TODAY’S S&P 500 SET-UP - June 14, 2011
The three things that matter this morning:
- Deflating The Inflation (our Q2 Macro Theme) was big yesterday = CRB Index down -1.1% on oil down hard
- Chinese Data for May was rock solid sequentially = Fixed Asset Investment up 40bps sequentially in May to +25.8%
- Global Equity Markets stopped going down
Bulls are dying for some bullish data to cling to at this point and, if you look hard enough, it's there today - what price do you pay remains the question. In SP500 points, I say just relax and manage risk around the range (1)
Being perma anything won't work in 2011. As we look at today’s set up for the S&P 500, the range is 31 points or -0.94% downside to 1259 and 1.90% upside to 1290.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: -468 (+1452)
- VOLUME: NYSE 908.34 (-10.89%)
- VIX: 19.61 +3.98% YTD PERFORMANCE: +10.48%
- SPX PUT/CALL RATIO: 1.67 from 1.77 (-6.13%)
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 19.95
- 3-MONTH T-BILL YIELD: 0.05%
- 10-Year: 3.00 from 2.99
- YIELD CURVE: 2.60 from 2.58
MACRO DATA POINTS:
- 7:30 a.m.: NFIB Small Business Optimism, est. 90.5
- 7:45 a.m./8:55 a.m. ICSC/Redbook Weekly Sales
- 8:30 a.m.: Producer Price Index, est. 0.1%
- 8:30 a.m.: Retail sales, est. (-0.5%)
- 10 a.m.: Business inventories, est. 0.9%
- 11:30 a.m.: U.S. to sell $28b 4-wk bills
- 2:30 p.m.: Fed Chairman Bernanke speaks at the Committee for a Responsible Federal Budget Annual Conference
WHAT TO WATCH:
- Nokia and Apple agreed to settle all patent litigation between the companies in a deal that awards a one-off payment and royalties to Nokia
- BofA “significantly hindered” a federal review of its foreclosures on loans insured by the FHA, U.S. says
- U.K. inflation held at the fastest pace since October 2008
COMMODITY/GROWTH EXPECTATION
COMMODITY HEADLINES FROM BLOOMBERG:
- Sugar Rising as Thailand Port Congestion Worst in Memory: Freight Markets
- Michael Coleman’s Trading Company Hires Ex-JPMorgan Coal Trader Chan Bhima
- Cotton Acres in China Seen Capped as Manufacturing Jobs Lure Farm Workers
- Record Corn Crop in India May Help Increase Exports, Limiting Global Costs
- Fees Punish Savers Seeking Hedge-Fund Cachet in Commodities Futures Funds
- Crude Oil Trades Near One-Month Low on Demand Outlook for China and U.S.
- Corn Drops for Third Day as Weather Improves, Pre-Export Inspections Fall
- Copper Climbs for First Day in Three as China Production Maintains Growth
- Sugar Falls on Reduced Concern About Brazilian Supply; Coffee Prices Drop
- Gold May Advance on Inflation Concern, Sovereign-Debt Crisis in Europe
- Violent Protests Increase at Chile’s El Teniente Copper Mine, Codelco Says
- Chicken Breeders Face Tax-Cut Hawks in U.S. Senate Showdown Over Ethanol
- Sino-Forest’s Investors Will Question Executives After Stock Plunges 73%
CURRENCIES
EUROPEAN MARKETS
- EUROPE: another dead cat bounce on hope of Keynesian resolve? DAX up +1.6% (we're long); Spain +1.4% (were short); Greek stocks, no dice
ASIAN MARKETS
- ASIA: better than bad; China rallies on "news" that inflation hits a new high; Hang Sang fails to confirm (down -0.05%); India +0.27%
- China May CPI +5.5% y/y, matching expectations. May PPI +6.8% y/y vs cons +6.5%.
- Japan April capacity utilization (1.1%) m/m. Revised April industrial output +1.6% m/m vs prelim +1.0%.
MIDDLE EAST
Howard Penney
Managing Director