TODAY’S S&P 500 SET-UP – February 7, 2011
Equity futures are trading above fair value in a continuation of last week's performance due to further robust economic data, positive corporate earnings and an easing of the social unrest in Egypt.
Copper has hit record levels overnight, which has pushed resource plays higher across Asia and Europe. As we look at today’s set up for the S&P 500, the range is 22 points or -1.06% downside to 1297 and +0.62% upside to 1319.
MACRO DATA POINTS:
- 11 a.m.: Export inspections (corn, soybeans, wheat)
- 11:30 a.m.: U.S. sells $32b 3-mo bills, $30b 6-mo bills
- 3 p.m.: Fed. consumer credit, Dec., est. $2.500b, prior $1.346b
TODAY’S WHAT TO WATCH:
- American Apparel (APP) named John Luttrell CFO effective today
- Bank of America (BAC) created Legacy Asset Servicing unit to handle defaulted loans, discontinued residential mortgage products, names Terry Laughlin to lead
- Bemis (BMS) boosted qtr div to 24c from 23c
- Broadcom (BRCM) paid Morgan Stanley $300m under accelerated share buyback agreement
- DuPont (DD) may rise to as high as $65 if the proposed $6.3b acquisition of Danisco boosts its food- related businesses, Barron’s
- Genzyme (GENZ), Sanofi-Aventis announcement possible as early as today, people with knowledge of talks say. Companies said to be discussing price of ~$74-shr plus potential additional payments
- InterDigital (IDCC) may rise as much as 15% as demand increases for its network-maximizing technology and as it moves to a new business model, Barron’s said in its “The Trader” column
- Questcor Pharmaceuticals (QCOR) may drop by >half as the overhaul of the U.S. health-care system slashes earnings for its key product, Acthar, a treatment for baby seizures, Barron’s
- Starbucks (SBUX) may rise as much as 15% in the next year on “growth initiatives” such as its Via instant coffee, Barron’s reported in its “The Trader” column
- Terremark Worldwide (TMRK) reported 3Q 23c loss per shr, est. loss 10c; rev. $94.3m, est. $90.8m. Sees 4Q rev. $93.8m-$96.8m, est. $113.6m; 2012 rev. $445m-$455m, est. $423.6m
Only the XLP remains broken on TRADE - 8 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND.
- One day: Dow +0.25%, S&P +0.29%, Nasdaq +0.56%, Russell +0.19%
- Month-to-date: Month-to-date: Dow +1.68%, S&P +1.92%, Nasdaq +2.56%, Russell +2.41%
- Quarter/Year-to-date: Dow +4.45%, S&P +4.23%, Nasdaq +4.39%, Russell +2.10%
- Sector Performance - (6 sectors traded higher): - Tech +0.69%, Consumer Discretionary +0.64%, Consumer Staples +0.58%, Healthcare +0.46%, Industrials +0.35%, Materials +0.01%, Financials (0.05%), Energy (0.26%), and Utilities (0.61%)
- ADVANCE/DECLINE LINE: -7 (-275)
- VOLUME: NYSE 920.447 (-7.94%)
- VIX: 15.93 -4.55% YTD PERFORMANCE: -10.25%
- SPX PUT/CALL RATIO: 1.85 from 1.67 (+11.00%)
CREDIT/ECONOMIC MARKET LOOK:
Treasuries fall for sixth day, longest losing streak in three months, 2/10 curve nears record as U.S. prepares to sell $72b of notes/bonds over three days starting tomorrow.
- TED SPREAD: 16.19 -0.457 (-2.747%)
- 3-MONTH T-BILL YIELD: 0.15% +0.01%
- YIELD CURVE: 2.91 from 2.87
- CRB: 338.92 -0.61%
- Oil: 89.03 -1.67% - trading +0.26% in the AM
- COPPER: 462.90 +0.77% - trading +1.08% in the AM
- GOLD: 1,347.65 -0.49% - trading -0.03% in the AM
OTHER COMMODITY NEWS:
- The Iranian representative to the Organization of Petroleum Exporting Countries said oil supply and demand in international markets is balanced despite the tension in Egypt.
- San Diego Gas & Electric lifted a natural gas emergency at noon Friday, saying conservation is not essential in the face of warmer weather, better supplies and a forecast for lower use this weekend.
- Gold declined on speculation that an economic recovery will curb demand for the metal as an alternative investment. The dollar gained against the euro after a Labor Department report showed the U.S. jobless rate unexpectedly fell to 9 percent in January.
- Copper extended a rally to a record on mounting concern that the global economic recovery will boost consumption of the metal used in cars, homes and appliances while mining companies struggle to increase output.
- U.S. exporters reported sales of 101,000 metric tons of corn to Japan, with 50,500 tons for delivery by Aug. 31 and the rest for delivery in the year starting Sept. 1, the U.S. Department of Agriculture said today in a statement.
- U.S. wheat futures on the Chicago Board of Trade fell for a second day on Friday but the market remained poised to show a gain for the week after severe cold in the U.S. Plains helped prices hit 2-1/2-year highs.
- Coffee exports from Uganda, Africa’s largest producer of the robusta variety of the crop, fell 18 percent in January, according to the Uganda Coffee Development Authority.
- Hundreds of buffalo from America's last great remaining wild herd could be sent for slaughter after being driven from Yellowstone national park by high snow and harsh temperatures, conservationists warned today.
- EURO: 1.3546 -0.50% - trading -0.26% in the AM
- DOLLAR: 78.044 +0.38% - trading +0.23% in the AM
- FTSE 100: +0.68%; DAX: +0.76%; CAC 40: +0.92%; IBEX: -0.40%
- European markets trade higher in a broad based advance that saw European shares near a two and a half year.
- All sectors trade higher buoyed by firmer markets in US and Asia, constructive European corporate news and hopes that talks between Egypt's government and opposition will make progress.
- Eurozone Feb Sentix sentiment 16.7 vs consensus 12.5 and prior 10.6
- German December factory orders -3.4% M/m, est. -1.5% (prior +5.2%)
- Asian Markets: Nikkei +0.46%; Hang Seng (1.49%); Shanghai Composite (closed)
- Asian markets traded mostly higher, with investor sentiment aided by Friday's gains in the US as the job market showed further signs of recovery.
- Markets in China, Taiwan and Vietnam remain closed for Lunar New Year.
- Australia; Dec retail sales were below consensus in December, +0.2% over the period incorporating Christmas, after a revised +0.4% gain in November.
- Hong Kong stocks fell into the close with oil stocks leading the way down hit by lower crude prices.
- Bank of Japan Governor Masaaki Shirakawa said to overcome deflation in Japan, two things are essential, consistent monetary easing and efforts to strengthen the foundation for economic growth. Mr. Shirakawa also said that recent economic indicators show that Japan's economy is about to emerge from its recent pull back.