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TODAY’S S&P 500 SET-UP – January 25, 2013


As we look at today's setup for the S&P 500, the range is 21 points or 0.92% downside to 1481 and 0.48% upside to 1502.              

SECTOR AND GLOBAL PERFORMANCE

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EQUITY SENTIMENT:


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CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 1.65 from 1.61
  • VIX  closed at 12.69 1 day percent change of 1.85%
  • BOND YIELDS – We had lively debates in Boston and NYC seeing clients this week; we definitely surprised people w/ my bullishness on both growth and stocks; especially relative to Treasuries and JGBs; Fund Flows (into stocks, out of bonds) = big part of my call here; we just saw the 3rd consecutive wk of real US Equity inflows (+$3.7B ex-ETFs); that’s why this market won’t go down.

MACRO DATA POINTS (Bloomberg Estimates):

  • 10am: New Home Sales, Dec., est. 385k (prior 377k)
  • 10am: New Home Sales M/m, Dec., est. 2.1% (4.4%)
  • 11am: Fed to buy $3b-$3.75b debt in 2018-2019 sector
  • 1pm: Baker Hughes rig count

GOVERNMENT:

    • Treasury Secretary Tim Geithner to step down
    • CFTC meets on surveillance, enforcement matters, 10am
    • FDA to release documents on Boehringer Ingelheim’s once-daily drug olodaterol for chronic obstructive pulmonary disorder
    • Second day of HHS, FDA meeting on public health benefits, risks of drugs containing hydrocodone, 8am
    • HHS, NIH meeting on deafness and other communication disorders, Bethesda. 8:30am

WHAT TO WATCH

  • Fed pushes into "uncharted territory" as assets hit $3t
  • Apple expands audits, says China labor agent forged documents
  • Microsoft’s Windows bolsters sales in challenging PC environment
  • Boeing design should prevent 787 battery fires, NTSB says
  • tarbucks profit meets ests. on sales increase in Americas
  • Samsung, Apple Hold half smartphone mkt as shipments jump 43%
  • Weyerhaeuser 4Q EPS ex-items 26c; CEO says building momentum
  • U.K. eco. shrank more than forecast in 4Q
  • German business confidence gained for 3rd mo. in Jan.
  • Samsung drops after warning won may cut earnings $2.8b
  • AT&T 4Q loss narrows as smartphone sales hit record
  • Financial job losses near 4-yr high as Europe leads cuts
  • Icahn says no respect for Ackman after Herbalife bet
  • Morgan Stanley CEO pay said to decline 30% excluding new award
  • Whitman Capital founder gets 2 yrs’ prison in insider case
  • Fed Meeting, U.S. Jobs, Boeing, China: Week Ahead Jan. 26-Feb. 2

EARNINGS:

    • Covidien (COV) 6am, $1.06 - Preview
    • Prosperity Bancshares (PB) 6:02am, $0.84
    • Honeywell International (HON) 6:30am, $1.10 - Preview
    • Immunogen (IMGN) 6:30am, $(0.25)
    • Halliburton Co (HAL) 6:56am, $0.61
    • Kimberly-Clark (KMB) 7am, $1.36
    • Procter & Gamble (PG) 7am, $1.11 - Preview
    • Amcol International (ACO) 7am, $0.48
    • Oshkosh (OSK) 7am, $0.31
    • Moog (MOG/A) 7:55am, $0.82

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • WTI Crude Poised for Longest Run of Weekly Gains Since 2009
  • Copper Seen Extending Rally With China Accelerating: Commodities
  • Wheat Falls as Moisture May Ease Drought Stress in U.S. Plains
  • Cotton Falls in N.Y., Heading for First Drop in Eight Sessions
  • Copper Slips 0.1% to $8,091 a Ton in London, Erasing Advance
  • Munich Re Says World Crop Insurance Costs Top Record on Drought
  • Leaf Rust Outbreak Threatens Central American Coffee Output
  • Palm Exports From Malaysia Drop at Slower Pace on Indian Demand
  • Oil May Increase as Economic Growth Boosts Demand, Survey Shows
  • Corn Swoon Returning on Moving-Average Break: Technical Analysis
  • Chavez Cancer Freezes Venezuela’s Overseas Oil Funding: Energy
  • European Weekly Crude Palm Oil Price at 3-Month High: BI Chart
  • Gas Demand Declines for Fourth Year in Mature European Markets
  • Gold Declines as Focus Shifts to Investor Selling; Silver Falls

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CURRENCIES

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EUROPEAN MARKETS

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ASIAN MARKETS


JAPAN – ah the fresh smell of Taro Aso’s burning Yen again on the tape this morning as the Yen hits new lows; Nikkei rips +2.9% on that to fresh new highs (up +26.2% since mid-Nov!) and they haven’t even hit the CTRL+P button hard yet; with -0.2% y/y DEFLATION in their DEC CPI, they are going to have to print like the world has never seen to hit “2% inflation”.

KOSPI – this is the Currency War, and the South Korean currency (and stock market) does not like this; KOSPI confirms our breakdown signal from 3days ago, dropping another -0.9% overnight (down -4.4% from its JAN high); interconnectedness in global macro markets matters; stay tuned on this, Chinese stocks broke 2313 TRADE support this wk too.

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MIDDLE EAST


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The Hedgeye Macro Team