THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - February 3, 2011


Equity futures are trading slightly below fair value following yesterday's weak internals which saw major indices close all but flat.  As we look at today’s set up for the S&P 500, the range is 19 points or -0.92% downside to 1292 and +0.53% upside to 1311.

 

 MACRO DATA POINTS:

  • 8:30 a.m.: Net export sales, commodities
  • 8:30 a.m.: Non-farm productivity, est. 2.0%
  • 8:30 a.m.: Jobless claims, est. 420k, prior 454k
  • 10 a.m.: ISM Non-Manufacturing, est. 57.1, prior 57.1
  • 10 a.m.: Factory orders, est. (-0.5%), prior 0.7%
  • 10:30 a.m.: EIA Natural Gas, est. (-187), prior (-174)
  • 8 p.m. Fed’s Kocherlakota speaks in Minn. (Topic similar to Jan. 11 speech)

EARNINGS/WHAT TO WATCH:

  • Dunkin’ Donuts CEO Nigel Travis told CNBC co. may “do something like an IPO” in the future. Sees “no pressure” to do it immediately.  In statement, Dunkin’ reports prelim. fiscal 2010 rev. up 7% to $575m to $580m, global system-wide 2010 sales up 7% to $7.7b, same store sales up 2.3%
  • Gunfire erupted in Cairo’s Tahrir Square early today as supporters of President Mubarak battled with demonstrators. Europe’s Cameron, Merkel and Sarkozy demand immediate regime change in Egypt.
  • Nippon Steel and Sumitomo Metal Industries plant to merge to form world’s second-largest steelmaker behind ArcelorMittal.
  • Bank of America is said to be near an agreement to sell its Balboa insurance unit to Australia’s QBE Insurance. 
  • SharesPost to publish first report on value of Groupon, 10 a.m.
  • Ameriprise (AMP): 4Q op EPS miss
  • BMC Software (BMC): 3Q adj. EPS miss
  • Cadence Design  (CDNS): Sees 1Q EPS 8c vs est. 6c
  • Green Mountain Coffee (GMCR):  Sees 2Q adj. EPS 38c-42c, est. 34c
  • GT Solar International  (SOLR): Raised 2011 EPS view
  • Hartford Financial  (HIG):  4Q EPS beats est.
  • News Corp. (NWSA): 2Q EPS, Rev. beat; evaluating alternatives for MySpace
  • Shutterfly (SFLY):  Sees yr EPS $1.16, est. 98c.
  • Southern Copper (SCCO): 4Q EPS beat
  • Visa  (V):  Reaffirmed view for 2011 rev. 
  • Yum! Brands  (YUM): 4Q adj. EPS, rev. beat

PERFORMANCE:


The XLP and XLY remain broken on TRADE - 7 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND.

  • One day: Dow +0.02%, S&P (0.27%), Nasdaq (0.04%), Russell 2000 (0.34%)
  • Month-to-date: Dow +1.26%, S&P +1.39%, Nasdaq +1.85%, Russell +1.91%;
  • Quarter/Year-to-date: Dow +4.01%, S&P +3.69%, Nasdaq +3.67%, Russell +1.60%
  • Sector Performance - (8 sectors down and 1 up): - Financials (0.78%), Utilities (0.55%), Healthcare (0.34%), Consumer Spls (0.38%), Materials (0.16%), Industrials (0.31%), Consumer Disc (0.29%), Energy (0.08%), Tech +0.18%

  EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -197 (-2159)  
  • VOLUME: NYSE 933.47 (-14.72%)
  • VIX:  17.30 -1.87% YTD PERFORMANCE: -2.54%
  • SPX PUT/CALL RATIO: 2.35 from 1.21 (+94.52%)

CREDIT/ECONOMIC MARKET LOOK:

Treasuries were weaker for a third straight session.

  • TED SPREAD: 16.44 +0.406 (2.531%)
  • 3-MONTH T-BILL YIELD: 0.16% +0.01%      
  • YIELD CURVE: 2.85 from 2.87

COMMODITY/GROWTH EXPECTATION:

  • CRB: 343.80 +0.48%  
  • Oil: 90.86 +0.10% - trading +1.12% in the AM
  • COPPER: 454.40 -0.07% - trading +0.29% in the AM  
  • GOLD: 1,329.97 -0.90% - trading +0.26% in the AM  

COMMODITY HEADLINES:

  • Blaming it on the traders....Commodity traders in the European Union may face restrictions including position limits under proposals from the European Commission aimed at curbing excessive price volatility. 
  • Inventories at Cushing, Oklahoma, the delivery point for New York-traded West Texas Intermediate oil, increased 667,000 barrels to 38.3 million, the highest level since the department started keeping records at the storage hub in 2004.
  • Natural gas futures climbed for the third day in four in New York on forecasts of below-normal temperatures in the Midwest that would boost demand for the heating fuel. 
  • Cash premiums for corn and soybeans shipped this month to terminals near New Orleans rose relative to Chicago futures after a Midwest blizzard threatened to hinder grain sales and transportation. 
  • As Australia’s worst floods caused as much as $20 billion of damage to eastern states, 3,000 kilometers (1,900 miles) to the west farmer Pete Mills is battling a Chinese mining company for water after a decades-long drought.  At stake is the output of the country’s biggest wheat- growing state at a time when global food shortages have pushed prices to records. The drought has already prompted the government of Western Australian state Premier Colin Barnett to cut its economic growth forecast for the year to June 30 to 4%, from 4.5%

CURRENCIES:


Dollar gains vs majority of counterparts while euro holds gains vs yen on speculation ECB will signal willingness to tackle inflation at meeting today.

  • EURO: 1.3788 -0.25% - trading -0.19% in the AM
  • DOLLAR: 77.158 +0.12% - trading +0.04% in the AM 

EUROPEAN MARKETS:

  • FTSE 100: (0.41%); DAX: (-0.12%); CAC 40: (1.14%); IBEX: (-1.18%)
  • European stocks slide as gunfire erupts in Cairo and political turmoil in Middle East spreads to Yemena and ahead of the ECB's monetary policy meeting.
  • Europe economic news was constructive.
  • Declining sectors lead advancers 15-3 with construction (1.4%) and healthcare (1%) leading fallers and technology +0.3% and telecom +0.2% heading gainers.
  • Jan Final Services PMI
  • France 57.8 vs prelim 57.1
  • Germany 60.3 vs prelim 60.0
  • EuroZone 55.9 vs prelim 55.2
  • UK Jan services PMI 54.5 vs consensus 51.4

ASIAN MARKTES:

  • Nikkei (0.25%); Hang Seng, Shanghai Composite closed for Lunar NY
  • Markets finished mixed, in a tight band, following a tepid performance by Wall Street.
  • Egyptian turmoil dents confidence...
  • Gains for basic materials producers boost Australia’s S&P/ASX 200.  Insurers rose after Cyclone Yasi caused less damage than feared.
  • Japanese stocks fall for first time in three days. Panasonic drops 3.2%, leading consumer stocks lower after 3Q net income misses estimates. Exporters were sold on a strong yen.
  • Markets in China, Hong Kong, South Korea, Singapore, Taiwan and Vietnam are closed for the Lunar New Year.

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

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