TODAY’S S&P 500 SET-UP - June 16, 2011
Our top Global Macro Themes remain:
1. Growth Slowing
2. Deflating The Inflation (housing, equities, commodities)
3. Indefinitely Dovish (bullish on UST Bonds)
While Oil, Copper, SP500 are immediate-term TRADE oversold this morning, it's important to recognize that yesterday only heightened the probability that these will all remain bearish intermediate-term TRENDs. Consensus isn't quite there yet. As we look at today’s set up for the S&P 500, the range is 20 points or -0.35% downside to 1261 and 1.23% upside to 1281.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: -2098 (-4093)
- VOLUME: NYSE 1068.78 (+16.76%)
- VIX: 21.32 +16.76% YTD PERFORMANCE: +20.11%
- SPX PUT/CALL RATIO: 2.86 from 1.50 (+89.90%)
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 19.92
- 3-MONTH T-BILL YIELD: 0.05%
- 10-Year: 2.98 from 3.11
- YIELD CURVE: 2.60 from 2.66
MACRO DATA POINTS:
- 8:30 a.m.: Current account balance, est. ($-130.0b), prior ($113.3b)
- 8:30 a.m.: Net export sales
- 8:30 a.m.: Initial jobless claims, est. 420k, prior 427k
- 8:30 a.m.: Housing starts, est. 545k (up 4.2%), prior 523k
- 8:30 a.m.: Building permits, est. 557k (down 1.1%)
- 9:45 a.m.: Bloomberg Consumer Comfort, prior (-45.9)
- 10 a.m.: Philadelphia Fed, est. 7.0, prior 3.9
- 10 a.m.: Freddie Mac 30-yr mortgage
- 10 a.m.: Fed’s Tarullo testifies on regulatory reform
- 10:30 a.m.: EIA natural gas storage, est. 69
- 8 p.m.: ECB’s Trichet speaks in NY
WHAT TO WATCH:
- Paulson Suffers Sizable Losses, One Fund Is Down 19.65% - WIRES
- Greek PM Papandreou to reshuffle cabinet today and seek a confidence vote, battling to control a shrinking majority and pass austerity measures demanded by international lenders
- Capital One bidding for HSBC’s U.S. credit card unit: WSJ
- Borders Group may have deal with lenders and creditors to avoid closing as many as 51 stores; canceled auction set for today
- U.S. banks must be willing to raise capital to guard against a potential financial crisis, FDIC Chairman Sheila Bair will tell lawmakers at House Financial Services meeting today
COMMODITY/GROWTH EXPECTATION
COMMODITY HEADLINES FROM BLOOMBERG:
- Copper Falls Most in a Week on Concern Greece’s Debt Crisis May Cut Demand
- Oil Trades Near Four-Month Low on Concern Europe Debt Crisis Is Worsening
- Lower U.S. Cattle Sales Squeezing Beef Supply Means More Costs for Packers
- Gold Falls as Stronger Dollar Erodes Demand for an Alternative Investment
- Wheat Drops for a Fourth Day as European Rainfall Eases Production Concern
- Cocoa Falls Most in Two Weeks in London on African Supplies; Sugar Drops
- Food-Safety Fears Grow in Japan as Radiation Testing Engenders Skepticism
- Lead Output in China to Extend Drop as Battery Makers Shut After Poisoning
- Tractor Sales in India Surge to Record as Commodity Boom Drives Production
- Record Brent Crude Premium to Shrink on North Sea Oil Flow: Energy Markets
- Gold May Extend Drop on Seasonality, Commerzbank Says: Technical Analysis
- No More Major Weather Threats Seen for Commodities in ‘11, Forecaster Says
- Lenzing $875 Million Share Sale Priced at Bottom of Range; Stock Plummets
CURRENCIES
EUROPEAN MARKETS
- EUROPE: gong show; all of my TRADE and TREND durations have gone bearish (including Germany); Greece down -28.5% since Feb. We are short Spain.
- UK May Retail Sales +0.2% y/y vs consensus +1.5% and prior revised +2.4% from +2.3%
ASIAN MARKETS
- ASIA: just a mess; China down -1.5% to fresh YTD lows; Japan down another -1.7% (were short) to -8% YTD; Korea -1.9%, Indonesia -1.4%
MIDDLE EAST
Howard Penney
Managing Director