THE HEDGEYE DAILY OUTLOOK

THE HEDGEYE DAILY OUTLOOK

 

TODAY’S S&P 500 SET-UP - October 14, 2011

Provided that the SP500 doesn’t get above 1229 (TREND) on the Google news, we’re crossing the Rubicon of bank earnings Monday (Citi reports today), Tuesday (Goldman and BAC), and Thursday (Morgan Stanley).  JPM’s reaction will leave a psychological mark, as bank earnings and counterparty risk are not going to be resolved for anytime soon.

 

G20 – the setup here is a little unnerving as Geithner is going to do what he’s been groomed to do for 47% of his born life (bailout banks) appearing again this morning on TV at 910AM (CNBC) as central planning Europeans huddle in Paris.

 

As we look at today’s set up for the S&P 500, the range is 55 points or -2.80% downside to 1170 and 1.77% upside to 1225

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - hrmsv

 

THE HEDGEYE DAILY OUTLOOK - bpgm1

 

THE HEDGEYE DAILY OUTLOOK - hrmsp

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -666 (-2457) 
  • VOLUME: NYSE 898.46 (-15.72%)
  • VIX:  30.70 -1.79% YTD PERFORMANCE: +72.96%
  • SPX PUT/CALL RATIO: 1.40 from 1.70 (-17.69%)

CREDIT/ECONOMIC MARKET LOOK: 

  • TED SPREAD: 38.79
  • 3-MONTH T-BILL YIELD: 0.02%
  • 10-Year: 2.19 from 2.24     
  • YIELD CURVE: 1.90 from 1.95

MACRO DATA POINTS (Bloomberg Estimates):

  • G-20 finance ministers meet in Paris
  • 8:30 a.m.: Import Price Index, est. (-0.4% M/m)
  • 8:30 a.m.: Retail sales, est. 0.7%
  • 9:10 a.m.: Treasury Secretary Tim Geithner speaks on CNBC
  • 9:55 a.m.: UMich Confidence, est. 60.2
  • 10:00 a.m: Business inventories, est. 0.4%
  • 1:00 p.m.: Baker Hughes rig count
  • 2:00 p.m.: Monthly budget: est. (-$64.0b)

WHAT TO WATCH:

  • UBS, Lloyds and RBC had long-term issuer default grades cut by Fitch Ratings, which put more than a dozen other lenders on watch negative as part of a global reviewSlovakia may approve Europe’s enhanced bailout fund today or tomorrow, finishing ratification process
  • Google is seeking agreements with record companies by the end of the month to start a music store that will compete with Apple’s iTunes.
  • Apple is poised to sell as many as 4m units of its new iPhone 4S this weekend
  • Presidents Obama visit a GM plant in Michigan.

 

COMMODITY/GROWTH EXPECTATION                                                                    

 

THE HEDGEYE DAILY OUTLOOK - dcommv

 

MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:

  • Bangkok Will Escape Flooding as Barriers Hold, Yingluck Says
  • Copper Heads for Second Weekly Gain as LME Inventories Decline
  • Oil Heads for Second Weekly Gain on U.S., Europe Demand Outlook
  • Walter Jumps on Report of Takeover by Anglo American, BHP
  • Naphtha’s Top 2011 Premiums Seen on Supply Cuts: Energy Markets
  • Gold Gains in London on European Debt Woes, Physical Purchases
  • Weakest Rupee Sends Refiners to Dollar Borrowings: India Credit
  • Oil Heads for Second Weekly Gain Before U.S. Retail Sales Data
  • Copper Rises, Heads for Second Weekly Gain on Demand Signals
  • Deere Plans to Supply Fewer Combines in U.S., Dealers Say
  • Sugar Futures Rally as Floods Delay Asia Harvests; Cocoa Falls
  • Rubber Drops on Concern Spreading Debt Crisis May Reduce Demand

 

CURRENCIES                                                                             

 

EURO – the hope trade continues to look more like short covering than anything else as the long-term TAIL of Euro resistance at 1.39 wasn’t even tested this week. As hope turns into a timing problem (no way this bazooka comes anytime soon), there’s a heightening chance of a Euro currency crash down to 1.22 vs USD. Buy the US Dollar (our Macro call today on this at 11AM EST)

 

THE HEDGEYE DAILY OUTLOOK - dcurrv

 

EUROPEAN MARKETS

 

Spain has its long-term sovereign credit rating cut to AA- from AA by S&P, which cited likely deterioration of nation’s bank assets and weaker economic growth prospects that will keep unemployment elevated.

 

THE HEDGEYE DAILY OUTLOOK - bpem1

 

ASIAN MARKETS

 

ASIA – significant signals continue to remind us that Asia’s Growth Slowdown is accelerating (European demand down hard); both the Shanghai Comp and the Hang Seng failed at TRADE lines of resistance again last night (2489 and 18,842) with HK dropping another -1.4% and Singapore (China’s key regional advisor) cutting GDP growth estimates again to 5%.

 

India inflation exceeds 9% 10th month amid rate pressure

 

THE HEDGEYE DAILY OUTLOOK - bpam1

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - me

 

Howard Penney

Managing Director

 

 


Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more