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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – August 29, 2013


As we look at today's setup for the S&P 500, the range is 37 points or 0.43% downside to 1628 and 1.84% upside to 1665.                                     

                                                                                          

SECTOR PERFORMANCE


THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

EQUITY SENTIMENT:


THE HEDGEYE DAILY OUTLOOK - 10


CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 2.39 from 2.37
  • VIX  closed at 16.49 1 day percent change of -1.67%

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:30am: GDP Annlized Q/q, 2Q revised, est. 2.2% (prior 1.7%)
  • 8:30am: Init. Jobless Claims, Aug. 24, est. 331k (pr 336k)
  • 8:50am: Fed’s Bullard speaks in Memphis
  • 9:45am: Bloomberg Consumer Comfort, Aug. 25, prior -28.8
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural-gas storage change
  • 11am: Fed to buy $1.25b-$1.75b in 2036-2043 sector
  • 1pm: U.S. to sell $29b 7Y notes
  • 2pm: Fed’s Lacker speaks in Newport News, Va.

GOVERNMENT:

    • 9am: Transportation Dept, Federal Railroad Administration hold mtg of Railroad Safety Advisory Cmte to discuss July derailment in Quebec
    • 10am: FDIC Chairman Gruenberg announces 2Q bank, thrift earns
    • Syria showdown widens rift as U.S., U.K. press for action

WHAT TO WATCH:

  • JPMorgan bribery probe said to expand as spreadsheet found
  • Vodafone, Verizon in talks over U.S. wireless stake sale
  • US Airways’ Washington Airport prize hobbles bid for AMR merger
  • Blackstone settles IPO disclosure lawsuit for $85m
  • Seaworld slumps after slashing prices as visitors drop
  • U.S. and Swiss said to agree in offshore tax evasion probe
  • Zurich Chairman Ackermann resigns after CFO’s suicide
  • Brazil raises rate to 9% as real undercuts inflation fight

EARNINGS:

    • Africa Oil (AOI CN) 5:30pm, $(0.02)
    • Campbell Soup (CPB) 7:30am, $0.42
    • Esterline Technologies (ESL) 4pm, $1.54
    • Golar LNG (GLNG) Bef-mkt, $0.20
    • Golar LNG Partners (GMLP) Bef-mkt, $0.53
    • K12 (LRN) 6am, $0.02
    • Krispy Kreme Doughnuts (KKD) 4:05pm, $0.16
    • Pall (PLL) 7am, $0.89
    • Royal Bank of Canada (RY CN) 6am, C$1.38 - Preview
    • Salesforce.com (CRM) 4:05pm, $0.07
    • Signet Jewelers (SIG) 6:30am, $0.83
    • Splunk (SPLK) 4:02pm, $(0.03)
    • Toronto-Dominion (TD CN) 6:30am, C$1.53 - Preview

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Gold Snaps Five-Day Rally as Data May Increase Case for Tapering
  • Cotton Glut Expands to Record as Hanes Profit Gains: Commodities
  • WTI Oil Falls From Two-Year High as Syria Intervention Debated
  • Robusta Coffee Falls to 2-Month Low on Bear Trend; Cocoa Slides
  • Copper Trades Near Two-Week Low on Concern About Syria Unrest
  • Noble Wins Order to Liquidate Ebullio Commodity Master Fund
  • Wheat Exports From India Seen Climbing on Record Plunge in Rupee
  • New Billionaire Profits From Vietnam-China Cotton Cost Gap
  • Soybeans, Corn Decline on Improving Outlook for Midwest Weather
  • China Galvanized Steel Slowdown May Cool Zinc Use After 1H Boost
  • Gas Price Jump Seen in Record Europe Stockpiling: Energy Markets
  • Capital One Hires JPMorgan, Barclays Bankers to Expand in Energy
  • South Africa Gold Companies Considering Locking Out Workers
  • Oil May Fall as Retaliation for Syria Strike Unlikely: Citigroup

THE HEDGEYE DAILY OUTLOOK - 5

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - 6

 

GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 3

 

THE HEDGEYE DAILY OUTLOOK - 4

 

EUROPEAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 7

 

ASIAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 8

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - 9

 

 

The Hedgeye Macro Team

 

 

 

 

 

 

 

 

 

 

 

 



Sin's Knowledge

“The physicists have known sin; and this is a knowledge which they cannot lose.”

-Robert Oppenheimer

 

Got introspective accountability? After he (quickly) realized the capacity of the nuclear weapons he helped create, Robert Oppenheimer became very unpopular with the State – primarily because he held both himself and the government to account.

 

Can you imagine a central planner of the Bernanke epoch holding themselves accountable to the highest levels of food, energy, education, etc. inflation in world history? Nah. That would require un-spinning the truth.

 

And the truth is that American political scientists who engaged in devaluing the purchasing power of the American people to 40 year lows in Q2 of 2011 know that sin. This is a market knowledge that history will not lose.

 

Back to the Global Macro Grind

 

If you’ve sat across the table from me and my macro research team in the last few years, you’ll know that I refuse to have a debate about mean reversion risks without contextualizing the post Nixon low in the world’s reserve currency (see chart):

  1. Got Causality? Of course, when a country cuts rates to zero then whispers to everyone front-running their next move that zero really isn’t zero (for Bernanke 0 = 0 minus 1, 2, 3, 4? QE5?), its currency goes down, hard
  2. Post Nixon (i.e. post his devaluing the Dollar by abandoning the Gold Standard in 1971, purely for political gain), the US Dollar Index has never seen a lower-low versus the 2011 low; that’s also when Gold hit its all-time high

Since most global commodities settle in Dollars, why there’s been raging inverse correlation (Dollar Down = Commodities Inflation Up) alongside causality in this relationship is trivial to everyone other than the people who should be held responsible for it.

 

What is less trivial is all of the unintended consequences associated with the ultimate central planning sin (an un-elected overlord confiscating the purchasing power of The People). Here are some of the big ones:

  1. Commodity Bubble
  2. Bond Bubble
  3. Emerging Market Bubble

Yep, that’s going to be a lot for Bernanke’s children (and their children) to noodle over for the next century. That is, of course, unless the next guy or gal running the un-elected agency does what no modern Federal Reserve Chairman has ever not done – raise rates.

For the last 6-12 months, I’ve spent a lot of time ranting about these Global Macro Themes:

  1. #CommodityDeflation
  2. #RatesRising
  3. #EmergingOutflows

These are relatively easy long-term TAIL risk calls to make because all 3 of them are basically about unwinding all 3 of the aforementioned bubbles. Once prices stop making all-time highs (commodities, bonds, or currencies), there’s this big little risk management critter Bernanke has never mentioned under oath called asymmetry.

 

So, alongside an English major who has never traded a macro market in his life being the chief Keynesian access “economist” @CNBC, at this stage of the cycle this is what you get:

  1. US Dollar making a series of intermediate-term TREND higher-lows (off her all-time lows in 2011)
  2. US Interest Rates making a series of intermediate-term TREND higher-lows (off their all-time lows in 2012)
  3. Gold and food prices making a series of intermediate-term TREND lower-highs (off their all-time highs of 2011-2012)

All the while, what we still get from the consensus TV circus that is government #AccessMedia is a bunch of uninformed people begging for more of the drugs that the political scientists got rich selling us.

 

If I am not clear on my long-term policy view, let me state it plainly – stop devaluing the Dollar and trying to smooth economic gravity. If you ever want to see US growth expectations come back, you have to let the US Dollar come back (and let rates rise alongside her).

 

Why am I going off on this today? Well America, we’re at The Crossroad. Unwinding the sin embedded in Bernanke’s post 2012 Jackson Hole policy is what markets have been doing for 10 months.

 

Collectively, we either have the responsibility within all of us to rise up against the tyranny of easy money and currency debauchery, or we do not. At this point, I can only hope the people who voted for this government hold it to account.

 

Our immediate-term Risk Ranges across 6 Big Macros are now as follows:

 

UST 10yr Yield 2.72-2.93%

SPX 1

VIX 15.26-17.04

USD 80.91-81.69

Brent 111.63-115.98

Gold 1

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Sin's Knowledge - CHART

Sin's Knowledge - vp


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THE M3: MBS WINS 1ST S'PORE DEBT CASE

THE MACAU METRO MONITOR, AUGUST 29, 2013

 

 

MBS SCORES LANDMARK VICTORY IN CASINO DEBT COLLECTION CASE Business Times

The High Court has handed Marina Bay Sands a decisive victory in Singapore's first casino debt collection trial over an unpaid debt that a patron, Lester Ong Boon Lin, had sought to avoid on technical grounds.  Justice Lai Siu Chiu awarded $240,868 - the unpaid debt - plus default interest and costs to MBS after finding in favor of the casino on two pivotal issues.


JCP: Reminder -- Consumer Trend and Liquidity Conference Call

Takeaway: Reminder that today we're hosting a conference call at 11am to discuss our consumer survey on JCP, and it's implication on on liquidity.

JCP: Reminder -- Consumer Trend and Liquidity Conference Call - JCPdialin 08.29.13

 

Please join us for a conference call titled  "JCP: Where is The Consumer and The Cash?" later this morning at 11:00am EDT.The call will take an in-depth look at consumer trends and analyze J.C. Penney's (JCP) current liquidity situation.

  

CALL DETAILS WILL INCLUDE:  

  • We'll debut the results of our extensive consumer survey of JCP shoppers to gain insight into the following:
    • Why consumers left JCP (or spent less while they were there).
    • If they left, where did they take their business (KSS, M, GPS, Other, or Nowhere?)
    • Are they gone forever, or can JCP win them back?
    • What does JCP need to do to win back the business? Are they doing it under Ullman?
    • What do consumers think of redesigned stores, and does it impact their decision to return to JCP?
    • We will present our liquidity sensitivity analysis, and while JCP will cut it close at times, we don't think it is at risk of a material liquidity event.
    • Discuss how liquidity ties in to the timing of a shift to a permanent CEO.
    • Take a detailed look at Gross Margin, which is the one line on the P&L that we think could improve sooner than later.

  

 

DIAL-IN DETAILS:

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 173225#
  • Materials: CLICK HERE (Slides will download approximately one hour prior to the start of the call) 

 

 

CONTACT

For question please email .   

 


Time to Make Some Decisions

So. How does yesterday's -1.6% drop in the S&P 500 look within the context of the Top-3 drops since April? It ranks as #3 (June 20th = -2.5% and April 15th = -2.3%). 

 

Time to Make Some Decisions - bu77

 

The reality is you haven’t had many opportunities to buy US growth stocks in 2013. This one is a shallower correction (on less volume). Meanwhile, S&P 500 TREND support is literally right where it closed yesterday.

 

Incidentally, the II Bull/Bear Spread just tanked to a 6-month low. Only 38% in the survey admit to being bullish. That's a fresh year-to-date low. It has crashed 56% in less than a month. It's also an uber-bullish signal.

 

It's time to make some decisions.

 

Time to Make Some Decisions - hchart1


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