SP500 Levels, Refreshed: Bite the Bullet


The Thunder Bay Bull, our CEO Keith McCullough, is on the road in New York meeting with subscribers and walking them through our Q1 2012 investment themes.  Accompanying him is our Asia Analyst, Darius Dale, more of a bear, at least in body type, given that he is a former Yale offensive lineman.  (Unfortunately for him, he is also a Seahawks fan.)  As it relates the stock markets, we are neither bearish nor bullish, but merely trying to play the game in front of us. 

 

So, what has lead to this bullish shift.

 

1. Employment is improving on the margin – The most recent data point supporting improving employment is the regional and state employment survey from the BLS, which was released earlier today.  In aggregate versus the September data, 37 states saw their unemployment rates decline and 10 states saw their unemployment rates stay flat.  The national rate is 8.5% and 0.9% less than December 2010.

 

2. Europe is stabilizing – The key risk to global markets and global economic growth in 2012 was Europe’s deteriorating sovereign debt situation.  Clearly, Europe is not out of the woods, but the credit and intra-bank markets are much less stressed in Europe than they were a month ago.  The data point we highlighted this morning on our morning call (ping if you don’t have dial in information) was that the most recent Spanish 3 to 6 month bill auction was completed at an average yield of 1.847%.  This was a dramatic improvement from the last auction on December 20th that was completed at a yield of 2.435%.

 

 3. Growth is bottoming – A key data point for us in this regard is the price of copper, which we consider a leading indicator for global growth.  The price of copper is up 10.90% YTD and now bullish TRADE and TREND in our models.  The most critical factor driving copper pricing has been the acceleration of copper imports to China, which hit a new monthly high in December (up more than 70% year-over-year).

 

Clearly, many risks remain, but as the other eponymous Ontario native titled one his songs, sometimes you just have to “bite the bullet” and play the game in front of you.

 

Our updated SP500 levels are in the chart below.

 

 

Daryl G. Jones

 

Director of Research

 

 

  SP500 Levels, Refreshed: Bite the Bullet - sp.01.24


 


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more