THE HEDGEYE DAILY OUTLOOK
TODAY’S S&P 500 SET-UP - August 29, 2011
Last week we took our cash position from 70% to 61%, buying Silver, Corporate Bonds, and some US Equity Exposure (XLU). As we look at today’s set up for the S&P 500, the range is 37 points or -1.94% downside to 1154 and 1.21% upside to 1191.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: +2029 (+3616)
- VOLUME: NYSE 1119.40 (-7.43%)
- VIX: 35.59 -10.49% YTD PERFORMANCE: +100.51%
- SPX PUT/CALL RATIO: 1.65 from 1.72 -4.37%
CREDIT/ECONOMIC MARKET LOOK:
FIXED INCOME: US Treasury yields on 3mth paper are negative this morning! -0.01% - retirees, now you pay the
government to hold your cash
- TED SPREAD: 32.79
- 3-MONTH T-BILL YIELD: 0.01%
- 10-Year: 2.19 from 2.23
- YIELD CURVE: 1.99 from 2.01
MACRO DATA POINTS (Bloomberg Estimates):
- 8:30 a.m.: Personal income, est. 0.3%, prior 0.1%
- 8:30 a.m.: Personal spending, est. 0.5%, prior (-0.2%)
- 10 a.m.: Pending home sales, est. (M/m) (-0.9%), prior 2.4%
- 10:30 a.m.: Dallas Fed, est. (-8.5%), prior (-2.0%)
- 11 a.m.: Export inspections: corn, soybeans, wheat
- 11:30 a.m.: U.S. to sell $29b 3-mo., $27b 6-mo. bills
- 4 p.m.: Crop conditions
WHAT TO WATCH:
- Monsanto's bug-resistant corn isn't anymore - WSJ
- Finance Minister Yoshihiko Noda elected new Prime Minister of Japan - Nikkei
- Some German banks, agencies have yet to decide if they will join bond swap to help Greece - FT
COMMODITY/GROWTH EXPECTATION
- COMMODITIES: Gold is a raging bull off last week's freakout lows, busting through Hedgeye's TRADE line of resist ($1809) this morning.
- Our TRADE and TREND lines in Gold and Silver have held and both look like raging bulls here this morning. With Bernanke not defending the US Dollar, to a degree this is a repudiation of Keynesian economics but more so a function of real-interest rates being negative. US 3 month treasury yields are literally NEGATIVE this morn at -0.01%!
MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:
- Sino-Forest CEO Resigns Amid Investigation, Share Suspension
- Gold Drops as Bernanke Says Growth Intact, Offers No Stimulus
- Cleanup Under Way to Restore Power to 6 Million Cut by Irene
- Texas Dust Bowl Drives Cotton Rally as Rick Perry Prays for Rain
- Hedge Funds Turn Gas Bears After Five Months: Energy Markets
- Funds Boost Bullish Agriculture Bets as Yields May Slump
- India’s Grain Glut Shows Need to Allow Exports: Chart of the Day
- Oil Trades Near Three-Day High; Gasoline Drops as Irene Passes
- Rice May Rally 22% as Thai Buying Raises Cost, Cuts Exports
- High Rare-Earth Prices Force Hitachi, Toyota to Find Alternative
- Rusal Seeks to Complete Debt Refinancing Talks in Four Weeks
- World Growth to Be Sluggish to 2015, CEBR Says, Cutting Forecast
- Copper Gains in China as Bernanke Says Economic Recovery Intact
- Corn, Soybeans May Rise as Dry U.S. Weather Eroding Crop Outlook
- Rubber Demand Seen ‘Sluggish’ as Economic Recovery Stalls
- Soybeans Advance to Six-Month High on Declining U.S. Yields
- U.S. Fuel Pipeline, Terminal Operators Report Outages, Flooding
CURRENCIES
EUROPEAN MARKETS
- EUROSQUEEZE – Greece up +9.2% this morning and Cyprus +18.1%; perfectly normal price action – and I guess Bernank and Trichet call this le “price stability”; Greece and Cyprus were the 2 worst performing stock markets in the world prior to this move at -37.8% and -59.1% YTD, respectively.
- We covered our only European short we had left last week (Italy); we have no European longs (stocks, bonds, or FX)
ASIAN MARKETS
- ASIA: very mixed overnight with China/Indonesia/Philippines down and Korea/India/Singapore up.
MIDDLE EAST
Howard Penney
Managing Director