TODAY’S S&P 500 SET-UP - June 24, 2011
Hedgeye’s most controversial LONG idea is being long China (long the CAF since June 16th). What's interesting about the debate is that the people who tend to disagree with me are still bullish on US Equities. To me, that makes no sense; if you are that bearish on Chinese demand, after the market has gone down for 15 months, how can you be bullish on anything equities?
China was up another +2.2% overnight and up for the 4th consecutive day (higher-lows). Meanwhile European stocks and US futures are rallying to lower-highs this morning. In the FX market, my Euro 1.42 line continues to be my line in the sand (intermediate-term TREND line); if it breaks, mostly everything else that's trading inversely to the US Dollar will. Conversely, If EURO 1.42 holds, the US and Western European Equity bulls get to live to play another day.
As we look at today’s set up for the S&P 500, the range is 39 points or -1.91% downside to 1259 and 1.13% upside to 1298.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: -486 (+35)
- VOLUME: NYSE 1117.47 (+30.49%)
- VIX: 19.29 +4.16% YTD PERFORMANCE: +8.68%
- SPX PUT/CALL RATIO: 2.41 from 2.01 (+20.04%)
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 24.14
- 3-MONTH T-BILL YIELD: 0.01%
- 10-Year: 2.93from 3.01
- YIELD CURVE: 2.58 from 2.62
MACRO DATA POINTS:
- 8 a.m.: Richard Fisher, Dallas Fed president, speaks on Bloomberg TV
- 8:30 a.m.: Durable goods, est. 1.5%, prior (-3.6%)
- 8:30 a.m.: GDP, 1QT, est. 1.9%, prior 1.8%
- Noon: Treasury Secretary Geithner meets with business leaders in NH, speaks at Dartmouth at 4 p.m.
- 1 p.m.: Baker Hughes rig count
- 3 p.m.: USDA hog inventory
WHAT TO WATCH:
- Fed Chairman Bernanke’s viewed favorably by 30% surveyed in Bloomberg National Poll, lowest in 2 yrs of polling on issue
- New York, California said to start antitrust investigation of Google, along with Texas and Ohio
- EU leaders pledged to stave off a Greek default as long as Prime Minister Papandreou pushes through a package of $111b in budget cuts next week
- Breakdown of deficit talks puts onus on President Obama, House Speaker Boehner to bridge partisan differences before Aug. 2 deadline
- China to Cut Import Tariffs on Some Oil Products, Zinc, Alloys
COMMODITY/GROWTH EXPECTATION
COMMODITY HEADLINES FROM BLOOMBERG:
- Sarkozy’s Fight Against Agriculture Speculators Moves to Finance Ministers
- Commodities Rebound From Four-Month Low Amid Speculation Demand to Climb
- Oil Rises on Concern IEA Emergency Crude Release May Limit Future Supplies
- Pasta Price May Surge as Swamped North Dakota Cuts Supply of Durum Wheat
- Copper Advances for First Day in Three as Commodities Rally After Selloff
- Sugar Mills in India Seeking More Exports May Widen Supplies, Lower Prices
- Gold May Rebound From Slump as U.S. Interest Rate Policy Increases Demand
- Palm Oil Set for Worst Run of Losses Since January 2010 After Crude Slumps
- Korea Said Buying Corn as Price Rebounds From Lowest Level in Three Months
- Cotton Demand in India May Miss Estimate as Textile Mills Lower Production
- Corn Rebounds From Lowest in Three Months Signs of Improving Global Demand
- U.S. Leads Emergency Oil Release as Price Surge on Libya Threatens Economy
- Gold Demand in China to Grow at Least 20% in 2011, Association Tells Daily
- Gold May Advance Next Week on Europe Debt Woes, Fed Policy, Survey Shows
CURRENCIES
EUROPEAN MARKETS
- EUROPE: Germany +1.6% (were long) holding steady above my support line of 7166 this morn on better than bad data; Spain +0.96% (were short)
- The euro-area debt crisis poses the biggest risk to the stability of the U.K. financial system and banks should build up capital when earnings are strong, BoE said today in the minutes of the June 16 meeting of the new Financial Policy Committee.
ASIAN MARKETS
- ASIA: awesome week for us being long China - up +2.2% overnight making it 4 consecutive up days and a very nice hedge against short USA.
MIDDLE EAST
Howard Penney
Managing Director
