TODAY’S S&P 500 SET-UP - November 17, 2011
As we look at today’s set up for the S&P 500, the range is 28 points or -1.04% downside to 1224 and 1.22% upside to 1252.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: -1594 (+795)
- VOLUME: NYSE 918.72 (+17.7%)
- VIX: +33.51 +7.3% YTD PERFORMANCE: +88.79%
- SPX PUT/CALL RATIO: 2.54 from 1.51 (+68%)
CREDIT/ECONOMIC MARKET LOOK:
TREASURIES – KM is long both the Long-bond (TLT) and Growth Slowing (Treasury Flattener, FLAT) and have been using an immediate-term TRADE target on 10yr yields of 1.98% - we’re there this morning, so the gross exposure call now is to sell some Treasuries and start allocating assets to US Equities. Take your time.
- TED SPREAD: 46.60
- 3-MONTH T-BILL YIELD: 0.00%
- 10-Year: 2.00 from 2.00
- YIELD CURVE: 1.75 from 1.76
MACRO DATA POINTS (Bloomberg Estimates):
- 8:30am: Jobless claims, est. 395k (prior 390k)
- 9:45am: Bloomberg Consumer Comfort, est. -50.4 (prior -51.6)
- 10am: Philadelphia Fed, est. 9.0 (prior 8.7)
- 10am: Freddie Mac mortgage rates
- 10:30am: EIA natural gas storage change
- 12:30pm: Fed’s Pianalto speaks on economy in Kentucky
- 12:50pm: Fed’s Dudley speaks on economy at West Point
- 1pm: U.S. to sell $11b 10-yr TIP reopening
- TBA: Mortgage Delinquencies (prior 8.44%)
WHAT TO WATCH:
- Spain sold 3.56b euros of 10-yr bonds with avg yield of almost 7%, the most since the euro’s creation
- Builders probably began work on fewer homes in Oct; median est. starts fell 7.3% to 610k annual rate
- Energy Secretary Steven Chu said final decisions on Solyndra were mine”; Chu to testify before House panel this morning
- American Airlines pilot talks may recess for 2 wks with sides “far apart”
- Northern Rock agreed to be sold to Virgin Money Holdings for $1.2b
- AT&T’s Glenn Lurie says co. in talks to start selling Nokia’s WP smartphones next year
- Guggenheim Partners said to seek buyers for Claymore Investments
- MF Global subpoenas said to be issued by Chicago U.S. Attorney
- Gartner sees inventory correction in semiconductor industry to damp sales at least thru 2011
- House Democratic group urging Congress to overhaul the tax code by lowering corporate rates, removing breaks and easing the burden on U.S. companies’ overseas operations
- Obama said cutting the U.S. budget won’t reduce the nation’s military and economic commitments to the Asia-Pacific region
- Olympus pledges $3.3b debt cut, will report earnings by Dec. 14
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
- Candy-to-Fuel Demand Cuts Oil Inventory to ‘75 Low: Commodities
- Gold Demand Rose 6% in Third Quarter on European Debt Crisis
- Oil Falls From Five-Month High on Signs Europe Crisis Spreading
- Gold Imports by India Drop 20% as Record Prices Deter Buyers
- Buffett’s Burlington Exploits Boxed Asia Grain Up 29%: Freight
- Copper Declines Most in a Week as European Crisis May Spread
- Gold Falls in New York, London as Equities Drop May Spur Sales
- Wheat Falls for Second Day as Syria Rejects Tender on Prices
- Sugar Falls to Seven-Week Low on Indian Exports; Cocoa Slides
- Gold Top Pick at Morgan Stanley as Europe Debt Spurs Demand
- Soybean Imports by Japan May Drop 11%, Ministry Says
- Severstal CEO Mordashov Says Company Deserved U.S. Vehicle Loan
- Orange Juice May Climb on ‘Cup and Handle’: Technical Analysis
- U.S. Crude Discount Versus Brent May End Soon: Chart of the Day
- COMMODITIES DAYBOOK: Candy-to-Fuel Demand Cuts Oil Inventories
- China’s Gold Jewelry Demand Gains 13% to Make It World’s Largest
- Japan Restricts Some Rice Shipments After Radiation Found
CURRENCIES
EUROPEAN MARKETS
SPAIN – their bond auction was a mess (3.6B of 10yr fiat at 6.97%) and now both Spanish and French Equities are moving to immediate-term TRADE oversold alongside the Euro. That Goldman call to buy the Euro last week is now officially the worst FX call on Old Wall St of the year; 1.34 last.
ASIAN MARKETS
ASIA – we’ve been the 2011 Bear on Growth Slowing and now the high-frequency data is slowing even faster than we thought; I haven’t seen the legacy media lead w/ this yet and I don’t expect them to, but Singapore just printed a DOWN -16.2% y/y export # for OCT vs what was already startling at -4.6% in SEP. Indian stocks joined HK in crash mode overnight.
MIDDLE EAST
The Hedgeye Macro Team
Howard Penney
Managing Director