US STRATEGY - RECOVERY OR HOPE?

TODAY’S SET UP

 

As we look at today’s set up for the S&P 500, the range is 44 points or 2.3% (1,059) downside and 1.8% (1,103) upside.  Equity futures are trading above fair value, as technology stocks in Europe are among the leading performers, buoyed by strong results from Apple (AAPL).

 

The Recovery/Reflation trade drove the market higher yesterday as Materials (XLB), Energy (XLE) and Industrials (XLI) were the three best performing sectors yesterday.  The RECOVERY trade benefited from a  three-week high in China shares on speculation surrounding a relaxation of tightening measures aimed at the residential property market. In addition, Spain, Ireland and Greece held relatively successful bond auctions yesterday.

 

China closed up another 0.26% this morning.  Also helping to confirm the move in the RECOVERY trade yesterday, copper rose 1.6% - the most in three weeks.     

 

Following yesterday’s move in the S&P 500, the Materials (XLB) and Energy (XLE) are now positive on TRADE, bringing the total to five of nine - the other three Utilities (XLU), Consumer Staples (XLP), and Technology (XLK).  Utilities (XLU) remains the only sector positive on TREND.

 

The only sector to decline yesterday was Healthcare (XLV).  The weakness largely attributed to JNJ which declined 1.7%.  JNJ missed on the top-line for Q2 and lowered its 2010 EPS guidance by a larger-than-expected $0.15 to reflect the impact of the OTC recall and manufacturing suspension and FX headwinds.

 

Fed Chairman Ben S. Bernanke will give his semiannual report on monetary policy to the Senate

Banking Committee today and will testify at the House Financial Services Committee tomorrow. 

 

Treasuries were unchanged to a tad firmer yesterday despite the recovery in stocks. The dollar index traded up 0.1% and the VIX declined 7.9%. 

 

The Investors Intelligence poll sees bullish sentiment increases to 35.6% from 32.6% in the latest Investor's Intelligence poll. 

 

US STRATEGY - RECOVERY OR HOPE? - 1

 

THE EARNINGS SEASON

 

Yesterday of the 26 companies that reported 2Q earnings 81% beat the earnings estimates, while 35% of the companies missed revenue expectations.  Those same percentages hold for what we have seen so far in the 2Q earnings season. 

 

THE HEDGEYE MACRO TRADE RANGES FOR 7/21/10:

 

US STRATEGY - RECOVERY OR HOPE? - S P

 

US STRATEGY - RECOVERY OR HOPE? - DOLLAR

 

US STRATEGY - RECOVERY OR HOPE? - VIX

 

US STRATEGY - RECOVERY OR HOPE? - OIL

 

US STRATEGY - RECOVERY OR HOPE? - GOLD

 

US STRATEGY - RECOVERY OR HOPE? - COPPER


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

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more