TODAY’S S&P 500 SET-UP - March 10, 2011

As I said in yesterday’s Early Look (Under Attack), the rose-tinted view that has driven the S&P to current levels, up 4.96% year-to-date, is becoming more and more difficult to justify.  As we look at today’s set up for the S&P 500, the range is 32 points or -1.37% downside to 1302 and 1.06% upside to 1334.



  • 8:30 a.m.: Jobless claims, est. 376k, prior 386k
  • 8:30 a.m.: Trade balance, est. (-$41.5b), prior (-$40.6b)
  • 9 a.m.: Fed’s consumer advisory council hosts meeting
  • 9:45 a.m.: Bloomberg consumer confort index, prior (-39.3)
  • 10 a.m.: Freddie Mac 30-year mortgage
  • 10:30 a.m.: EIA Natural Gas storage
  • 1 p.m.: $13b 30-year bond reopening
  • 2 p.m.: Monthly budget statement   


  • NATO defense ministers scheduled to meet in Brussels today and tomorrow to discuss, possibly decide on alliance involvement in Libya 
  • Ontario Securities Commission Chairman Howard Wetston scheduled to speak in hearing to review proposed sale of TMX Group to LSE
  • Japan’s Tokyo Stock Exchange Group plans to hold merger discussions with Osaka Securities Exchange
  • Galleon Group founder Raj Rajaratnam’s insider trading trial continue.
  • President Obama is seeking to reshape federal government; plan may include folding U.S. Trade Representative’s office into Commerce Department
  • Spain’s credit rating cut one level to Aa2 by Moody’s on bank bailout costs 
  • Barclays, Deutsche Bank, JPMorgan Chase, Wells Fargo said to host lender meeting to discuss Jarden debt refinancing   


For the second day we have 5 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND.  The four sectors that are positive on both TRADE and TREND are XLY, XLP, XLE and XLE.

  • One day: Dow (0.01%), S&P (0.14%), Nasdaq (0.51%), Russell 2000 (0.42%)
  • Month-to-date: Dow (0.11%), S&P (0.54%), Nasdaq (1.10%), Russell (0.27%)
  • Quarter/Year-to-date: Dow +5.49%, S&P +4.96%, Nasdaq +3.73%, Russell +4.79%
  • Sector Performance: - Materials (1.62%), Energy (0.69%), Tech (0.41%), Industrials (0.22%), Financials (0.1%), Healthcare +0.15%, Consumer Disc +0.23%, Consumer Spls +0.5%, Utilities +1.1%


  • ADVANCE/DECLINE LINE: -152 (-1710)  
  • VOLUME: NYSE 871.20 (-13.11%)
  • VIX:  20.22 +2.02% YTD PERFORMANCE: +13.92%
  • SPX PUT/CALL RATIO: 2.27 from 1.55 (+46.34%)


Treasuries were stronger yesterday on Libya concerns and a better 10-year note auction.

  • TED SPREAD: 22.23 +0.406 (1.860%)
  • 3-MONTH T-BILL YIELD: 0.10% -0.01%
  • 10-Year: 3.48 from 3.56
  • YIELD CURVE: 2.78 from 2.83


  • CRB: 360.23 -0.24% YTD: +8.24%  
  • Oil: 104.38 +0.61%; YTD: +12.09% (trading -0.30% in the AM)
  • COPPER: 421.25 -2.90%; YTD: -5.95% (trading -0.77% in the AM)  
  • GOLD: 1,429.60 +0.12%; YTD: +0.42% (trading +0.40% in the AM)  


  • Oil fell for a second day in New York after supplies surged at Cushing, Oklahoma, the delivery point for West Texas Intermediate, the U.S. benchmark grade. 
  • Gasoline inventories tumbled 5.94 million barrels to 229.2 million, the biggest decline since September 2008, according to the department. Stockpiles were forecast to drop 1.5 million barrels. Supplies of distillate fuel, a category that includes heating oil and diesel, fell 3.98 million barrels to 155.2 million, the lowest level since June. 
  • Gold and silver rose for the third time in four sessions as mounting tension in Libya and higher energy costs boosted demand for precious metals as an investment haven and an inflation hedge.
  • Copper futures fell to the lowest in more than two months on concern that demand will wane as higher energy costs slow the global economy.  Copper stockpiles monitored by the London Metal Exchange have jumped 22 percent from last year’s low on Dec. 10.
  • Arabica coffee extended a rally to the highest price since May 1997 on speculation that global supplies won’t satisfy demand.
  • The U.S. cattle herd is the smallest since 1958 as beef exports surged 19 percent in 2010 to about 2.3 billion pounds (1.04 million metric tons), according to the U.S. Department of Agriculture. Cattle prices have jumped 27 percent in the past year, fueled by a global economic recovery that is boosting meat demand in emerging economies, including China.
  • PepsiCo Inc. is raising prices for its Tropicana juice line by as much as 8% after record cold temperatures slashed this season's orange crop, the company said.


  • EURO: 1.3900 +0.06% (trading -0.40% in the AM)
  • DOLLAR: 76.721 -0.10% (trading +0.36% in the AM) 


  • FTSE 100: (0.93%); DAX (0.76%); CAC 40 (0.64%)
  • Major indices are lower as fighting continues in Libya and Moody's downgrade of Spain's sovereign debt rating one notch to Aa2 from Aa1.
  • Moody's said it expects Spain's bank restructuring will cost more than the government currently expects, "leading to a further increase in the public-debt ratio."
  • Bank of England keeps asset plan and interest rates steady.


  • Nikkei (1.47%); Hang Seng (0.82%); Shanghai Composite (1.51%)
  • Regional indices followed Wall Street and closed lower on concerns about Libya, with the situation exacerbated by disappointing macroeconomic data.
  • Japan fell on futures selling spurred by higher oil prices.  Japan was led lower by weaker exporters as the yen rose.
  • Seoul rose after the Bank of Korea raised interest rates by 25bps to 3%.
  • Property developer’s dragged Hong Kong lower.
  • Weak financials weighed on the Shanghai Composite.
  • Japan Feb domestic CGPI +1.7% y/y vs cons +1.8%. Q4 revised real annualized GDP (1.3%) vs prelim (1.1%)
  • China Feb trade balance ($7.3B) vs cons $3.9B
  • Australia down 1.43% February unemployment 5.0%, net job creation (10,100) vs cons +20K

 Howard Penney

Managing Director



Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more