THE HEDGEYE DAILY OUTLOOK

 

TODAY’S S&P 500 SET-UP – June 1, 2012


As we look at today’s set up for the S&P 500, the range is 21 points or -1.25% downside to 1294 and 0.36% upside to 1315. 

                                            

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 5/31 NYSE -124
    • Up from the prior day’s trading of -2264
  • VOLUME: on 5/31 NYSE 1327.72
    • Increase versus prior day’s trading of 72.73%
  • VIX:  as of 5/31 was at 24.06
    • Decrease versus most recent day’s trading of -0.33%%
    • Year-to-date increase of 2.82%
  • SPX PUT/CALL RATIO: as of 05/31 closed at 1.74
    • Down from the day prior at 2.35 

CREDIT/ECONOMIC MARKET LOOK:


#GrowthSlowing – pick your high-frequency data pt this week from the bomb of Pending US Home Sales (-5.5% Apr) to yesterday’s US PMI of 52 (down -7.4% vs last month) to South Korean exports being negative in May (3rd consecutive month of y/y declines) to UK PMI of 45.9 in May (vs 50.5 in April); the concept of “de-coupling” is as dead as Keynes in 2012. 

  • TED SPREAD: as of this morning 40
  • 3-MONTH T-BILL YIELD: as of this morning 0.06%
  • 10-Year: as of this morning 1.53
    • Decrease from prior day’s trading at 1.56
  • YIELD CURVE: as of this morning 1.28
    • Down from prior day’s trading at 1.30 

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:30am: Nonfarm Payrolls, May, est. 150k (prior 115k)
  • 8:30am: Unemployment Rate, May, est. 8.1% (prior 8.1%)
  • 8:30am: Avg Hourly Earning (M/m), May, est. 0.2% (prior 0.0%)
  • 8:30am: Avg Weekly Hours, May, est. 34.5 (prior 34.5)
  • 8:30am: Personal Income, Apr., est. 0.3% (prior 0.4%)
  • 8:30am: Personal Spending, Apr., est. 0.3% (prior 0.3%)
  • 8:30am: PCE Core (M/m), Apr., est. 0.2% (prior 0.2%)
  • 8:58am: Markit US PMI (final), May, (prior 53.9)
  • 10am: ISM Manufacturing, May, est. 53.8 (prior 54.8)
  • 10am: ISM Prices Paid, May, est. 57 (prior 61)
  • 10am: Construction Spending (M/m), Apr., est. 0.4% (prior 0.1%)
  • 1pm: Baker Hughes rig count 

GOVERNMENT:

    • Senate not in session, House meets at 9am
    • Former Fla. Gov. Jeb Bush testifies at House Budget hearing
    • House Financial Svcs. panel holds hearing on cyber threats to capital markets, corporate accounts, 9:30am

WHAT TO WATCH:

  • Payrolls in U.S. probably picked up from smallest gain in 6m
  • Toyota, Honda may post biggest rises in monthly auto sales
  • Euro-area unemployment reaches record 11% led by Spain, Italy
  • China manufacturing expands at weakest pace since Dec.
  • Disney names ex-Warner executive as film operation chairman
  • Wal-Mart holds its annual meeting today
  • ASCO conference this weekend; watch for data on J&J’s Zytiga
  • Goldman CEO Blankfein to be witness at Gupta’s trial, U.S. says
  • BP to pursue sale of $20b stake in Russian producer TNK-BP
  • Thomas H. Lee Partners said to be in lead to buy Party City
  • Acer, Toshiba said to unveil Windows 8 tablets to challenge IPad
  • German note yield drops below zero for first time
  • Liberty tells regulators it wants control of Sirius XM radio
  • Google loses court case to dismiss claims over digital books
  • Bernanke, China Inflation, Diamond Jubilee: Week Ahead June 2-9 

EARNINGS:

    • No major earnings reports scheduled for today 

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

Bernanke’s Bubbles – this remains our short Commodities (long Dollar) call for Q2; oil is capitulating to immediate-term TRADE oversold this morning ($84.68 WTIC), but oil is also crashing (down -23% from the Feb high). There are plenty of large exposures to Oil, Gold, etc in the asset management community to be very aware of here. 

  • Mittal’s Price Squeezed in $960 Billion Steelmaking: Commodities
  • Brent Oil Falls Below $100 a Barrel for First Time Since October
  • Gold Falls in London as Stronger Dollar Curbs Investor Demand
  • Copper Falls Amid Signs European Crisis Is Hurting Economies
  • Commodities Drop to Lowest Level Since October on China, Europe
  • Copper Bears Rise to Eight-Month High as Hedge Funds Bet on Drop
  • Commodity Revenues at Top Banks Decline as Volatility Drops
  • BP to Pursue Sale of TNK-BP Shares as Billionaire Partners Bid
  • China’s Lead-Battery Exports May Fall as Output Capacity Cut
  • Palm Oil Slumps to Five-Month Low as Chinese Demand Set to Fall
  • LME Said to Get Assurance From Bidders on Keeping U.K. Base
  • Barry Callebaut Says Cocoa Bean Processing May Decline in Europe
  • Corn Futures to Extend Slump to 20-Month Low: Technical Analysis
  • Commodities Extend Fall on China Slowdown
  • China May Resume Nuclear Plant Approvals as Cabinet Passes Plan
  • Rubber Falls to Six-Month Low as China’s Output Decelerates
  • Thailand, Indonesia Agree Steps Needed to Halt Rubber Decline 

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CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - 5

 

 

EUROPEAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 6

 

 

ASIAN MARKETS


CHINA – we sold our China long position last month because our research was signaling an immediate-term acceleration in China’s growth slowing pattern; this morning’s PMI of 50.4 (vs 53.3 in April) confirms that – all of Asia was weak (has been since Feb/Mar), and consensus is now forced to agree.

 

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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

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

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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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