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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – February 7, 2012


As we look at today’s set up for the S&P 500, the range is 23 points or -1.44% downside to 1325 and 0.27% upside to 1348. 

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

THE HEDGEYE DAILY OUTLOOK - 3

 

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -540 (-2253) 
  • VOLUME: NYSE 687.23 (-24.90%)
  • VIX:  17.76 3.86% YTD PERFORMANCE: -24.10%
  • SPX PUT/CALL RATIO: 1.78 from 1.29 (37.98%)

CREDIT/ECONOMIC MARKET LOOK:


USD – attempted to have an up day yesterday, then got pounded into the close; the US Dollar Index really needs to hold its intermediate-term TREND line of 78.69 support or Gold, Oil, etc can go a lot higher.

  • TED SPREAD: 45.71
  • 3-MONTH T-BILL YIELD: 0.07%
  • 10-Year: 1.91 from 1.91
  • YIELD CURVE: 1.68 from 1.68

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:45am/8:55am: Weekly retail sales
  • 10am: Fed’s Bernanke testifies to Senate Budget Committee
  • 10am: JOLTs job openings
  • 10am: IBD/TIPP economic optimism, est. 48.6 (prior 47.5)
  • 11:30am: U.S. to sell 4-week bills, $26b 52-week bills
  • 1:00pm: U.S. to sell $32b 3-yr notes
  • 3:00pm: Consumer Credit, Dec., est. $7b (prior $20.374b)

 GOVERNMENT

  • Republican presidential caucuses in Minnesota, Colorado, non-binding primary in Missouri
  • President Barack Obama speaks at White House Science Fair
  • House, Senate in session:
    • House Energy Committee marks up North American Energy Access Act, 9 a.m
    • House Appropriations panel considers GAO, CBO budget, 9:30am
    • House-Senate Conference meets on payroll tax-cut extension, 10am
    • House Education and Workforce Committee holds hearing President Obama’s recess appointments to the NLRB, 10am
    • Joint Economic Committee holds hearing on payroll tax- cut extension, unemployment benefits, 2:30pm

WHAT TO WATCH: 

  • Glencore agreed to buy Xstrata for $62b in the biggest mining  takeover
  • California, New York AGs still haven’t signed on to a proposed mortgage-foreclosure settlement
  • Fed Chairman Bernanke testifies before Senate Budget Committee on outlook for U.S. economy, monetary policy, 10am
  • Goldman Sachs said to be seeking outside investors for its REDI Technologies trading-software business
  • Oracle seeks new trial in suit against SAP: court filing
  • Toyota raised profit forecast for year on rebounding sales in the U.S.
  • UBS 4Q profit trails est.; investment bank posts second straight loss
  • SEC said to be near a proposal to shore up the $2.7t money- market fund industry, WSJ says

EARNINGS

  • Becton Dickinson (BDX) 6 a.m., $1.17
  • Emerson Electric (EMR) 6:45 a.m., $0.51
  • Broadridge Financial Solutions (BR) 7 a.m., $0.13
  • Church & Dwight (CHD) 7 a.m., $0.51
  • Scotts Miracle-Gro (SMG) 7 a.m., $(1.21)
  • TransDigm Group (TDG) 7 a.m., $1.25
  • AGCO (AGCO) 7:30 a.m., $1.33
  • Harman International Industries (HAR) 7:30 a.m., $0.74
  • Coca-Cola (KO) 7:30 a.m., $0.77
  • Perrigo Co (PRGO) 7:47 a.m., $1.15
  • Louisiana-Pacific (LPX) 8 a.m., $(0.20)
  • Magellan Midstream Partners (MMP) 8 a.m., $0.95
  • Martin Marietta Materials (MLM) 8:12 a.m., $0.39
  • Bell Aliant (BA CN) 8:19 a.m., C$0.38
  • Saputo (SAP CN) 9:37 a.m., C$0.63
  • Netgear (NTGR) 4 p.m., $0.64
  • Panera Bread (PNRA) 4 p.m., $1.42
  • Axis Capital Holdings (AXS) 4:01 p.m., $0.44
  • Cerner (CERN) 4:01 p.m., $0.53
  • Life Technologies (LIFE) 4:01 p.m., $1.04
  • Western Union (WU) 4:01 p.m., $0.40
  • Buffalo Wild Wings (BWLD) 4:01 p.m., $0.67
  • Waste Connections (WCN) 4:04 p.m., $0.35
  • CBRE Group (CBG) 4:05 p.m., $0.43
  • ValueClick (VCLK) 4:05 p.m., $0.40
  • Solera Holdings (SLH) 4:05 p.m., $0.68
  • Lincoln National (LNC) 4:10 p.m., $1.00
  • Two Harbors Investment (TWO) 4:10 p.m., $0.42
  • Walt Disney (DIS) 4:15 p.m., $0.72
  • Hartford Financial (HIG) 4:15 p.m., $0.60
  • RenaissanceRe Holdings (RNR) 4:30 p.m., $1.04
  • CYS Investments (CYS) 5:01 p.m., $0.51
  • RAL Holdings (RAH) 5:04 p.m., $1.37

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

OIL – so the price of Brent Oil is at $115.95 this morning = up +6% since the #SOTU and #BernankTax on the week of Jan 23rd; since we know that inflation slows real-consumption growth, we think being long energy (XLE) and anything inflation really (as opposed to being long Consumer Discretionary (XLY) like we were before Jan 26th) is the right sector shift.

  • Farmers Plan Biggest Crops Since 1984, Led by Corn: Commodities
  • Corn Falls as U.S. May Plant Most Since 1944; Wheat Declines
  • Glencore’s 2011 Trading Earnings Slide on Cotton Plunge, Metals
  • Copper Falls for Second Day as Chinese Output Growth May Slow
  • Sugar Falls as Brazil’s Production May Increase; Cocoa Drops
  • Oil Trades Near Six-Week Low on Forecast of Rising U.S. Supplies
  • Gold May Decline as Dollar Strengthens Amid Greece Bailout Talks
  • Sugar May Fall 20% This Year Before Second Consecutive Surplus
  • Russia May Not Need to Limit Grain Exports, Producers Union Says
  • Billion-Ton Coal Market Looms as India Increases Sea Cargoes
  • Glencore, Xstrata Deal to Squeeze Japan Coal After Fukushima
  • Carbon Capture Projects Imperiled by Worst-Case Scenario: Energy
  • Tanker Rates Seen at Four-Year High as Refineries Shut: Freight
  • Copper Stockpile Drop May Herald China Revival: Chart of the Day
  • Glencore Agrees to Buy Xstrata for $41 Billion in Shares
  • Distressed Ship Owners to Rise as Rates Plunge, Fitch Says

THE HEDGEYE DAILY OUTLOOK - 4

 

 

CURRENCIES


THE HEDGEYE DAILY OUTLOOK - 5

 

 

EUROPEAN MARKETS


THE HEDGEYE DAILY OUTLOOK - 6

 


ASIAN MARKETS


ASIA – follow the bouncing macro ball – China fails at TREND line resistance yesterday (down 1.7% overnight); Singapore’s PM warns of a Chinese “rough landing” ahead of this week’s China data; and Glenn Stevens at the RBA refused to cut Aussie interest rates last night = inflation expectations in Asia rising like the chart of Brent Oil.

 

THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 8

 

 

 

The Hedgeye Macro Team

 


THE M3: S'PORE TOURISM; SLOT RULES

The Macau Metro Monitor, February 7, 2012

 

 

SINGAPORE TOURISM VISITORS JUMP TO RECORD 13 MILLION IN 2011 AS CASINOS LURE GAMBLERS Washington Post

A record number of visitors came to Singapore last year as new casinos lured gamblers, the Singapore tourism authority said. Visitor arrivals rose to 13.2MM, up 13% from 2010.  About 2.6MM Indonesians visited Singapore last year, followed by tourists from China, Malaysia and Australia.  Arrivals from China surged 35% in 2011.

 

NEW RULES FOR SLOTS IN MACAU Macau Business

The Gaming Inspection and Coordination Bureau has released new Macau-specific technical standards for electronic gaming machines.  Among the new rules, it is stated that “any electronic gaming machine [that] plays a game that is recognizable to be a simulation of a live casino game ... must have an identical RTP [return to player rate]”.  The new rules will come into effect on Friday but a grace period applies until October 1.



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Corridors of Power

“Inspired by a common creed, the young Keynesians sought each other out in the corridors of power.”

-Nicholas Wapshott

 

Picture that. I just love the drama associated with that quote by Nicholas Wapshott in Chapter 11 of “Keynes Hayek” titled Keynes Takes America. He was referencing meetings these guys would have in Washington at the National Planning Association in the early 1930s.

 

A National Planning Association!

 

Back to the Global Macro Grind

 

Evidently we are now centrally planning a tax on not only American Savers, but Global Consumers too. Nice.

 

The price of Brent Oil is up almost +6% ($115.95/barrel this morning) since The Bernank’s decision to pander to the Corridors of Power and adopt his conflicted and compromised 0% rate or return for American Savers through 2014.

 

This is not new, but since President Obama took office in January of 2009:

  1. The US Dollar Index = down -8.3%
  2. The Price of Oil = up +165.8%

Now before you get all heated for my using the name Obama (my wife and I voted for him – team vote), long-time readers of my morning rants will recall that I was equally critical of President Bush’s Keynesian Policies to Inflate. Democrat or Republican in this country, if you’ve been economically “advised” in the last decade within the Corridors of Power, you’ve been Keynesed.

 

So how is that working out for you?

  1. The net jobs added during the Bush/Obama decade in America = 0
  2. The Price of Oil = +460% in the last decade (since February 2002)
  3. Your Savings Account has been given The Gold Finger (Gold up for 11 consecutive years)

But say nothing of these common Keynesian Creeds because political life is easier that way. Or is it? And for whom?

 

Broadening our horizons beyond the World Bank and IMF’s headquarters (right next to the Fed in Washington, DC), what’s happening in the rest of the world right now (particularly in the East) is that, ironically enough, 80 years later, young economists are gathering at their own meetings – Hayekians, Thatcherites, and Chaos Theorists – all of them. They don’t believe in National Planning Boards.

 

Look at what’s going on outside of the Corridors of Washington Power this morning:

  1. The Prime Minister of Singapore is warning of a “rough landing” in China if food/energy inflation re-accelerates
  2. The head of the Reserve Bank of Australia, Glenn Stevens, refused to cut interest rates on his citizenry’s savings accounts
  3. Greece

What about Greece? It’s literally the first time in 2012 that all 3 of the Most Read headlines on the Bloomberg machine are about Greece this morning. Now that the Greek stock market is down -54% since February of last year when your local Keynesian strategist was telling you Greece was a “one-off” and Global Growth was “going to be fine”, I guess it matters…

 

Or does it?

 

Bloomberg news also reports this morning that the “Irish Urge Children to Leave Amid Job Losses.” Great.

 

The Global Zeitgeist on these macro matters is fairly straight forward. No one trusts that any one of these aging Keynesians will get it right in the end. That’s one of the many reasons why the US Labor Participation Rate in last week’s glorified employment report hit a 30-year low. People are giving up.

 

Keynes nailed it – in the long-run, all of the politicians will be dead. That said, in the short-run the rest of us have to live.

 

Larry Kudlow asked me last night where I see the immediate-term economic pressure (growth expectations falling as inflation expectations are rising). With Energy stocks (XLE – we’re long inflation expectations) up +1.2% on the day and the SP500 flat, it was fairly obvious yesterday. That was good for my P&L – not good for the country.

 

Long-term US Treasury yields have been signaling Growth Slowing since Ben Bernanke made his move on January 25th. Just when free markets were getting ready to bust a move above my key intermediate-term TREND line of 2.03% resistance on the 10-year, boom – we got Bernanked.

 

Being Keynesed or Bernanked may be good for short-term stock sector and commodity market inflations, but they’re not good for the long-term economic health of this or any other consumption led economy.

 

My immediate-term support and resistance ranged for Gold, Oil (Brent), EUR/USD, Energy (XLE), 10-year UST Yield, and the SP500 are now $1, $112.56-115.93, $1.30-1.32, $71.93-73.76, 1.80-1.96%, and 1, respectively.

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Corridors of Power - Chart of the Day

 

Corridors of Power - Virtual Portfolio




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The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.28%
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