TODAY’S S&P 500 SET-UP – March 14, 2012
As we look at today’s set up for the S&P 500, the range is 30 points or -2.07% downside to 1366 and 0.08% upside to 1397.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: 1813 (2178)
- VOLUME: NYSE 907.12 (40.92%)
- VIX: 14.80 -5.37% YTD PERFORMANCE: -36.75%
- SPX PUT/CALL RATIO: 1.42 from 1.36 (4.41%)
CREDIT/ECONOMIC MARKET LOOK:
STOCKS – fascinating, but maybe not surprising, that the lowest “quality” countries in the world are leading the upside this morning (Japan +1.5%, Greece +2.6%, Romania +1.5%). China and Hong Kong closed down -2.6% and -0.2% post the “stress test” squeeze into the US market close. We should hang out up here in the nosebleed seats, until we don’t – new SPX range = 1.
BONDS – kaboom! 2-yr US Treasury yields are only up about +33% in 10 days, so there’s really no Global Macro interconnected risk with this Bernanke pancake plan, is there? Only if you are long anything Bonds, Gold, or FX – 10yr absolutely ripped after it crossed my 2.03% line. This is one of the biggest off-sides 1-day moves I’ve ever seen in Global Asset Class attribution.
- TED SPREAD: 39.24
- 3-MONTH T-BILL YIELD: 0.08%
- 10-Year: 2.20 from 2.13
- YIELD CURVE: 1.84 from 1.78
MACRO DATA POINTS (Bloomberg Estimates):
- 7:00am, MBA Mortgage Applications, week of Mar. 9 (prior - 1.2%
- 8:30am, Import Price Index (M/m), Feb., est. 0.6% (prior 0.3%)
- 8:30am, Current Acct Balance 4Q, est. -$115.0b (prior -$110.3b)
- 10am, Bernanke speaks in Nashville, Tenn. at Independent Community Bankers convention
- 1:00pm, U.S. to sell $13b 30-yr bonds (reopening)
GOVERNMENT:
- British PM David Cameron visits White House, holds joint press conference with President Obama
- House not in session, Senate meets
- Senate Agriculture Committee holds hearing to develop a 2012 farm bill. 10am
- Senate Foreign Relations Committee hears from actor George Clooney on Sudan and South Sudan. 10am
- Senate Finance Committee holds hearing on proposal to establish permanent normal trade relations with Russia. 10am
- Supreme Court not in session
WHAT TO WATCH:
- Rick Santorum won Alabama, Mississippi presidential primaries, strengthening his status as Mitt Romney’s main challenger; Romney won Hawaii’s caucuses: AP
- Apple said to be subpoenaed by FTC as part of antitrust probe of Google, seeking information on how company incorporates the search engine on iPhone, iPad
- Fed yesterday said 15 of 19 banks passed stress tests; JPMorgan, Wells Fargo raised dividends, share purchases after getting approval while Citigroup will resubmit capital plan
- Boeing to pay Air India $500m in compensation because of delays in delivering 27 on-order 787 Dreamliners
- Carlyle, Onex Group seeking to take Allison Transmission Holdings public at valuation almost triple what they paid
- BofA, JPMorgan, three other banks agreed to pay $25m to NY to resolve some monetary claims over use of mortgage database after reaching $25b national settlement on foreclosure practices
- Senate will vote today on two-year, $109b bill to fund highway construction, mass transit
- Roche gets second FTC information request on Illumina deal
- Yahoo! put CFO Tim Morse on board of Alibaba to fill position vacated by Jerry Yang when he stepped down in Jan.
- U.S. budget deficit shortfall for 2012 will be $1.2t, ~$93b more than forecast two months ago, CBO said in report yesterday
- Five biggest European telecoms may face investigation by EC, FT says
EARNINGS:
- Lin TV (TVL) 7:30am, $0.20
- Marcus (MCS) 7:45am, NA
- Vera Bradley (VRA) 4pm, $0.47
- Youku (YOKU) 4pm, $0.05
- Guess? (GES) 4:05pm, $1.04
- Power Corp of Canada (POW CN) 4:17pm, $0.55
- Semafo (SMF CN) 4:50pm, $0.13
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
- Anglo’s Diamonds Seen as M&A Turnoff for Glencore: Commodities
- Copper Drops as China Signals Housing-Market Curbs Will Remain
- Oil Declines on Forecast U.S. Supply Rose to Six-Month High
- Gold Seen Heading for 12th Annual Advance on Investor Hoarding
- Gold Drops as Economic Recovery Curb’s Metal’s Investment Demand
- Palm Oil to Climb to Year High as Cooking-Oil Supply Drops
- YPF Given Five Days to Retract Argentine Province Price Increase
- Soybeans Reach Six-Month High on Supply Concern, China Demand
- IEA Predicts Bumpy Ride for Oil Prices Amid Non-OPEC Supply Cuts
- Vekselberg Crisis Warning Spurs Rusal Yield Surge: Russia Credit
- Wheat Stockpiles in Australia Seen at Record 10.5 Million Tons
- Dubai Oil Draws Near to Brent on Iran, Asian Use: Energy Markets
- Copper Stocks at ‘Critical Level’ Signal Rise: Chart of the Day
- Gold Seen Heading for 12th Annual Advance
- Coffee Reaches One-Week Low as Supply May Improve; Sugar Drops
- Indian Funds Best Gold Deal as Producers Trail: Riskless Return
- Gazprom Trips in India as Shale Upends Asia Gas Markets: Energy
CURRENCIES
CURRENCIES – so the Japanese Yen is crashing (down -9.1% in 2 months) and now the Euro is back into a Bearish Formation. The best news we have here, but only for Americans, is that Strong Dollar is potentially back (until Qe4 whispers come on a 50bps SPY down move). But the globally interconnected risk to a sustained strong dollar (Gold hammered) is tangibly evident.
EUROPEAN MARKETS
ASIAN MARKETS
MIDDLE EAST
The Hedgeye Macro Team