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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – June 22, 2012


As we look at today’s set up for the S&P 500, the range is 15 points or -0.57% downside to 1318 and 0.57% upside to 1333. 

                                            

SECTOR AND GLOBAL PERFORMANCE

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EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: on 6/21 NYSE -1901
    • Down from the prior day’s trading of 10
  • VOLUME: on 6/21 NYSE 865.87
    • Increase versus prior day’s trading of 15.27%
  • VIX:  as of 6/21 was at 20.08
    • Increase versus most recent day’s trading of 16.47%
    • Year-to-date decrease of -14.19%
  • SPX PUT/CALL RATIO: as of 6/21 closed at 1.81
    • Down from the day prior at 1.90 

CREDIT/ECONOMIC MARKET LOOK:


YIELD SPREAD – watch this 10s/2s Spread in the US like a hawk; it’s at 133bps wide this morning and still holding the low end of its recent range – historically, the Yield Spread always mean reverts to dead flat. That’s your bear case for bank earnings from here which, incidentally, we think is a much more relevant next catalyst for the money centers than whatever Moodys figured out after the fact. 

  • TED SPREAD: as of this morning 38
  • 3-MONTH T-BILL YIELD: as of this morning 0.08%
  • 10-Year: as of this morning 1.64
    • Increase from prior day’s trading at 1.62
  • YIELD CURVE: as of this morning 1.34
    • Up from prior day’s trading at 1.32 

MACRO DATA POINTS (Bloomberg Estimates):

  • 11am: Fed to purchase $1.5b-$2.25b notes in 2/15/2036-5/15/2042 range
  • 12:30pm: Federal Reserve Bank of Cleveland President Sandra Pianalto speaks in Cleveland
  • 1pm: Baker Hughes rig count

GOVERNMENT:

    • House, Senate not in session
    • CFTC holds closed meeting on enforcement matters, 10am
    • U.S. Transportation Secretary Ray LaHood makes funding announcement on conference call, 10:15am

WHAT TO WATCH: 

  • Moody’s downgrades 15 global banks; Morgan Stanley only cut 2 levels, Credit Suisse reduced by 3
  • Citigroup, other banks call Moody’s cuts unwarranted
  • German business confidence fell more than estimated in June
  • KKR said to consider sale of BIS unit ahead of refinance date
  • Italian consumer sentiment fell to a record low
  • AIG names Koellner as executive chairman of ILFC after CEO’s relationship is probed
  • International Game, Bally secure Nevada online casino licenses
  • Sony in final stages of talks to invest in Olympus: Nikkei
  • U.S. Health Care, EU Summit, Google, RIM: Week Ahead

EARNINGS:

    • Darden Restaurants (DRI) 7am, $1.15
    • Carnival (CCL) 9:15am, $0.08    

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG

 

OILBernanke’s Bubbles (Commodities) are in some cases popping; others (oil) crashing. This morning we are finally getting an immediate-term TRADE oversold signal for Brent at $89.92, so cover Energy shorts here and re-short the bounce. Both the Commodity and the stocks that have earnings expectations based on the wrong top-line assumptions.

  • Crop Traders Bullish for Ninth Week on Dry Weather: Commodities
  • Copper Heads for Seventh Weekly Drop in Eight on Slowdown Signs
  • Gold Seen Cutting Weekly Decline as Europe Concern Spurs Demand
  • Brent Oil Futures Rise on Speculation Plunge Below $90 Excessive
  • Corn Climbs as Dry Midwest Weather Threatens to Hurt U.S. Yields
  • Batista Said to Sell 49% AUX Stake to Qatar Fund for $2 Billion
  • Sugar Falls as Supplies Seen Ample as Demand Slows; Coffee Drops
  • Fortescue Challenges Gillard’s Mining Tax in Australian Court
  • Jet Fuel Gets Olympic Spur as Europe Plants Shut: Energy Markets
  • Soy Harvest Squandered as Reserves Decline: Argentina Credit
  • Normal Monsoon for a Third Year Set to Boost India Harvests
  • Food Stamps Vie With Aid to Growers in U.S. Agriculture Overhaul
  • Aluminum Set to Extend Decline to 2010 Lows: Technical Analysis
  • Nippon Steel Stainless Unit Eyes Mergers as Japan Demand Wanes
  • Gazprom Biggest Loser as Shale Gas Upends World Markets: Energy
  • Deripaska Comfortable on Rusal Debt as Yields Up: Russia Credit

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CURRENCIES

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EUROPEAN MARKETS


RUSSIA – while the Johnny come lately shorts in Spain cover all at the same time, Russian stocks continue to crash – get the petro and the Dollar right, and you’ll get the PetroDollar markets like Russia right. RTSI down another -2% here and crashing like oil has, down -27% since March. Context: Russia is the world’s 9th largest economy (Spain is 12th). There is no such thing as “de-coupling.”

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ASIAN MARKETS

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MIDDLE EAST


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The Hedgeye Macro Team