Hedgeye - 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

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

CURRENCIES

EUROPEAN MARKETS

ASIAN MARKETS

MIDDLE EAST

The Hedgeye Macro Team