TODAY’S S&P 500 SET-UP – April 5, 2012
As we look at today’s set up for the S&P 500, the range is 15 points or -0.43% downside to 1393 and 0.65% upside to 1408.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
SENTIMENT – whether it was our go to move (selling gross Equity/Commodity/Beta exposure at VIX 14-15) or the II Bull/Bear Spread survey which hit a fresh 3yr high before yesterday’s fall (+3,150bps Bull Spread = 53% Bulls; 21.5% Bears), it was all out there. Plenty Hedge Funds got squeezed out of their short positions right at another intermediate-term top.
- ADVANCE/DECLINE LINE: -1838 (-949)
- VOLUME: NYSE 832.49 (1.87%)
- VIX: 16.44 4.98% YTD PERFORMANCE: -29.74%
- SPX PUT/CALL RATIO: 1.89 from 1.67 (13.17%)
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 39.79
- 3-MONTH T-BILL YIELD: 0.07%
- 10-Year: 2.18 from 2.22
- YIELD CURVE: 1.84 from 1.88
MACRO DATA POINTS (Bloomberg Estimates):
- 7:30am: Challenger Job Cuts (Y/y), Mar.
- 8:30am: Jobless Claims, week of Mar. 31, est. 355k (prior 359k)
- 9:10am: Fed’s Bullard speaks in St. Louis
- 9:45am: Bloomberg Consumer Comfort, week of Apr. 1
- 10am: Freddie Mac mortgage rates
- 10:30am: EIA natural gas
- NOTE: Friday: U.S. unemployment/payrolls report, 8:30am
GOVERNMENT:
- Mitt Romney, Rick Santorum hold campaign events in Pennsylvania, site of Republican primary on April 24
- President Obama signs “Jumpstart Our Business Startups” Act, 2pm
WHAT TO WATCH:
- Gap, Macy’s among U.S. retailers reporting March comp sales, Retail Metrics est. +3.3% gain; Zumiez beat est., Costco missed
- U.S. sales of Nokia Lumia 900, which debuts this weekend, seen at below 1m in 1st 3 mos: analysts
- U.S. said to be near settlement with Simon & Schuster, HarperCollins, Hachette on e-book price contracts with Apple
- Phil Falcone said he may consider voluntary bankruptcy for LightSquared
- AT&T faces strike this weekend from 40,000 workers
- IBM bought 20% stake in the technology unit of Brazilian billionaire Eike Batista
- Blackstone agreed to buy 69 warehouses valued at about $800m from Dexus Property Group
- Dick’s Sporting to make GBP20m investment in U.K.’s JJB Sports, entitled to nominate up to 2 non-exec. directors to JJB board
- Toshiba, Hynix considering joint bid for Elpida, Nikkei says; Micron Technology seen as preferred bidder
- JPMorgan CEO Jamie Dimon used his annual letter to shareholders to rail against “contrived” and confusing financial rules that he said may stymie lending
- Rambus appeals $3.95b California antitrust trial loss to Hynix, Micron
- Great Wolf gets $6.25/shr cash offer from KSL Capital, topping Apollo’s bid
- DirectTV reaches agreement to carry Tribune television stations, ending 4-day blackout of 23 local outlets
- 3D Systems to replace Taleo in S&P Smallcap 600 effective at end of day
- FRIDAY: U.S. may report tomorrow that employers added 205k jobs, unemployment rate remains at 8.3%
EARNINGS:
- Pier 1 Imports (PIR) 6 a.m., $0.48
- CarMax (KMX) 7:30 a.m., $0.40
- Constellation Brands (STZ) 7:30 a.m., $0.39
- RPM International (RPM) 7:30 a.m., $0.01
- Schnitzer Steel Industries (SCHN) 8:30 a.m., $0.32
- WD-40 (WDFC) 4 p.m., $0.54
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
COMMODITIES – kaboom! USD + UST Yields up = Gold down. That we know. What we don’t know is how quickly Deflating The Inflation will help Global Consumption. We’ve seen this big beta Commodity crash 3x coming out of Q1 in the last 4yrs. We call it the Correlation Risk, and it matters. Energy stocks (XLE) = down -7.8% for April to date!
- Gold Traders Bearish for First Time in 2012 on Fed: Commodities
- Oil Trades Near Seven-Week Low on Renewed European Debt Concern
- Cocoa Extends Drop as Ivory Coast Rains Return; Sugar Retreats
- World Food Prices Climb for Third Month as Oilseed Costs Rise
- Soybeans Rise, Set for Second Weekly Gain on Brazil Crop Concern
- Gold May Gain as Drop to Near Three-Month Low Spurs Purchases
- Palm-Oil Stockpiles in Malaysia May Reach Seven-Month Low
- Cooking-Oil Imports by India Surge on Local Prices, Tax Risk
- Copper May Advance as Economists Project Firm U.S. Employment
- India Billions Secure Afghan Mines in Challenge to China Drive
- China May Approve Vale Vessels to Stop in Ports: Daily
- World Cotton Output to Fall After Prices Plunged, Ecom Says
- BP Pursues Namibia Crude Amid No Known Discovery of Oil: Energy
- Gold Traders Bearish for First Time in 2012
- Palm Oil Heads for Fifth Weekly Advance on Soybean Crop Concerns
- Rubber May Decline 8% as Rally Loses Steam: Technical Analysis
- Ship Smog Seen as Next Target to Clear Hong Kong Skies: Freight
CURRENCIES
EUROPEAN MARKETS
GERMANY – one of the most critical leading indicators for Global Growth Slowing is the DAX and the correction there is instructive (-5.7% from the March high) given that Germany’s fiscal and employment situation is much better than the USA’s right now. The immediate-term TRADE line for the DAX is now broken (6978); for the USA, the equiv SP500 line = 1390.
ASIAN MARKETS
MIDDLE EAST
The Hedgeye Macro Team