Hedgeye - THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – September 13, 2012

As we look at today’s set up for the S&P 500, the range is 32 points or -1.22% downside to 1419 and 1.01% upside to 1451.

SECTOR AND GLOBAL PERFORMANCE

EQUITY SENTIMENT:

ADVANCE/DECLINE LINE: on 09/12 NYSE 778
- Decrease versus the prior day’s trading of 1030
VOLUME: on 09/12 NYSE 663.83
- Decrease versus prior day’s trading of -0.47%
VIX: as of 09/12 was at 15.80
- Decrease versus most recent day’s trading of -3.72%
- Year-to-date decrease of -32.48%
SPX PUT/CALL RATIO: as of 09/12 closed at 1.12
- Down from the day prior at 1.64

CREDIT/ECONOMIC MARKET LOOK:

QE4 – pushing the goal posts out a full year to 2014 on January 25th was Qe3. That, in turn, slowed growth (oil up). Now the question is will Bernanke push out investor duration by 12 months at a time every 3-6 months? Just pull forward all the yield and performance chasing into 2012 and hope for the best. US Dollar is the biggest ball under water trade I have seen in a very long time into a very big event.

TED SPREAD: as of this morning 29.77
3-MONTH T-BILL YIELD: as of this morning 0.10%
10-Year: as of this morning 1.74%

Decrease from prior day’s trading of 1.76%

YIELD CURVE: as of this morning 1.51

Down from prior day’s trading at 1.52

MACRO DATA POINTS (Bloomberg Estimates)

8am: RBC Consumer Outlook Index, Sept. (prior 46.4)
8:30am: Producer Price Index M/m, Aug. est. 1.2% (prior 0.3%)
8:30am: Initial Jobless Claims, Sept. 8, est. 370k (prior 365k)
8:30am: Continuing Claims, Sept. 1 est. 3.318m (prior 3.322m)
9:45am: Bloomberg Consumer Comfort, Sept. 9 (prior -46.5)
10am: Freddie Mac mortgage rates
10:30am: EIA natural-gas change
11am: U.S. to announce plans for 10-yr TIPS auction on Sept. 20
12:30pm: FOMC rate decision
1pm: U.S. sells $13b 30-yr bonds
2pm: Fed to release projections of economy, interest rates
2pm: Monthly Budget Statement, Aug. est. -$170.0b (prior - $134.1b)
2:15pm: Fed’s Bernanke holds news conference

GOVERNMENT:

Obama administration may detail sequestration cuts
House, Senate in session
House Armed Services panel holds hearing on F-22 pilot physiological issues, 10am
House Oversight panel meets on spending for reconstruction in Afghanistan, 10am
Interior Dept. officials testify on land, minerals management at House Natural Resources hearing, 10am
House Energy panel holds hearing on U.S. energy independence, with Daniel Ahn, chief commodity economist for Citi; John Freeman, managing director of Raymond James; John Purcell, vice president for wind Energy at Leeco Steel, 10am
Senate Banking hears from Consumer Financial Protection Bureau Director Richard Cordray on agency operation, 10am
House Financial Services, Government Reform panels hold joint hearing on implementation of Jumpstart Our Business Startups Act, known as the JOBS Act, passed in April, 10am
House Financial Services panel holds hearing on “Examining the Uses of Consumer Credit Data,” 2pm
Senate Judiciary considers amending US law to clarify video tape service providers’ consent policies, 10am
House Intelligence holds hearing on “National Security Threats Posed by Chinese Telecom Companies Working in the U.S.,” with representatives from Huawei, ZTE, 10am
House Energy panel holds hearing on “Creating Opportunities through Improved Government Spectrum Efficiency,” with Steve Sharkey of T-Mobile USA, 10:15am
House Transportation panel holds hearing on effectiveness of DOT’s truck and bus safety program, with Scott Mugno, vice president at FedEx Ground, 10am

WHAT TO WATCH:

U.S. investors betting central bank will keep rate near zero
Possible EADS, BAE merger may generate FY sales of ~$100b
ECB member says central bank may never need to buy bonds
SNB to maintain FX ceiling at 1.2 francs per euro
Freddie Mac may get additional $3.4b in mortgage buybacks
Moore Capital said to cut jobs in team restructuring
Itochu in talks with Dole to buy packaged-food unit, Asian fruit & vegetable business
Nomura’s Americas equities chief O’Kelly leaving amid overhaul
Manhattan apartment vacancy rate rises as rents reach record
U.S. embassy compound in Yemen stormed as film protests spread

EARNINGS: (All times ET, with Bloomberg est.)

Pier 1 Imports (PIR) 6am, $0.19
Empire (EMP/A CN) Pre-mkt, C$1.40

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

Soy Rally Pushes Amazon Growers to Sow Record Crop: Commodities
Chesapeake’s McClendon Taps Expanding Shale Oil Demand: Energy
Gold Seen Falling Before Federal Reserve; Palladium Extends Gain
Oil Trades Near Three-Week High on Mideast Protests, Fed Meeting
Copper Swings Between Gains and Drops Before Fed Policy Decision
Sugar Rises a Second Day as Brazil Rains May Return; Cocoa Gains
Wheat Futures Climb as Importers Including Egypt Seek Supplies
Indonesian Tin Smelters Resume Output After Metal Rallies
Aluminum Stockpiles Climb the Most This Year on Detroit Jump
LNG Shortage in Japan Spurring Record Expansion: Energy Markets
Rebars Poised for First Weekly Gain in Five on Baoshan Pricing
Cocoa Shipments From Indonesia Seen Declining on Local Grinding
‘Tomato Trade War’ Seen Sparking Broader U.S.-Mexico Food Fight
Rubber Drops From Eight-Week High Ahead of Fed Stimulus Decision
Palm Oil Declines as Stockpiles Set to Climb on Output Increase
Thai Government May Buy 300,000 Tons of Rubber to Bolster Prices

CURRENCIES

EUROPEAN MARKETS

EUROPE – with the exception of Germany (making higher-highs vs March), all European Equity Indices are making lower-highs again this morning; stagflation is ultimately what Europe has to deal with now at $116 Brent Oil. 1970s stagflation kept US Equities at 7-8x earnings don’t forget. Short-term market moves do not represent economic realities.

ASIAN MARKETS

CHINA – We know, it’s weird, but after 6wks of rumors about the stimuli coming out of China, reality is there has been none – the Chinese do not appreciate the food/oil inflation Bernanke is perpetuating; Chinese stocks down -0.8% before his un-elected lordship provides causality and correlation to commodity markets.

MIDDLE EAST

The Hedgeye Macro Team