THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - June 6, 2011

There isn’t a data point or market price across the Hedgeye Global Macro risk management model that suggests this correction is over, yet:

1. Treasury Bonds – continuing higher this morning w/ 2-yr yields crashing to 0.42% (10s at 2.99%); yield curve compressing
2. Asian/European Stocks – Japan + Spain (2 of our short positions) down -1.2% and -0.9% this morning (Keynesianism not working)
3. US Stocks – down for 5 consecutive weeks, which isn’t exactly textbook bull market (down -4.6% since April 29th high)

As we look at today’s set up for the S&P 500, the range is 24 points or -0.32% downside to 1296 and 1.53% upside to 1320.

 

SECTOR AND GLOBAL PERFORMANCE

 

EQUITY SENTIMENT:

• ADVANCE/DECLINE LINE: -1315 (+1135)  
• VOLUME: NYSE 971.40 (-3.66%)
• VIX:  17.95 -0.77% YTD PERFORMANCE: +1.93%
• SPX PUT/CALL RATIO: 1.61 from 1.19 (-26.59%)

 

CREDIT/ECONOMIC MARKET LOOK:

• TED SPREAD: 22.15
• 3-MONTH T-BILL YIELD: 0.04%
• 10-Year: 2.99 from 3.04
• YIELD CURVE: 2.57 from 2.59 

 

MACRO DATA POINTS:

• 11 a.m.: Export inspections: corn, soybeans, wheat
• 11:30 a.m.: U.S. to sell $27b 3-mo., $24b 6-mo. bills
• 1:15 p.m.: Treasury’s Geithner speaks to bankers in Atlanta
• 4 p.m.: Crop conditions: Corn, winter wheat, cotton, soybean
• 5:30 p.m.: Fed’s Fisher speaks in NY

WHAT TO WATCH:

• Philly Fed President Charles Plosser said plan to withdraw central bank’s record monetary stimulus, “normalize” interest-rate policy would help avert confusion in financial markets
• Death toll from Germany’s E. coli outbreak rose to 22, with officials saying sprouts grown near Uelzen a “significant source of the bacteria”
• German government spokesman says expects EU/ECB/IMF report on Greece by mid week -- Reuters
• Social Democrats win Portuguese parliamentary election, removing the Socialist Party from power -- Boston Globe

COMMODITY/GROWTH EXPECTATION

 

COMMODITY HEADLINES FROM BLOOMBERG:

• Wheat Fields Wilt in Drought as Parched Earth Spreads From China to Kansas
• Oil Falls for a Second Day on Signs Slowing U.S. Economy May Crimp Demand
• Copper Rises for Second Day as Strike at Codelco Mine Fuels Supply Concern
• Gold Advances for Second Day After U.S. Data Increases Recovery Concerns
• Wheat Climbs on Speculation USDA Is Set to Reduce Global Supply Estimate
• OPEC Overshadowed by Qaddafi in Most-Hostile Meeting Since 1990 Gulf War
• Russia’s Black Earth Grains Growing Area Faces ‘50-50’ Chance of Drought
• Rubber in Tokyo Advances for Second Day Amid Tight Supplies in Thailand
• Grain Stockpiles Worldwide May Drop, Soybeans May Increase, Survey Shows
• Commodity Bubbles Caused by Speculators Need Intervention, UN Agency Says
• Olam Said to Raise $600 Million in Share Sale to Help Fund Acquisitions
• Funds Boost Bullish Commodity Bets Amid Improving Global Growth Prospects
• E. Coli Outbreak Death Toll Rises to 22 as Blame Focuses on Bean Sprouts

CURRENCIES

EUROPEAN MARKETS

• In Europe a wet Kleenex continues to hover over Europe Keynesian experiment; Spain down -0.8% after Portugal votes out the socialist party too
• UK new car registrations (1.7%) y/y in May - SMMT -- wires
  
  

ASIAN MARKETS

• In Asia, China closed but rest of Asia continues lower; Japan down -1.2% to -8.3% YTD (we're short $EWJ); Thailand down -1.1%; Vietnam -2.2%
• Hong Kong, China, and Taiwan were closed for Tuen Ng/Dragon Boat Festival
• South Korea was closed for Hyun Choong Il.

MIDDLE EAST

Howard Penney

Managing Director