THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – May 21, 2012


As we look at today’s set up for the S&P 500, the range is 53 points or -1.02% downside to 1282 and 3.07% upside to 1335. 

                                            

SECTOR AND GLOBAL PERFORMANCE

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EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: on 5/18 NYSE -1586
    • Up from the prior day’s trading of -2242
  • VOLUME: on 5/18 NYSE 1162.10
    • Increase versus prior day’s trading of 23.00%
  • VIX:  as of 5/18 was at 25.10
    • Increase versus most recent day’s trading of 2.49%
    • Year-to-date increase of 7.26%
  • SPX PUT/CALL RATIO: as of 05/18 closed at 2.08
    • Down from the day prior at 2.30 

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 1.76
    • Increase from prior day’s trading at 1.72
  • YIELD CURVE: as of this morning 1.47
    • Up from prior day’s trading at 1.43 

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:30am: Chicago Fed National Activity Index
  • 11am: Fed to purchase $1.5b-$2b notes in 2/15/2036 to 5/15/2042 range
  • 11:30am: U.S. to sell $30b 3-mo., $27b 6-mo. bills 

GOVERNMENT:

    • NATO Summit of World Leaders in Chicago
    • Senate in session, House not in session
    • Interior Secretary Salazar, Bureau of Safety and Environmental Enforcement Chief Watson conduct forum on oil well blowout preventers and federal oversight, 8am
    • BASF CFO Engel, International Energy Agency Deputy Director Jones among speakers at Deloitte energy conf., 8am
    • Deadline for SEC to respond to Senate inquiries seeking explanation for decision to place chief investigator on leave
    • Donald H. Layton takes over as CEO of Freddie Mac
    • Financial Industry Regulatory Authority holds annual conference; opening address by CFTC Chairman Gensler     

WHAT TO WATCH:

  • Alibaba to buy 20% stake in itself back from Yahoo for ~$7.1b
  • JPMorgan CEO Jamie Dimon to speak at investor conference in New York
  • JPMorgan CIO Risk Chief Irvin Goldman said to have history of trading losses
  • DaVita, a provider of kidney dialysis services, agreed to buy HealthCare Partners for ~$4.42b
  • China’s Wanda Group to buy AMC Entertainment for $2.6b   * Raj Gupta, former Goldman director, goes on trial
  • Premier Wen says China to focus on growth, Xinhua says
  • China to speed up approvals for qualified foreign investors
  • Nasdaq CEO says ‘poor design’ in IPO software delayed Facebook; SEC to review problems
  • U.S. ITC judge may release ruling this week on Kodak’s $1b patent dispute vs. Apple, RIM
  • Fed’s Lockhart says QE3 can’t be ruled out amid European risks
  • Facebook closed at $38.23 Friday, with underwriter support keeping it above $38 IPO price
  • Vodafone may be forced to share Cable & Wireless: Telegraph
  • Apple, Samsung are unlikely to resolve their worldwide fight over mobile device patents in court-ordered talks that start today between their CEOs, said lawyers following the case
  • German, French leaders meet this wk to map out a revised plan for the euro as the Group of 8 exposed disagreement on a rescue strategy
  • Osborne says U.K. is making contingency plans for euro-zone turmoil
  • Canadian Pacific Railway workers said they may strike as soon as Weds.
  • No IPOs expected to price today
  • NATO Summit, China, JPMorgan, Formula 1: Week Ahead May 21-26 

EARNINGS:

    • Lowe’s Cos (LOW) 6am, $0.42; Preview
    • Tech Data (TECD) 6am, $1.16
    • Krispy Kreme (KKD) 6:30am, $0.09
    • Campbell Soup (CPB) 7:30am, $0.52; Preview
    • Tidewater (TDW) 8:03am, $0.60
    • Urban Outfitters (URBN) 4pm, $0.20
    • Post Holdings (POST) 4:17pm, $0.48
    • Nordson Corp (NDSN) 4:30pm, $0.87 

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

COMMODITIES – Deflating The Inflation of Bernanke’s Bubbles remains our top Q2 Macro Theme, so on the bounce you don’t want to be buying anything commodities related – energy and basic materials stocks are easily the worst looking in our Sector studies, so use the bounces as selling opportunities. 

  • Investors Least Bullish in 2012 as Crisis Escalates: Commodities
  • Ex-SocGen Commodity Officials Plan Hedge Fund in Final Quarter
  • Oil Rises First Time in Seven Days; Goldman Sees Tighter Supply
  • Copper Climbs for Second Day as China Pledges to Boost Growth
  • Gold Seen Climbing a Third Day in London on Europe Debt Concern
  • Coffee Reaches Eight-Month High as European Stockpiles Decline
  • Grain-Pit Traders Squeezed Out as CME Expands to Match ICE Hours
  • Fonterra May Cut Milk Payout on Price Drop, Curbing Supply
  • Palm Oil Ends Little Changed as Europe’s Crisis May Hurt Demand
  • Saudi Aramco Plans to Start Operating Jazan Refinery Before 2017
  • Oil Decline Exaggerated as Market Tightening, Goldman Sachs Says
  • Japan Copper-Cable Shipments Climb in April for Third Month
  • Chinese Iron Ore, Coking Coal Buyers Defer Imports, Mirae Says
  • Wheat Climbs to Eight-Month High on Weather
  • Wheat Climbs to Highest Level Since September on Dry Weather
  • Speculators Boost Gas Bets as Surplus Shrinks: Energy Markets
  • Chesapeake Director’s Firm Paid $343 Million Amid Ties: Energy

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CURRENCIES


US DOLLAR – after 3 consecutive up weeks (up 12 of the last 13 days), the Correlation Risk spike to -0.91-0.99 (depending on your USD vs whatever pair) takes a breather. Dollar down this morning finally stops oil, copper, etc from going down and Petro-Dollar equity markets (Russia, Norway, Saudi) all lead gainers #interconnected.

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EUROPEAN MARKETS

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ASIAN MARKETS


CHINA – plenty of bears out there, but this is the best major country in terms of stock performance for Q2 to-date, and the Chinese have plenty of policy ammo that you can wake up to any day of the week, both fiscal and monetary (see China Securities Daily for the latest whispers from Wen).

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MIDDLE EAST


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The Hedgeye Macro Team