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TODAY’S S&P 500 SET-UP - March 4, 2011


Equity futures are trading above fair value in a follow-through from yesterday, which saw the Dow post its largest one-day gain since December 2010. Today's non-farm payroll number is the key catalyst, with consensus at +190K for February.  April crude futures climbed back above $102 a barrel overnight as tension in the Middle East remains heightened and hopes fade for negotiated peace deal in Libya.  As we look at today’s set up for the S&P 500, the range is 24 points or -0.97% downside to 1318 and 0.83% upside to 1342.

MACRO DATA POINTS:

  • 8:30 a.m.: Nonfarm payrolls: est. +196k, prior 36k
  • 8:30 a.m.: Unemployment rate: est. 9.1%, prior 9.0%
  • 10 a.m.: Fed’s Yellen speaks on international system in Paris
  • 10 a.m.: Fed’s Nelson testifies on TALF liquidity facility
  • 10 a.m.: Factory orders, est. +2.0%, prior +0.2%
  • 1 p.m.: Baker Hughes Rig Count

EARNINGS/WHAT TO WATCH:

  • Goldman Sachs CEO Blankfein said to agree to testify at Raj Rajaratnam’s trial, set to begin next week
  • NFL, union labor deadline extended by 24 hours to midnight
  • BP Pipelines North America may restart the Tri-States natural gas liquids pipeline
  • The U.S. DoJ is probing online video patent owner MPEG LA over antitrust concerns regarding claims against Google’s VP8: WSJ

PERFORMANCE:


We have 8 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND.  XLF is the only sector broken on TRADE.

  • One day: Dow +1.59%, S&P +1.72%, Nasdaq +1.84%, Russell 2000 +2.22%
  • Month-to-date: Dow +0.26, S&P +0.28%, Nasdaq +0.59%, Russell +0.84%
  • Quarter/Year-to-date: Dow +5.88%, S&P +5.83%, Nasdaq +5.50%, Russell +5.77%
  • Sector Performance: - Industrials +2.4%, Financials +2.2%, Healthcare +2%, Materials +2%, Tech +1.7%, Consumer Disc +1.7%., Energy +1.5%, Consumer Spls. +1.1%, Utilities +1%

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 1914 (+1111)  
  • VOLUME: NYSE 1074.11 (+4.79%)
  • VIX:  18.60 -10.14% YTD PERFORMANCE: +4.79%
  • SPX PUT/CALL RATIO: 1.60 from 2.02 (20.75%)

CREDIT/ECONOMIC MARKET LOOK:


Treasuries were weaker with the better global risk backdrop, upbeat economic data, rally in stocks and lingering inflation concerns.

  • TED SPREAD: 19.08 +0.203 (1.075%)
  • 3-MONTH T-BILL YIELD: 0.13%
  • 10-Year: 3.58 from 3.46
  • YIELD CURVE: 2.79 from 2.77

COMMODITY/GROWTH EXPECTATION:

  • CRB: 360.56 +0.40%; YTD: +8.34%  
  • Oil: 101.91 -0.31%; YTD: +10.40% (trading +0.67% in the AM)
  • COPPER: 449.00 -0.18%; YTD: +2.25% (trading +1.04% in the AM)  
  • GOLD: 1,417.69 -1.43%; YTD: -0.08% (trading +0.10% in the AM)  

COMMODITY HEADLINES:

  • Commodities Rise to Two-Year High as Cotton Jumps to Record, Cocoa Gains
  • Deere Courts Indian Farmers, South Korea Scouts Chicago Amid Price Rally
  • Bearish Bets on Soybeans, Cattle Surge to Two-Year High in Options Market
  • Cotton Gains to Record, Heads for Biggest Weekly Advance in Three Months
  • Coffee Rises on Speculation About Short Supply; Cocoa Reaches 32-Year High
  • Wheat Advances as Dry Weather Fans Concern About Possible U.S. Crop Damage
  • Copper Heads for First Weekly Climb in Four Before U.S. Employment Report
  • Gold May Extend Best Run of Weekly Gains Since October on Mideast Turmoil
  • Saudi Arabia May Raise Light Crude Oil Premium to Highest Since July 2008
  • Gillard Weighs Impact of Currency's Gains, Says Commodity Boom Will Endure
  • Container Shipping Shares Boom as Dry Bulk Carriers Wane: Freight Markets
  • High Food Prices May Persist as Economic Growth Boosts Demand, IMF Says
  • Ferrous Resources Said to Seek Funding for $4 Billion Iron Ore Expansion
  • Copper May Fall Next Week on Concern About Rising Inflation, Survey Shows 

CURRENCIES:

  • EURO: 1.3935 +0.48% (trading +0.24% in the AM)
  • DOLLAR: 76.483 -0.25% (trading +0.01% in the AM) 

EUROPEAN MARKETS:

  • FTSE 100: +0.59%; DAX: +0.80%; CAC 40: +0.52% 
  • European markets advanced following strong markets in Asia and a constructive close on Wall Street on growing economic optimism and expectations for a favorable US payroll report after yesterday's better than expected jobless data.
  • Bonds continued to be pressured following ECB's Trichet hawkish comments yesterday and a growing expectation of a rate increase in the EuroZone as early as next month.
  • Hermes Reports 44% Jump in Earnings as Margins Exceed Increased Forecast
  • Daimler's Steel Headwind Saps Profit as Continental AG's Rubber Costs Soar
  • Salgado Favors Easing Greek Bailout Terms as EU Wrangles on Crisis Accord
  • Crude Heads for Fifth Weekly Gain In London on Libya Violence, U.S. Demand
  • Jet Fuel, Diesel Past $1,000 on Libya Fan Growth Concern: Energy Markets
  • Ferrous Resources Said to Seek Funding for $4 Billion Iron-Ore Expansion
  • U.K. House Prices Dropped Last Month, Erasing January Gain, Halifax Says

ASIAN MARKTES:

  • Nikkei +1.0%; Hang Seng +1.2%; Shanghai Composite +1.4%
  • Asian markets rose today in response to lower oil prices and lower-than-expected jobless claims in the US.
  • Gillard's Concern at Australia Dollar's Impact Shows 'Dutch Disease' Risk
  • Asian Stocks Advance for Fourth Day This Week on U.S. Employment Data, Oil
  • Dollar Yield Gap at 21-Month High as Prices May Spur Unrest: China Credit
  • China Forestry Ex-CEO Should Face Hong Kong Lawsuit, City's Watchdog Says
  • Korea Express Shareholders Said to Seek up to $1.8 Billion From Stake Sale
  • Record Food Prices May Persist as Economic Growth Boosts Demand, IMF Says
  • Singapore Court Rejects Former Standard Chartered Clients' Bid to Sue Bank
  • Singapore Exchange's ASX Takeover Offer Gets a Boost From Chi-X Approval
  • Chinese IPO Risk on U.S. Markets Tops American Corporations, Options Show

Howard Penney

Managing Director

THE HEDGEYE DAILY OUTLOOK - setup