THE HEDGEYE DAILY OUTLOOK
TODAY’S S&P 500 SET-UP - December 2, 2011
US Futures spike as short sellers are now in Pain Trade mode while the “long-onlys” chase beta. Always a powerful combo in the immediate-term – also the biggest downside risk after the immediate-term squeeze makes a lower-high. As we look at today’s set up for the S&P 500, the range is 25 points or -0.93% downside to 1233 and 1.08% upside to 1258.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: -610 (-2916)
- VOLUME: NYSE 855.83 (-48.67%)
- VIX: 27.41 -1.40% YTD PERFORMANCE: +54.42%
- SPX PUT/CALL RATIO: 1.54 from 2.33 (-33.69%)
CREDIT/ECONOMIC MARKET LOOK:
TREASURIES: the most important quote today into/out of jobs rpt = 10yr yields; big TRADE line resistance at 2.12%
- TED SPREAD: 53.74
- 3-MONTH T-BILL YIELD: 0.01%
- 10-Year: 2.11 from 2.08
- YIELD CURVE: 1.84 from 1.83
MACRO DATA POINTS (Bloomberg Estimates):
- 8:30am: Change in nonfarm payrolls: est. 125k (prior 80k)
- 8:30am: Unemployment rate: est. 9.0% (prior 9.0%)
- 9am: Fed’s Fisher speaks in Dallas
- 10am: Fed’s Plosser speaks in Philadelphia
- 12:30pm: ECB’s Stark gives speech in NY
- 1pm: Baker Hughes rig count
- 1:30pm: Fed’s Rosengren speaks on economy in Boston
WHAT TO WATCH:
- Germany’s Merkel rejected joint euro-area bonds, central bank action while pushing for closer economic ties and tougher budget enforcement
- U.K. judge ordered Apple to disclose to HTC Corp. which features of its competing mobile phones may infringe Apple’s European patents by today
- Dallas Fed President Richard Fisher, St. Louis Fed President James Bullard say central bank doesn’t need to lower discount rate: WSJ
- Market no longer thinks major US banks are too big to fail - WSJ
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
COPPER – The Doctor looks exactly like European Stoxx because they have the same correlation to the USD. Copper climbs back above its immediate-term TRADE line of resistance this week of 3.47/lb and remains under TREND line resistance of 3.72/lb. Pick your European stock market and the TRADE/TREND setup is the same. Trade the new ranges.
- Oil Margins Falling as U.S. Fuel Import Era Ends: Energy Markets
- Copper Traders Bullish for First Time in Six Weeks: Commodities
- Commodities to Rally on ‘Cheap Money,’ Renaissance Predicts
- Crude Oil Rises Amid Middle East Tension, Heads for Weekly Gain
- U.S. Stocks Retreat After Rally as Spanish, French Bonds Advance
- Palladium Set for 12% Weekly Gain, Most in Year; Beats Gold
- Monsanto Corn May Be Failing to Kill Bugs in 4 States, EPA Says
- Bank of Korea Boosts Gold Reserves for Second Time This Year
- Gold Gains in London, Heads for Weekly Jump After Bank Purchase
- Citigroup’s Base-Metal Research Head Thurtell Said to Leave
- Copper Extends Weekly Gain After U.S. Manufacturing Data
- Copper Stockpiles Drop to Lowest in 28 Months in Shanghai
- Palm Oil to Surge as Production Growth Decelerates, Mistry Says
- GFMS More Bullish on Palladium in 2012 on ‘Structural Deficit’
- Rio Tinto to Invest $2.7 Billion in Aluminum Smelter Upgrade
- Wheat Trims Biggest Weekly Gain Since August on Rising Supply
- Oil Falls First Time in Five Days as U.S. Jobless Claims Rise
- ICAP Names MF’s Pettit Global Head of Financial Futures, Options
- Cocoa Futures Fall as Goldman Cuts Forecast; Sugar, Coffee Drop
CURRENCIES
EUROPEAN MARKETS
EUROPE: Every market has taken out our immediate-term TRADE line of resist - TAILS remain bearish, but this insulates some downside, for now
ASIAN MARKETS
CHINA – Unfortunately, the Chinese economy doesn’t like the commodity inflation – this only compounds the already accelerating deceleration in sequential (Q4 vs Q3) Asian and European growth. China closed down another -1.1% overnight, right back to where it was pre the rate cut.
MIDDLE EAST
- Oil Margins Falling as U.S. Fuel Import Era Ends: Energy Markets
- ‘Dubai’ Lands in Karachi as Pakistanis Flock to 60-Store Complex
- EU Widens Iran Sanctions, Remains Split on Halt to Oil Purchases
- Islamists Electoral Rise Due to Failed Secularism: Pankaj Mishra
- EU Wimps Out on Oil Sanctions to Halt Iran’s Nuclear Drive: View
- Sukuk Borrowing Costs Rise Most Since May 2010: Islamic Finance
- U.S. Senate Approves Sanctions Aimed at Crippling Iran Oil Sales
- Saudi Arabia Poised for Record Heavy-Crude Premiums on Fuel Oil
- Lukoil May Buy Remaining 40% of Italy’s ISAB Refinery From ERG
- U.S. Senate Backs Sanctions Intended to Cripple Iran Oil Exports
- Emaar Said to Raise $800 Million Loan at a Discount to Its Sukuk
- MSCI to Say Whether U.A.E., Qatar Upgraded on Dec. 14
- OPEC to Boost Crude Exports on Asian Demand, Oil Movements Says
- Citigroup Deal Haunts Pandit as Saudis Claim $383 Million
- South Europe Wants Saudi Oil to Cover Iran Ban, Petromatrix Says
- Biden Seeks Turkey’s Help to Keep Up Pressure on Syria and Iran
The Hedgeye Macro Team
Howard Penney
Managing Director
