Hedgeye - THE HEDGEYE DAILY OUTLOOK

THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - September 2, 2011

With the SP500 closing 1 point above its immediate-term TRADE line of 1203 yesterday, this morning’s jobs print in the US becomes very relevant. We have ZERO edge on what the number will be (the government makes up the birth/death adjustment), but we have a process/ plan post print.

If the SPX breaks and holds below 1203, immediate term TRADE support becomes 1182
On a breach of 1182 and a VIX breakout > 35.40, retest of the 2011 lows is in play
If the SPX draws down and recovers 1203, immediate-term upside to 1234

As we look at today’s set up for the S&P 500, the range is 41 points or -1.86% downside to 1182 and 1.54% upside to 1223.

SECTOR AND GLOBAL PERFORMANCE

EQUITY SENTIMENT:

ADVANCE/DECLINE LINE: -1433 (-2334)
VOLUME: NYSE 1017.95 (+19.54%)
VIX: 31.82 +0.63% YTD PERFORMANCE: +79.27%
SPX PUT/CALL RATIO: 1.78 from 1.40 +27.11%

CREDIT/ECONOMIC MARKET LOOK:

TED SPREAD: 31.93
3-MONTH T-BILL YIELD: 0.02% +0.01%
10-Year: 2.22 from 2.19
YIELD CURVE: 2.03 from 1.99

MACRO DATA POINTS (Bloomberg Estimates):

8:30 a.m.: Unemployment rate, est. 9.1%, prior 9.1%
Change in non-farm payolls, est. 68k, prior 117k
1 p.m.: Baker Hughes rig count

WHAT TO WATCH:

Bank of America, JP Morgan, other banks may be sued by the U.S. FHFA for misrepresenting quality of mortgage securities during height of housing bubble: NY Times
Bank of America told by Fed to show steps it would take if its financial condition worsens: WSJ
BP, Exxon Mobil, others shut almost 6% of Gulf crude output ahead of tropical depression
Netflix said Starz walked away from talks on new streaming deal; contract ends next Feb.

COMMODITY/GROWTH EXPECTATION

COMMODITIES: big breakout lines in Gold and Silver = $1819 and $41.53

MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:

China Buries Obama’s Solar-Power Ambitions With $34.4 Billion
Gold Gains for Second Day as Equities Drop on Growth Concern
Oil Drops Before U.S. Jobs Data; Gulf Rigs Shut as Storm Builds
Saudi Oil May Gain as China Refineries Restart: Energy Markets
Shanghai Plans Fivefold Increase in Metal Bonded Warehousing
Baosteel Group Pays $1.95 Billion for Stake in Niobium Miner
Copper Falls for Second Day as Growth Concerns Weigh on Demand
Corn Rallies After Biggest Drop in Two Months Spurs Purchases
Glencore Proposes Cash Bid Valuing Optimum Coal at $1.2 Billion
Gold May Advance on Concern About Slowing Growth, Survey Shows
Palm Oil Gains as Widening Discount to Soybean Oil Lures Buyers
Ukraine’s Corn Exports Surge Capping Price Rally as U.S. Bakes
Australia Wheat Forecast Cut 4 Percent on Dry East, ANZ Says

CURRENCIES

EUROPEAN MARKETS

EUROPE: broadly lower lead by Greece and Germany down 3.6% and 2.8%, respectively.
Greek Finance Minister denies that EU/IMF talks are suspended, says new cycle of talks will begin on 14-Sept -- Reuters
Eurozone July PPI +6.1% y/y vs consensus +6.1% and prior +5.9%; Eurozone July PPI +0.5% m/m vs consensus +0.5% and prior +0.0%

ASIAN MARKETS

ASIA: mixed last night (Japan and China down 1.2% and 1.1%), but the Philippines (which I am long) was up 0.6% moving to up +1% for September

MIDDLE EAST

Howard Penney

Managing Director