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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – September 29, 2014


As we look at today's setup for the S&P 500, the range is 32 points or 1.05% downside to 1962 and 0.56% upside to 1994.                                     

                                                                                          

SECTOR PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

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EQUITY SENTIMENT:

 

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CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 1.93 from 1.95
  • VIX closed at 14.85 1 day percent change of -5.05%

 

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:30am: Personal Income, Aug., est. 0.3% (prior 0.2%)
  • 9am: Fed’s Evans speaks in Chicago
  • 10am: Pending Home Sales m/m, Aug., est. -0.5% (prior 3.3%)
  • 10:30am: Dallas Fed Mfg Activity, Sept. est. 10.5 (prior 7.1)
  • 11am: U.S. to announce plans for auction of 4W bills
  • 11:30am: U.S. to sell $24b 3M, $24b 6M bills

 

GOVERNMENT:

    • Senate, House out of session
    • President Obama attends DNC event, India’s Prime Minister Modi attends dinner at White House
    • Sen. Ted Cruz addresses National Security Action Summit
    • U.S. ELECTION WRAP: Nunn Calls Perdue Ad ‘Lie’; Cotton Donors

 

WHAT TO WATCH:

  • Yahoo’s Mayer Says Will Review Starboard Letter Carefully
  • Pimco Suffers $10b of Outflows After Gross’s Departure: WSJ
  • Allianz Won’t Sell Pimco After Gross Departure: FT
  • Encana Schedules Conference Call Before U.S. Market Open
  • Stock Exchanges Plan to Meet Deadline for SEC Audit System
  • U.S. Judge Rules U.S. Bank Must Face Some Peregrine Claims
  • DreamWorks Animation Studio Said Weighing Sale to SoftBank
  • Family Dollar: State AGs to Probe Dollar General Share Deals
  • Ex-Apple CEO Sculley Says IPhone Rollout Drama Overstated
  • Russia Oil Chief Says Sanctions No Bar to Work in Arctic
  • Greenberg Team to Grill Bernanke, Paulson, Geithner on AIG
  • Commerzbank Said to Face Probe of Money-Laundering Controls
  • Oracle Cloud Product to Match Amazon.com’s Pricing: Ellison
  • Alibaba Said to Pay Credit Suisse, Morgan Stanley Top IPO Fees
  • U.S. Iraq Strikes are ‘Not America Against ISIL’: Obama
  • ‘Equalizer’ Tops Box Office; Washington Shows His Worth

 

EARNINGS:

    • Cal-Maine Foods (CALM) 6:30am, $1.17
    • Cantel Medical (CMN) 8am, $0.27
    • Cintas (CTAS) 4:15pm, $0.75
    • Ferrellgas (FGP) 7am, $(0.28)
    • Synnex (SNX) 4:05pm, $1.48

 

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • WTI Crude Set for Biggest Loss in a Week With Brent Before Data
  • ICE Europe Takes Liffe Commodities Markets After 18 Years
  • Hedge Funds Raise Bullish Cocoa Bets on Ebola Risk: Commodities
  • Nickel Heads for Bear Market on Record Inventories Even With Ban
  • Gold Rises on Demand for Alternative Investment as Stocks Drop
  • LME Introducing One-Off Membership Application Fee as of Jan. 1
  • Iron Ore’s ‘Credible Guy’ Albanese Says Weak Prices Will Endure
  • Singapore Bourse to Start Kilobar Gold Trading to Lure Investors
  • Soybeans Drop to Four-Year Low as China Suspends Import Approval
  • Raw Sugar Rises for Fifth Session Before Expiry; Cocoa Advances
  • ABN Amro Commits to China Commodity Finance Growth Post Qingdao
  • Peanut Butter in Maple-Bacon Sandwiches as Prices Tumble: Retail
  • Rebar in Shanghai Falls to Record Low as Iron Ore Price Plunges
  • LME Raises Average Transaction Fees by 34% to Cover Investment

 

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CURRENCIES


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GLOBAL PERFORMANCE

 

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THE HEDGEYE DAILY OUTLOOK - 4

 

EUROPEAN MARKETS

 

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ASIAN MARKETS

 

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MIDDLE EAST

 

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The Hedgeye Macro Team

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


FLASH CALL TODAY 2PM: CRUISE LINES - EUROPEAN RISK

We are hosting a Flash Call at 2PM TODAY as we walk through our thesis on European slowdown risk and how it will impact CCL/RCL.

 

 


THESIS OVERVIEW:

 

  • Hedgeye cruise survey points to weakening European pricing
  • Fragile consumer environment in the Eurozone e.g. Germany, Italy, and France projected by Hedgeye Macro team
  • RCL and CCL share appreciation, overly bullish sentiment, and relatively high valuations suggest reaction to negative European pricing pivot could be sharp

 

CALL DETAILS:


Attendance on this call is limited.  Ping  for more information.


CCL/RCL – RISK WHERE YOU LEAST EXPECT IT

Takeaway: Cruise pricing survey and Macro suggest European winds shifting against RCL and CCL

Takeaways:

 

  • Hedgeye cruise survey points to weakening European pricing
  • Fragile consumer environment in the Eurozone e.g. Germany, Italy, and France projected by Hedgeye Macro team
  • RCL and CCL share appreciation, overly bullish sentiment, and relatively high valuations suggest reaction to negative European pricing pivot could be sharp

 

Please see our in-depth report HERE.



Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

Commodities: Weekly Quant

Commodities: Weekly Quant - chart1 divergences

Commodities: Weekly Quant - chart2 deltas

Commodities: Weekly Quant - chart3 USD Correls

Commodities: Weekly Quant - chart4 S P correls

Commodities: Weekly Quant - chart5 volume

Commodities: Weekly Quant - chart 6 implied vol

Commodities: Weekly Quant - chart7 sentiment

Commodities: Weekly Quant - chart8 1 moth correls

Commodities: Weekly Quant - chart 9 3 mth correls

Commodities: Weekly Quant - chart10 6mth correls

Commodities: Weekly Quant - chart11 1YR correls

Commodities: Weekly Quant - chart12 3YR correls

 

 

Ben Ryan 

Analyst


The Week Ahead

The Economic Data calendar for the week of the 29th of September through the 3rd of October is full of critical releases and events.  Attached below is a snapshot of some of the headline numbers that we will be focused on.

 

The Week Ahead - 09.26.14 Week Ahead

 


The Best of This Week From Hedgeye

Takeaway: Here's a quick look at some of the top videos, cartoons, market insights and more from Hedgeye this past week.

HEDGEYE TV

McCullough: Move Into 'Quad Four' May Mean Market Pain

Hedgeye CEO Keith McCullough discusses the move into Quadrant 4 of Hedgeye's proprietary Growth/Inflation/Policy (GIP) model and what it means for the markets in this excerpt fromThursday's Morning Macro Call for institutional subscribers. Quadrant 4 is where both growth and inflation slow.   

 

Two Chip Stocks to Key In On as Skittish Investors Rotate Into Large Cap Liquidity

In a macro environment where skittish investors are rotating into the largest capitalization stocks, Hedgeye Semiconductors sector head Craig Berger discusses why he like Texas Instruments (TXN) and Qualcomm (QCOM) as the top mega-cap stocks in his sector.

 

An Epic Bubble in Small Caps (And Why Market Illiquidity Remains One of Our Biggest Concerns) 

In this excerpt from Tuesday's Morning Macro Call, Hedgeye CEO Keith McCullough discusses the recent trend we’ve been highlighting of down moves in U.S. stocks on greater-than-usual volume, and why investors need to be particularly careful right now with respect to the bubble in small cap stocks.

HEDGEYE IN THE MEDIA

Hedgeye Raises More Than $56,000 for Bridgeport Youth Program in Inaugural Charity Golf Tournament

 

STAMFORD, Conn – September 25, 2014 – Hedgeye Risk Management, today announced that it has raised over $56,000 to support Bridgeport Caribe Youth Leaders (BCYL) a 501(c)(3) youth organization in Bridgeport, CT committed to engaging young people in athletic, educational and community programs. The money was raised via Hedgeye Cares 1st Annual Charity Golf Challenge, which was held September 16th at the Great River Golf Course in Milford, CT.

 

In its inaugural year, the Hedgeye tournament attracted 91 golfers. It included a full day of lunch, golf, dinner and a silent auction later in the evening. The Lincoln Motor Company was the event’s Platinum Sponsor and offered participants test drives in their newest models. Other major Sponsors included Bloomberg, Salesforce, MBIA Foundation and Firefly Space Systems.

 

“I am deeply grateful to [Hedgeye CEO] Keith McCullough and the entire Hedgeye Cares team for their generous support to the Bridgeport Caribe Youth Leaders.  Their contribution will help us to continue to provide Bridgeport youth; the environment, resources and inspiration that foster leadership skills and values.  I admire Hedgeye’s commitment to the community and BCYL and look forward to a long lasting relationship together,” said BCYL President John Torres.

 

The Best of This Week From Hedgeye - Keith McCullough John Torres large

 

Some of the silent auction items donated included a Martha’s Vineyard vacation, a signed jersey and hockey stick from New York Ranger forward Martin St. Louis and a round of golf at the exclusive Sebonack Golf Club in Southhampton.

 

”We’ve been enormously blessed and are just trying to give a little something back to our community here in Connecticut. John Torres and his team at Caribe are working tirelessly to give kids in Bridgeport the tools they need to become tomorrow’s leaders and success stories,” said Hedgeye CEO Keith McCullough.

 

Click below to watch video highlights.

 

McCullough on Fox Business: ‘Fade Like a Flower’ Fed Has a Surprise in Store for Market

Hedgeye CEO Keith McCullough spent the full hour with Fox Business host Maria Bartiromo on “Opening Bell” Wednesday morning. In this clip, McCullough explains his non-consensus call on why the Yellen Fed is set to get easier, why the Russell 2000 is in an epic bubble and how to position yourself right now. 

CARTOON

 Magic Carpet Ride

The Best of This Week From Hedgeye - Magic cartpet Alibaba 9.244.14

"One of the most epic US stock market days I’ve witnessed in my career," Hedgeye CEO Keith McCullough wrote about BABA's Friday IPO.

 

Growth?

The Best of This Week From Hedgeye - Slowgrowth 9.24.14

We’re one more bad jobs (and/or GDP) report away from Janet sounding like Mario.

CHART

Be Long Mega Cap Liquidity Vs. Short Small Cap Illiquidity 

The Best of This Week From Hedgeye - COD 9.23.14

At 55x trailing earnings, and 42% of the names in the Russell 2000 crashing (-20% or more from their 12 month peak), the US stock market is “cheap.” Right.

 

An Effective -3% Fed Funds Rate For An Economy That's Allegedly "Humming Along"?

The Best of This Week From Hedgeye - COD 9.25.14

POLL OF THE DAY 

 YELLEN

"We’re one more bad jobs (and/or GDP) report away from Janet Yellen sounding like Mario Draghi," Hedgeye CEO Keith McCullough wrote Wednesday. "We're reiterating our call for a lower 10-year yield." 

 

Correction?

"Remember when The Facebook (FB), Apple (AAPL), and BABA had a projected $1 TRILLION in combined cap?" Hedgeye CEO Keith McCullough wrote in Monday's Morning Newsletter. "I do. That may have been the top."


 


Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

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