THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – January 25, 2012

As we look at today’s set up for the S&P 500, the range is 21 points or -0.81% downside to 1304 and 0.79% upside to 1325. 

 

SECTOR AND GLOBAL PERFORMANCE

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EQUITY SENTIMENT:

US DOLLAR – We #SOTU Word Scored the entire speech last night and the US Dollar was not mentioned once. #FairShare had 5 mentions and #Capitalism = 0. Just words, but they matter – Even the NYT and BBC ran #FairShare in their headline this morning. It’s just not good for our Strong Dollar case. Clinton and Regan both rolled w/ Strong Dollar, Strong Consumption (ie 71% of US GDP).

TREASURIES – stocks lost all of their Pre-#SOTU speech Apple momentum and have gone red this morning as UST Bond Yields fall a few beeps and the Yield Curve compresses by 3 basis points d/d. If you had to score the speech on Growth, it didn’t score well either. 10yr UST Yields of 2.03% is the most important Global Macro line in our model right now. If we snap it, I’ll get more defensively positioned.

GLOBAL EQUITIES – at about 6PM last night we thought the futures had it right and Apple was going to bust a move taking the SP500 to a fresh YTD high – no dice. Instead we are looking at what’s called an Outside Reversal from Monday (testing new highs intraday of 1322, failing, and closing at/below prior closing high). Asian, European, and Latin American stocks are at risk of doing the same.

  • ADVANCE/DECLINE LINE: 236 (-262) 
  • VOLUME: NYSE 742.71 (2.74%)
  • VIX:  18.91 1.29% YTD PERFORMANCE: -19.19%
  • SPX PUT/CALL RATIO: 1.78 from 2.24 (-20.54%)

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 52.35
  • 3-MONTH T-BILL YIELD: 0.03%
  • 10-Year: 2.04 from 2.06
  • YIELD CURVE: 1.81 from 1.83

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:00am: MBA Mortgage Apps, week of Jan. 20
  • 10:00am: House Price Index (M/m), Nov., est. 0.0% (prior - 0.2%)
  • 10:00am: Pending Home Sales (M/m), Dec., est. -1.0% (prior 7.3%)
  • 10:30am: DoE inventories
  • 11:30am: U.S. to sell $35b 5-yr notes
  • 12:30pm: FOMC rate decision, est. unchanged at 0.25%
  • 2pm: FOMC to release projections of economy, fed funds rate
  • 2:15pm: Fed’s Bernanke to hold press conference

GOVERNMENT:

      • Rep. Gabrielle Giffords to resign today
      • House, Senate in session
      • 8am: House Oversight subcommittee hears from General Motors CEO Dan Akerson and NHTSA Administrator David Strickland on Volt vehicle fires

WHAT TO WATCH: 

  • More than 2,500 business, political leaders gather at World Economic meeting this week. More Davos coverage
  • Roche Holding made hostile bid of $44.50-shr, or $5.7b for Illumina to bolster cancer-drug sales
  • Apple shares rose in German trading after profit doubled, putting it on track to surpass Exxon Mobil as world’s most valuable company
  • President Obama pushed drilling for gas in shale rock and support for cleaner energy in State of Union
  • Obama also proposed new plan to help borrowers reduce monthly mortgage payments
  • Facebook trading on secondary markets may be suspended for 3 days
  • FOMC plans to release a policy statement at 12:30 p.m. in Washington after 2-day meeting. Central bank for the first time will release forecasts from participants for the main interest rate at 2pm, Bernanke plans to hold a press conference 2.15pm
  • Apollo Capital, Riverstone Capital said to consider $7b joint bid to acquire energy assets from Kinder Morgan: New York Post
  • German business confidence jumps to 5-mo. high
  • U.K. economy shrank more than forecast in 4Q, leaving Britain on brink of recession
  • Ericsson drops to 3-yr low after earnings miss est.
  • Starwood Hotels President Matthew Avril said in interview in Davos occupancy rates in U.S. hotels are back above their level before the financial crisis started
  • International investors say capitalism is in crisis, with almost one in three backing radical changes to the system: Bloomberg survey

     EARNINGS:

      • Wellpoint (WLP) 6 a.m., $1.11
      • TE Connectivitiy (TEL) 6 a.m., $0.70
      • Praxair (PX) 6:01 a.m., $1.37
      • Textron (TXT) 6:30 a.m., $0.34
      • Xerox (XRX) 6:45 a.m., $0.33
      • Motorola Solutions (MSI) 7 a.m., $0.82
      • United Technologies (UTX) 7 a.m., $1.46
      • Dover (DOV) 7 a.m., $1.04
      • General Dynamics (GD) 7 a.m., $1.99
      • Corning (GLW) 7 a.m., $0.33
      • RLI (RLI) 7 a.m., $1.13
      • Rockwell Automation (ROK) 7 a.m., $1.21
      • US Airways Group (LCC) 7 a.m., $0.03
      • MeadWestvaco (MWV) 7:05 a.m., $0.26
      • Abbott Laboratories (ABT) 7:24 a.m., $1.44
      • Boeing (BA) 7:30 a.m., $1.01
      • Delta Air Lines (DAL) 7:30 a.m., $0.38
      • Hess (HES) 7:30 a.m., $1.26
      • Molex (MOLX) 7:30 a.m., $0.41
      • Occidental Petroleum (OXY) 7:30 a.m., $1.96
      • St Jude Medical (STJ) 7:30 a.m., $0.84
      • Automatic Data Processing (ADP) 7:30 a.m., $0.68
      • Allegheny Technologies (ATI) 7:30 a.m., $0.54
      • Southern (SO) 7:30 a.m., $0.30
      • Exelon (EXC) 8 a.m., $0.88
      • WW Grainger (GWW) 8 a.m., $2.12
      • New York Community Bancorp (NYB) 8 a.m., $0.27
      • ConocoPhillips (COP) 8:30 a.m., $1.80
      • Varian Medical Systems (VAR) 4 p.m., $0.75
      • LSI (LSI) 4:01 p.m., $0.11
      • Owens-Illinois (OI) 4:02 p.m., $0.46
      • Symantec (SYMC) 4:04 p.m., $0.41
      • Lam Research (LRCX) 4:05 p.m., $0.30
      • Netflix (NFLX) 4:05 p.m., $0.54
      • SanDisk (SNDK) 4:05 p.m., $1.26
      • Citrix Systems (CTXS) 4:05 p.m., $0.76
      • First Cash Financial Services (FCFS) 4:05 p.m., $0.69
      • E*Trade Financial (ETFC) 4:05 p.m., $0.21
      • Raymond James Financial (RJF) 4:08 p.m., $0.53
      • Stanley Black & Decker (SWK) 4:20 p.m., $1.29
      • Noble (NE) 4:33 p.m., $0.49
      • Murphy Oil (MUR) 4:47 p.m., $1.41
      • Jacobs Engineering Group (JEC) Aft-mkt, $0.70

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Gold Proves Safest as Goldman Forecasts Record: Riskless Return
  • Oil Falls a Second Day as U.S. Supply Gain Counters Fuel Demand
  • Copper Falls From Four-Month High on Debt-Crisis Growth Threat
  • Uralkali Ready to Cut Potash Output to Shield Price: Commodities
  • Corn Poised for Longest Winning Run Since December on Argentina
  • Cocoa Gains as Ivory Coast Supplies May Be Curbed; Coffee Falls
  • Rubber Climbs to 3-Month High on Yen Drop, Thai Price Support
  • Gold Drops a Second Day in London as Physical Demand Slows
  • Ethanol May Face Second Down Year on Oversupply: Energy Markets
  • Natural Gas Glut Foils Junk Utility Bond Rally: Credit Markets
  • Kazakhstan, Mongolia Increased Bullion Reserves in December
  • IMF Forecasts Bigger Declines in Non-Oil Commodities for 2012
  • Corn Isn’t Chicken Feed on South African Farms: Chart of the Day
  • COMMODITIES DAYBOOK: Uralkali Ready to Cut Potash Production

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CURRENCIES


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EUROPEAN MARKETS


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ASIAN MARKETS

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MIDDLE EAST


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The Hedgeye Macro Team