THE HEDGEYE DAILY OUTLOOK
TODAY’S S&P 500 SET-UP - October 31, 2011
As we look at today’s set up for the S&P 500, the range is 27 points or -1.41% downside to 1267 and 0.69% upside to 1294.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: -57 (-2378)
- VOLUME: NYSE 1009.62 (-29.46%)
- VIX: 25.43 -3.65% YTD PERFORMANCE: +38.20%
- SPX PUT/CALL RATIO: 1.54 from 1.60 (-16.23%)
CREDIT/ECONOMIC MARKET LOOK:
10-yr TREASURY – bond yields have had the same call we’ve had for most of 2011; intermediate to long-term US economic growth is structurally impaired (slower) than what garden variety recovery models expect. The 10-yr failed at my intermediate-term TREND level of 2.41% last week and is down 6bps this morn vs Friday.
- TED SPREAD: 42.94
- 3-MONTH T-BILL YIELD: 0.01%
- 10-Year: 2.34 from 2.42
- YIELD CURVE: 2.06 from 2.11
MACRO DATA POINTS (Bloomberg Estimates):
- 9:45am: Chicago Purchasing Manager, est. 59.0, prior 60.4
- 10:30am: Dallas Fed Manufacturing, est. (-5.0), prior (-14.4)
- 11:30am: U.S. to sell $29b 3-mo., $27b 6-mo. bills
WHAT TO WATCH:
- MF Global said to hire Weil, Gotshal & Manges; nearing deal for bankruptcy filing and asset sale to Interactive Brokers, WSJ says
- Yahoo said to be leaning toward selling its Asian assets and redistributing the proceeds to shareholders, rather than selling itself to a group of buyers
- U.S. may postpone second share sale of AIG: WSJ
- World population to surpass 7b today, U.N. projects
- Daylight savings time in most of Europe ended over weekend; difference between London, New York is now only 4 hours. U.S. clocks roll back next weekend.
- ACI Worldwide (ACIW) received a request for more info from DOJ regarding proposed takeover of S1 Corp.
- Amazon.com (AMZN) may gain 20%, citing Citigroup, Barron’s said
COMMODITY/GROWTH EXPECTATION
COPPER – agrees with the move in China – Dr Copper down -2.9% this morning after failing at TREND line resistance ($3.91/lb) last week; Oil fails at its long-term TAIL of resistance ($93.86 WTIC) but holds its TREND line of $88.89 support. Plenty of volatility to trade around whatever the US Dollar does.
MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:
- Colonel Sanders Devouring Little Sheep Means 69% Gain: Real M&A
- Hedge Funds Bet on Collapse of WTI-Brent Spread: Energy Markets
- Funds Lift Bullish Bets Amid Best Rally Since 2009: Commodities
- Green Mountain Puts Highest Since ’09 as Einhorn Shorts: Options
- Thai Floods May Spare Inner Bangkok as Drainage Efforts Succeed
- China Seeks New Iron Ore Price Model, Holds Talks With Miners
- Gold Drops, Paring Monthly Gain, as Yen Slump Hurts Commodities
- Thai ‘Credibility’ at Stake as Factories Soak in Flood Plain
- Thai Floods May Ease as Bangkok Defenses Hold, Yingluck Says
- Anglo to Extend Rally From Cheapest Since 2009: Chart of the Day
- Iron Ore May Extend Falls to $95 a Ton, Morgan Stanley Says
- Oil Declines, Paring Biggest Monthly Increase Since May 2009
- Copper Pares Biggest Monthly Gain Since December as Metals Drop
- COMMODITIES DAYBOOK: Funds Bet on Collapse of WTI-Brent Spread
- Indonesian Tin Producers Extend Export Halt to Boost Prices
- Corn Drops as Improved Ukrainian Yields Boost Global Supplies
- Palm Oil Declines on Speculation U.S. Soybean Crop to Increase
- Copper Falls in London as China’s Demand May Slow: LME Preview
- Freeport Indonesia Workers Call for One-Week Suspension of Talks
- Oil Declines, Paring Biggest Monthly Increase Since May 2009
CURRENCIES
EURO - watch that long-term TAIL line of $1.40 for your front-running signal on beta. It’s driving everything else.
EUROPEAN MARKETS
ASIAN MARKETS
CHINA – Chinese stocks hit a new low 2-weeks ago (down -4.7% wk) then rallied the same % move as US stocks did last wk (+6.7%) and stopped going up this morning; overall TREND in both the Shanghai Comp and Hang Seng remains bearish. Asian growth (q/q) continues to slow and should through Q1 of 2012.
MIDDLE EAST
The Hedgeye Macro Team
Howard Penney
Managing Director