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
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
CURRENCIES
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.
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.
MIDDLE EAST
The Hedgeye Macro Team