THE HEDGEYE DAILY OUTLOOK

THE HEDGEYE DAILY OUTLOOK

 

TODAY’S S&P 500 SET-UP - December 6, 2011

 

Another low-volume rally to a lower-high in US stocks as the interconnectedness of Asia’s slowdown gets ignored by consensus (so 2008).  Next catalysts (1) Chinese economic data for November (on Thursday) and (2) an ECB rate cut (also on Thursday).   Both should perpetuate what you see on your screen this morning (weaker Asian equities and weaker Euro).  As we look at today’s set up for the S&P 500, the range is 26 points or -1.84% downside to 1234 and 0.23% upside to 1260. 

 

SECTOR AND GLOBAL PERFORMANCE

 

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THE HEDGEYE DAILY OUTLOOK - hrmsp

 

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EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE:  +1681 (+1051) 
  • VOLUME: NYSE 892.77 (+2.29%)
  • VIX:  27.84 +1.16% YTD PERFORMANCE: +56.85%
  • SPX PUT/CALL RATIO: 1.52 from 1.67 (+8.97%)

 

CREDIT/ECONOMIC MARKET LOOK:

 

YIELDS – it’s trivial to realize that European bond yields continue to make a series of higher lows – that now includes German Bund Yields which are trading back up to 2.24% this morn (10s) and +18bps wider than USTs.  Spread risk remains our focus. UST yields are actually lower for the week to date with 10s down at 2.06%, signaling US Growth Slowing sequentially Q4 vs Q3

  • TED SPREAD: 53.90
  • 3-MONTH T-BILL YIELD: 0.01%
  • 10-Year: 2.04 from 2.05   
  • YIELD CURVE: 1.77 from 1.80

 

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:00 a.m.: AICPA releases quarterly CPA survey
  • 7:45 a.m./8:55 a.m.: ICSC/Redbook weekly retail sales
  • 10:00 a.m: IBD/TIPP Economic Optimism, est. 42.0, prior 40.6
  • 10:00 a.m: Fed’s Tarullo speaks at Senate Banking Committee
  • 11:30 a.m: U.S. to sell $35b 4-wk bills
  • 12:00 p.m: DoE short-term energy outlook
  • 4:30 p.m.: API inventories

 

WHAT TO WATCH: 

  • Dubai wants to renegotiate $10B in debt held by state, state-related companies – FT
  • NFL near media deals worth $3.2B/year for eight years, +60% on current deals – WSJ
  • Kraft Foods provides broad details for post-split plans – WSJ
  • MF Global CRO raised concerns to board about company's exposure to European sovereign debt – WSJ
  • Senate Democrats will seek another vote on a payroll tax cut for workers this week
  • Treasury Secretary Timothy Geithner meets with Italian Prime Minister Mario Monti in Milan
  • 1:00 p.m.: Obama speaks at Osawatomie High School in Kansas City, Mo.

 

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

TREASURIES: UST 10y yields actually down for the wk to date now at 2.06%; continues to signal consumption growth slows as oil rises

  • Meiji Holdings Slumps After Cesium Reported in Baby Food
  • ‘Beau’ Taylor Said to Lock Fund as Assets Top $1 Billion
  • Carmakers’ $7 Billion Platinum Bill Shrinking Glut: Commodities
  • Japan’s Gold-for-Bonds Offer Could Boost Return By 5.9 Times
  • Singapore Syndicated Lending Surges 91% to Record $38 Billion
  • End of Easy Mideast Oil Means Work for Exxon, BP: Energy Markets
  • Gold Drops Along With Stocks, Commodities on S&P Ratings Review
  • Oil Snaps Two-Day Gain as S&P Threatens Europe Debt Downgrades
  • Palm Oil Output in Malaysia May Drop as Peak Season Closes
  • Shanghai Exchange Seeks Institutional, Foreign Investors
  • Base Metals Decline After S&P Puts Europe on Downgrade Watch
  • South Korea GDP Expands 0.8%, More Than Initially Estimated
  • STX-Vale Mega-Ship to Be Moved at Brazil Port After Leak Found
  • Aluminum Fee to Japan Said Cut by Most in Two Years on Glut
  • Wheat Crop in Australia Set for Record, Swelling Supplies
  • Stocks Rise as Europe Fights Crisis; Euro, Oil Reverse Gains
  • Eagle Bulk Said to Discuss Restructuring Options With Jefferies
  • Bunge May Expand Palm Business Into China Next Year, White Says

 

THE HEDGEYE DAILY OUTLOOK - dcommv

 

CURRENCIES

 

EURO – big league failure at the immediate-term TRADE zone of 1.35-1.36 resistance, again, yesterday. We think the EU Summit is a liability now that expectations/hopes are so high – or is it fear? Tough to discern if institutional investors are more afraid of missing a “year-end rally” than understanding what it means if there is no Eurobond (i.e. money printing backstop to bail out German and French banks).

 

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EUROPEAN MARKETS


THE HEDGEYE DAILY OUTLOOK - bpem1

 

ASIAN MARKETS

 

ASIA – Chinese stocks down again overnight, taking out their lows from last week that were established prior to their rate cut (lower-lows) as the rest of Asia continues to print slowing economic data (PMIs) and countries cutting rates (Australia last night) are seeing their markets fall on that news (Australia down -1.3%). Get Growth Slowing right, you’ll ultimately get the stocks right.

 

 

 

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MIDDLE EAST (HEADLINES FROM BLOOMBERG)

  • Arab League Snubs Syria as U.S. Plans Talks With Opposition
  • End of Easy Mideast Oil Means Work for Exxon, BP: Energy Markets
  • BP Has Road Map in Citgo Case to Formula for Oil-Spill Fine
  • KNOC May Spend Up to $4 Billion Next Year to Buy Oil Assets
  • CIMB to Expand in Persian Gulf to Capture Sukuk: Islamic Finance
  • Dubai, State Entities Have $101.5 Billion Debt, Moody’s Says
  • Dubai May Restructure Some State-Company Bonds, FT Reports
  • Moody's: Debt profile of Dubai state-owned corporates has
  • Dubai Shares Drop Most in 2 Weeks on Debt Restructuring Report
  • U.A.E. Bank Loans Exceed Deposits for Second Time This Year
  • Most OPEC States Signal No Need to Alter Quota in Vienna (Table)
  • Taqa’s $1.5 Billion Bond Pricing Shows ‘Large’ Investor Demand
  • Emirates NBD Aims to Sell Islamic Bonds This Month, CEO Says
  • Nakheel Posts First-Half Net of $134 Million as Projects Resume
  • Investcorp Completes Sales of Accuity Holdings for $530 Million
  • Drake & Scull Saudi Unit Wins 352 Million Dirhams Contract
  • Gas Demand to Rise 60% by 2040, Surpass Coal Use, Tillerson Says
  • Dubai eyes refinancing of $10bn in state debt

 

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The Hedgeye Macro Team

Howard Penney

Managing Director