TODAY’S S&P 500 SET-UP - March 31, 2011
Now that the IMF is cutting their US GDP growth estimate for 2011 (to 2.8%), our call for Growth Slowing As Inflation Accelerates is being absorbed into the craws of consensus. Dr. Copper remains bearish and broken with intermediate term TREND resistance (was longstanding support) = 4.38/lb. As we look at today’s set up for the S&P 500, the range is 28 points or -1.75% downside to 1305 and 0.36% upside to 1333.
PERFORMANCE:
As of the close yesterday we have 8 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND. The XLF is the only sector to be broken on TRADE.
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: 1338 (+248)
- VOLUME: NYSE 899.14 (+11.78%)
- VIX: 17.71 -2.48% YTD PERFORMANCE: -0.23%
- SPX PUT/CALL RATIO: 1.49 from 1.73 (-13.94%)
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 21.32
- 3-MONTH T-BILL YIELD: 0.10%
- 10-Year: 3.47 from 3.50
- YIELD CURVE: 2.67 from 2.69
MACRO DATA POINTS:
- 8:30 a.m.: Jobless claims, est. 380k, prior 382k
- 8:30 a.m.: USDA planting data
- 8:30 a.m.: Net export sales (cotton, corn, soybeans, soy meal, soy oil, wheat)
- 9:45 a.m.: Chicago Purchasing Manager, est. 69.7, prior 71.2
- 9:45 a.m.: Bloomberg consumer comfort, prior (-48.9)
- 10 a.m.: Freddie Mac 30-yr mortgage
- 10 a.m.: Annual revisions, wholesale inventories
- 10 a.m.: NAPM Milwaukee, prior 63.0
- 10 a.m.: Factory orders, est. 0.5%, prior 3.1%
- 10:30 a.m.: Fed’s Lacker to speak at 2011 credit symposium in Charlotte
- 10:30 a.m.: EIA Natural gas storage change, est. (-1), prior (-6)
- 12:30 p.m.: Fed’s Tarullo to speak at 2011 credit symposium in Charlotte
- 2:05 p.m.: Fed’s Pianalto to speak on economic outlook, oil prices
WHAT TO WATCH:
- Bullish sentiment among individual investors rose to 41.8% this week, reaching a 4-wk. high in American Assoc. of Individual Investors survey.
- Standard & Poor's announced that following its recent downgrade of Greece's sovereign credit, its lowering our long-term counterparty credit ratings of four Greek banks
- David Sokol, considered a candidate to replace Warren Buffett as head of Berkshire, resigned as it was disclosed he purchased stock in a company he later helped negotiate a takeover
- WTO to rule on claims that Boeing received government subsidies
- Irish Central Bank stress test results being released
- Outside advisers to FDA will vote on safety of food dyes
- Troops loyal to Muammar Qaddafi force Libyan rebels to retreat as the U.S., U.K. say they will consider arming opposition forces; Libya’s foreign minister resigned and flew to London
- Google being investigated for tax evasion in China
- Baseball’s Opening Day
COMMODITY/GROWTH EXPECTATION
COMMODITY HEADLINES FROM BLOOMBERG:
- Commodities Heading for Third Quarterly Advance on Recovery, Surging Crude
- Wheat Demand Sustained by Japan as Grain Sought for East Coast After Quake
- Crude Above $100 Approaches Economic Danger Zone on Libya: Energy Markets
- Soybeans Gain on Speculation Lower U.S. Sowing, Brazil Rain May Cut Supply
- Cocoa Falls to 11-Week Low on Speculation Ivory Coast Exports to Increase
- Gold Heads for Longest Quarterly Winning Streak Since 1979 on Haven Demand
- Food-Price Surge to Swamp Consumers With Inflation, According to Superfund
- Copper May Advance Before Report on Manufacturing in China, Biggest User
- Hedge Funds Cutting Bullish Bets May Show Commodity Drop: Chart of the Day
- Aluminum Smelters in China Ramp Up Production as Country Ends Power Curbs
- U.S. Detects Trace Amounts of Radiation in Milk, Poses No Threat to Health
- World’s Biggest Shipping Lines Are Still Taking Cargoes to Tokyo Bay Ports
CURRENCIES
EUROPEAN MARKETS
European markets trade mixed to lower with the periphery again in focus and particularly Ireland and Portugal; Austria, Greece and Italy are leading the way down.
MACRO DATA POINTS:
- UK Mar Nationwide house prices +0.5% vs con (0.1%)
- Germany Feb retail sales +1.1% y/y vs con +1.8%
- France Feb PPI +0.8% m/m vs con +0.7%
- Germany Mar unemployment rate +7.1% vs con +7.2% (lowest since 1992)
- Eurozone Mar preliminary CPI +2.6% y/y vs consensus +2.3% and prior +2.4% (fastest since October 2008)
ASIAN PACIFIC MARKTES:
The Asian markets turned in a stronger relative performance with the exception of China. In Japan February housing starts +10.1% y/y vs consensus +7.2%. February construction orders +19.5% y/y.
MIDDLE EAST
Howard Penney
Managing Director