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TODAY’S S&P 500 SET-UP – May 25, 2012


As we look at today’s set up for the S&P 500, the range is 48 points or -2.02% downside to 1294 and 1.61% upside to 1342. 

                                            

SECTOR AND GLOBAL PERFORMANCE

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

THE HEDGEYE DAILY OUTLOOK - 3

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: on 5/24 NYSE 512
    • Down from the prior day’s trading of 643
  • VOLUME: on 5/24 NYSE 796.46
    • Decrease versus prior day’s trading of -7.71%
  • VIX:  as of 5/24 was at 21.54
    • Decrease versus most recent day’s trading of -3.54%
    • Year-to-date decrease of -7.95%
  • SPX PUT/CALL RATIO: as of 05/24 closed at 1.24
    • Down from the day prior at 1.83 

CREDIT/ECONOMIC MARKET LOOK:


CLIFF – first time we have written about the fiscal cliff in a while - that’s because it’s the 1st time we have had a quantitative signal to do so – short rates (2yr UST yields) are starting to hint at a breakout (0.28% = TRADE support). If we keep up w/ these ridiculous rumors and the denominator (GDP) keeps slowing, that US deficit/GDP ratio comes back on the table, faster. 

  • TED SPREAD: as of this morning 38
  • 3-MONTH T-BILL YIELD: as of this morning 0.09%
  • 10-Year: as of this morning 1.77
    • Decrease from prior day’s trading at 1.78
  • YIELD CURVE: as of this morning 1.47
    • Down from prior day’s trading at 1.48 

MACRO DATA POINTS (Bloomberg Estimates):

  • Univ. of Michigan releases confidence index for May, Est. 77.8 (prior 77.8), 9:55am
  • USDA issues monthly food inflation data, 10am
  • Baker Hughes rig count, 1pm 

GOVERNMENT:

    • Comment period ends on proposed Federal Reserve rule for determining whether a company is “predominantly engaged in financial activities”
    • House, Senate meet in pro forma sessions
    • CFTC holds closed meeting on enforcement matters, 10am     

WHAT TO WATCH: 

  • Morgan Stanley said to tell brokers it will fix Facebook orders
  • Merkel considers debt-sharing plan as Monti says she’s isolated
  • SEC staff said to end Lehman probe without finding fraud
  • JPMorgan gave risk oversight to museum head who sat on AIG board
  • Delphi open to more acquisitions after buying supplier for almost $1b
  • Dell said to weigh buying Quest to add computer-management tools
  • Lehman said to reach deal with banks to buy rest of Archstone
  • NBCUniversal is in talks to buy Microsoft’s stake in MSNBC.com
  • Fox, NBC, CBS sue Dish over ad skipping video-on-demand service
  • Gupta prosecutors try to show links with wiretaps, phone records
  • French 10-yr bond yield declines to record low of 2.422%
  • Money funds open to deal w/ SEC, WSJ says
  • U.S. markets closed on Monday for Memorial Day holiday
  • U.S. Jobs, Chinese Output, Cannes: Week Ahead May 26-June 2 

EARNINGS:

    • Mentor Graphics (MENT) 8am, $0.25 

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG) 

  • Copper Traders Extend Bearish Streak as Prices Drop: Commodities
  • Oil Rises on Euro-Bond Speculation to Trim Fourth Weekly Drop
  • Copper Advances as European Leaders May Contain Debt Crisis
  • Gold Climbs in London as Buyers Take Advantage of Price Drop
  • Corn Climbs in Chicago as Dry Weather Threatens Crops in Midwest
  • Robusta Coffee Gains to Eight-Month High on Rising Global Demand
  • China’s Cotton Planting Drops 10% as Labor Costs Increase
  • Nigeria Losing Top Oil Buyer U.S., Turns to Asia: Energy Markets
  • Palm Oil Climbs as 10% Fall in Prices This Month Lures Investors
  • Trade Deal Spurs Flow of Arbitrage North Sea Oil to South Korea
  • Copper Set to Extend Losses to $7,100 a Ton: Technical Analysis
  • Balrampur Says Mills Losing Money on Controls: Corporate India
  • China Zinc Smelters Likely to Further Cut Output, Wang Says
  • Copper Extends Bearish Streak on Price Drop
  • Soybean Imports by Japan Seen Dropping to 43-Year Low on Yen
  • Rubber Gains First in Three Days on Thailand Purchase Plans
  • Indonesia’s Nickel-Ore Exports Seen Dropping 20% in Second Half           

 THE HEDGEYE DAILY OUTLOOK - 4

CURRENCIES

THE HEDGEYE DAILY OUTLOOK - 5

EUROPEAN MARKETS


RUMORS – back to the same playbook that has already killed European equity markets and, to a large degree, killed US inflows into Equities too – people don’t trust this casino, and they probably shouldn’t. Monti says that there is a consensus amongst countries that can’t fund on Eurobonds – I bet. But Germany doesn’t need a consensus.

THE HEDGEYE DAILY OUTLOOK - 6

 

ASIAN MARKETS


CHINA – 3rd consecutive day of selling in the Chinese stock market after snapping our critical TREND line of 2373 support; markets don’t think growth is slowing at a slower rate there yet – it’s consensus (and has been), but that doesn’t mean consensus can’t be right for another few months. Our models have China’s growth slowing at a slower rate in Q3/Q4, not in Q2.

THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 8

The Hedgeye Macro Team