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TODAY’S S&P 500 SET-UP – January 4, 2013


As we look at today's setup for the S&P 500, the range is 42 points or 1.88% downside to 1432 and 1.00% upside to 1474.     

SECTOR AND GLOBAL PERFORMANCE

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EQUITY SENTIMENT:


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CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 1.67 from 1.65
  • VIX closed at 14.56 1 day percent change of -0.82%
  • BONDS – massive 3wk move in Treasuries and now Bond Yields are in a Bullish Formation (bullish TRADE, TREND, TAIL) now that they took out my 1.85% TAIL risk line (1.96% last); no intermediate-term resistance in the 10yr to 2.4% and our asset allocation to Fixed Income remains 0%.

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:30am: Nonfarm Payrolls, Dec., est. 153k (prior 146k)
  • 8:30am: Unemployment Rate, Dec., est. 7.7% (prior 7.7%)
  • 10am: Factory Orders, Nov., est. 0.4% (prior 0.8%)
  • 10am: ISM Non-Manf. Composite, Dec., est. 54.0 (prior 54.7)
  • 10:30am: EIA natgas storage
  • 11am: DoE weekly inventories
  • 1pm: Baker Hughes U.S. rig count
  • 1:15pm: Plosser speaks in San Diego on real business cycles
  • 1:30pm: Lacker speaks in Baltimore on economic outlook
  • 3:30pm: Yellen speaks in San Diego on systemic risk
  • 5:30pm: Bullard speaks to economists in San Diego

GOVERNMENT:

    • House, Senate meet to count electoral votes for president
    • House to vote on $9.7b for national flood insurance program
    • CFTC holds closed meeting on enforcement matters, 10am

WHAT TO WATCH

  • Payrolls in U.S. probably held gains in Dec. as economy grew
  • JPMorgan faces sanction for refusing to provide Madoff docs
  • Abbott, J&J, Sanofi said to show interest in Bausch & Lomb bid
  • Moody’s, S&P, Fitch must face fraud claims in Rhinebridge suit
  • Cohen’s SAC fund tops most-profitable list amid insider probes
  • Berkshire ex-executive Sokol won’t face SEC action, lawyer says
  • Wal-Mart creates new role to oversee alternative format stores
  • Facebook testing free calling on message app: L.A. Times
  • Best Buy, Toys R Us say Wal-Mart misleading in ads: WSJ
  • Euro-area manufacturing, services shrink more than estimated
  • Euro-area Dec. consumer prices rise 2.2% in yr, est. 2.1%
  • IBM insider case analyst agrees to U.S. return, court told
  • ECB, China Trade, Chavez, Oscar Nominees: Wk Ahead Jan. 5-12

EARNINGS:

    • Finish Line (FINL) 6:45am, $0.10
    • Mosaic (MOS) 7am, $0.88, preview

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)


GOLD – getting plastered this morning, down another -2% (Silver down -5%) as the world comes to realize that there are many unintended consequences associates w/ A) #GrowthStabilizing and B) Bernanke’s experiment in unemployment targeting; if this jobs picture continues to improve, we think Gold continues lower – oversold here today.

  • Oil Declines for a Second Day as Fed Discusses Curbing Stimulus
  • Gold Seen Rallying From Worst Streak in Eight Years: Commodities
  • Copper Declines Most in Two Weeks as Fed Signals Stimulus End
  • Soybeans Rebound on Speculation Demand May Rise Following Slump
  • Gold Set for Worst Run Since 2004 as Fed Sees End to Purchases
  • Sugar Falls to Two-Week Low on Surplus; Coffee and Cocoa Slide
  • SHFE Metal Stockpiles Expand as Copper Rises to Eight-Month High
  • West African Cocoa Premiums Said to Drop on Better Crop Outlook
  • Palm Oil Advances as Malaysian Shipments May Gain on Tax Revamp
  • Uranium Rebound Seen as Japan Considers Nuclear: Energy Markets
  • Mississippi Seen Navigable Through Jan. 26 After Rock Removal
  • Oil May Increase as Economic Growth Spurs Demand, Survey Shows
  • Gold May Drop to $1,600 on Moving Averages: Technical Analysis
  • Rebar Advances to Five-Month High as Demand Increases in China

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CURRENCIES


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EUROPEAN MARKETS


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ASIAN MARKETS


JAPAN – in what might be the end of Keynesian policy “experimentation” gone gnarly, the Japanese are literally torching their currency at this pt (Yen down another -1.1% this morn) and the Nikkei is going Weimar style republic (+25.2% since mid OCT!); all the while, Japanese economic growth is one of the few majors in the world still slowing – this should end well.

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MIDDLE EAST


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The Hedgeye Macro Team