US STRATEGY - MIXED SIGNALS

There appears to be a bit of waning upside momentum, but the daily pattern of higher-highs and higher-lows remains intact.  The S&P 500 closed down 0.5%, with volume up 3.3% day-over-day.  Breadth declined significantly with the advance/decline at -2353 to -992. 

 

The US MACRO data points continue to come in with a mixed message.  On one hand, the durable goods report was positive for the third month at 0.5%, though slightly below expectations of 0.6%.  On the other hand, housing continues with a string of disappointments as new home sales hit a record low.   The February new home sales were 308,000; lower than consensus 315,000 and down from a revised January report of 315,000. The Census Bureau estimate of new houses for sale at the end of February was 236,000, which represents 9.2 months of supply; up slightly from 9.1 months in January.  Overseas, Fitch’s downgrade of Portugal created increased sovereign debt concerns. 

 

The Dollar index had another strong day improving 1.2% and is down slightly in early trading today. 

 

The VIX was up 7.3% yesterday, the biggest up day since February 4, 2010.  The VIX continues to be broken on all three durations - TRADE, TREND and TAIL. 

 

The Financials (XLF) was the only sector to close up on the day.  The XLF was driven by the banks with the BXK +0.4% on the day.  BAC is leading the money center names higher after the company announced that it would start forgiving mortgage loan principal for homeowners who owe more than 120% of their homes' value.  MBIA and Genworth Financial were the two best performing stocks in the XLF. 

 

Despite the disappointing news in housing, the S&P 500 Homebuilding index rose +1.9%; the third straight daily gain.  LEN reported a much smaller loss than expected and said that it is on track to achieve profitability in fiscal 2010.

 

Crude was down 1.6% following a larger than expected build in crude inventory.  Yesterday, crude broke the Hedgeye immediate term risk management line, so we sold out of our position in the USO.  With Global Sovereign Debt risk mounting, we don't get paid to hope oil holds support.

 

Yesterday, gold prices are trading lower nearing a six-week low as continued negative Euro zone news lifted the dollar.  In early trading, copper is trading lower also as the dollar is trading higher. 

 

In early trading, equity futures are trading above fair value, in an effort to reverse yesterday's declines.  As we look at today’s set up the range for the S&P 500 is 17 points or 0.7% (1,160) downside and 0.5% (1,174) upside. 

 

Today's MACRO highlights are:

  • weekly jobless claims
  • Bernanke testifies on the FEDs exit strategy
  • weekly natural gas inventories

 

Howard Penney

Managing Director


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more