THE HEDGEYE DAILY OUTLOOK
TODAY’S S&P 500 SET-UP - October 10, 2011
And so it begins… the Dexia Domino falls into a bailout package: BAILOUT – interestingly, but not surprisingly, Sarkozy is trying his best to nip gravity in the bud and stop Dexia becoming the European domino – this morning’s Dexia bailout is only 61% backstopped by Belgium – France is taking a big piece. Both the DAX and CAC are holding their immediate-term TRADE lines of support (5429 and 3004, respectively) on the news. As we look at today’s set up for the S&P 500, the range is 24 points or -0.91% downside to 1145 and 1.17% upside to 1169.
SECTOR AND GLOBAL PERFORMANCE
- ADVANCE/DECLINE LINE: -1218 (-3413)
- VOLUME: NYSE 1137.24 (+1.77%)
- VIX: 36.20 -0.19% YTD PERFORMANCE: +103.94%
- SPX PUT/CALL RATIO: 2.16 from 1.70 (-27.60%)
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 38.60
- 3-MONTH T-BILL YIELD: 0.01%
- 10-Year: 2.10 from 2.01
- YIELD CURVE: 1.80 from 1.72
MACRO DATA POINTS (Bloomberg Estimates):
- No material events today
WHAT TO WATCH:
- House, Senate not in session
- Government offices closed for Columbus Day holiday
- Superior Energy to buy Production Services for 29% premium in cash and stock.
- American Eagle, pilots’ union hit impasse in efforts to agree on a new contract before Eagle is spun off from AMR Corp., the union said.
- Microchip Technology (MCHP) may be poised to rise to $40, Barron’s said
- Borrowed shares climbed to 11.6% of stock last month from 9.5% in July, biggest increase since at least 2006: Data Explorers
COMMODITIES: rallying to lower highs across board this morning; I covered our short Gold position last week; looking to see if $1676 resistance holds.
MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:
- Hedge Funds Miss Biggest Rally as Short Bets Rise: Commodities
- Short Sales Rise Most Since ’06 as Stocks Lose $11 Trillion
- Thailand Bolsters Flood Defenses as Deluge Threatens Bangkok
- Hedge Funds Cut Bullish Oil Bets for Third Week: Energy Markets
- BHP Wins Australia’s Approval for Olympic Dam Expansion
- Gold Climbs as Investors Mull Europe Crisis Amid Merkel Pledge
- Oil Gains a Fourth Day After European Pledge to Contain Debt
- Paulson’s Main Fund Said to Lose 47% in 2011 Through September
- Copper May Drop in London on Concern About Outlook for China
- Chemical M&A Grinds to Slowest Pace Since 2009 on Growth Concern
- U.K. Wants EU Farm Payments Cut as Agriculture Policy Reviewed
- Hong Kong Bourses Decline to Comment on LME Bid-Interest Report
- Palm Oil Inventories Increase as Production Gains, Exports Ebb
- Police Say Two Workers Shot Near Grasberg Mine in Indonesia
- Australia’s Eastern Crops Improve, La Nina May Boost Yields
- COMMODITIES DAYBOOK: Saudi Oil Minister Sees No Excess Supply
- Indonesia’s Refined Tin Shipments Extend Drop as Prices Fall
- Lundin Mining to Consider Possible Merger in Review in 2012
- Pemex CEO Says Lack of Repsol Collaboration Is ‘Ridiculous’
EURO – cutting off perceived tail risk is bullish for the Euro’s insolvency pricing until it isn’t. TRADE line resistance = 1.36 and the TAIL (that’s broken) of resistance is up at 1.39 – so we’d be shorting Euros and buying US Dollars all day long on the news.
EUROPE: bazooka in play but markets not up as much as socialists would have thought; DAX and CAC look fine; Austria
getting hammered -4.4%
AUSTRIA – domino is as domino does; Erste bank is getting powered and the Austrian stock market is down -4.4% this morning; Greece is down another -4.5% (fresh new lows) and Romania is -2.5% - all of this tells me the interconnectedness of risk is what we think it is and not unlike Bear Stearns, this Dexia moment is not the end (no bailouts in Greece today).
ASIA: subdued session with China down -0.61%; HK flat, and KOSPI +0.38% as Asia looks for direction from Europe's bank bailout Part I.