THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - February 18, 2011

Equity futures are trading flat to fair value following Thursday's low key session which saw indices close modestly higher having reversed early weakness. With no major data scheduled and with Monday a holiday, trading is expected to be range bound.   As we look at today’s set up for the S&P 500, the range is 14 points or -0.93% downside to 1328 and 0.12% upside to 1342.

MACRO DATA POINTS:

  • 8 a.m.: Bernanke speaks on global imbalances in Paris. Q&A
  • 1 p.m.: Baker Hughes rig count
  • G20 Finance Ministers & Central Bank Govs meet in Paris this weekend

EARNINGS/WHAT TO WATCH:

  • Bats Global Markets is close to deal to take over Chi-X Europe, two people familiar with discussions say; Bats offered ~$300m for Chi-X, people familiar with deal said Dec.
  • Philip Falcone’s LightSquared is close to securing $585m loan to build its wireless network, as it negotiates a wholesale deal with a nationwide carrier, two people familiar with plans say
  • Time Chairman and CEO Jack Griffin is leaving co. after six months in the job; Time Warner’s magazine unit will be led by interim management committee until permanent successor found
  • U.S. House edges closer to passing bill to reduce govt. spending by at least $61b. Final vote on 2011 budget measure may come as soon as today; it then would go to the Senate, where the Democratic majority is likely to reject proposal
  • China’s central bank raises reserve requirements for lenders for second time this year to counter inflation, curb property-price gains. Ratios will increase 0.5 pct. pt. starting Feb. 24
  • Egypt’s foreign ministry says it has received and is studying a request from Iran for two military ships to pass through the Suez Canal
  • American Public Education (APEI) reported 4Q EPS 52c vs est. 47c
  • Aruba Networks (ARUN) forecast 3Q non-GAAP EPS 14c-15c vs est. 14c
  • Blue Coat Systems (BCSI) forecast 4Q adj. EPS 32c-38c vs est. 38c
  • Brocade Communications Systems (BRCD) forecast 2Q non-GAAP EPS 10c vs est. 9c
  • Clearwire (CLWR) said may sell assets and hasn’t made decision on spectrum; posted 4Q rev. $180.7m vs. est. $190.2m
  • Exelixis (EXEL) said its lead drug, XL184, reduced bone tumors in prostate cancer patients
  • Intuit (INTU) forecast 2011 adj. EPS $2.41-$2.48, vs est. $2.41
  • Newpark Resources (NR) posted 4Q EPS 15c vs est. 10c (4 est.)
  • Nordstrom (JWN) forecast 2012 adj. EPS $2.95-$3.10 vs est. $3.05
  • SunPower (SPWRA) raised 2011 adj. EPS forecast to $2-$2.20 from $1.75-$2.05 in Nov., vs est. $1.74

PERFORMANCE:

We have 8 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND.

  • One day: Dow +0.24%, S&P +0.31%, Nasdaq +0.21%, Russell 2000 +0.68%
  • Month-to-date: Dow +3.58%, S&P +4.22%, Nasdaq +4.87%, Russell +6.75%
  • Quarter/Year-to-date: Dow +6.40%, S&P +6.58%, Nasdaq +6.74%, Russell +6.43%
  • Sector Performance: - Materials +0.90%, Energy +0.99%, Consumer Spls +0.68%, Healthcare +0.43%, Utilities +0.19%, Industrials +0.24%, Tech +0.19%, Consumer Disc +0.03%, Financials (0.12%)

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 751 (-752)  
  • VOLUME: NYSE 882.14 (-5.04%)
  • VIX:  16.59 -0.78% YTD PERFORMANCE: -6.54%
  • SPX PUT/CALL RATIO: 1.22 from 1.88 (-35.13%)

CREDIT/ECONOMIC MARKET LOOK:

Treasuries were higher today despite the move in stocks and some of the adverse headlines surrounding inflation (though this seemed to help the 30-year TIPS auction).

  • TED SPREAD: 22.43  
  • 3-MONTH T-BILL YIELD: 0.09% -0.03%
  • 10-Year: 3.58 from 3.62
  • YIELD CURVE: 2.78 from 2.76

COMMODITY/GROWTH EXPECTATION:

  • CRB: 341.27 +0.90%; YTD: +2.54%  
  • Oil: 84.90 +1.61%; YTD: -6.85% (trading -0.68% in the AM)
  • COPPER: 445.50 +0.32%; YTD: +0.34% (trading -0.93% in the AM)  
  • GOLD: 1,385.18 +0.63%; YTD: -2.37% ( trading +0.21% in the AM)  

COMMODITY HEADLINES:

  • Gold Rises, Silver Goes to 30-Year High as Middle East Unrest Spurs Demand
  • World Feeding Itself Spurs Search for Answers Amid Global Feast and Famine
  • Crude Rises in London as Protests in Libya, Bahrain Fuel Supply Concern
  • Sugar Output in Thailand May Climb to Record on Higher Yields, Board Says
  • Copper May Decline in London on Chinese Leading Indicators: LME Preview
  • Bank of America Said to Hire Ex-JPMorgan Chase Metals Prop Trader Daniel
  • Rubber in China to Extend Record Rally, Zhongcai Says: Technical Analysis
  • Cotton Declines, Reversing Advance to Record, on Outlook For Next Harvest
  • Malaysian Palm Oil Gets Greater Access to Indian Buyers Under Trade Accord
  • Natural Gas Producer Hedging Gains as Rally Prospects Fade: Energy Markets
  • Speculators, Not Demand, Driving Surge in Food, Poland's Sawicki Tells WB
  • China $1.3 Trillion Rail Opening to Interior Aids Daqin: Freight Markets
  • Posco, Units to Cut Costs by 2.4 Trillion Won to Fight Raw-Material Prices
  • Copper May Drop Next Week as Buyers Delay Purchases, According to Survey 

CURRENCIES:

  • EURO: 1.3594 +0.35% (trading -0.25% in the AM)
  • DOLLAR: 78.121 -0.29% (trading +0.16% in the AM) 

EUROPEAN MARKETS:

  • FTSE 100: (0.453%); DAX: (0.11%); CAC 40: (0.09%) (as of 06:15 ET)
  • European markets reversed modest early gains to trade lower.
  • Banks were pressured as elevated levels of emergency overnight borrowing from ECB leading to speculation that a EuroZone bank may be facing funding problems.
  • There was also a newspaper report that Spanish saving banks will get a six month extension to the time frame to seek private capital, when the Spanish government adopts new bank capital requirements, expected later today.
  • Finance Ministers of the G20 meet today with Fed Chairman Bernanke due to make an address at 8ET.
  • Peripheral markets lead the region lower with declines approaching (1%).
  • France Feb business climate 106 vs con 109, prior 108
  • UK Jan Retail sales +5.3% y/y vs con +4.1% vs prior revised to (0.7%) from +0.0%
  • Retail sales ex fuel +5.3% y/y vs con +4.4% vs prior revised to +0.3% from +1.0%
  • Jan impacted by VAT change, heavy snow; Dec revisions due largely to late survey returns due to snow

ASIAN MARKTES:

  • Nikkei +0.1%; Hang Seng +1.3%; Shanghai Composite (0.9%)
  • Asian markets were mixed tending up today.
  • South Korea rebounded +1.82% on foreign investors and bargain hunters.
  • Chinese financials and HSBC Holdings rose to power Hong Kong’s gain.
  • Japan ended flat as banks recovered from early losses.
  • Australia finished lower by -0.03%; Australia and New Zealand Banking Group fell 3% when it failed to beat expectations for earnings.
  • China fell as data showed that the property market remains hot, despite government efforts to cool it. Property developers, unsurprisingly, rose on the news, but other large caps were sold.
  • Thailand was closed for Makha Bucha Day.
  • Japan January department-store sales (1.1%) y/y. Tokyo January department-store sales +1.4% y/y.
  • The PBOC raised its required reserve ratio by 50 bps. The hike is effective 24-Feb

Howard Penney

Managing Director

THE HEDGEYE DAILY OUTLOOK - dailyhp