THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – May 29, 2012


As we look at today’s set up for the S&P 500, the range is 39 points or -1.66% downside to 1296 and 1.30% upside to 1335. 

                                            

SECTOR AND GLOBAL PERFORMANCE

 

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EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: on 05/25 NYSE 114
    • Down from the prior day’s trading of 512
  • VOLUME: on 05/25 NYSE 595.63
    • Decrease versus prior day’s trading of -25.22%
  • VIX:  as of 05/25 was at 21.76
    • Increase versus most recent day’s trading of 1.02%
    • Year-to-date decrease of -7.01%
  • SPX PUT/CALL RATIO: as of 05/25 closed at 2.03
    • Up from the day prior at 1.24 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: as of this morning 39
  • 3-MONTH T-BILL YIELD: as of this morning 0.09%
  • 10-Year: as of this morning 1.72
    • Decrease from prior day’s trading at 1.74
  • YIELD CURVE: as of this morning 1.43
    • Down from prior day’s trading at 1.45 

MACRO DATA POINTS (Bloomberg Estimates):

  • 9am: S&P/CS 20-city (M/m), Mar., est. 0.2%, prior 0.15%
  • 9am: S&P/CS Home Price Index, Mar., est. 134.4, prior 134.2
  • 10am: Consumer confidence, May, est. 69.5, prior 69.2
  • 10:30am: Dallas Fed manuf. activity, May, est. 1.5, prior -3.4
  • 11:30am: U.S. to sell $30b 3-mo., $27b 6-mo. bills 

GOVERNMENT:

    • 10am: Defense Secretary Panetta speaks at Naval Academy Commencement ceremony
    • 3:25pm: President Obama to award Presidential Medals of Freedom to Bob Dylan, Toni Morrison, John Glenn, others
    • Supreme Court issues opinions
    • Texas Republican primaries; Romney may get enough votes to push him past the 1,144 needed to clinch nomination

 WHAT TO WATCH:

  • Marubeni to buy grain merchandiser Gavilon for $3.6b
  • Dewey & LeBoeuf files Chapter 11 bankruptcy
  • Vale sells Colombian coal assets to Goldman for $407m
  • South Korean manufacturer confidence falls from 9-month high
  • CP Railway strike may end in three days, Canada’s Raitt says
  • Spain may use debt instead of cash to support Bankia Group
  • Greek fund distributes EU18b to country’s 4 biggest banks
  • Italy borrowing costs rise at 6-mo. bill auction
  • Richard Li may be bidder for ING Asia insurance unit: WSJ
  • TNK-BP’s Fridman quits as CEO, deepening dispute
  • Moody’s says China growth collapse may hurt sovereign rating
  • Weekly agendas for energy, real estate, media/entertainment, consumer, industrials, health, finance, tech, rates, Canada oil & gas, Canada mining
  • U.S. Jobs, Chinese Output, Panetta: Week Ahead May 28-June 2 

EARNINGS:

    • Sanderson Farms (SAFM) 6:30am, $0.90
    • Bank of Nova Scotia (BNS CN) 7:30am, C$1.15
    • Copart (CPRT) After-mkt, $0.43 

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG) 

  • Platinum Glut Diminishing as Bear Market Approaches: Commodities
  • Copper Slips to $7,684 a Ton, Erasing Advance; Aluminum Drops
  • China Agrees to Fund $3 Billion of Farming Projects in Ukraine
  • Oil Advances for a Third Day on Outlook for U.S. Economic Growth
  • Gold Declines as Investors Favor Dollar Amid European Crisis
  • Wheat Drops as Rain From Russia to Australia Boosts Crop Outlook
  • Gold Recycling in India to Jump as Near-Record Price Cuts Demand
  • Sugar Seen Falling on Speculation Prices Have Climbed Too High
  • Wheat Price Seen Having Potential to Jump on Exporter Stockpiles
  • Marubeni Agrees to Buy Gavilon for Access to U.S. Grain Trade
  • Rashnikov Paring MMK Debt Aided by Mystery Suit: Russia Credit
  • Coal Use Set for 1984 Low Batters Global Prices: Energy Markets
  • Seaway Oil Torrent Boosts Gas Cargoes as Scorpio Rises: Freight
  • Copper Gains on China Stimulus Speculation
  • Chinese Sugar Smuggling Seen Declining by Two-Thirds in Q2
  • Gold Losing Allure for Biggest Buyers Spurs Bonds: India Credit
  • Palm Oil Advances to Two-Week High on Ramadan Demand Outlook 

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CURRENCIES


US DOLLAR – after 4 consecutive up weeks, our Strong Dollar theme is getting some headline respect (Most Read on Bloomberg this morn = “Dollar Scarce”). In conjunction with the consensus headline, the USD weakens and commodities strengthen this morning; Gold looks like it could re-test $1601 if the USD down move has any follow through.

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EUROPEAN MARKETS


SPAIN – Spanish Retail Sales get smoked (-11.3% y/y in April) and their stock market crash continues (down another -1.5% this morn, down -29% since March). Rajoy wants a Bankia bailout – he’ll probably get that, but lose the trust/flows of his stock/bond market in the meantime. That’s the other side of the trade. 10yr Spanish yields hitting new highs at 6.52% (higher than Nov 2011).

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ASIAN MARKETS


CHINA – not an outright bailout plan from the Chinese overnight; they’ll go with stimulus plans first – that had the Shanghai Comp +1.3% (HK +1.4%) but we’d need to see follow through from these levels for the risk management setup to change from the bearish setup Asian Equity markets have been in since March.

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MIDDLE EAST


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The Hedgeye Macro Team