-7 with autos (3.1%) and travel (2.7%) leading fallers, with banks and insurers leading gainers up +1.4%.
- Ahold reports Q4 Group net sales €6.98B vs Rtrs €6.90B, says the environment remained challenging
- Remy Cointreau reports Q3 revenues €266.7M vs Rtrs €261.5M, cautious on Q4 vs tough comps, forecasts good growth in turnover and financial results for FY11
- Germany Dec PPI +5.3% y/y vs consensus 5.0%
ASIAN MARKTES:
- Nikkei (1.13%); Hang Seng (1.70%); Shanghai Composite (2.92%)
- Asian markets followed Wall Street down today, as strong growth in China rekindled fears that more tightening measures are coming.
- Weakness in bank and tech stocks brought South Korea down 0.43%.
- Miners led Australia down 1.05%. Virgin Blue soared 10% when Air New Zealand bought a substantial stake.
- Banks led Japan down after disappointing earnings from US peers.
- Hong Kong followed China down. Li & Fung managed a 1% gain on a block trade.
- In China, banks fell on news that they extended more than CNY1T in new loans by yesterday, and China Development Bank Corp ordered its branches to stop lending for the rest of the month.
- China 2010 GDP +10.3% vs consensus +10.1%. Q4 GDP +9.8% y/y vs +9.2% consensus. 2010 CPI +3.3% vs government target of +3.0%. December CPI +4.6% y/y vs +4.7% consensus. December PPI +5.9% vs +5.5% consensus. December convenience-store comps +3.3%.
