THE HEDGEYE DAILY OUTLOOK
TODAY’S S&P 500 SET-UP - September 14, 2011
Ultimately, what matters most to markets (longer term) is growth – our call in 2011 has been that Fiat Fool policy would perpetuate a growth slowdown; no matter where Geithner or Lagarde go this week. As we look at today’s set up for the S&P 500, the range is 40 points or -2.72% downside to 1141 and 0.69% upside to 1181.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
SENTIMENT – most bullish data point of the morning is that Wall Street is finally capitulating (right on time – our Italian bond auction and EFSF debate catalyst has been mid-late September since we started making the call in May); bulls in the II survey plummet to 35.5% this morning and bears shoot up to 41%; that’s the 1st bearish spread (bulls minus bears) of 2011.
- ADVANCE/DECLINE LINE: +1569 (+1788)
- VOLUME: NYSE 1070.84 (-1.57%)
- VIX: 36.91 -4.35% YTD PERFORMANCE: +107.94%
- SPX PUT/CALL RATIO: 1.71 from 2.20 -22.45%
CREDIT/ECONOMIC MARKET LOOK:
FIXED INCOME: UST 10yr fails at my TRADE line of resistance (2.03%); no support to 1.85%
- TED SPREAD: 34.71
- 3-MONTH T-BILL YIELD: 0.01%
- 10-Year: 2.00 from 1.94
- YIELD CURVE: 1.79 from 1.73
MACRO DATA POINTS (Bloomberg Estimates):
- 7:00 a.m.: MBA Mortgage Applications, prior (-4.9%)
- 8:30 a.m.: Aug. Producer Price Index, est. M/m 0.0%, prior 0.2%
- 8:30 a.m.: Aug. Retail Sales, est. 0.2%, prior 0.5%
- 10:00 a.m.: July Business Inventories, est. 0.5%, prior 0.3%
- 10:30 a.m.: DoE inventories
- 1 p.m.: U.S. to sell $13b 30-yr bonds reopening
WHAT TO WATCH:
- ConAgra will withdraw $5.18b offer for Ralcorp unless company engages in “constructive dialogue” by 5 p.m. on Sept. 19
- ECB will lend two euro-area banks dollars tomorrow, a sign they are finding it more difficult to borrow the greenback in markets
- Caijing magazine reported China is willing to buy bonds of nations hit by debt crisis, citing Zhang Xiaoqiang, vice chairman of National Development and Reform Commission
- A majority of Americans don’t believe President Obama’s $447b jobs plan will help lower the unemployment rate; Obama’s approval rating drops to record low 45%: Bloomberg poll
- Dell (DELL) board authorized added $5b for stock repurchases
- President Obama promotes jobs plan in Raleigh-Durham, NC, ~1 p.m. Later, Obama attends and delivers remarks at Congressional Hispanic Caucus Institute’s Annual Awards Gala in Washington
COMMODITY/GROWTH EXPECTATION
COPPER - the Doctor is sick. Copper down another full 1% this morning testing its early august lows. Yes Oil holds TRADE line support of $86.03, but both Oil and Copper have bearish/broken TAILS. The TAIL risk trumps the bullish TRADE in oil.
MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:
- Korean Offshore Wind Farm Helps Shipyards Challenge Siemens
- Crude Drops From Six-Week High on Concern Recovery May Falter
- Gold May Fall in London as Europe’s Debt Woes Bolster Dollar
- Silvercorp Plunges After Muddy Waters Says It’s Shorting Stock
- Fuel-Oil Loss Set for Two-Year Low on Supplies: Energy Markets
- Corn Futures Extend Losses as U.S. Crop Improves, Soybeans Drop
- Atlas Iron CEO Rebuffs Approaches, Sees 10-Fold Stock Price Gain
- Copper Drops as Europe Sovereign-Debt Concern Outweighs Strike
- Freeport Miners in Peru, Indonesia Will Go on Strike Over Wages
- Oil, Copper Lead Commodity Declines on Demand Outlook Concerns
- Wheat Harvest in West Australia May Jump 89% on Weather
- Oil Drops From Six-Week High as Europe Crisis Threatens Demand
- China 2011 Corn Harvest May Exceed 180 Million Tons: China Daily
- West Australia’s Barnett to Visit China for Oakajee Ore Funding
- Palm Oil Declines as Slowing Global Economy May Hurt Demand
- Spot Gold Falls, Futures Pare Gains as Stocks, Commodities Drop
- Aluminum, Zinc ETPs Are Unviable on High Costs, Norilsk Says
CURRENCIES
EUROPEAN MARKETS
- EUROPE: As socialists at both the IMF and EU unite, they still haven't delivered the short squeeze headline; DAX down now (still crashing).
- UK July ILO unemployment +7.9% vs consensus +7.9% and prior +7.9%
- UK August Claimant count unemployment change +20.3k vs consensus +35.0k vs prior +37.1k
- Eurozone July Industrial Production +4.2% y/y vs consensus +4.6% and prior revised to 2.6% from +2.9%
ASIAN MARKETS
- ASIA – what’s going on in South Korean and Japanese equities isn’t headline news but that doesn’t mean that these equity market meltdowns cease to exist; KOSPI down hard on big volume last night (down -3.5% and crashing, down -21.5% since May) as the Nikkei hits a fresh 18 month low (lower than the tsunami low) – big economies; big slowdowns.
MIDDLE EAST
Howard Penney
Managing Director
