TODAY’S S&P 500 SET-UP – January 4, 2012
Raging European bears are begging for bad news and they just aren’t getting it 4 days into the year, yet… KM
As we look at today’s set up for the S&P 500, the range is 18 points or -0.79% downside to 1267 and 0.62% upside to 1285.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: +1659 (+1813)
- VOLUME: NYSE 855.12 (+45.42%)
- VIX: 22.97 -1.84% YTD PERFORMANCE: -1.84%
- SPX PUT/CALL RATIO: 1.88 from 1.49 (+26%)
CREDIT/ECONOMIC MARKET LOOK:
10YR – really bullish for German Bunds to see 4.06B of 10yr paper printed 4bps below 10yr UST’s (1.93% on Bunds vs 1.97% on USTs). Keith is watching 10yr UST’s like a hawk for a confirmation that Growth’s Bottom (2011 Slowdown) is in. He'd need to see a sustained breakout > 2.03% to sell TLT and keep ramping up Global and US Equity exposure (moved to 12% Global Equities yest).
- TED SPREAD: 57.23
- 3-MONTH T-BILL YIELD: 0.02%
- 10-Year: 1.97 from 1.89
- YIELD CURVE: 1.64 from 1.70
GLOBAL MACRO DATA POINTS (Bloomberg Estimates):
- 7am, MBA Mortgage Applications, Dec. 30
- 7:45am/8:55am: ICSC/Redbook weekly retail sales
- 10am: Factory Orders, Nov., est. 2.0% (prior -0.4%)
- 11:30am: U.S. to sell $30b 4-week bills
- 4:30pm: API inventories
- Eurozone Dec preliminary CPI +2.8% y/y vs consensus +2.8% and prior +3.0%
- Eurozone Dec Final services PMI 48.8 vs consensus 48.3 and prior 48.3
WHAT TO WATCH:
- President Obama to discuss economy at high school in Shaker Heights, Ohio, 1:15pm
- Yahoo may name CEO this morning; PayPal president Scott Thompson a leading candidate: AllThingsD
- Mitt Romney beat Rick Santorum by 8 votes in Iowa caucuses, each capturing less than 25%; Ron Paul third, Rick Perry considering whether to continue campaign
- Bullish sentiment decreases to 49.5% from 50.5% in the latest US Investor's Intelligence poll
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
- Citigroup Sues Hedge Fund Manager in Singapore Over Gold Losses
- China’s Wen Jiabao Sees ‘Relatively Difficult’ First Quarter
- Raw-Materials Rebound Seen as Economy Skirts Slump: Commodities
- Oil Trades Near 8-Month High on Iran Tension, Shrinking Supply
- Exxon in Talks to Restructure Stake in Japan Refining Unit
- Gold May Advance for a Fourth Day on Outlook for Asian Demand
- Dalian to ‘Seriously Consider’ Vale-Ship Protests, Owners Say
- Oil Trades Near 8-Month High on Iran Tension, Shrinking Supply
- Vedanta Plans India Caustic Soda Unit, Cost-Cuts as Prices Dip
- Copper Drops as Europe Crisis Boosts Demand Concern; Tin Slumps
- Chesapeake Comes Up Short of Investment-Grade: Corporate Finance
- Hong Kong Keeps Ban on Some Poultry Imports Due to Avian Flu Tie
- Copper Falls as Societe Generale Says Prices May Drop Almost 10%
- Gold Demand in India Is ‘Moderate,’ Rajesh Exports Says
- Dow Climbs to Highest Since July, Oil Surges on Manufacturing
- Saudi Arabia May Cut Oil Premiums for February From Record Highs
- Silver Will Lead Gains in 2012 Among Raw Materials: Table
CURRENCIES
EUROPEAN MARKETS
GERMANY – shaping up on the long side after really impressive employment data this wk (6.8% unemployment rate for DEC amidst the mayhem) and a better than bad Services PMI this morn (52.4 DEC vs 52,7 NOV). German 10yr bond auction was solid too - KM
ASIAN MARKETS
ASIA – after 2 solid up days to start 2012, the 3rd was not a charm – China down -1.4%, HK -0.8%, and India -0.5% reminds us that Equity market bottoms are processes, not points. December data implies growth slowing at a slower rate in Asia (but it’s still slowing).
MIDDLE EAST (HEADLINES FROM BLOOMBERG)
- U.S. Spurns Iran’s Demand to Keep Aircraft Carrier Out of Gulf
- U.A.E. Deposit Fall May Squeeze Banks as Debt Looms: Arab Credit
- Oil Trades Near 8-Month High on Iran Tension, Shrinking Supply
- Afghan Taliban Takes Step Toward Peace Talks to End War With U.S
- Huawei’s Work in Iran May Violate U.S. Sanctions, Lawmakers Say
- U.S. Defense Strategy Plan Focuses on Thwarting China, Iran
- Oil Trades Near 8-Month High on Iran Tension, Shrinking Supply
- Aldar’s May 2014 Bond Yield Drops to Record on Asset Sale
- Arabtec Wins 561 Million Dirhams Contract at Dubai Airport
- Saudi Arabia May Cut Oil Premiums for February From Record Highs
- Iran’s Nuclear Fuel Rod Isn’t Military Threat, U.S. Analysts Say
- Dana Gas Bond Yield Jumps Most in Two Weeks Ahead of Meeting
- OPEC Crude Production Rises to Three-Year High, Survey Shows
- Kuwait Oil Tanker Will Award Contracts to Daewoo, Al-Anba Says
- Gold Rallies Most in 10 Weeks on Iran, Dollar; Wien Sees $1,800
- Biggest Hedge Fund in Ships Sees Frozen Gas Beating Oil: Freight
- Jarir Fourth-Quarter Profit Jumps 21% on Phone, Laptop Sales
The Hedgeye Macro Team
Howard Penney
Managing Director