THE HEDGEYE DAILY OUTLOOK
TODAY’S S&P 500 SET-UP - May 27 2011
UST Bond Yields showing how bullish people are on the Growth Slowing trade this morning (bullish for bonds). 2s are immediate-term TRADE oversold at 0.48% and 30s at 4.22%, but this is really starting to look like May-July of 2010 in the bond market – they can run.
The Hedgeye favorite Macro long positions remain TLT and FLAT – and we bought our GLD back yesterday. If Growth Slowing and Deflating The Inflation (our Macro Themes) become consensus by mid-summer, all 3 of these positions should hold up just fine. Remember Gold acts best when real-interest rates imply negative yields.
As we look at today’s set up for the S&P 500, the range is 18 points or -1.18% downside to 1310 and 0.17% upside to 1328.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: 1261 (+327)
- VOLUME: NYSE 846.11 (11.98%)
- VIX: 16.09 -5.74% YTD PERFORMANCE: -9.35%
- SPX PUT/CALL RATIO: 1.76 from 1.30 (+30.00%)
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 20.84
- 3-MONTH T-BILL YIELD: 0.05%
- 10-Year: 3.07 from 3.13
- YIELD CURVE: 2.59 from 2.59
MACRO DATA POINTS:
- 8:30 a.m.: Personal income, est. 0.4%, prior 0.5%
- 8:30 a.m.: Personal spending, est. 0.5%, prior 0.6%
- 9:55 a.m.: UMich Consumer Sentiment, final: est. 72.4, prior 72.4
- 10 a.m.: Pending home sales, est. M/m, (-1.0%), prior 5.1%
- 1 p.m.: Baker Hughes rig count
WHAT TO WATCH:
- EU Commission tables measure to ensure fluidity of the EU sugar market
- Eurozone May Business climate 0.99 vs consensus 1.20 and prior 1.28
- Microsoft CEO hints at tablet software - WSJ
- Bank of America (BAC), Morgan Stanley (MS) pay more than $22M to settle wrongful disclosure on active troops - WSJ
COMMODITY/GROWTH EXPECTATION
COMMODITY HEADLINES FROM BLOOMBERG:
- Global Tire Demand Exceeding Supply Helps Bridgestone, Goodyear, Sumitomo
- Corn-Planting Delays Signal Price Gain as U.S. Farmers Switch to Soybeans
- Oil Rises on World Economy Outlook, Dollar; JPMorgan Sees OPEC Quota Gain
- Copper Gains to Three-Week High on Indications of Stronger Chinese Demand
- Thailand’s Sugar Exports May Surge to Record as Domestic Quota Lowered
- Gold Heads for Second Weekly Advance on Europe Debt Concern, Weaker Dollar
- Wheat Falls to $8.085 a Bushel in Chicago Trading, Erasing Earlier Advance
- Copper Premiums in China Advance to Seven-Month High as Demand Recovers
- Coffee Drinkers Won’t Get Break on Prices as Colombia Sees Global Deficit
- Corn Demand in China Poised to Exceed Output for First Time in Three Years
- Barrick Must Let Zambia Keep Equinox Shares as Part of Lumwana Approval
- Mississippi Crop Cargoes Plunged 39% as Flooding Worsened: Freight Markets
- Coal Set for Three-Year High on China Drought, Power Cuts: Energy Markets
- Sugar Price May Gain Next Week on Signs of Increased Demand, Survey Shows
CURRENCIES
EUROPEAN MARKETS
- EUROPE: broad rally this morn but volume is sketchy; DAX (were long) wobbly at this level; Spain/Italy/Greece/Russia all broken TRENDs
- UK May GfK consumer confidence (21) vs consensus (31)
- Nationwide UK May house prices (1.2%) y/y vs consensus (1.7%)
- European Automobile Manufacturers' Association (ACEA) Apr Commercial Vehicles Registrations in the EU +9.5% y/y
ASIAN MARKETS
- A bad week for Asian equities with China down 5 out of 5 days; Vietnam crashing, then bouncing hard (down -15.6% since May4); and Japan remaining abyss
- Fitch revises Japan's outlook to negative from stable
MIDDLE EAST
Howard Penney
Managing Director
