THE HEDGEYE DAILY OUTLOOK

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

 


Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more