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    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

TODAY’S S&P 500 SET-UP - August 5, 2011

From a research/risk management perspective yesterday was one of the best day’s we’ve had versus our sell-side competition since 08. It was also the biggest down day for stocks since 08, so that makes sense. Having 0% asset allocation to US/European Equities helps!

Every bear market gets immediate-term TRADE oversold, and that’s what I see this morning. That said, I want to be crystal clear on this, sell all rallies in Equities/Commodities because the Street is still too long and needs to take down gross and net exposures.

As we look at today’s set up for the S&P 500, the range is 91 points or -2.92% downside to 1165 and 4.66% upside to 1256.

SECTOR AND GLOBAL PERFORMANCE

THE HEDGEYE DAILY OUTLOOK - levels 85

THE HEDGEYE DAILY OUTLOOK - daily sector view

THE HEDGEYE DAILY OUTLOOK - global performance

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -2818 (-3263)  
  • VOLUME: NYSE 1821.32 (+34.71%)
  • VIX:  31.66 +35.41% YTD PERFORMANCE: +78.37%
  • SPX PUT/CALL RATIO: 2.24 from 1.51 (+47.70%)

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 26.94
  • 3-MONTH T-BILL YIELD: 0.02%
  • 10-Year: 2.47 from 2.64    
  • YIELD CURVE: 2.31 from 2.33

MACRO DATA POINTS:

  • 8:30 a.m.: Change in Nonfarm Payrolls, Jul, est. 85k, prior 18k
  • Change in Private Payrolls, Jul, est. 113k, prior 57k
  • Change in Manu Payrolls, Jul, est. 10k, prior 6k
  • Unemployment Rate, Jul, est. 9.2%, prior 9.2%
  • 1 p.m.: Baker Hughes Rig Count
  • 3 p.m.: Consumer Credit, Jun, est. $5.00b, prior $5.08b

WHAT TO WATCH:

  • WSJ is lukewarm on Kraft Foods
  • Payrolls probably climbed by 85k workers in July, failing to create enough jobs to reduce 9.2% unemployment rate, economists’ forecast ahead of today’s report
  • Google+ may grow to claim 22% of online U.S. adults in a year, surpassing Twitter, LinkedIn to be 2nd-most-used social site after Facebook, survey from Bloomberg/YouGov found
  • 2-yr note yield hits record low of 0.3039%

COMMODITY/GROWTH EXPECTATION

THE HEDGEYE DAILY OUTLOOK - daily commodity view

COMMODITY HEADLINES FROM BLOOMBERG:

  • Commodities Post Worst Run Since 2008, Erasing Gains for Year
  • Copper Slumps to Five-Week Low on Concern Growth Will Falter
  • Gold Gains in London as Financial Turmoil Boosts Investor Demand
  • Oil Drops to Lowest in Eight Months Amid Global Rout on Economy
  • China Said to Be Planning Soybean Sale to Rotate State Inventory
  • Indonesia May Surpass Japan as Biggest Wheat Buyer in Asia
  • Palm Oil Drops as Commodities Plunge on U.S. Recovery Concern
  • Rubber Slumps Most in Almost Six Weeks as Economic Concern Grows
  • AngloGold Plans Trial to Tap $118 Billion of 3-Mile Deep Ore
  • Palm Oil Inventory in Malaysia Climbs to 19-Month High on Output
  • Goldman Raises Corn, Wheat Targets on ‘Remarkably Hot’ Spell
  • Escondida Workers Vote on Proposal to End Chile Mine Strike
  • Wheat, Corn Decline as Economic Recovery Concern Dampens Demand
  • Crude Oil May Fall on Slowing Economy Concern, Survey Shows
  • Japan Considers Additional Steps to Contain Tainted Beef Crisis
  • Copper Seen Above $4 a Pound on China Recovery, Codelco Says
  • Zimbabwe Diamond Production Surges After Marange Sales Allowed

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - daily currency view

EUROPEAN MARKETS

  • EUROPE: same scary divergences; all "rallies" trying to come out of the lowest quality markets while the pseudo safe get smoked (Germany)

THE HEDGEYE DAILY OUTLOOK - euro performance

ASIAN MARKETS

  • ASIA: China down the least of the majors in the world this week (down -2.1% last night), and that’s about the only constructive thing I can say

 THE HEDGEYE DAILY OUTLOOK - asia performance

MIDDLE EAST

THE HEDGEYE DAILY OUTLOOK - MIDEAST PERFORMANCE

Howard Penney

Managing Director