THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - July 5, 2011

 

In Global Equities, a lot changed for the positive last week, but in a Fiat Fool world that only A) shortens economic cycles and B) amplifies market volatility.  We have been focused on the Euro/USD intermediate-term TREND line of 1.42 as support (the line that needs to hold or else a lot of other asset prices - particularly stocks) will start to break. Now that line = 1.43. Time and prices change my risk management scenarios. 

 

Euro/USD trading down -0.55% this morn to 1.44 is nothing to stress about.  Interestingly, on another sequential slowdown in high-frequency German data (Services PMI for June was 56.7 vs 58.3 in May), the DAX held its bid (we're long EWG and Germany is up +7.8% YTD).

 

China is the other equity market we really like and it just moved back to positive for the YTD this morn after a bigger rally from the lows than US stocks had. If the world isn't melting down, buy China and Germany at these prices before you buy USA.  As we look at today’s set up for the S&P 500, the range is 26 points or -1.92% downside to 1340 and 0.02% upside to 1340.

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - levels 75

 

THE HEDGEYE DAILY OUTLOOK - daily sector view

 

THE HEDGEYE DAILY OUTLOOK - global performance

 

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 1973 (+575)  
  • VOLUME: NYSE 865.08 (-13.15%)
  • VIX:  15.87 -3.93% YTD PERFORMANCE: -10.59%
  • SPX PUT/CALL RATIO: 1.30 from 1.38 (-5.50%)

 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 23.56
  • 3-MONTH T-BILL YIELD: 0.02%
  • 10-Year: 3.22 from 3.18
  • YIELD CURVE: 2.72 from 2.73 

 

MACRO DATA POINTS:

  • 10 a.m.: Factory orders, est. 1.0%, prior (-1.2%)
  • 11 a.m.: Weekly export inspections
  • 11:30 a.m.: U.S. to sell $27b 3-mo. bills, $24b 6-mo. bills
  • 4 p.m.: Crop conditions: corn, cotton, soybeans, winter wheat

WHAT TO WATCH:

  • An EU-approved payout for Greece may result in a default rating, S&P said yesterday
  • Australia leaves cash rate unchanged at 4.75%, as expected
  • Eurozone May retail sales (1.9%) y/y vs consensus (0.5%) and prior revised to +0.8% from +1.1%
  • ECB will continue to accept Greek debt as collateral- FT


 

COMMODITY/GROWTH EXPECTATION

 

THE HEDGEYE DAILY OUTLOOK - daily commodity view

 

COMMODITY HEADLINES FROM BLOOMBERG:

  • Bear Market in Tin Ending as Shortages Mean PT Timah’s Profit Advances 55%
  • Crude Oil Halts Two-Day Decline in London on Speculation of Rising Demand
  • Wheat, Corn Gain on Speculation Lowest Prices of 2011 Attracted Importers
  • Copper May Slide on Report Top Consumer China Is Set to Raise Rates Again
  • Sugar Climbs as Brazil’s Output May Miss Initial Estimate; Coffee Slides
  • Gold Climbs in London Trading as China Bank Exposures May Boost Demand
  • Palm Oil Dropping to Lowest in More Than Nine Months May Reduce Food Costs
  • Copper May Reach Record High by October on ‘Bull Flag:’ Technical Analysis
  • Vale Has No Concern Iron-Ore Demand in China May Slow, CFO Cavalcanti Says
  • Soybean Oil Imports by India to Drop 40% as Premium Widens Over Palm Oil
  • India’s Farm Ministry ‘Not Pushing’ for Exports of Wheat, Rice, Pawar Says
  • Rapeseed Imports by Pakistan to Slump as Prices Climb, Buyers’ Group Says
  • Rubber Drops Most in a Week on Concern Chinese Demand May Weaken on Rates
  • Hedge Funds Reduce Natural Gas Bets by Most in Four Months: Energy Markets

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - daily currency view

 

 

EUROPEAN MARKETS

  • EUROPE: holds up reasonably well given the German Services PMI slowed sequentially (were long $EWG); Spain remains below its TREND line

 

THE HEDGEYE DAILY OUTLOOK - euro performance

 

 

ASIAN MARKETS

  • ASIA: Chinese stocks (were long $CAF) continue higher, now back into the green for the YTD, but the Hang Seng not confirming, still below TREND

 

THE HEDGEYE DAILY OUTLOOK - asia performance

 

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - MIDEAST PERFORMANCE

 

 

Howard Penney

Managing Director


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more