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    MARKET EDGES

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TODAY’S S&P 500 SET-UP - June 2, 2011

Nothing in the last week has changed our Global Macro risk management view.

  1. Growth is slowing
  2. Inflation (reported) is sticky
  3. Stagflation is bad for asset prices (commodities and equities in particular)

Growth Slowing is bullish for UST bonds (TLT) and Compression in the Yield Curve (FLAT). Those 2 positions remain Hedgeye’s highest conviction macro longs alongside Gold (GLD).  Although, all 3 of them are getting overbought in the immediate-term.  As we look at today’s set up for the S&P 500, the range is 18 points or -0.73% downside to 1305 and 0.64% upside to 1323.

SECTOR AND GLOBAL PERFORMANCE

THE HEDGEYE DAILY OUTLOOK - levels 62

THE HEDGEYE DAILY OUTLOOK - daily sector view

THE HEDGEYE DAILY OUTLOOK - global performance

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -1943 (-3520)  
  • VOLUME: NYSE 1189.94 (-21.46%)
  • VIX:  18.30 +18.45% YTD PERFORMANCE: +3.10%
  • SPX PUT/CALL RATIO: 2.19 from 1.61 (+35.79%)

 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 21.22
  • 3-MONTH T-BILL YIELD: 0.05%
  • 10-Year: 2.96 from 3.05
  • YIELD CURVE: 2.52 from 2.60 

 

MACRO DATA POINTS:

  • 8:30 a.m.: Jobless claims, est. 417k, prior 424k
  • 8:30 a.m.: Nonfarm Productivity, 1Q final, est. 1.7% from 1.6%
  • 9:45 a.m. Bloomberg consumer comfort, est. (-47.0), prior (-48.4)
  • 10 a.m.: Factory orders, est. (-1.0%)
  • 10:30 a.m.: Natural gas storage change, est. 93
  • 11 a.m.: DOE Inventories  

WHAT TO WATCH:

  • Japan Prime Minister Naoto Kan survives no-confidence vote - Nikkei
  • European bank stress test results to be delayed until July - WSJ
  • Greece’s risk of default was raised to 50% by Moody’s as European officials rushed to put together the second bailout plan in two years to stave off renewed financial turmoil in the region. 

COMMODITY/GROWTH EXPECTATION

THE HEDGEYE DAILY OUTLOOK - daily commodity view

 

COMMODITY HEADLINES FROM BLOOMBERG:

  • Billionaire Deripaska Joins Russia Grain Rush as Export Sales Ban Ends
  • Rice Soaring 50% in Thailand as Thaksin Seeks Votes in World’s Top Shipper
  • Wool Rallies to Highest Since 1995 as Flock Shrinks, Stockpile Replenished
  • Drought in China’s Yangtze May Be Relieved by Rains, Helping Rice, Cotton
  • Wheat Gains in Chicago on Speculation of Increased Livestock Feeder Demand
  • Copper, Aluminum Drop as Weaker Data Drive Speculation Recovery May Falter
  • Gold May Advance as Economic Slowdown, Greece’s Debt Turmoil Spur Demand
  • Cooking Oil Imports May Climb as Indian Farmers Dump Soybeans for Cotton
  • Japan Steel Works to Target Non-Atomic Energy Sales After Nuclear Disaster
  • Rubber Declines to One-Week Low as U.S. Data Raises Concern Demand to Slow
  • Oil Falls to Lowest in Week as Manufacturing Slows; U.S. Supplies Increase
  • BHP Facing First Strike in 10 Years at World’s Biggest Steel Coal Supplier
  • N.Z. Proposes Agency to Regulate Exploration, Mining in Its Offshore Zone
  • Goldman, Major Banks See 55% Average Rise in Commodities Income, WSJ Says

CURRENCIES

THE HEDGEYE DAILY OUTLOOK - daily currency view

EUROPEAN MARKETS

  • Spain's treasury sells €2.75B of 2014 bond, bid-to-cover ratio 2.5 vs 1.8 at previous auction, bond average yield 4.037% vs 3.568% at previous auction

THE HEDGEYE DAILY OUTLOOK - euro performance

ASIAN MARKETS

  • Indonesia was closed for Ascension Day.
  • Will China raise rates over the weekend?
  • Japan Q1 manufacturing capex +27.7% y/y, corporate capex +3.3% y/y. Monetary base +16.2% y/y vs +23.9% seq.
  • Australia April trade surplus A$1.60 vs A$1.69B seq. April retail sales +1.1% m/m vs revised (0.3%) seq

THE HEDGEYE DAILY OUTLOOK - asia performance

MIDDLE EAST

THE HEDGEYE DAILY OUTLOOK - MIDEAST PERFORMANCE

Howard Penney

Managing Director