Hedgeye - THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – May 3, 2012

As we look at today’s set up for the S&P 500, the range is 24 points or -0.81% downside to 1391 and 0.90% upside to 1415.

SECTOR AND GLOBAL PERFORMANCE

EQUITY SENTIMENT:

ADVANCE/DECLINE LINE: on 5/02 NYSE -377
- Down from the prior day’s trading of 908
VOLUME: on 5/02 NYSE 780.19
- Increase versus prior day’s trading of 1.13%
VIX: as of 5/02 was at 16.88
- Increase versus most recent day’s trading of 1.69%
- Year-to-date decrease of -27.86%
SPX PUT/CALL RATIO: as of 05/02 closed at 2.69
- Up from the day prior at 1.74

CREDIT/ECONOMIC MARKET LOOK:

TED SPREAD: as of this morning 39
3-MONTH T-BILL YIELD: as of this morning 0.08%
10-Year: as of this morning 1.93

Unchanged from prior day’s trading

YIELD CURVE: as of this morning 1.67

Unchanged from prior day’s trading

MACRO DATA POINTS (Bloomberg Estimates):

7:30am: Challenger Job Cuts (Y/y), Apr.
7:45am: ECB rate decision
8:30am: Nonfarm Productivity, 1Q P, est. -0.6% (prior 0.9%)
8:30am: Unit Labor Costs, 1Q P, est. 2.8% (prior 2.8%)
8:30am: Jobless Claims, week of Apr. 28, est. 379k (prior 388k)
9:45am: Bloomberg Consumer Comfort, week of Apr. 29
10:00am: ISM Non-Manf., Apr., est. 55.3 (prior 56)
11:00am: Fed’s Williams speaks on economy in Santa Barbara, CA
1:00pm: Fed’s Lockhart speaks on economy in Santa Barbara, CA * 1:30pm: Fed’s Plosser speaks on economy in Santa Barbara, CA

GOVERNMENT:

U.S. Treasury Secretary Tim Geithner, Secretary of State Hillary Clinton attend opening session U.S.-China Strategic and Economic Dialogue in Beijing
President Obama hosts Cinco de Mayo reception
House, Senate not in session
Quinnipiac University officials discuss latest poll of “swing state” voters in Florida, Ohio and Pennsylvania, 10am

WHAT TO WATCH:

April retail sales expected to gain 1.5%: Retail Metrics
European Central Bank may leave benchmark interest rate at record low 1%, economists est. Rate decision at 7:45am, press conference 45 minutes later
JPMorgan to take stake of almost 30% in France’s Technicolor, in move supported by Technicolor management: Les Echos
U.K.’s Sage said to be in talks on putting its accounting software for small businesses on Microsoft’s Azure cloud platform: FT
ISM’s index of non-manufacturing industries probably cooled to 4-month low of 55.3 from 56 in March, economists est.
Nexon said to be in talks to distribute Electronics Arts’s next “FIFA Online” title in Asia rather than buy the company
Carlyle sold 30.5m shrs at $22 each, less than $23-$25 range
Temasek selling $2.4b in BOC, China Construction Bank
CME raises margins for non-hedged accounts to meet CFTC rule
BP wins tentative approval for $7.8 billion oil-spill pact
Billionaire James Packer may sell his investment in Foxtel, held through his control of Consolidated Media Holdings, to help fund bid for Echo Entertainment: Daily Telegraph
Philip N. Duff, founder of FrontPoint Partners, said to be struggling to attract assets for his latest money-management venture
Lockheed Martin won’t lead a team to compete against Hewlett-Packard for $4.5b Navy network deal; may increase chances HP will hold onto its biggest U.S. govt. contract
One of Edvard Munch’s four versions of “The Scream” set record for work of art at auction when it sold at Sotheby’s last night for $119.9m

EARNINGS:

Lamar Advertising (LAMR) 6am, $(0.14)
Cimarex Energy (XEC) 6am, $1.27
Cigna (CI) 6:30am, $1.30
Fortress Investment Group (FIG) 6:30am, $0.10
Gildan Activewear (GIL CN) 6:33am, C$0.21
NRG Energy (NRG) 6:45am, $(0.08)
Teradata (TDC) 6:55am, $0.56
American Tower (AMT) 7am, $0.74
Alpha Natural Resources (ANR) 7am, $(0.06)
BCE (BCE CN) 7am, C$0.73
Cardinal Health (CAH) 7am, $0.88; Preview
Apartment Investment & Management (AIV) 7am, $0.37
HCA Holdings (HCA) 7am, $0.98
Lear (LEA) 7am, $1.20
GE Energy (OGE) 7am, $0.33
Jean Coutu Group PJC (PJC/A CN) 7am, C$0.24
Plains Exploration & Production (PXP) 7am, $0.62
Elizabeth Arden (RDEN) 7am, $0.04
Viacom (VIAB) 7am, $0.89
Xylem (XYL) 7am, $0.36
Beam (BEAM) 7:01am, $0.47
ANSYS (ANSS) 7:03am, $0.66
WPX Energy (WPX) 7:15am, $(0.02)
SCANA (SCG) 7:22am, $1.03
El Paso (EP) 7:29am, $0.28
Airgas (ARG) 7:30am, $1.07
General Motors (GM) 7:30am, $0.85; Preview
Hyatt Hotels (H) 7:30am, $0.09
Progress Energy (PGN) 7:30am, $0.65
Sealed Air (SEE) 7:30am, $0.21
Scripps Networks Interactive (SNI) 7:30am, $0.60
Sara Lee (SLE) 7:30am, $0.25; Preview
El Paso Pipeline Partners (EPB) 7:44am, $0.61
Apache (APA) 8am, $3.07
Level 3 Communications (LVLT) 8am, $(0.52)
Pinnacle West Capital (PNW) 8am, $(0.07)
Valeant Pharmaceuticals International (VRX CN) 8am, $0.97
CenterPoint Energy (CNP) 8:15am, $0.33
Cablevision Systems (CVC) 8:15am, $0.18
Manulife Financial (MFC CN) 8:22am, C$0.37
Denbury Resources (DNR) 8:30am, $0.38
MGM Resorts International (MGM) 8:30am, $(0.16)
Sempra Energy (SRE) 9am, $0.98
SNC-Lavalin Group (SNC CN) 9:05am, C$0.52
Great-West Lifeco (GWO CN) 12:38pm, C$0.52
CareFusion (CFN) 4pm, $0.45
Mohawk Industries (MHK) 4:01pm, $0.55
LinkedIn (LNKD) 4:02pm, $0.09
First Solar (FSLR) 4:04pm, $0.48
Fluor (FLR) 4:05pm, $0.87
Kraft Foods (KFT) 4:05pm, $0.56
SandRidge Energy (SD) 4:05pm, $0.02
American International Group (AIG) 4:15pm, $1.13
Northeast Utilities (NU) 4:15pm, $0.67
CF Industries Holdings (CF) 4:18pm, $4.95
Southwestern Energy (SWN) 5pm, $0.32
Public Storage (PSA) 5:03pm, $1.42
Eldorado Gold (ELD CN) 5:41pm, C$0.17
Pembina Pipeline (PPL CN) 6:12pm, C$0.25

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

OIL – most important Global Macro move of the week right now is Brent Oil snapping my intermediate-term TREND support line of $119.17; Oil has been the big holdout of the major commodities deflating; if this holds, its bullish on the margin for Consumers (and Consumption Equities). The Divergence their yesterday (XLE -1.6% vs XLY up agrees).

Crude Oil Extends Biggest Decline in Two Weeks on Jobs, Supplies
Iran Embargo Impossible to Meet as Ships Depend on Blended Fuel
Chesapeake Alone on Wall Street in Gas-Rally Bailout: Energy
Barrick Gold Spending Faster Than Earnings Rise: Commodities
CME Raises Margins for Non-Hedged Accounts to Meet CFTC Rule
Gold Declines on Concern Slowing European Growth to Boost Dollar
Copper Falls for Second Day as Slowing Economies May Curb Demand
World Food Prices Fell in April as Cost of Dairy, Grain Declined
Corn Set to Gain on Speculation China May Boost U.S. Purchases
Shanghai Exchange to Start Silver Futures Trading From May 10
Palm Oil Slumps to Six-Week Low as Weather May Aid U.S. Soybeans
Real Yields Topping Asia as Rains to Cool Prices: India Credit
New Europe Ports Seen Unprofitable With Slump Deepening: Freight
Indonesia Ban on Unprocessed-Metal Exports to Proceed as Planned
Sugar Falls to 19-Month Low on India’s Exports; Coffee Declines
Proposed Rule Would Weaken Mad Cow Protections, Ranch Groups Say

CURRENCIES

US DOLLAR – Strong Dollar = Stronger Consumption, globally; that’s the only way out of this mess and it doesn’t take much. Yesterday’s +0.35% move in the USD Index was more of an arrest of its decline (down -6 of the last 7 wks) than a rip higher. If you see a sustainable breakout > $80 USD Index, Oil is going to come down a lot faster.

EUROPEAN MARKETS

SPAIN – we learn a lot more about bear markets on the bounces than on the declines; the 2012 crash/decline in Spain’s IBEX is trivial to consider in the rear-view mirror (down -23% from YTD peak yesterday, making a fresh crisis low which matters vs 2011); the bounce would have to get > 7498 for us to change our view from bearish to bullish.

ASIAN MARKETS

MIDDLE EAST

The Hedgeye Macro Team