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
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
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
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)
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
MIDDLE EAST
The Hedgeye Macro Team
Howard Penney
Managing Director