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TODAY’S S&P 500 SET-UP – January 17, 2013

As we look at today's setup for the S&P 500, the range is 12 points or 0.45% downside to 1466 and 0.36% upside to 1478.                                                                                                                               

SECTOR AND GLOBAL PERFORMANCE

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EQUITY SENTIMENT:


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CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 1.60 from 1.58
  • VIX  closed at 13.42 1 day percent change of -0.96%
  • RUT – after making a series of all-time highs (higher-highs), the Russell2000 finally flashed a negative divergence into yesterday’s close (closing down -0.33% w/ the Nasdaq up); not a bearish signal on the margin unless confirmed today, so watch that.

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:30am: Housing Starts, Dec., est. 890k (prior 861k)
  • 8:30am: Housing Starts, M/m,  Dec., est. 3.3% (prior -3%)
  • 8:30am: Building Permits, Dec., est. 905k (prior 900k)
  • 8:30am: Init Jobless Claims, Jan. 12, est. 368k (prior 371k)
  • 9:45am: Bloomberg Consumer Comfort, Jan. 13 (prior -34.4)
  • 10am: Freddie Mac 30-yr mortgage
  • 10am: Philadelphia Fed., Jan., est. 6.0 (prior 4.6)
  • 10:30am: EIA natural gas storage change
  • 11am: Fed to purchase $2.75b-$3.5b in 2020-2022 sector
  • 11am: U.S. Treasury to announce plans for 10Y TIPS auction
  • 12:05pm: Fed’s Lockhart speaks, Bloomberg Global Mkts Summit

GOVERNMENT:

    • Senate not in session
    • SEC Commissioner Gallagher at U.S. Chamber of Commerce
    • Bloomberg Global Markets Summit, w/speakers Atlanta Federal Reserve President Dennis Lockhart, Paul Wolfowitz of the American Enterprise Institute, 8am
    • CFPB holds hearing on mortgage-svcing underwriting rule
    • FDA decisions:
      • NuPathe’s migraine patch
      • Decision date for Santarus, Cosmo ulcerative colitis drug
    • Dept. of Veterans Affairs may award five-year, $5b technology contract; Lockheed Martin, HP, have shown interest

WHAT TO WATCH

  • Boeing’s Dreamliner planes grounded by U.S.
    • Japan Airlines to cancel all Boeing 787 flights Jan. 19-25; Air India, Latam Airlines will also ground its Dreamliners
    • GS Yuasa may take months to complete 787 battery probe
  • Citigroup, BofA among banks releasing earnings this AM
  • Silver Lake close to lining up ~$15b in funds for Dell LBO
  • HP approached by investment bankers about selling assets
  • Rio Tinto CEO steps down, co. taking ~$14b of writedowns
  • JPMorgan said to settle claim with Whale trader’s supervisor
  • AB InBev unwilling to sell Modelo plant for merger approval
  • Goldman Sachs issued $6b of bonds in lender’s largest offering
  • EBay sales beat ests. as Donahoe pushes mobile commerce
  • Trauson says Stryker offers to buy outstanding shrs at HK$7.5 each
  • Wilbur Ross still plans to have IPO of Intl Automotive Components Group; declined to say when
  • Deutsche Bank profited as derivative hid Monte Paschi losses
  • Advanced Micro Devices ex-employees sued over trade secrets
  • GM to invest $1.5b in North America factories this year
  • Sun Life, Khazanah Nasional Berhad to buy CIMB Aviva for $596m
  • Accordia plans to sell ~10 properties to finance shr-buyback
  • Hollywood studios sued over royalties from home video sales

EARNINGS:

    • Huntington Bancshares (HBAN) 5:55am, $0.17
    • BB&T (BBT) 6am, $0.71
    • UnitedHealth Group (UNH) 6am, $1.20
    • PNC Financial Services Group (PNC) 6:30am, $1.48
    • Fifth Third Bank (FITB) 6:30am, $0.41
    • BlackRock (BLK) 6:30am, $3.73
    • Bank of America (BAC) 7am, $0.20
    • Fastenal (FAST) 7am, $0.33
    • Netscout Systems (NTCT) 7:30am, $0.35
    • Citigroup (C) 8am, $0.96
    • Amphenol (APH) 8am, $0.90
    • Intel (INTC) 4:01pm, $0.45
    • Associated Banc-corp (ASBC) 4:01pm, $0.26
    • American Express (AXP) 4:01pm, NA
    • People’s United Financial (PBCT) 4:02pm, $0.19
    • Wintrust Financial (WTFC) 4:04pm, $0.59
    • Capital One Financial (COF) 4:05pm, $1.59
    • Matthews International (MATW) 4:10pm, $0.42
    • Xilinx (XLNX) 4:20pm, $0.37

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • WTI Oil Rises to Four-Month High to Cut Brent Discount to $15
  • JPMorgan Tops Banks for Third Year as Loans Retreat: Commodities
  • Rio CEO Albanese Steps Down as $14 Billion Writedown Looms
  • Rising Crude Oil May Accelerate Growth of EU Consumer Gas Prices
  • Soybeans Drop From 3-Week High on Rising South American Supplies
  • Gold Poised to Decline in New York Before U.S. Economic Data
  • European 2014 Power Drops to Record as Near-Term Prices Decline
  • Iamgold Sees ‘Peak Gold’ Forging $2,500 Price: Corporate Canada
  • Korean Oil Buyers to Halt North Sea Price Slide: Energy Markets
  • Trough in China PMI, Electricity Output Aids Metals: Bull Case
  • Lukoil, Iraq Agree to Cut Output Target at West Qurna-2 Field
  • Cocoa Butter Stabilizes in Europe as Grinders Boost Processing
  • Palm Oil Declines as India Changes Calculation of Import Taxes
  • Merkel Offshore Wind-Power Dream Stalls as Vow Turns to Bluster
  • Copper Rises on Speculation Chinese Economic Growth Strengthened

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CURRENCIES


YEN – 2-days up, tapped immediate-term TRADE resistance (24hrs ago), then straight back down here today (-0.87%); we re-shorted the bounce and went through why in our Global Macro Themes presentation titled #QuadrillYen this wk; let us know if you want that slide deck. Interesting that Nikkei didn’t go up on Yen down overnight.

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EUROPEAN MARKETS


DAX – starting to make a series of lower-highs and also leads losers in European majors this morning – Euro up +0.5% to $1.33 starting to annoy some European exporters; this is the Currency War.

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ASIAN MARKETS

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MIDDLE EAST


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The Hedgeye Macro Team