The S&P 500 finished higher on Thursday after selling off in early trading.  The market can go down but it will not stay down.  Each move down is followed by a rebound, and each move higher is a BETA shift up.  The best performing sectors yesterday were the high beta XLY, XLE and XLF.  The underperformers yesterday were XLU, XLV and XLP. On the MACRO front, U.S. stocks rose for the seventh time in nine days as strong retails sales more than offset any fears triggered by concern over Greece’s debt crisis.


Following the European Central Bank’s decision today to keep its main interest rate on hold at 1%, ECB President Jean-Claude Trichet held his usual follow-up press conference. Notably, the media pressed him in the Q&A session to explain the economic conditions (parameters) that will initiate the EU and IMF to inject funding for Greece, or conversely the market conditions that should initiate the Greek government to request capital. In typical Trichet fashion he was tight-lipped on such questions, but did express that “a default is not an issue for Greece”.


As head into next week’s earning season, the corporate calendar looks to be a bright spot, as most retailers reported stronger-than-expected March same-store sales. The retail sector extended its outperformance vs. the broader market on the news. The S&P retail Index advanced 1.3% yesterday and is up 3.2% for the past week.  The Thomson Reuters same-store sales index rose 9.1% in March vs. final consensus expectations for a 6.3% gain, marking the seventh consecutive positive reading. The Street Account beat/miss ratio improved to 83%/17% in March from 79%/21% in February and marked only the second 80+% reading since they began tracking the figures closely nearly five years ago.


Yesterday, the Financials (XLF) was a big driver to the upside in the market, the banking group leading the way; the BKX was up 1.0% on the day. 


The increased M&A speculation in the airline industry offered additional support for market stocks yesterday and the Transports +1.4% outperformed the broader market.  The bulk of the upside leadership came from the airlines, with the XAL +3.3%. The group was underpinned by renewed consolidation speculation following reports that UAL Corp. and Us Airways are in advanced merger talks.


Technology (XLK) was unable to keep pace, just slighting underperforming the S&P 500.  Storage-related names were among the worst performers as CML bombed after guiding Q1 revenue below the Street.  The Semis also took it on the chin with the SOX declining 1.4%.   


Healthcare (XLV) can’t get out of its own way, declining again for the fourth straight day.  Managed care was a laggard again today with the HMO down 1% yesterday and down 2.2% over the past week.  The pharmacy group also struggled with the IHE down 0.4% yesterday.


In early trading, crude oil is looking lower for a second day in New York after a report showed U.S. crude inventories increased more than forecasted last week. 


In early trading, gold is looking to decline on the back of a stronger dollar.


In early trading, copper fell in London for a second day, extending a decline from a 20-month high, on concern that recent advances were not supported by demand from China. 


In early trading, equity futures are trading above fair value in a continuation of yesterday’s late-session recovery which saw a reversal from earlier losses, which were helped by stronger-than-expected retail sales and in reaction to comments from ECB President Trichet. Today's macro agenda is thin with only Wholesale Inventories scheduled for 10:00 ET.  As we look at today’s set up the range for the S&P 500 is 16 points or 0.7% (1,178) downside and 0.6% (1,194) upside. 


Howard Penney

Managing Director

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more