THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – May 4, 2012


As we look at today’s set up for the S&P 500, the range is 50 points or -1.91% downside to 1365 and 1.68% upside to 1415.   

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

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EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: on 5/03 NYSE -1194
    • Down from the prior day’s trading of -377
  • VOLUME: on 5/03 NYSE 844.17
    • Increase versus prior day’s trading of 8.20%
  • VIX:  as of 5/03 was at 17.56
    • Increase versus most recent day’s trading of 4.03%
    • Year-to-date decrease of -24.96%
  • SPX PUT/CALL RATIO: as of 05/03 closed at 1.57
    • Down from the day prior at 2.69 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: as of this morning 38
  • 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):

  • 8:30am: Nonfarm Payrolls, Apr., est. 160k (prior 120k)
  • 8:30am: Unemployment Rate, Apr., est. 8.2% (prior 8.2%)
  • 11:25am: Fed’s Williams keynote speech to California Bankers Association convention in Dana Point, CA
  • 11:30am: Fed’s Evans moderates panel on economic stability
  • 1pm: Baker Hughes rig count 

GOVERNMENT:

    • President Obama speaks to high school students in Va., 11:50am
    • House, Senate not in session
    • CFTC holds closed meeting on enforcement matters, 10am
    • CFPB Chief of Staff Meredith Fuchs discusses financial crisis at Forum for Sustainable and Responsible Investment, 11:05am
    • Treasury Secretary Tim Geithner and Secretary of State Hillary Clinton are in Beijing, attending U.S.-China Strategic and Economic Dialogue
    • U.S. Intellectual Property Enforcement Coordinator Victor Espinel speaks at Intl. Anti-Counterfeiting Coalition event, 9am
    • Postal Service board of governors meets on finances, 8:30am

WHAT TO WATCH: 

  • U.S. payrolls may have risen 160k in April as jobless rate remained 8.2%, according to economist ests.
  • Warren Buffett’s Berkshire Hathaway reports first-quarter earnings after the close of trading
  • Facebook said to meet today with its underwriters in New York to discuss planned IPO
  • Goldman Sachs, an AMR bondholder, said to be among creditors being lobbied by US Airways to back possible takeover bid
  • Yahoo! will review educational record of CEO Scott Thompson after investor Third Point, fighting for representation on company board, highlighted inaccuracy in his credentials
  • Wal-Mart’s board sued by California pension fund over mishandling of allegations co. bribed Mexican officials
  • Goldman Sachs said to plan starting electronic trading system for corporate bonds this month as bank adapts to regulatory changes, competition
  • RBS says it will pay back the last of its emergency aid from the U.K. government
  • Las Vegas Sands’s Singapore unit, Marina Bay Sands, said to have attracted Sumitomo Mitsui Banking, and about 10 other lenders to its S$4.6b loan to refinance debt
  • Data breach at Global Payments that may have exposed accounts to fraud may have affected at least 7m card accounts, exceeding earlier estimates: WSJ
  • CME Group requested and received 90-day extension for implementing margin changes for members announced May 2; rule will be enforced on Aug. 5
  • Juror in Oracle’s copyright-infringement trial against Google asked judge for guidance about not being able to reach unanimous verdict, raising possibility panel is deadlocked
  • BofA said to have held talks with lawyers for more than 1,000 former Merrill Lynch brokers, may lead to settlement costing hundreds of millions of dollars: WSJ
  • U.S. Air Force plans to restart competition on biggest defense contract, valued at as much as $6.9b, announced April 16 following protests from a dozen losing bidders
  • U.S. officials Hillary Clinton and Tim Geithner meet with Chinese leaders in Beijing
  • French Election, Chinese Trade, Buffett: Week Ahead May 5-12 

EARNINGS:

    • AES (AES) 6am, $0.27
    • AON (AON) 6:30am, $0.83
    • Buckeye Partners (BPL) 6:30am, $0.74
    • Spectra Energy (SE) 6:30am, $0.52
    • Sirona Dental Systems (SIRO) 6:30am, $0.69
    • PPL (PPL) 6:58am, $0.69
    • Brookfield Office Properties (BPO CN) 7am, $0.25
    • Church & Dwight Co (CHD) 7am, $0.61
    • Duke Energy (DUK) 7am, $0.36
    • ITT (ITT) 7am, $0.32
    • Pepco Holdings (POM) 7am, $0.24
    • Telephone & Data Systems (TDS) 7:02am, $0.36
    • Estee Lauder (EL) 7:30am, $0.34
    • Ameren (AEE) 7:54am, $0.24
    • Clear Channel Outdoor Holdings (CCO) 8am, $(0.08)
    • Exelon (EXC) 8am, $0.79
    • Madison Square Garden Co (MSG) 8am, $0.18
    • Spectra Energy Partners (SEP) 8am, $0.47
    • United States Cellular (USM) 8:01am, $0.43
    • Berkshire Hathaway (BRK/A) 5:15pm, $1,780  

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

OIL – we’ve been signaling this highly correlated immediate-term relationship between the US Dollar Index and oil prices for the last few weeks and our intermediate-term TREND lines for Brent ($119.17) and WTIC ($103.94) breaking have proven to be catalytic. Oil moves to bearish TRADE and TREND. That’s very new; bullish, on the margin, for US Consumption Growth. 

  • Soy Traders Most Bullish in Seven Weeks on Drought: Commodities
  • Oil Falls to 3-Week Low Before U.S. Jobs Data, Europe Elections
  • Gold Falls in London on Speculation Jobs Data Will Curb Demand
  • LME’s Abbott Predicts Multiple Takeover Offers as Deadline Looms
  • Copper Seen Falling on Concern About Strength of U.S. Employment
  • Soybeans Gain, Trimming Weekly Loss, as U.S. Export Sales Climb
  • Sugar Gains as Lower Prices Seen Spurring Demand; Coffee Rises
  • Copper Dominant Holding Is ‘Adding Fuel to Fire,’ Galena Says
  • Iran May Lose 9.5% of Oil Contracts as Asian Buyers Cut Imports
  • United Energy in Talks to Buy Canadian Producer for $1 Billion
  • India’s Quest for Coal Stalls as Red Tape Kills Mining Takeovers
  • CME Gets 90-Day Extension to Implement Member Margin Changes
  • Barclays Capital Commodities Head Roger Jones Said to Quit Bank
  • Soybean Traders Most Bullish Since March
  • Rice Prices Seen Under ‘Pressure’ on Ample Supply, FAO Says
  • Hedge-Fund Millionaire Diggle Targets $150 Million for Farm Fund
  • Coal at 18-Month Low Seen Lacking China Boost: Energy Markets

THE HEDGEYE DAILY OUTLOOK - 4

 

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - 5

 

 

EUROPEAN MARKETS


RUSSIA – the problem, of course, is that whats good for the US Dollar and the American Consumer is actually quite bad in the very short term for stock markets levered to Commodities (including, to a degree, the SP500 and Russell2000). Russia’s RTSI is the poster child of Petro-Dollar equity beta. Dollar stops going down and Russian stocks -13% since mid March.

 

THE HEDGEYE DAILY OUTLOOK - 6

 

 

ASIAN MARKETS


CHINA – both the American and Chinese people have one very big thing in common – we like down oil prices. Chinese stocks (which we are long) love Deflating The Inflation. Shanghai Composite up for 3 consecutive days (w/ SP500 down 3 of last 4) to +11.5% YTD. There’s always a bull market somewhere!

 

THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 8

 

 

 

The Hedgeye Macro Team

 


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

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7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

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Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

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GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

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Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

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Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

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Cartoon of the Day: Acrophobia

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People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

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UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

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Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

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Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

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An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

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