• HEDGEYE’S MARKET BRIEF
    Our FREE Investing Newsletter
    Get Exclusive Summer Sale Discounts

    By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails. All Hedgeye products and services are subject to Hedgeye’s Terms of Service available at www.hedgeye.com/terms_of_service

TODAY’S S&P 500 SET-UP - May 4, 2011


The mechanism driving most Correlation Risk across asset classes in the market remains the USD. So watching where the USD might stop crashing is a critical risk management exercise in play yesterday (USD flat on day = XLE (Energy stocks) down -2.5%; Brazil down -1.8%, etc…).

The Hedgeye immediate-term TRADE line of resistance in the USD developing at $73.52 – watching that very closely as resistance becoming support could easily trigger a much larger move in the hedge fund community’s largest net long position since 2007 - long the Inflation trade.  As we look at today’s set up for the S&P 500, the range is 24 points or -0.56% downside to 1349 and 1.21% upside to 1373.

SECTOR AND GLOBAL PERFORMANCE


Yesterday, Energy broke the TRADE duration leaving 7/9 sectors broken on TRADE and 8/9 broken on TREND.

THE HEDGEYE DAILY OUTLOOK - levels 54

THE HEDGEYE DAILY OUTLOOK - daily sector view

THE HEDGEYE DAILY OUTLOOK - BEST PERFORMING GLOBAL

THE HEDGEYE DAILY OUTLOOK - WORST PERFORMING GLOBAL

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -911 (-400)  
  • VOLUME: NYSE 1003.11 (+7.26%)
  • VIX:  16.70 +4.44% YTD PERFORMANCE: -5.92%
  • SPX PUT/CALL RATIO: 1.84 from 1.38 (+33.87%)

 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 25.00 -0.200 (-0.794%)
  • 3-MONTH T-BILL YIELD: 0.03% -0.02%
  • 10-Year: 3.28 from 3.31
  • YIELD CURVE: 2.67 from 2.70 

 

MACRO DATA POINTS:

  • Quarterly Treasury debt sales announcement
  • 7 a.m.: MBA Mortgage Applications, prior (-5.6%)
  • 7:30 a.m.: Challenger job cuts, prior (-38.6%)
  • 8:15 a.m.: ADP employment, est. 198k, prior 201k
  • 10 a.m.: ISM non-manufacturing, est. 57.5, prior 57.3
  • 10:30 a.m.: DoE inventories
  • 3:30 p.m.: SF Fed President John Williams makes first policy speech
  • 4 p.m.: Fed’s Fisher speaks in New Mexico
  • 4:15 p.m.: Geithner speech on economy in Washington
  • 7 p.m.: Fed’s Lockhart speaks in Atlanta

WHAT TO WATCH:

  • Treasury Secretary Tim Geithner speaks in Washington on the economy.
  • Conagra makes a $86/share cash bid for Ralcorp for a takeover that would acquire $2.5b of debt.
  • Applied Materials agrees to buy Varian Semi for 55% premium at $63/share.
  • Richard Branson says no deadline for decision on whether to sell airline.

COMMODITY/GROWTH EXPECTATION


THE HEDGEYE DAILY OUTLOOK - daily commodity view

 

COMMODITY HEADLINES FROM BLOOMBERG:

  • Silver Slumps on Higher Margins; Gold Drops on Report of Soros Fund Sales
  • Rice May Drop on ‘Abundant’ Thai Supply, Aiding World’s Poor as Corn Gains
  • Cocoa Poised to Tumble as Maersk Cargo Signals Price Peak: Freight Markets
  • Glencore Seeks $61 Billion Value in London, Hong Kong Initial Share Offer
  • Crude Oil Halts Two-Day Decline in London Before U.S. Employment Report
  • Copper Drops to Seven-Week Low on Concern China May Tighten Credit Further
  • Corn, Soybeans Drop for a Third Day as Price Rallies May Cut Into Demand
  • Sugar Falls for a Fifth Day on Thai Output, China Inflation; Coffee Drops
  • Cash-Copper Premium in China Signals Demand May Increase: Chart of the Day
  • Gasoline ‘Bubble’ May Grow Past 2008 Record on Supply Drop: Energy Markets
  • Palm Oil Drops to Two-Week Low as Demand for Soybeans Weakens, Crude Falls
  • Coal Stocks ‘Alarming Low’ in China, ‘Critical’ in India: Chart of the Day
  • Cocoa Arrivals From Bahia Boost Brazilian Production to Most in 16 Years

 

CURRENCIES

THE HEDGEYE DAILY OUTLOOK - daily currency view

EUROPEAN MARKETS

  • Euro approaches 18-month high versus dollar before interest-rate decision
  • Portugal financial rescue medicine may be just a first taste - euro credit
  • German 2-year notes drop on ECB tightening bets; Portuguese bonds advance
  • Spain’s thousands of illegal homes sour development minister’s sales pitch
  • BMW profit advances more than estimated on demand for 5-series, x3 models
  • new deutsche bank CEO turns on Krause vying with Weber for power with Jain
  • European stocks fluctuate; Holcim drops while shares of Actelion advance
  • Europe retail sales drop most in 11 months on rising oil, government cuts
  • UK house prices drop for first time in three months as cuts deter buyers
  • UK Mar mortgage approvals 47.6k vs consensus 48.0k and prior revised to 46.7k from 47.0k
  • Uk Apr Construction PMI 53.3 vs consensus 55.5 and prior 56.4
  • Eurozone April Services PMI 56.7 vs consensus 56.9 and prior 56.9
  • Germany April Services PMI 56.8 vs consensus 57.7 and prior 57.7

THE HEDGEYE DAILY OUTLOOK - BEST PERFORMING EURO

THE HEDGEYE DAILY OUTLOOK - WORST PERFORMING EURO

ASIA MARKETS

  • China and Hong Kong fell on fears of further monetary tightening in china.
  • Most Asian stocks decline as raw material producers, Australian banks retreat
  • Hong Kong home sales fall to two-year low on government curbs, loan rates
  • Shinhan profit little changed as Korea property slump drives up bad loans
  • Vietnam raises repurchase rate for fifth time this year in inflation fight
  • Philippines, Malaysia will consider rate rises as oil fuels Asia inflation
  • Asia seeks to boost use of local currencies in trade, reduce dollar’s role.
  • Japan was closed for Greenery Day and will remain closed until 6-May.

THE HEDGEYE DAILY OUTLOOK - BEST PERFORMING ASIA

THE HEDGEYE DAILY OUTLOOK - WORST PERFORMING ASIA

MIDDLE EAST

THE HEDGEYE DAILY OUTLOOK - MIDEAST PERFORMANCE

Howard Penney

Managing Director