THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - February 14, 2011


Equity futures are trading slightly below fair value ahead of this week's key data releases which are likely to set the tone for further short-term risk appetite.  As we look at today’s set up for the S&P 500, the range is 16 points or -0.99% downside to 1316 and +0.21% upside to 1332.

 MACRO DATA POINTS:

  • 8:30 a.m.: NOPA monthly oil, soybean capacity, Jan.
  • 10 a.m.: New York Fed briefing on regional economy. President William Dudley speaks
  • 11 a.m.: Weekly export inspections (corn, soybeans, wheat)
  • 11:30 a.m.: U.S. to sell $32b 3-mo. bills, $30b 6-mo. bills

EARNINGS/WHAT TO WATCH:

  • Biogen Idex (BIIB): May buy back 20m shrs
  • Devon Energy (DVN): May rise to $100-shr: Barron’s
  • KLA-Tencor (KLAC): Plans to buy back 10m shrs
  • Intercontinental Hotels (IHG): may rise on economic recovery: Barron’s; may boost div. ~10%: Sunday Times
  • International Paper (IP): May raise div., buy back shares: Barron’s
  • Silicon Graphics International (SGI): May be profitable for the full year: Barron’s
  • Tootsie Roll Industries (TR): 4Q EPS in line with est., sales beat (1 est.)
  • Transocean (RIG): Richard George is resigning from board, and Chairman Robert E. Rose and director Victor E. Grijalva won’t stand for re-election; seeking board approval for a $1b div.

PERFORMANCE:


Strength was seen from Financials and Discretionary; weakness in Energy and Tech. We have day 5 of perfect = 9 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND.

  • One day: Dow +0.36%, S&P +0.55%, Nasdaq +0.68%, Russell +1.16%
  • Month-to-date: Dow +3.21%, S&P +3.35%, Nasdaq +4.05%, Russell +5.23%
  • Quarter/Year-to-date: Dow +6.01%, S&P +5.69%, Nasdaq +5.9%, Russell +4.91%
  • Sector Performance: - Financials +1.37%, Consumer Discretionary +1.02%, Industrials +0.75%, Consumer Staples +0.54%, Materials +0.56%, Tech +0.53%, Healthcare +0.22%, Energy (0.01%), and Utilities (0.19%)

  EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 1453 (+1360)  
  • VOLUME: NYSE 972.00 (-5.34%)
  • VIX:  15.69 -2.49% YTD PERFORMANCE: -11.61%
  • SPX PUT/CALL RATIO: 1.84 from 1.66 (+11.17%)

CREDIT/ECONOMIC MARKET LOOK:


Treasuries were stronger on the session, but not without a pullback following the Egypt news flow. The 10yr yield fell to 3.61% in early trading, before pulling back to 3.64%.  

  • TED SPREAD: 20.04 -0.101 (-0.503%)
  • 3-MONTH T-BILL YIELD: 0.12%
  • 10-Year: 3.64 from 3.70
  • YIELD CURVE: 2.79 from 2.85

COMMODITY/GROWTH EXPECTATION:

  • CRB: 337.78 -0.64%; YTD: +1.50%  
  • Oil: 85.58 -1.33%; YTD: -7.15% (trading +0.06% in the AM)
  • COPPER: 453.60 -0.17%; YTD: +3.41% (trading +1.49% in the AM)  
  • GOLD: 1,357.30 -0.35%; YTD: -4.26% ( trading +0.09% in the AM)  

COMMODITY HEADLINES:

  • Oil fell to a 10-week low in New York after Egyptian President Hosni Mubarak stepped down and handed power to the military, reducing concern that crude shipments from the Middle East will be disrupted.
  • Gold erased some of early gains in directionless trade on Friday, under pressure from a
    drop in ETF holdings to their lowest since late January, a firm U.S. dollar and a lacklustre physical market. 
  • The tightest physical silver supplies in four years have tipped the U.S. silver futures market into backwardation this week, making near-term prices more expensive than more distant months. 
  • Corn traded near a 30-month high in Chicago, heading for a second weekly advance, on increased demand amid tight supply. Wheat and soybeans climbed.

CURRENCIES:

  • EURO: 1.36554 -0.53% (trading -0.63% in the AM)
  • DOLLAR: 78.46 +0.27% (trading +0.29% in the AM) 

EUROPEAN MARKETS:

  • FTSE 100: (-0.20%); DAX: +0.23%; CAC 40: (-0.18%) (as of 07:00 AM EST)
  • European markets mostly trade higher following firmer markets across Asia, with European M&A activity and generally constructive corporate results also helping sentiment.
  • Credit Suisse rallied after raising capital from Middle Eastern investors.
  • The pound and the euro are trading at $1.6017 and $1.3460 respectively
  • euro was pressured by reports that WestLB failed to agree on a restructuring over the weekend and BaFin becoming increasingly involved in how the bank will be rescued

 ASIAN MARKTES:

  • Nikkei +1.13%; Hang Seng +1.28%; Shanghai Composite +2.54%
  •  Asian markets rose this morning on optimism that an Egyptian crisis has been largely averted, getting a boost when Japan’s GDP shrinkage was less than expected.
  • Japan rose on the economic data and a weaker yen.
  • South Korea +1.89, Samsung Engineering rallied on announcing a $600M contract with Saudi Arabian Oil Co.
  • Widespread gains by banks and miners powered Australia higher +1.12. BHP Billiton gained 2% after China January copper imports beat expectations.
  • Taiwan up 0.88% - Asustek jumped 7% on results.
  • Japan Oct-Dec GDP real GDP (1.1%) y/y. China January trade surplus $6.45B vs consensus $10.7B.

Howard Penney

Managing Director

THE HEDGEYE DAILY OUTLOOK - 2 14 2011 7 29 10 AM