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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - November 7, 2011

After the biggest 1 month short squeeze ever, welcome to November where King Dollar has returned to its bullish 6 month TREND.  As we look at today’s set up for the S&P 500, the range is 58 points or -3.45% downside to 1210 and 1.18% upside to 1268. 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - hrmsv

 

THE HEDGEYE DAILY OUTLOOK - hrmsp

THE HEDGEYE DAILY OUTLOOK - bpgm1

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -636 (-1939) 
  • VOLUME: NYSE 861.48 (-14.04%)
  • VIX:  30.16 -1.11% YTD PERFORMANCE: +69.92%
  • SPX PUT/CALL RATIO: 1.57 from 1.55 (+0.98%)

 

CREDIT/ECONOMIC MARKET LOOK:

TREASURIES – bond yields have been front-running equity investors for all of 2011 and that didn’t change in either US Treasury yields or European sovereigns during October’s stock market beta chase. UST 10 yr yields back into a Bearish Formation with TRADE line of support (2.12%) breaking last week (that’s why we bought TLT back) and now testing 2.00% so the masses will have to pay attention.

  • TED SPREAD: 44.26
  • 3-MONTH T-BILL YIELD: 0.01%
  • 10-Year: 2.06 from 2.09    
  • YIELD CURVE: 1.84 from 1.85

 

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:40 a.m.: Fed’s Rosengren speaks in Boston
  • 11:30 a.m.: U.S. to sell $29b 3-mo., $27b 6-mo. bills
  • 3 p.m.: Consumer credit, est. $5.20b, prior (-9.50b)

WHAT TO WATCH:

  • Italian benchmark yields climbed to a euro-era record; pressure grew on PM Silvio Berlusconi to resign
  • Greek PM George Papandreou agreed to step down as premier to allow creation of a national unity government
  • U.S. House will probably “move” on infrastructure bill this year, Speaker John Boehner said Sunday.
  • NBA makes ultimatum to players with Nov. 9 deadline
  • Senate will begin consideration of motion to proceed to H.R.674, to amend IRS code of 1986 to repeal imposition of 3% withholding on certain payments to vendors by govt entities

COMMODITY/GROWTH EXPECTATION

                                                                                                             

THE HEDGEYE DAILY OUTLOOK - dcommv

 

MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:

  • Bangkok Tourists Vanish on Floods Leaving Hotel Bars Empty
  • Papandreou to Step Down in Accord on Greek Unity Government
  • Hedge Funds Curb Wagers for First Time in a Month: Commodities
  • China PMI, Inflation Signal Rate Cut Unlikely: Chart of the Day
  • Hedge Funds Bet Against Gas as Stockpiles Surge: Energy Markets
  • Gold Climbs to Six-Week High as European Concerns Spur Demand
  • Oil Trades Near Three-Month High as Europe Tackles Debt Crisis
  • Evraz Plc Rises as Russia’s Largest Steelmaker Relocates to U.K.
  • Copper Drops on Europe Debt-Crisis Concern Before Italy Vote
  • German Gold Reserves ‘Untouchable’ for EFSF, Roesler Says
  • Norilsk’s U.S. Premium Widens as Buyback Ends: Russia Overnight
  • Freeport’s Grasberg Workers Refuse 35% Wage-Rise Offer
  • Australian Wheat Exports Seen Jumping 15% on Bumper Crop
  • Copper Falls as Economic Slowdown May Curb Demand: LME Preview
  • Oil Falls From Three-Month High in N.Y, as Euro, Equities Slide
  • Commodities May Rise 6% in Next Three Weeks: Technical Analysis
  • Viterra Bonds Erase Gains on Shareholder Rebuff: Canada Credit
  • Copper Drops for a Second Day on European Debt-Crisis Concern
  • Rubber Falls to Two-Week Low as Thai Floods Threaten Factories

CURRENCIES

THE HEDGEYE DAILY OUTLOOK - dcurrv

EUROPEAN MARKETS

EUROPE – the percentage losses don’t tell this morning’s story of risk – with bearish TREND zones intact, now the immediate-term TRADE lines for the DAX (6068) and CAC (3191) have snapped this morning. All the while Italian bond yields are making all-time highs (6.68% on 10s) - now that the G20 meetings are gone, there really is no catalyst to keep Europe afloat.

  • UK house prices (1.8%) y/y vs consensus (2.3%), prior (2.3%) -- Halifax
  • EuroZone Nov Sentix (21.2) vs consensus (20.0), prior (18.5)
  • EuroZone Sep Retail Sales (1.5%) y/yvs consensus (0.5%), prior revised (0.1%) from (1.0%)


THE HEDGEYE DAILY OUTLOOK - bpem1

 

ASIAN MARKETS

CHINA – both the Shanghai Composite and Hang Seng failed hard at TREND line resistance levels of 2562 and 20341, respectively last night; importantly, this comes ahead of October data from China which should continue to decelerate, sequentially.

  • Japan September index of coincident indicators 88.9, (1.4 pts) m/m. Index of leading indicators 91.6, (2.2 pts) m/m.

THE HEDGEYE DAILY OUTLOOK - bpam1

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - me

 

MOST POPULAR MIDDLE EAST HEADLINES FROM BLOOMBERG

  • Syrian Forces Kill 22; Arab League Calls Emergency Meeting
  • Doha Bank Considers 2012 Acquisition in Emerging Market
  • Iran on Verge of Building Nuclear Weapon, Washington Post Says
  • Huawei Confirms MTN Irancell Sales, Denies Censorship Role
  • Russia’s Lavrov Opposed to Possible Israeli Strike Against Iran
  • IAEA Says Foreign Expertise Has Brought Iran to Threshold of Nuclea
  • Israel's Warnings on Iran Get Quiet Nods in Gulf
  • Iran on Verge of Building Nuclear Weapon, Washington Post Says
  • 'Military op vs Iran to jeopardize stability of entire region'
  • Aramco Cuts Asia Oil Differentials, Lifts U.S.: Persian Gulf Oil
  • Iran on threshold of nuclear capability: Report
  • Billionaire Facing Death Threats Says Egypt Risks Becoming Iran
  • British Firm With Links to William Hague Sells 'Protester-tracking' P
  • Iran on Verge of Building Nuclear Weapon: Washington Post Link
  • Ehud Barak Refuses to Rule Out Military Strike Against Iran
  • Al Jazeera: CIA veteran: Israel to attack Iran in fall
  • Russia: Any strike against Iran would be "very serious mistake"

The Hedgeye Macro Team

Howard Penney

Managing Director