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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - November 3, 2011

Another day, another dislocation between stocks and bonds – bond yields have had the big moves right in 2011.  As we look at today’s set up for the S&P 500, the range is 37 points or -2.09% downside to 1212 and 0.90% upside to 1249. 

SECTOR AND GLOBAL PERFORMANCE

THE HEDGEYE DAILY OUTLOOK - hrmsv

 

THE HEDGEYE DAILY OUTLOOK - hrmsp

 

THE HEDGEYE DAILY OUTLOOK - bpgm1

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: +1998 (+4151) 
  • VOLUME: NYSE 957.34 (-27.98%)
  • VIX:  32.74 -5.84% YTD PERFORMANCE: +84.45%
  • SPX PUT/CALL RATIO: 2.29 from 2.29 (-0.28%)

 

CREDIT/ECONOMIC MARKET LOOK:

TREASURIES – UST 10yr yields are down -16% (39 bps) since this hour of the morning last Thursday; that’s a lot. And now we have 10s bearish on both TRADE and TREND durations again (TRADE line support was 2.11% and we’re looking at 2.02% this morning with the Yield Spread (10s minus 2s) down from 203bps wide at the start of the wk to 179bps this morn – not good).

  • TED SPREAD: 43.30
  • 3-MONTH T-BILL YIELD: 0.01%
  • 10-Year: 2.03 from 2.01    
  • YIELD CURVE: 1.80 from 1.78

 

MACRO DATA POINTS (Bloomberg Estimates):

  • 8am: RBC Consumer Outlook, prior 39.2
  • 8:30am: Nonfarm Productiviity, est. 3.0%, prior -0.7%
  • 8:30am: Jobless claims, est. 400k, prior 402k
  • 9:45am: Bloomberg Consumer Comfort, prior 51.1
  • 10am: ISM Non-Manufacturing, est. 53.5, prior 50.0
  • 10am: Factory orders, est. -0.2%, prior -0.2%
  • 10:30am: EIA natural gas storage, est. 70, prior 92

WHAT TO WATCH:

  • American Eagle Outfitters (AEO): narrows 3Q earnings forecast to 26c-27c/shr from 22c-27c, exceeding est. by at least 3c
  • Costco (COST); U.S. comp sales ex-fuel beat est.
  • Whole Foods Market (WFM): fails to increase its fiscal 2012 profit forecast, still sees EPS $2.21-$2.26
  • Groupon IPO expected to price this evening; yesterday, co. was said to stop taking orders for IPO because of demand
  • German, French leaders withheld EU8b, warned that Greece will surrender all European aid if it votes against bailout package agreed only last week.
  • MF Global’s commodity customer funds have shortfall of $633m, CFTC said
  • SEC likely to file charges against more Wall Street firms in connection with sale of mortgage-linked securities: FT
  • Bank of England, ECB announce interest rate decisions later today

COMMODITY/GROWTH EXPECTATION

COMMODITIES: The CRB Index remains bearish TREND and TAIL with a wall of resistance 326-335

                                                                                                             

THE HEDGEYE DAILY OUTLOOK - dcommv

 

MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:

  • Porsche Sells Malbec to Keep Autos Coming Into Argentina: Cars
  • Ikea’s Paper Pallet Challenges Wood’s 50-Year Dominance: Freight
  • Skunky Smells, 150-Decibel Blasts Pitched as Pirate Defenses
  • Gold Drops With Commodities as European Leaders Cut Greek Aid
  • China Record Corn Crop Still Failing to Meet Demand: Commodities
  • World Food Prices Drop Most in 19 Months on Grain, Dairy Slump
  • MF May Have Transferred Customer Money After Audit, CME Says
  • Oil Drops After Europe Freezes Greek Aid, U.S. Stockpiles Rise
  • U.S. Stocks Rebound, Commodities Rise as Dollar Slips After Fed
  • Coal India to Quicken Search for Overseas Mines as Output Drops
  • China Plans ‘Orderly’ Delivery of New Ships as Glut Hits Rates
  • Midwest Refinery Upgrades Boost Canadian Crudes: Energy Markets
  • Copper Declines on Concern European Debt Crisis to Damp Demand
  • Copper Resumes Drop on More Signs of China Slowdown: LME Preview
  • China Will Not Change Domestic Monetary Policy, Zhang Says
  • Thousands March in Oakland Shutting Down Fifth Busiest U.S. Port
  • Twenty-Five Indonesian Tin Producers to Extend Export Ban
  • Oil Near Two-Month High as Europe Presses Greece on Rescue Deal
  • U.S. Rebel’s Split Riles $6 Billion World of Ethical Commerce
  • Top Gold Forecasters See Rally to Record by March: Commodities

CURRENCIES

THE HEDGEYE DAILY OUTLOOK - dcurrv

 

EUROPEAN MARKETS

EUROPE -  "off the lows" again, this rally looks really suspect (no volume) as the CAC in particular remains bearish/broken across durations

FRANCE – interestingly, but not surprisingly, French bond yields are flagging the nasty – whether you look at the spread risk b/t German Bunds or the nominal level of French 10s, it all looks the same to me – on the stock side, the CAC40 keeps failing at my TREND zone of 3403. France’s stock market remains in crash mode (> 20% peak to trough decline for the YTD)

THE HEDGEYE DAILY OUTLOOK - bpem1

 

ASIAN MARKETS

ASIA: ugly breakdowns in both the Hang Seng (-2.5%) and KOSPI (1.5%) overnight; both remain bearish on the Hedgeye TREND duration

THE HEDGEYE DAILY OUTLOOK - bpam1

 

MIDDLE EAST

THE HEDGEYE DAILY OUTLOOK - me

The Hedgeye Macro Team

Howard Penney

Managing Director