TODAY’S S&P 500 SET-UP - November 1, 2011


As we look at today’s set up for the S&P 500, the range is 53 points or -3.14% downside to 1214 and 1.09% upside to 1267. 




From a TRADE and TREND perspective, today’s selloff didn’t do much to the Sector Studies. The only Sector to break its intermediate-term TREND line today was the one that’s most negatively correlated to a rising US Dollar – Basic Materials (XLB).


That’s the good news. The bad news is that 4 of 9 Sectors failed to succeed in recovering their long-term TAIL lines of support – Financials (down -15.4% YTD), Basic Materials (down -10.3% YTD), Industrials (down -4.3% YTD) and Energy (up +2.1% YTD). Again, these Sectors all have 1 thing in common – they do not like a rising US Dollar like most Americans do. The SP500’s long-term TAIL (1267) broke again today too.


The Hedgeye asset allocation has moved from 0% US Equities this summer to 9% currently and embraces the Bullish Formation (bullish on all 3 risk mgt durations – TRADE/TREND/TAIL) in Consumer Discretionary (XLY) which, in terms of upside from here, looks more attractive to me than Utilities (XLU). We like both, but XLY better; especially if Strong Dollar Deflates The Inflation (= bullish for US Consumption and economic growth in 2012).




THE HEDGEYE DAILY OUTLOOK - daily sector view


THE HEDGEYE DAILY OUTLOOK - global performance



  • ADVANCE/DECLINE LINE: -1908 (-1851) 
  • VOLUME: NYSE 1143.02 (+13.27%)
  • VIX:  29.96 +22.14% YTD PERFORMANCE: +68.79%
  • SPX PUT/CALL RATIO: 3.02 from 1.54 (+95.59%)




  • TED SPREAD: 42.94
  • 3-MONTH T-BILL YIELD: 0.01%
  • 10-Year: 2.17 from 2.34    
  • YIELD CURVE: 1.92 from 2.06


MACRO DATA POINTS (Bloomberg Estimates):

  • 7:45am/8:55am: ICSC/Redbook weekly sales
  • 10am: Construction spending, est. 0.3%, prior 1.4%
  • 10am: ISM, est. 52.0, prior 51.6
  • 11:30am: U.S. to sell $35b 4-wk bills
  • 4:30pm: API inventories


  • Greek’s PM Papandreou called referendum and parliamentary confidence vote, raising the prospect of derailing European bailout effort and pushing Greece into default.
  • Higher output from Honda and Toyota, combined with growing demand for full-size trucks by Ford, GM probably accelerated the SAAR to 13.2m vehicles.
  • Mario Draghi to succeed Jean-Claude Trichet as ECB President today
  • Congressional supercommittee meets on “Overview of Previous Debt Proposals,” 1pm
  • Senate is scheduled to resume consideration of amendments on spending bills




THE HEDGEYE DAILY OUTLOOK - daily commodity view




  • China Mobile Skirts Apple to Add 5 Million IPhone Users: Tech
  • Gisele, Gwyneth, Demi Pose for Testino; Kapoor’s Scary Tunnel
  • Record Coal Premium Turning Into Bargain as Deals Sour: Real M&A
  • Esprit Drops as Europe Sales Slide on Weaker Demand
  • IPhone China Rival Focuses on Software for Half-Price Device
  • Sony Revamps TV Business After Seven Straight Annual Losses
  • Toshiba, Nippon Yusen Call for More Government Action on Yen
  • Mideast Dining Means Darden-Led U.S. Chains Follow Money: Retail
  • Amazon Boosts Cloud Computing Sales, Seizing on U.S. Budget Cuts
  • Indonesia’s October Consumer Prices: Summary (Table)
  • Colonel Sanders Devouring Little Sheep Means 69% Gain: Real M&A
  • United Breweries Falls in Mumbai After Quarterly Net Drops 11%
  • Thailand Oct. Consumer Prices Rise 4.19% From Yr Ago; Est. +4.5%
  • Drinking My Way Through 1,000 Belgian Craft Beers: John Mariani
  • Louis Vuitton Store, Offices in London Sold for $28 Million
  • Panasonic Forecasts Biggest Loss in Decade on Strong Yen, TV
  • Esprit First-Quarter Sales Rise 0.6% as European Demand Slows




THE HEDGEYE DAILY OUTLOOK - daily currency view






THE HEDGEYE DAILY OUTLOOK - euro performance




Chinese authorities rhetorically signaled that it will be neither a source of “dumb money” for the EFSF, nor will it be pressured into easing too soon.


2007-08 Similarities Watch: Hong Kong Money Supply (M3) turned negative on a YoY basis in Sep like it die in 2Q08

Australia cuts key rate to 4.5% in first reduction since 2009.



THE HEDGEYE DAILY OUTLOOK - asia performance






The Hedgeye Macro Team

Howard Penney

Managing Director



Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

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