THE HEDGEYE DAILY OUTLOOK
TODAY’S S&P 500 SET-UP - September 23, 2011
As we look at today’s set up for the S&P 500, the range is 47 points or -0.93% downside to 1119 and 3.23% upside to 1166.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: -2395 (-243)
- VOLUME: NYSE 1716.20 (+41.80%)
- VIX: 41.35 +10.80% YTD PERFORMANCE: +132.96%
- SPX PUT/CALL RATIO: 2.75 from 2.66 (+3.62%)
CREDIT/ECONOMIC MARKET LOOK:
UST YIELD CURVE: heavy and compressing if dropped on your head; 152bps wide, new low for the cycle; very bad for banks
10YR UST Yields hitting record lows as academics refer to chapter 2 on buy stocks when bond yields are?
- TED SPREAD: 35.80
- 3-MONTH T-BILL YIELD: 0.00%
- 10-Year: 1.72 from 1.88
- YIELD CURVE: 1.52 from 1.67
MACRO DATA POINTS (Bloomberg Estimates):
- 1 p.m.: Baker Hughes rig count
- 1:30 p.m.: Fed’s Dudley to speak on panel in Washington D.C.
- 2:45 p.m.: Fed’s Williams on unconventional monetary policy in Zurich
- 4:30 p.m.: ECB’s Trichet speaks in Washington
WHAT TO WATCH:
- IMF/World Bank meetings take place and go over the weekend. Today, watch for comments from IMF Managing Director Lagarde, Fed President Dudley, Citigroup CEO Pandit, ECB President Trichet
- Reliance Industries said to be studying possible purchases of shale-gas assets in Canada; may also invest in clean- energy ventures
- Solyndra CEO Brian Harrison and CFO W.G. Stover appear before the House Energy and Commerce Committee
- Hewlett-Packard CEO Meg Whitman plans to stick by strategies set in motion by her predecessor
- Napster founder Sean Parker, Ron Burkle may partner on bid for EMI, N.Y. Post says
- Liberty Media’s spinoffs of Liberty Capital, Liberty Starz tracking stocks may be completed
- Bank of America said to be in talks to sell its stake in the biggest U.S. Pizza Hut franchisee for more than $800m
COMMODITY/GROWTH EXPECTATION
COMMODITIES: disaster continues for hedge funds (Hedgeye has a 0% asset allocation to Commodities and reiterate that call this morning, long USD)
MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:
- Copper, Nickel, Tin Slump on European Debt, Global Growth Risk
- Commodities Set for Worst Week in Four Months as Metals Tumble
- China Coal Outage to Spur Imports as Prices Rise: Energy Markets
- Gold Set for Worst Week in More Than 4 Months on Global Selloff
- Oil Rises After Sliding to Six-Week Low; Heads for Weekly Drop
- Record Harvest Cooling Inflation Checks Yield Rise: India Credit
- Goldman Sticks With ‘Resilient’ Commodities on Supply Risks
- Gold May Gain on Fed Measures, Europe Concerns, Survey Shows
- Copper Extends Drop to Lowest Since August 2010: LME Preview
- Deere CEO Won’t Let Asia Rice Paddy Sink $50 Billion Sales Goal
- Peruvian Congress Approves Law Setting Mining Tax on Profits
- Copper, Nickel, Tin Tumble on Debt, Growth Concerns
- Iron Ore’s Four-Year Slide Hitting Mining Earnings: Commodities
- Palm Oil Declines as Growing Recession Concerns Reduce Demand
- Soybeans Set for Worst Weekly Loss in 2 Years on Demand Concern
- Gold May Drop as Investors Sell to Cover Losses in Other Assets
- Europe Central Banks’ Gold Sales Set for Least Since 1999 Accord
- Oil Erases Gain in New York as Finance Heads Discuss Growth Risk
CURRENCIES
EUROPEAN MARKETS
EUROPE: contagion spreading to Russia (crashing -36% since May), Poland, and Austria (both markets down -1% this morning, never mind "bounce")
EUROPE: only "bounces" are in the largest hedge fund short position markets (Italy and Spain); DAX and CAC can barely sustain bids.
ASIAN MARKETS
ASIA: there was no bounce; crashing in Korea and Hong Kong continue making the S&P 500 hostage to crash (-20% drawdown from April) mean reversion
KOREA: KOSPI smoked for another -5.7% drop, taking the crash since May 2 to -24%; Korean bank exec jumped out of his window last night; sad
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MIDDLE EAST
Howard Penney
Managing Director