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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - August 1, 2011

Large bond fund managers who bet on US “credit risk” are either unwinding that theme or need to now – across the US Treasury curve bonds are breaking out to new YTD highs and the US Dollar is strengthening, making higher-all-time lows.  As we look at today’s set up for the S&P 500, the range is 41 points or -0.93% downside to 1275 and 2.26% upside to 1316.

SECTOR AND GLOBAL PERFORMANCE

THE HEDGEYE DAILY OUTLOOK - levels 82

THE HEDGEYE DAILY OUTLOOK - daily sector view

THE HEDGEYE DAILY OUTLOOK - global performance

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: +195 (+1223)  
  • VOLUME: NYSE 1110.41 (-8.19%)
  • VIX:  25.25 +6.36% YTD PERFORMANCE: +42.25%
  • SPX PUT/CALL RATIO: 2.41 from 2.30 (4.57%)

CREDIT/ECONOMIC MARKET LOOK:

YIELD SPREAD – one of the highest conviction  long positions we’ve had in 2011 to express our Growth Slowing theme has been a US Treasury Flattener (FLAT); the Spread b/t 10s and 2s is making a new YTD low this morn as bond yields collapse alongside awful US GDP and ISM reports.

 

  • TED SPREAD: 16.06
  • 3-MONTH T-BILL YIELD: 0.10%
  • 10-Year: 2.77 from 2.82    
  • YIELD CURVE: 2.39 from 2.46

MACRO DATA POINTS:

  • 7:45 a.m./8:55 a.m.: Weekly ICSC/Redbook retail sales
  • 8:30 a.m.: Personal income, est. 0.2%, prior 0.3%
  • 8:30 a.m.: Persona spending, est. 0.1%, prior 0.0%
  • 11:30 a.m.: U.S. to sell $23b 4-wk bills
  • 4:30 p.m.: API inventories

WHAT TO WATCH:

  • McGraw-Hill reiterated it was reviewing its portfolio after holder Jana Partners said it had discussions with co.
  • U.S. light-vehicle delivers in July, to be released later today, may have run at 11.8m seasonally adjusted annual rate, trailing the 12.5m rate in 1H, analysts’ estimate

COMMODITY/GROWTH EXPECTATION

OIL – it may have been out of the headlines, but that doesn’t mean its daily price/volume/volatility signals cease to exist; with the USD strengthening, WTIC oil has broken its TRADE line of support ($96.21) this morning and that matters since Energy is literally the only S&P Sector left that’s bullish in US Equities on both TRADE and TREND durations

 

THE HEDGEYE DAILY OUTLOOK - daily commodity view

COMMODITY HEADLINES FROM BLOOMBERG:

  • Gold Advances to Near Record as Slowing Growth Increases Demand
  • Sugar Falls for Fifth Day on Brazilian Exports; Coffee Rises
  • Copper May Climb as Strike Continues at World’s Biggest Mine
  • Bank of Korea Boosts Gold Holdings to ‘Reduce Investment Risks’
  • BHP Copper Miners ‘Optimistic’ on Agreement to End Chile Strike
  • Wilmar Says to Raise Cooking Oil Prices in China by About 5%
  • Coffee Seen Rising 10% in Two Months as Vietnam Delays Exports
  • Mining Takeovers Heading for Record in 2011, Ernst & Young Says
  • Rice May Sustain Rally as U.S. Acreage Declines, Ofon Says
  • Japan Widens Cattle Shipment Ban as Tochigi Beef Contaminated
  • BullionVault Lures Most Funds Since Lehman’s Collapse on Haven
  • Barrick Says Gold to Remain High on China, India Inflation

CURRENCIES

EUR/USD – remains the currency pair that makes the world’s correlation risk go round and this morning we’ve seen another decisive break-down below our $1.43 TREND line; Europig Equities are getting slaughtered – we have no long exposure to anything European Equities; we are long USD and short EUR

THE HEDGEYE DAILY OUTLOOK - daily currency view

EUROPEAN MARKETS

  • EUROPE: a royal Europig mess continues with FTSE and DAX breaking both TRADE and TREND lines as Italy and Spain collapse (stocks and bonds)
  • UK July construction PMI 53.5 vs consensus 53.0, prior 53.4

THE HEDGEYE DAILY OUTLOOK - euro performance

ASIAN MARKETS

  • ASIA: finally breaking some critical TRADE lines of support; Nikkei and KOSPI in particular down hard through lines that matter last night.
  • Australia June residential building approvals (3.5%) vs cons +2.5%.
  • Japan June wages (0.8%) y/y.
  • Japan June monetary base +15% y/y to ¥113.73T

THE HEDGEYE DAILY OUTLOOK - asia performance

MIDDLE EAST

THE HEDGEYE DAILY OUTLOOK - MIDEAST PERFORMANCE

Howard Penney

Managing Director