THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - January 21, 2011


Equity futures are trading marginally below fair value following Thursday's continuation of the recent downdraft following some disappointing corporate earnings and on rumors of further tightening moves by the Chinese.  As we look at today’s set up for the S&P 500, the range is 31 points or -1.27% downside to 1264 and +1.15% upside to 1295.

 

 MACRO DATA POINTS:

  • Net export sales (cotton, corn, soy meal, soybeans, wheat)
  • 1 p.m.: Baker Hughes rig count, Jan. 21
  • 3 p.m.: Cattle feedlots, Dec.

TODAY’S WHAT TO WATCH:

  • Warner Music hired Goldman Sachs to solicit takeover bids, according to a person with knowledge of co. plans; says Warner was approached by KKR several weeks ago
  • LinkedIn shares are being sold in an auction by secondary exchange SharesPost for $30 apiece, valuing the co. at almost $3b, three people familiar with matter say
  • Employee bonuses at Wall Street banks may be down ~5%-10% this yr, according to compensation advisor Square Mile Services. Morgan Stanley employees are set to find out their bonuses today, while Bank of America will announce bonuses on Jan. 26, according to people familiar with plans
  • IBM is said to be giving hundreds of thousands of non- executive workers $1,000 in stock after co. 4Q beat ests.
  • Advanced Micro Devices (AMD) forecast 1Q rev. ~$1.58b-$1.65b vs est. $1.54b
  • Eli Lilly (LLY) failed to win FDA panel’s backing for Amyvid
  • Emulex (ELX) sees 3Q adj. EPS 8c-11c vs est. 11c
  • Ezcorp (EZPW) reported 1Q adj. EPS 69c vs est. 64c
  • Flextronics International (FLEX) sees 4Q adj. EPS 21c-23c vs est. 21c
  • International Game Technology (IGT) reported 1Q rev. $464.8m vs est. $490.1m
  • Intuitive Surgical (ISRG) reported 4Q EPS $3.02 vs est. $2.25
  • People’s United Financial (PBCT) agreed to buy Danvers Bancorp for $23-shr cash or 1.624 PBCT shrs for each Danvers shr
  • Polycom (PLCM) reported 4Q rev. $340m vs est. $327.8m
  • Tempur-Pedic International (TPX) forecast 2011 EPS $2.60-$2.75 vs est. $2.49

EARNINGS:

  • Schlumberger Ltd (SLB) 6 a.m., $0.78 
  • Prosperity Bancshares (PRSP) 6 a.m., $0.68 
  • BB&T (BBT) 6:05 a.m., $0.25 
  • Air Products & Chemicals (APD) 6:30 a.m., $1.34 
  • SunTrust Banks (STI) 6:30 a.m., $0.09 
  • First Horizon National (FHN) 7 a.m., $(0.01)
  • Applied Industrial Technologies (AIT) 7 a.m., $0.44 
  • Bank of America (BAC) 7 a.m., $0.21 
  • Airgas (ARG) 7:45 a.m., $0.79

PERFORMANCE:


The XLB is still the only sector broken on the Hedgeye TRADE duration - 8 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND.

  • One day: Dow (0.02%), S&P (0.13%), Nasdaq (0.77%), Russell 2000 (1.12%)
  • Last Week: Dow +0.96%, S&P +1.71%, Nasdaq 1.93%, Russell +2.51%
  • Year-to-date: Dow +2.12%, S&P +1.80%, Nasdaq +1.94%, Russell (0.71%)
  • Sector Performance - (5 sectors up and 4 declined): - Materials (1.42%), Energy (0.71%), Tech (0.54%), Industrials (0.5%), Healthcare +0.25%, Consumer Disc +0.21%, Consumer Spls +0.51%, Financials +0.49%, Utilities +0.76%

  EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -722 (+945)  
  • VOLUME: NYSE 1190.18 (+9.30%)
  • VIX:  17.31 +3.93% YTD PERFORMANCE: +1.35%
  • SPX PUT/CALL RATIO: 1.65 from 2.28 (-27.83%)

CREDIT/ECONOMIC MARKET LOOK:


Treasuries were weaker with the better-than-expected economic data and supply overhang.

  • TED SPREAD: 15.30 +0.507 (3.430%)
  • 3-MONTH T-BILL YIELD: 0.16%      
  • YIELD CURVE: 2.82 from 2.77

COMMODITY/GROWTH EXPECTATION:

  • CRB: 331.90 -0.46%  
  • Oil: 89.59 -2.42% - trading +0.44% in the AM
  • COPPER: 427.20 -2.24% - trading +0.01% in the AM
  • GOLD: 1,352.13 -1.37% - trading -0.60% in the AM

OTHER COMMODITY NEWS:

  • Gold Set for Worst Weekly Run Since July on China Concern, Holdings Slump
  • Copper Exports From China Triple as Record LME Price Lures Trader Sales
  • Platinum Imports by China Jump in 2010 on Car Sales; Silver Exports Drop
  • Copper May Rise as German Confidence Unexpectedly Gains, Stockpiles Shrink
  • Cotton, Wheat Surge as `Return of Agflation' Outpaces Metals: Chart of Day
  • Palm Oil Futures Advance as Argentine Soybean Crop Gets Insufficient Rain
  • China Rural Incomes Rising Most Since '84 Show Lure for Job-Seeking Obama
  • Crude Rebounds From Two-Week Low as Confidence in Economic Recovery Grows
  • Corn Futures Decline as Price Near 30-Month High Deters Buyers; Soy Falls
  • OPEC Pressured to Lift Output as Africa, Asia Oil at $100: Energy Markets
  • Taurus Quits Silver After Metal Rallies `Too Much,' Sticks With Gold Wager
  • Gold May Advance Next Week as Investors Go `Bargain Hunting,' Survey Shows
  • Deflation Diminishing in Bond Market as Food Prices Increase: Japan Credit
  • Hay Point Coal Shipments Decline 22% Following Queensland Flooding, Rain

CURRENCIES:

  • EURO: 1.3470 -0.07% - trading +0.48% in the AM
  • DOLLAR: 78.823 +0.23% - trading -0.30% in the AM

EUROPEAN MARKETS:

  • FTSE 100: +0.73%; DAX: +0.60%; CAC 40: +1.16% (AS OF 6:00 AM EST)
  • European markets are trading higher on German business confidence
  • Banks gain on stronger economic outlook.
  • Oil & gas stocks advance on M&A, as crude recovers. Techs gain on earnings.
  • Spanish banks are higher, benefiting from reports the Spanish government is ready to restructure the Cajas by enabling them to become banks and by floating them on the market. Spanish government is also said to be ready to acquire stakes in the Cajas if the market shows little interest in investing. 
  • Royal Bank of Scotland is also higher, on hopes it may leave the government asset protection program.
  • European Macro economic data was mix; Germany January Ifo business-climate index +110.3 vs consensus 110. UK Dec Retail sales (0.8%) m/m vs consensus (0.3%) and prior revised +0.4% from +0.3

ASIAN MARKTES:

  • Nikkei (1.56%); Hang Seng (0.53%); Shanghai Composite +1.41%
  • Asian markets mostly declined today on worries of higher inflation and tightening from China, thanks to a report that an interest-rate hike may be coming within the next two weeks.
  • China, ironically, was the only major regional market to post a gain, with bargain-hunting rife after yesterday’s fall. Banks and property developers advanced, though not as much as they went down yesterday.
  • Energy stocks led Hong Kong down, despite China’s bounce.
  • Taiwan went down 0.75%
  • Energy companies fell on lower oil prices, causing Japan to reverse opening gains.
  • South Korea dropped (1.74%) and Indonesia down (2.16%).

THE HEDGEYE DAILY OUTLOOK - 1 21 2011 6 27 50 AM