01/26/12 07:42 AM EST

THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – January 26, 2012

As we look at today’s set up for the S&P 500, the range is 23 points or -1.36% downside to 1308 and 0.37% upside to 1331.

SECTOR AND GLOBAL PERFORMANCE

EQUITY SENTIMENT:

US DOLLAR – with the back-to-back US Dollar Debauchery statements from Obama and Bernanke, the US Dollar has broken its immediate-term TRADE line of support; now the question is will it hold its $78.03 intermediate-term TREND line of support (EUR/USD TREND resist = 1.34)? Last night when KM was on Kudlow, Romney said he’d fire Bernanke – KM would too. Enter the debate.

INFLATION – Bernanke fans can say whatever they want; bottom line is that market prices don’t lie; Keynesians do – Bernanke telling savers 0% is their rate-of-return until he gets fired has created an absolute 24hr melt up in both Inflation Expectations (TIPS) + Commodity Inflation –Copper and Gold just went vertical to $3.90/lb and $1720/oz en route to test bubble highs?

91% CASH – We obviously had very little patience for Qe2’s policy to inflate and got very bearish on this Feb-Apr of 2011 because INFLATION SLOWS GROWTH. If oil, copper, and cattle prices keep ripping like this, there is a very high probability that all of Global Growth slows, sequentially, in late JAN early FEB. Not good.

ADVANCE/DECLINE LINE: 1561 (1325)
VOLUME: NYSE 830.46 (11.82%)
VIX: 18.31 -3.17% YTD PERFORMANCE: -21.75%
SPX PUT/CALL RATIO: 1.87 from 1.78 (5.06%)

CREDIT/ECONOMIC MARKET LOOK:

TED SPREAD: 52.10
3-MONTH T-BILL YIELD: 0.04%
10-Year: 1.95 from 1.99
YIELD CURVE: 1.74 from 1.77

MACRO DATA POINTS (Bloomberg Estimates):

8:30am: Chicago Fed, Dec., est. -0.10 (prior -0.37)
8:30am: Durable Goods, Dec., est. 2.0% (prior 3.7% (revised))
8:30am: Jobless Claims, week of Jan. 21, est. 370k from 352k
9:45am: Bloomberg Consumer Comfort, week of Jan. 22
10am: Freddie Mac 30-yr mortgage
10am: Leading Indicators, Dec., est. 0.7% from 0.5%
10am: New Home Sales (M/m), Dec., est. 1.6% from 1.6%
10am: New Home Sales, Dec., est. 321k from 315k
10:30am: EIA Natural Gas
11am: Kansas City Fed, Jan., est. 2 (prior -4)
1pm: U.S. to sell $29b 7-yr notes

GOVERNMENT:

Treasury Secretary Tim Geithner attending World Economic Forum in Davos, Switzerland
Quinnipiac University releases poll of Florida voters
Republican presidential candidates face off in Jacksonville, Fla., in debate hosted by CNN, 8pm
Obama to speak in Las Vegas, Denver, Detroit as part of on 3-day swing
House not in session, Senate in session
9:30am: Senate meets to consider motion to proceed to H.J.Res.98, on increasing the debt limit

WHAT TO WATCH:

President Obama said to plan offering proposal to overhaul U.S. corporate tax system in Feb.
Treasury Secretary Geithner said he doesn’t expect Obama to ask him to stay in office if president re-elected Roche may need to raise $5.7b bid for Illumina to succeed; shrs closed 24% above Roche’s offer Sara Lee plans to buy full ownership of Senseo coffeemaker trademark from partner Philips
Pentagon said to plan proposal to spend ~$9.2b to buy 29 Lockheed F-35 jets in fiscal 2013 budget, 13 fewer than previously planned
Talks on a debt swap to avert a Greek default resume today
Orders for U.S. durable goods may have gained in Dec. for 3rd month, economists est.
Citigroup’s costs will be $2.5b-$3b lower next year as bank embarks on re-engineering, CEO Vikram Pandit says in BTV interview in Davos
BofA impeding investigation of loan modification practices by negotiating settlements with borrowers who must agree to keep them secret, not criticize bank in exchange for cash payments, loan relief, Arizona officials say
E*Trade Financial CEO sees loan portfolio declining by $600m-$650m per qtr in 2012: DJ
BofA investment bankers may get 75% of their year-end bonuses in stock: WSJ
Tablet-computer shipments more than doubled in 4Q, reflecting demand for Apple’s iPad, Amazon’s Kindle: Strategy Analytics
World Economic Forum coverage at DAVOS