TODAY’S S&P 500 SET-UP - October 3, 2011
Deflating The Inflation via a Strong Dollar remains our Global Macro call. Get the US Dollar right, you get a lot of other things right. As we look at today’s set up for the S&P 500, the range is 44 points or -1.63% downside to 1113 and 2.26% upside to 1157.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: -1836 (-3131)
- VOLUME: NYSE 1323.20 (+18.04%)
- VIX: 42.96 +10.61% YTD PERFORMANCE: +142.03%
- SPX PUT/CALL RATIO: 1.49 from 2.20 (-31.98%)
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 36.42
- 3-MONTH T-BILL YIELD: 0.02%
- 10-Year: 1.92 from 1.99
- YIELD CURVE: 1.67 from 1.72
MACRO DATA POINTS (Bloomberg Estimates):
- 7 a.m.: Fed’s Fisher speaks on CNBC
- 10 a.m.: Construction spending, est. (-0.2%), prior (-1.3%)
- 10 a.m.: ISM Manufacturing, est. 50.3, prior 50.6
- 11 a.m.: Fed to purchase $2.75b-$3.5b in notes/bonds
- 11 a.m.: Export inspections: corn, soybeans, wheat
- 11:30 a.m.: U.S. to sell $29b 3-mo. bills, $27b 6-mo. bills
- 1 p.m.: Fed’s Fisher speaks on Bloomberg Radio
- 6 p.m.: Fed’s Lacker speaks in Madison, Wis.
WHAT TO WATCH:
- European finance ministers meet in Luxembourg to consider how to shield banks from the debt crisis, boost region’s rescue fund
- Yahoo will hold 9 a.m. press conference; Alibaba Chairman Jack Ma said on Sept. 30 very interested in Yahoo, talks snagged over political issues
- Apple iPhone announcement tomorrow; watch for increasing speculation about iPhone 5 capability
- N.J. Gov. Chris Christie on brink of decision whether to seek Republican nomination for president
- Supreme Court’s term opens
- Congress returns from recess
- Anadarko (APC) won’t have to face personal-injury claims related to 2010 Gulf of Mexico spill, federal judge ruled
- Arch Coal (ACI) cut forecast for 2011 adjusted EPS
COMMODITY/GROWTH EXPECTATION
COMMODITIES – everyone and their brother knows Dr Copper is crashing now, and this is perpetuating weakness (down another -3.1% to start the wk making fresh lows at $3.05/lb). Every commodity in the Hedgeye model is now bearish TRADE and TREND, including Gold (TREND resistance $1680)
MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:
- China Manufacturing Stability May Ease ‘Hard Landing’ Risks
- Raw-Material Bets Cut 26% in Biggest Rout Since ’08: Commodities
- Hedge Funds Cut Oil Bets Most in Seven Weeks: Energy Markets
- Shell Declares Force Majeure After Fire, Cancels Oil Supply
- Gold Rises for Third Day as Greek Debt May Spur Increased Demand
- Obama Said Poised to Submit Three Trade Accords to U.S. Congress
- Platinum-Gold Ratio Tumbles to Lowest Level Since at Least 1987
- Commodities Drop to 10-Month Low as European Industry Shrinking
- Copper Falls to 14-Month Low on Prospects for Demand to Weaken
- Crude Extends Declines in New York After Closing at One-Year Low
- European Goldfields Rises in London on $600 Million Qatari Loan
- Corn Extends Declines After Biggest Monthly Drop in Five Decades
- Oil Falls After Closing at One-Year Low as Europe Ministers Meet
- Petrobras Bonds Trailing Pemex on Higher Costs: Brazil Credit
- Palm Oil Tumbles to One-Year Low as Soybeans Drop on Stockpiles
- Copper Falls to 14-Month Low Before Manufacturing: LME Preview
- U.S. Mint American Eagle Silver Coin Sales Most Since January
- Freeport, Striking Peru Copper Miners to Resume Wage Talks Today
- U.A.E. Says World Oil Use Stable, No Risk of Plunging Demand
CURRENCIES
EUROPEAN MARKETS
GREECE – so they fibbed again… what does that matter in a globally interconnected game of risk where the entire construct of the EUR/USD pair continues to trade off of politics? Greece leads the headlines and Germany’s DAX broke my critical TRADE line of 5439 support again. Not good.
ASIAN MARKETS
ASIA – complete meltdown where markets were opened last night w/ Hong Kong leading the crashers on the downside (down -4.4% overnight; down 31% since April 8th); Thailand and Indonesia collapsed for -4.7% and -5.9% moves, respectively. Asian Growth Slowing.
MIDDLE EAST
Howard Penney
Managing Director