THE HEDGEYE DAILY OUTLOOK

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


Equity futures are trading above fair value as news emerged overnight that a peace deal, suggested by Venezeula's Hugo Chavez, had been agreed to by Libyian President Gaddafi and the Arab League's Secretary-General Amr Mouss.   As we look at today’s set up for the S&P 500, the range is 28 points or -1.33% downside to 1291 and 0.81% upside to 1319.

MACRO DATA POINTS:

  • 8:30 a.m.: Initial jobless claims, Feb.26, est. 395k vs prev. 391k
  • 8:30 a.m.: Net export sales
  • 9:45 a.m.: Bloomberg Consumer Comfort, Feb. 27, est. -40.2, prev. -39.2
  • 10 a.m.: ISM Non-Manufacturing, Feb., est. 59.3 vs prev. 59.4
  • 10 a.m.: Freddie Mac 30-yr mortgage rates
  • 10:30 a.m.: EIA Natural Gas, Feb.25, est. -85 vs prev.-81
  • 11 a.m.: Fed’s Kocherlakota speaks in Minn., later Q&A
  • 12:15 p.m.: Fed’s Lockhart speaks in Tallahassee

EARNINGS/WHAT TO WATCH:

  • News Corp wins U.K. government approval for its $12.7b bid to take full control of BSkyB after agreeing to spin off the Sky News channel.
  • First exchange-traded fund for leveraged loans begins trading today, FT reports, without citing its sources. Fund is based on the Standard & Poor’s/LSTA US Leveraged Loan 100 Index
  • Ontario review of LSE/TMX deal begins second day of public hearings
  • BlackRock, Banco Santander and  10 private-equity firms are forming groups to bid for Citigroup’s U.S. consumer-lending unit
  • Legislation that would bar U.S. EPA from regulating greenhouse gases to be introduced as early as today
  • The National Football League and players’ union will reconvene this morning in a final bid to reach an agreement on a new labor accord before the existing one expires at midnight

PERFORMANCE:


We have 3 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND.

  • One day: Dow +0.07%, S&P +0.16%, Nasdaq +0.39%, Russell 2000 +0.47%
  • Month-to-date: Dow (1.30%), S&P (1.41%), Nasdaq (1.23%), Russell (1.52%)
  • Quarter/Year-to-date: Dow +4.23%, S&P +4.04%, Nasdaq +3.59%, Russell +3.48%
  • Sector Performance: - Energy +0.57%, Tech +0.61%, Industrials +0.47%, Consumer Disc +0.39%, Healthcare +0.30%, Materials +0.36%, Utilities +0.17%, Consumer Spls (0.27%), Financials (0.61%)

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 803 (+2393)  
  • VOLUME: NYSE 1025.00 (-13.65%)
  • VIX:  20.70 -1.48% YTD PERFORMANCE: +16.62%
  • SPX PUT/CALL RATIO: 2.02 from 2.32 (-12.65%)

CREDIT/ECONOMIC MARKET LOOK:


Treasuries were weaker yesterday with the slightly better risk backdrop, stronger-than-expected ADP private payrolls data and somewhat more upbeat Beige Book.  

  • TED SPREAD: 19.19 +0.406 (2.161%)
  • 3-MONTH T-BILL YIELD: 0.13% -0.01%
  • 10-Year: 3.46 from 3.41
  • YIELD CURVE: 2.77 from 2.75

COMMODITY/GROWTH EXPECTATION:

  • CRB: 359.12 +1.11%; YTD: +7.91%  
  • Oil: 102.23 +2.61%; YTD: +9.62% (trading -0.56% in the AM)
  • COPPER: 449.80 -0.26%; YTD: +1.35% (trading -0.04% in the AM)  
  • GOLD: 1,437.05 +0.60%; YTD: +0.79% ( trading -0.61% in the AM)  

COMMODITY HEADLINES:

  • World Food Prices Climb to Record as UN Sounds Alarm on Further Shortages
  • Oil Declines Most in a Week on Arab League's Libya Crisis Resolution Plan
  • Cocoa Rises to 32-Year High on Ivory Coast Political Tension; Sugar Falls
  • Cotton Futures Advance by Exchange Limit Toward Record on Supply Shortage
  • Corn Rally Makes Farmers Switch to Cheapest Wheat in Decade: Chart of Day
  • U.S. Cotton Is `Sold Out,' Boosting Australian Demand, Shippers Group Says
  • Gold May Fall From Near-Record Price Following Report of Libya Peace Plan
  • Copper Fluctuates on Report of Libya Mediation, Stocks at Seven-Month High
  • Palm Oil Advances for Third Day on Outlook for Brazil, U.S. Soybean Crops
  • Khomeini, Chavez Examples Show Libya Oil Production Decline: Chart of Day
  • Wheat, Corn Fluctuate as Investors Weigh Demand Against Mideast Tension
  • Freeport-McMoran Lured in Equinox Lowball Bid for Lundin Mining: Real M&A
  • Rain Means Hydropower Is `Stealing' Share From Natural Gas: Energy Markets
  • Iran Uranium Program Unhampered by Sanctions, Stuxnet Virus: Chart of Day. 

CURRENCIES:

  • EURO: 1.3869 +0.46% (trading +0.01% in the AM)
  • DOLLAR: 76.671 -0.49% (trading +0.03% in the AM) 

EUROPEAN MARKETS:

  • FTSE 100: +0.98%; DAX: +0.97%; CAC: 0.75% (as of 06:15AM EST)
  • European markets mostly trade higher aided by a fall in the oil price on talk of a peace deal in Libya brokered by the Venezuelan President.
  • Gains in major indices remain ahead of the ECB rate decision at 7:45ET when it is expected to leave its bench market interest rate unchanged at 1%.
  • Economic data was mixed with service sector growth moderating in Feb across the region.
  • Trichet Faces Oil Shock as Inflation Above 2% Threatens to Strangle Growth
  • Rogoff Says Debt Restructuring in Greece, Ireland, Spain Is `Inescapable'
  • U.K. House Prices Fall as Supply of Properties Surges Most in Three Years
  • Poles in Germany May Force Rates Higher at Home 22 Years After Berlin Wall
  • France Q4 ILO Unemployment rate 9.6% vs prior 9.7%
  • Germany Jan preliminary Retail Sales +2.6% y/y vs consensus +1.6%

February Final Services PMI:

  • France 59.7 vs prelim 60.8
  • German 58.6 vs prelim 59.5
  • Eurozone 56.8 vs prelim 57.2
  • UK Feb services PMI 52.6 vs consensus 53.5

ASIAN MARKTES:

  • Nikkei +0.9%; Hang Seng +0.3%; Shanghai Composite (0.4%)
  • Most Asian markets rose today on bargain-hunting, encouraged by Wall Street’s rise.
  • South Korea rose on industrial-output data.
  • Japan rebounded from yesterday’s fall.
  • Hong Kong ended slightly higher on short-covering and strength in Chinese banks. Standard Chartered rose 4% on results.
  • Australia finished flat. ASX (ASX.AU) fell 1% when Australian regulators released guidelines indicating a second stock exchange could go live in the country by October.
  • China fell as fears about further monetary tightening outweighed any optimism and led to profit-taking in the afternoon. High oil prices sent industrial shares down, but banks rose on the perception that they are undervalued.
  • Japan Oct-Dec corporate capex +3.8% y/y vs consensus +5.9%. February diffusion index of business sentiment +1.7 pts m/m to 35.4.
  • China HSBC February PMI 51.9 vs prior 52.0.

Howard Penney

Managing Director

THE HEDGEYE DAILY OUTLOOK - setup