THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – January 12, 2012


As we look at today’s set up for the S&P 500, the range is 22 points or -1.20% downside to 1277 and 0.50% upside to 1299. 

 

SECTOR AND GLOBAL PERFORMANCE

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EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 259 (-1374) 
  • VOLUME: NYSE 759.12 (-9.72%)
  • VIX:  21.05 +1.74% YTD PERFORMANCE: -10.04%
  • SPX PUT/CALL RATIO: 2.18 from 1.40 (+55.71%)

 

CREDIT/ECONOMIC MARKET LOOK:


INFLATION – there’s a big difference b/t Q2 of 2011 levels of global food/energy inflation and what you are seeing around the world now – a sequential DEFLATION OF THE INFLATION = big Q1 Macro Theme for us that Keith went through in the slide deck yesterday. This should continue to auger bullish for both Global Consumption and for the stocks that react to it. Germany’s CPI benign for DEC at 2.1%.

 

  • TED SPREAD: 56.63
  • 3-MONTH T-BILL YIELD: 0.02%
  • 10-Year: 1.92 from 1.90
  • YIELD CURVE: 1.70 from 1.68

 

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:00am: BOE announces rates, est. 0.5% (prior 0.5%)
  • 7:45am: ECB announces interest rates, est. 1% (prior 1%)
  • 8:30am: Advance Retail Sales, Dec., est. 0.3% (prior 0.2%)
  • 8:30am: Jobless Claims, week Jan. 7, est. 375k (prior 372k)
  • 8:30am: USDA Quarterly grain stocks, WASDE monthly
  • 9:45am: Bloomberg Consumer Comfort, week Jan. 8 (prior -44.8)
  • 10am: Freddie Mac 30-yr mortgage
  • 10am: Business Inventories, Nov., est. 0.4% (prior 0.8%)
  • 1pm: U.S. to sell $13b 30-yr bonds (reopen)
  • 2pm: Monthly Budget Statement, Dec., est. -83.7b (prior -78.1b)

 

WHAT TO WATCH: 

  • ECB likely to maintain interest rates at 1%; watch for comments by Mario Draghi at 8:30am ET
  • Bank of England rates decision, 7am ET
  • Sales at U.S. retailers may have risen 0.3% in Dec. on holiday discounts, economists est.
  • Vestas Wind Systems to cut 2,335 jobs worldwide; says 1,600 U.S. posts at risk as tax credit expires
  • Kinder Morgan said to prepare to start talks on selling off parts of El Paso’s oil and gas E&P unit in case it can’t find a buyer for the whole division.
  • President Obama said to reprise previously rejected deficit- reduction plans and tax increases on the wealthy as part of his FY2013 budget
  • Infosys cuts dollar sales forecast, citing global economy
  • Banks may seize more than 1m U.S. homes this year, up 25% Y/y, RealtyTrac said
  • U.S. may block Omnicare’s $716m bid for PharMerica: NYPost
  • Deutsche Bank executives said to decide to pursue sale of asset-management units after they were satisfied with early interest in the business
  • RBS to cut 3,500 jobs as it jettisons equities, mergers units U.S. Chamber of Commerce President Thomas Donohue delivers
  • “State of American Business” address, 9am
  • American Bankers Association holds news conference on consensus economic forecast, monetary policy predictions, 10am
  • No IPOs expected to price

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

COPPER – the Doctor’s signal that we gave you yesterday was a pure one = breakout > intermediate-term TREND line support of 3.45/lb and obviously getting squeezed to immediate-term TRADE overbought here (3.59 last), but this is one of the epicenters of what’s been a royal short squeeze of everything that didn’t work in NOV/DEC (Financials, Basic Materials, Pandora – the list is long).

  • China May Idle Most Aluminum Capacity Since 2009: Commodities
  • Oil Options Signal Doubt Iran Crisis Will Worsen: Energy Markets
  • LME’s Board in ‘Robust Debate’ After Decision to Raise Fees
  • World Food Prices Declined by 2.4% in December, UN’s FAO Says
  • China’s Central Bank May Be Behind Gold Import Rise, Pixley Says
  • Oil Climbs From Two-Week Low on Nigeria Disruption, Iran Tension
  • Coffee Reaches 4-Week High on Vietnam Bean Hoarding; Cocoa Drops
  • Copper Advances for Third Day as Spain’s Bond Sale Exceeds Goal
  • Silver Coin Sales May Signal Bear-Market End: Chart of the Day
  • EU Sugar Export Applications Exceeded the Limit by 2.5 Times
  • Soybeans Gain as USDA May Cut Estimate for World Oilseed Stocks
  • Freepoint Commodities Plans Asian Expansion After European Push
  • China Trade Spurs $115 Billion Australia Building Boom: Freight
  • COMMODITIES DAYBOOK: China May Idle Third of Aluminum Capacity
  • Gold Gains for Third Day as Dollar’s Drop May Spur More Demand
  • Plunging Bearish Gold Options Signal Rally: Chart of the Day
  • European States Said to Vote on Suspending Sugar-Import Tenders

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CURRENCIES

 

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EUROPEAN MARKETS


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ASIAN MARKETS

CHINA – the biggest Global Macro risk management shift of the last 3 wks has been both China’s high-frequency economic data and the reactions in both the China local and H-shares markets; China reported a CPI level of +4.1% DEC (inline w/ our estimate) – that’s down 10bps vs last month and, more importantly = 15 month low. Chinese stocks +3.5% for 2012 YTD and we’re long them (CAF) + EWH.

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MIDDLE EAST


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The Hedgeye Macro Team