04/13/11 07:56 AM EDT

THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - April 13, 2011

China continues to trade higher, up another +0.96% last night to +8.6% YTD (almost 2x the YTD SP500 return, unadjusted for Burning Bucks) leading what continues to be an improving Asian equity picture (ex-Japan). As global growth slows, unlevered Chinese growth becomes more valuable.

After being bearish/short China in 2010, we’re long now and will focus 1/3 of our Q2 Macro Theme presentation (Friday) on the why. As we look at today’s set up for the S&P 500, the range is 18 points or -0.32% downside to 1310 and 1.05% upside to 1328.

SECTOR AND GLOBAL PERFORMANCE

Two more sectors broke trade yesterday; Energy and Technology. We now have 6 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND.

EQUITY SENTIMENT:

ADVANCE/DECLINE LINE: -1498 (-318)
VOLUME: NYSE 949.53 (+15.98%)
VIX: 17.09 +3.10% YTD PERFORMANCE: -3.72%
SPX PUT/CALL RATIO: 1.50 from 1.37 (+9.26%)

CREDIT/ECONOMIC MARKET LOOK:

TED SPREAD: 23.51
3-MONTH T-BILL YIELD: 0.05%
10-Year: 3.52 from 3.59
YIELD CURVE: 2.75 from 2.74

MACRO DATA POINTS:

MBA mortgage applications index fell for third week, declining 6.7% week ended April 8 to lowest in 2 months; Refis down 7.7%; Purchases drop 4.7%
8:30 a.m.: Retail Sales, est. 0.5%, prior 1.0%
9 a.m.: IMF releases report on global financial stability
10 a.m.: Business inventories, est. 0.8%, prior 0.9%
10:30 a.m.: DoE inventories
1 p.m.: U.S. to sell $21b 10-year notes reopening
2 p.m.: Fed’s Beige Book
5 p.m.: Fed’s Bullard to speak in St. Louis

WHAT TO WATCH:

Leonard Green may make bid for BJ’s Wholesale Club today; BJ’s said to ask for opening round proposals this week: N.Y. Post
China’s debt rating may be cut for first time in 12 years after record jump in lending: Fitch.
Newsletter writers classified as bears by Investors Intelligence was below 20% for second week in a row. Bullish sentiment declines to 55.4% from 57.3% in the latest US Investor's Intelligence poll
EU Commission fines Procter & Gamble and Unilever a total of €315.2M in washing powder cartel case

COMMODITY/GROWTH EXPECTATION

COMMODITY HEADLINES FROM BLOOMBERG:

Sugar Seen Declining as Production in India Set to Climb 5% on Plantings
Oil Drops a Third Day in New York as Libyan Rebels Consider Truce Proposal
Soybeans Advance as Biggest Drop in a Month Lures Importers; Corn Climbs
Copper May Drop for Third Day on Concern About Credit Tightening in China
Gold May Rebound From One-Week Low as Japan Concern, Libya Add to Demand
Cocoa May Advance on Ivory Coast Disruption; Coffee Climbs, Sugar Drops
Equities Trump Gold as Investors' Best Inflation Hedge: Chart of the Day
China Cotton Buying Slows for U.S. Sellers, Eastern Trading Co.'s Lea Says
Rio Tinto Iron-Ore, Coal, Uranium Production Declines on Australian Floods
BHP Isn't Justifying Laggard Woodside's Most Expensive Valuation: Real M&A
Rubber Futures Tumble as Toyota Set to Suspend Output at European Plants
Cocoa Arrivals Gain 36% From Brazil’s Bahia Region, Thomas Hartmann Says
Malaysia Plans Sugar IPO, Postal Sale as State Companies Pledge to Divest

CURRENCIES

EUROPEAN MARKETS

Industrial production data for the euro area suggests that the economic outlook continues to deteriorate for the region’s weakest countries; EuroZone Feb Industrial Production +7.3% y/y vs consensus +7.8% and prior revised +6.3% from +6.6%; EuroZone Feb Industrial Production +0.4% m/m vs consensus +0.7% and prior revised +0.2% from +0.3%
European equity markets trade higher following a positive lead from Asia
France Mar CPI ex tobacco +0.8% m/m, prior +0.5%
Germany Mar Wholesale Prices +10.9% y/y vs consensus +10.7%, prior +10.8%
UK Feb ILO unemployment rate +7.8% vs con +8.0%
UK Mar claimant count +0.7k vs con (4.2K)