THE HEDGEYE DAILY OUTLOOK
TODAY’S S&P 500 SET-UP - September 22, 2011
Do not buy this dip. This is not a dip.
As we look at today’s set up for the S&P 500, the range is 40 points or -2.21% downside to 1141 and 1.22% upside to 1181.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: -2152 (-1338)
- VOLUME: NYSE 1210.29 (+20.66%)
- VIX: 37.32 +13.57% YTD PERFORMANCE: +110.25%
- SPX PUT/CALL RATIO: 2.66 from 1.91 (+38.96%)
CREDIT/ECONOMIC MARKET LOOK:
FIXED INCOME: by our score this is a 3.7 standard deviation move in 10yr UST bonds; Bernanke made the entire fixed income complex go haywire. The 10 year yields making lower-lows is very bearish for both economic growth and confidence.
- TED SPREAD: 35.80
- 3-MONTH T-BILL YIELD: 0.01%
- 10-Year: 1.88 from 1.95
- YIELD CURVE: 1.67 from 1.77
MACRO DATA POINTS (Bloomberg Estimates):
- 8:30 a.m.: Jobless claims, est. 420k, prior 428k
- 9:45 a.m.: Bloomberg consumer comfort, prior (-49.3)
- 10 a.m.: Leading indicators, est. 0.1%, prior 0.5%
- 10 a.m.: House price index, M/m, est. 0.1%, prior 0.9%
- 10 a.m.: Freddie Mac mortgage rates
- 10:30 a.m.: EIA natural gas storage
- 1 p.m.: U.S. to sell $11b 10-yr TIPS reopening
WHAT TO WATCH:
- United Technologies agrees to buy Goodrich for $16.5b, or $127.50-shr
- Hewlett-Packard’s board said to meet today; said to plan to consider firing CEO Leo Apotheker
- Hewlett-Packard deal to buy Autonomy will still go through, absent “material adverse change,” even if CEO ousted: Bernstein
- Australian dollar drops to parity with U.S. currency
- LivingSocial may seek more than $200m in private funding rather than seek IPO
- Mosaic to replace National Semiconductor in S&P 500
COMMODITY/GROWTH EXPECTATION
COMMODITIES: crashing Copper looks like the Hang Seng this morning; down -5% in a straight line and down -21% since QE2 (Februray)
OIL: is in what I call a Bearish Formation - bearish on all 3 of my risk management durations (TRADE, TREND, and TAIL)
GOLD: this is key and why I don't own it; now Gold becomes a source of liquidity for any Global Macro hedge fund; $1821 support broke
MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:
- Iron Ore’s Four-Year Slide Hitting Mining Earnings: Commodities
- Gold’s Price Surge Skews Inflation Numbers Across Asia
- Commodities Erase This Year’s Gains as Slowdown Concerns Swell
- Oil Drops to Four-Week Low as Fed Sees Downside Risks to Economy
- Managers Prefer Gold to Bonds on Faster Inflation: India Credit
- Copper Slumps Into Bear Market as Fed Assessment Hurts Outlook
- Gulf Cargo Gap Spurs Dubai-Abu Dhabi Rail Link: Freight Markets
- Foreign Investor ‘Land Grabs’ Harm Poor Farmers, Oxfam Says
- Copper Declines to One Year Low as China Manufacturing Contracts
- Metal Price Drop Attracts Buying by South Korea State Agency
- Pakistan to Boost Palm Oil Imports From Indonesia on Tax Cut
- Copper Falls to 10-Month Low on U.S., China, Europe: LME Preview
- Commodity-Ship Demolitions to Be Record in 2011, Bimco Says
- Sime Darby Sees Higher Palm-Oil Production as Yields Improve
- Rubber Tumbles to 10-Month Low as Economic Risk May Cut Deman
- China’s 2020 Corn Imports May Be 20 Million Tons, Cofco Says
- Brazil Sugarcane Harvest May Fall 10%, Rabobank’s Duff Says
- Bullion Vaults Run Out of Space as Gold Rallies: Commodities
CURRENCIES
EUROPEAN MARKETS
EUROPE = train wreck - Period. If you're a European country index down -3% this morning you are outperforming!
Russia is called a “Petro-Dollar” market; this stupid twist is Dollar bullish; Dollar bullish bearish for Oil, bearish for Russia
GERMANY: down -3.9% as the DAX fails at its immediate-term TRADE line of 5480; no support to 5019 - could re-test the lows.
ASIAN MARKETS
ASIA: put the crash helmets back on and do up your chinstraps; Indonesia was down -8.9% last night; Hong Kong down -5% moves into crash mode
MIDDLE EAST
Howard Penney
Managing Director