THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – September 20, 2012


As we look at today’s set up for the S&P 500, the range is 25 points or -0.82% downside to 1449 and 0.89% upside to 1474. 

                                            

SECTOR AND GLOBAL PERFORMANCE


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EQUITY SENTIMENT: 

  • ADVANCE/DECLINE LINE: on 09/19 NYSE 473
    • Increase versus the prior day’s trading of -341
  • VOLUME: on 09/19 NYSE 643.72
    • Increase versus prior day’s trading of 1.71%
  • VIX:  as of 09/19 was at 13.88
    • Decrease versus most recent day’s trading of -2.12%
    • Year-to-date decrease of -40.68%
  • SPX PUT/CALL RATIO: as of 09/18 closed at 1.53
    • Up  from the day prior at 1.49 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: as of this morning 26.93
  • 3-MONTH T-BILL YIELD: as of this morning 0.11%
  • 10-Year: as of this morning 1.74%
    • Decrease from prior day’s trading of 1.77%
  • YIELD CURVE: as of this morning 1.49
    • Down from prior day’s trading at 1.51 

MACRO DATA POINTS (Bloomberg Estimates)

  • 7:44am: Fed’s Rosengren speaks in Massachusetts on economy
  • 8:30am: Init Jobless Claims, Sept. 15, est. 375k (prior 382k)
  • 8:58am: Markit U.S. PMI Prelim, Sept. est. 51.5 (prior 51.5)
  • 9:30am: Fed’s Lockhart speaks at Kansas City Fed conference
  • 9:45am: Bloomberg Consumer Comfort, Sept. 16 (prior -42.2)
  • 9:45am: Bloomberg Economic Expectations, Sept. (prior -22)
  • 10am: Philadelphia Fed, Sept. est. -4.5 (prior -7.1)
  • 10am: Freddie Mac mortgage rates
  • 10am: Leading Indicators, Aug. est. -0.1% (prior 0.4%)
  • 10:30am: EIA natural-gas change
  • 11am: Fed to sell $7b-$8b notes due 6/15/2015-8/31/2015
  • 11am: U.S. to announce auction sizes for 2-yr, 5-yr and 7-yr auctions
  • 12pm: Federal Reserve Flow of Funds Report
  • 1pm: U.S. to sell 10-yr TIPS (reopening)
  • 1:30pm: Fed’s Kocherlakota speaks in Michigan
  • 5pm: Fed’s Pianalto speaks in Ohio
  • 6:30pm: Fed’s Bullard gives lecture at U. Notre Dame

GOVERNMENT:

    • House, Senate in session
    • Tax treatment of capital gains debated at joint hearing of Senate Finance, House Ways and Means, 10am
    • House Small Business hearing on likely effects of sequestration on government contractors 1pm
    • House Oversight panel holds hearing on Afghanistan, 2pm
    • House Oversight panel holds hearing on Medicare, 2pm
    • House Judiciary holds hearing on regulations, jobs, 10am
    • Senate Homeland Security panel holds hearing on offshore profit shifting and the U.S. tax code, 2pm
    • Senate Commerce releases results of investigation into consumer abuses by moving and storage industry, 10am
    • SEC holds closed hearing on enforcement matters, 2pm
    • FERC holds monthly meeting, 10am

WHAT TO WATCH:

  • Chinese manufacturing survey points to 11th month of contraction
  • Nike to spend $8b buying back shares over 4 years
  • Liberty Global offers to buy remaining 50% of Telenet for $2.54b
  • Spain sells EU4.8b of bonds, most since January
  • BOJ scraps requirement for regular purchases of govt. debt
  • CIC-led group said to pay $2b for 5.6% of Alibaba
  • Norfolk Southern sees 3Q earnings at $1.18-$1.25 vs est. $1.63
  • Bain Capital said to be in advanced talks to buy Apex Tool for $1.5b-$1.8b
  • UBS more cautious on U.S. banks; cuts MS, Citigroup, Goldman
  • Peugeot to sell Gefco stake for $1.04b to help cut debt
  • SEC’s Gallagher says retail bond investors fighting headwinds
  • Billabong bidder drops out leaving A$694m sale to TPG
  • KBW ordered to face lawsuit by trustee for Guaranty Financial
  • Capital Bank raises $180m in IPO, pricing below range
  • GM said to plan bid for Ally Financial’s Europe, Latam ops
  • American Airlines cancels 300 flights on maintenance delays and sick pilots

EARNINGS:

    • IHS (IHS) 6am, $1.01
    • Scholastic (SCHL) 7am, $(1.05)
    • Rite Aid (RAD) 7am, $(0.07)
    • ConAgra Foods (CAG) 7:30am, $0.35
    • CarMax (KMX) 7:35am, $0.52
    • Jefferies Group (JEF) 8am, $0.26
    • Oracle (ORCL) Aft-mkt, $0.53
    • Tibco Software (TIBX) 4:10pm, $0.27
    • Cintas (CTAS) 4:15pm, $0.59

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

OIL – does Dollar UP matter? We don’t need an opinion on that; fact is that this is the 1st UP wk for the US Dollar Index in the last 7 and oil just got smoked for an -8% drop from the Bernanke Policy to Inflate SEP top; we continue to think that the Bernanke Bubble in Commodities is in the process of popping; long-term tops are processes, not points.

  • Fed Stimulus Fading as Forecasters Say Best Is Over: Commodities
  • Bakken Gain Triples Brent as Trains Oust Pipes: Energy Markets
  • China, India Show Gold Is Expensive Insurance: Chart of the Day
  • Gold Drops as Strengthening Dollar Erodes Demand; Platinum Falls
  • Oil Falls to Six-Week Low on China Slowdown, U.S. Supply Surge
  • Copper Falls Most in a Month on Concern About Global Slowdown
  • Corn Falls as Record Brazilian Harvest May Ease Supply Concerns
  • Sugar Rises as Demand May Rebound After Drop; Cocoa Declines
  • Indonesia Will Relax 2014 Ore Ban to Increase Time for Smelters
  • Rebar Drops Most in 11 Months as Chinese Manufacturing Shrinks
  • China Overtakes U.S. as Largest Crop Importer, WTO Data Show
  • Lonmin Pact With Illegal Strikers Sets ‘Dangerous’ Precedent
  • Cosco May Order Supertankers Amid Rising China Oil Imports
  • Copper to Extend Gain as Resistance Breached: Technical Analysis
  • Chinese, Indians Buy Pink Diamonds as Rarity Clicks, Rio Says
  • Shell Leads LNG Competitors Out to Sea With Biggest Ship: Energy

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CURRENCIES


EURO – if $1.29 EUR/USD doesn’t hold, watch out below for the Euro (no immediate-term TRADE support to $1.26); this is the #1 issue we had w/ Bernanke Expectations, Spread Risk – it’s as obvious b/t the Euro and USD as it is USD and CRB; wicked correlated in the short-term, so stay disciplined with your risk management levels here.

 

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EUROPEAN MARKETS


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ASIAN MARKETS


CHINA – never mind what NSC surprised people with (bulk commodity volumes slowing), Chinese stocks have been pounding this into our craws since May (Qe commodity inflation is not demand); Shanghai Comp -2.1% last night to a fresh YTD low (-18% since May); Japan’s attempt to play the Bernanke card was good for a 1-day rally, then Nikkei straight back down -1.6%.

 

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MIDDLE EAST


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The Hedgeye Macro Team


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