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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – May 20, 2014


As we look at today's setup for the S&P 500, the range is 32 points or 1.07% downside to 1865 and 0.63% upside to 1897.                                                           

                                                                    

SECTOR PERFORMANCE

 

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EQUITY SENTIMENT:

 

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CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 2.19 from 2.20
  • VIX closed at 12.42 1 day percent change of -0.16%

 

MACRO DATA POINTS (Bloomberg Estimates):

 

  • 7:45am/8:55am: ICSC/Redbook weekly sales
  • 12:30pm: Fed’s Plosser speaks in Washington
  • 1pm: Fed’s Dudley speaks in New York
  • 4:30pm: API inventories

 

GOVERNMENT:

    • Water Resources bill H.R. 308 may be taken up on House floor as House-Senate conference report
    • Finra annual conf. in Washington; speakers include SEC Commisioner Dan Gallagher
    • 9am: Natural Products Assn CEO Dan Fabricant at BGov conference
    • 9:30am: House Oversight/Govt Reform subcmte hearing on misspent Medicare funds
    • 10am: House Appropriations subcmte FY15 budget bill markup for Agriculture Dept, FDA, related agencies
    • 10am: Senate Appropriations  mark up Military Construction and Veterans Affairs bill spending bills
    • 10:30am: FCC Chairman Tom Wheeler  before House Energy & Commerce panel on agency oversight
    • 3:30pm: House Fin Svs Cmte’s Hensarling at Heritage Foundation
    • U.S. Senate holds procedural vote on Fischer Fed nomination
    • Ark., Ga., Idaho, Ky., Ore., Penn., hold primaries
    • U.S. ELECTION WRAP: Primaries; Senate Outside Ad Buys

 

WHAT TO WATCH:

  • Cobham to buy Aeroflex for $895m to grow in civil market
  • Pfizer’s $117b AstraZeneca hunt said likely to fail
  • Investcorp said to tap JPMorgan for $1.1b Esmalglass sale
  • Credit Suisse agrees to plead guilty in tax case, pay $2.6b
  • Apple, Samsung blame the other for blocking settlement talks
  • America Movil unable to buy significant part of AT&T stake
  • Visa, MasterCard forced to weigh Russia exit as elections loom
  • Twitter said to be discussing music deals including SoundCloud
  • T. Rowe’s Twitter bullishness wanes; firm dumps 26% of stake
  • LSE in exclusive talks with Russell parent company
  • Cisco, WWE, Jarden CFOs speak at Bloomberg conference
  • BP faces billions in spill payments after court upholds deal
  • RSA to sell Canadian broker to Arthur J. Gallagher
  • U.K. inflation up more than forecast on transport costs
  • China suspends cybersecurity cooperation after U.S. charges
  • Thai military declares martial law, seeks to quell protests
  • Microsoft hosts new product event in NYC
  • BlackRock CEO Fink speaks at ICI meeting

 

AM EARNS:

    • Apollo Investment (AINV) 7:30am, $0.21
    • Dick’s Sporting Goods (DKS) 7:30am, $0.52
    • Donaldson Co (DCI) 7am, $0.47
    • Home Depot (HD) 6am, $0.99 - Preview
    • Medtronic (MDT) 7:15am, $1.12 - Preview
    • Stage Stores (SSI) 6am, ($0.38)
    • Staples (SPLS) 6am, $0.21 - Preview
    • TJX (TJX) 8:28am, $0.67 - Preview

 

PM EARNS:

    • Analog Devices (ADI) 4:05pm, $0.56
    • Heico (HEI) 5:14pm, $0.40
    • Intuit (INTU) 4pm, $3.50
    • Salesforce.com (CRM) 4:05pm, $0.10 - Preview
    • Tidewater (TDW) 4:03pm, $0.63

 

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

 

  • Gold Demand in India Seen Climbing as Government May Ease Curbs
  • WTI Trades Near Four-Week High on Cushing Supplies; Brent Steady
  • Stumpy Brazil Cane Crop Signals World Sugar Deficit: Commodities
  • Nickel Drops on Speculation Supplies Are Adequate to Meet Demand
  • Gold Consumption in Thailand Drops in Q1 as Bar Demand Slumps
  • Wheat Rises Most in Two Weeks as U.S. Crop Ratings Deteriorate
  • Palm Oil Drops to 4-Month Low as Malaysian Exports Seen Slowing
  • Port Hedland Engineers Union Set to Continue Talks with Teekay
  • Commodity Assets Said by Barclays to Fall $2 Billion in April
  • U.S. LNG Won’t Replace Russian Gas as Europe Seeks Options
  • Ukraine Must Show Will to Pay Before Gas Talks, Medvedev Says
  • Europe Has 28-Year Shale Gas Rebuff to Russia: Chart of the Day
  • Japan Triples Oil Imports, Boosts LNG 23% on Nuclear Shutdown
  • Gold Demand Little Changed as Jewelry Counters Lower Investment

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CURRENCIES


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GLOBAL PERFORMANCE

 

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EUROPEAN MARKETS

 

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ASIAN MARKETS

 

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MIDDLE EAST

 

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The Hedgeye Macro Team

 

 

 

 

 

 

 

 

 

 

 

 

 


May 20, 2014

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BULLISH TRENDS

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BEARISH TRENDS

 

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Poll of the Day Recap: 89% Say Gas Prices Not a Factor in Memorial Day Plans

Takeaway: 89% NO; 11% YES.

Oil prices are surging – meaning higher prices at the pump – just in time for Memorial Day weekend when Americans are being taxed six-ways to Sunday from rent to food. It’s just another sign of #InflationAccelerating. So while every car-owning American who fills up the tank may be feeling the pinch, we wanted to know how it’s affecting your holiday.

 

Today’s poll question was: As a result of rising gas prices, are you planning to change your Memorial Day plans?

 

Poll of the Day Recap: 89% Say Gas Prices Not a Factor in Memorial Day Plans - flags 891055a


At the time of this post, an overwhelming 89% of voters said NO; 11% said YES.


Of those who voted NO, voters explained their various reasons:

  • “While higher gas prices will not affect my Memorial Day plans, it has definitely affected my normal day to day driving habits.”
     
  • “Working class travelers have adjusted their monthly budgets to current prices. Gas prices need to be .50 higher to have the same effect as seen in 2008.”
     
  • “What's a few extra dollars at the pump between friends??”
     
  • “I am numb to higher gas prices after at least 5 years at these inflated levels.”
     
  • “Not sure the price of gas is the swing factor, but it will impact how much the average consumer has left over to spend on potato salad and Bud Light!”
     
  • “We were already planning to not go anywhere.  The price of gas is generally not a factor in our travel decisions.”
     

Conversely, as one YES voter said, “I'd rather not go anywhere than spend $200 roundtrip on gas. It's pure insanity."

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Hedgeye Retail: Target Execs Should Be Afraid for Their Jobs | $TGT

Takeaway: The fact that Target's CMO personally addressed the anonymous letter in public is telling.

Hedgeye Retail: Target Execs Should Be Afraid for Their Jobs | $TGT - 12

 

The Truth Hurts

 

Target CMO, Jeff Jones, in response to an article posted by an anonymous employee on Gawker:

 

• "You’d think that these two incidents alone [Data Breach & CEO resignation] would create enough pain to last a brand a lifetime but one of the most challenging things that has happened, in my opinion, have been reports, some attributed to unnamed team members, that paint a picture of a culture that is in crisis. When a recent post on a well-known blog called me out by name, it only felt right that I should respond."

 

• "While we would have preferred to have a conversation like this with the team member directly, speaking openly and honestly, and challenging norms is exactly what we need to be doing today and every day going forward."

Takeaway From Hedgeye’s Brian McGough:

Normally we wouldn't characterize the opinion of one disgruntled employee as indicative of the corporate culture, but the fact that Target's CMO, Jeff Jones, personally addressed the anonymous letter in public is telling. Jones was actually the only person called out as being a positive influence in the executive ranks. He's speaking up on behalf of the executive officers of Target, most of whom are afraid for their jobs.  They should be.

 

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Editor's Note: This is a complimentary research excerpt from Hedgeye Retail Sector Head Brian McGough. Follow McGough on Twitter @HedgeyeRetail

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Video | McCullough: Listening to What Mr. Macro Market Is Telling Us

Hedgeye CEO Keith McCullough walks us through what the markets are telling us about growth, inflation, yield spreads and more.


FLASHBACK | Cartoon of the Day: Out of Gas

Takeaway: This cartoon was originally published April 14.

FLASHBACK | Cartoon of the Day: Out of Gas - Out of gas 04.14.14

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