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