THE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - October 4, 2010

As we look at today’s set up for the S&P 500, the range is 14 points or -0.46% downside to 1141 and 0.76% upside to 1155. Equity futures are trading below fair value in a subdued start to trading in a week which is likely to be dominated by the start of the Q3 earnings season, Friday's employment data and speculation surrounding the timing of any fresh QE.  Today's macro headlines include: August Pending Home sales and Factory Orders.

 

  • AT&T (T) agreed to pay $300m to the IRS in 4Q to settle disagreement over 2008 tax return
  • Dynamex (DDMX) agreed to be bought for $21.25 per share by Greenbriar Equity Group; 58% premium to average close over past 30 days
  • Icad (ICAD) filed to sell as much as $75m in common stock
  • Iridium Communications (IRDM) settled lawsuit filed by Motorola in February 2010; terms not disclosed
  • Barron’s - JPMorgan (JPM) may boost dividend next year and rise as much as 45% during next two years
  • Sunday Telegraph - New York Times (NYT) plans to pay back $250m loan from Carlos Slim three years ahead of schedule
  • Prudential Financial (PRU) got a term loan of as much as $3b to finance purchase of AIG Japan units
  • Barron’s - Snap-On (SNA) may rise as overseas automobile-repair growth boosts sales
  • Barron’s - United Technologies (UTX) may rise as much as 20% during next year on demand for elevators and escalators, improved profit at carrier air-conditioning unit
  • WD-40 (WDFC US) boosted Q dividend by 8% to $0.27 per share
  • Barron’s - World Wrestling Entertainment (WWE) may decline as fans increasingly turn to mixed martial-arts rival Ultimate Fighting Championships instead

PERFORMANCE

  • One day: Dow +0.39%, S&P +0.44%, Nasdaq +0.09%, Russell +0.47%
  • Month/Quarter-to-date: Dow +0.39%, S&P +0.44%, Nasdaq +0.09%, Russell +0.47%.
  • Year-to-date: Dow +3.85%, S&P +2.79%, Nasdaq +4.48%, Russell +8.62%

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 1113 (+1047)
  • VOLUME: NYSE - 1072.22 (-16.45%)  
  • SECTOR PERFORMANCE: Outsized strength in energy, materials and financials; tech lags as the space missed out on the afternoon rally.
  •  MARKET LEADING/LOOSING STOCKS YESTERDAY: Citi 4.87%, Metro PCS +4.49% and Freeport MC +3.38%/Tenet -4.03,Abercrombie -3.99% and Sears -3.35%
  • VIX: 22.50 -5.06% - YTD PERFORMANCE: (+3.87%)
  • SPX PUT/CALL RATIO: 1.32 from 1.72, -24.96%

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 13.75 -0.304 (-2.166%)
  • 3-MONTH T-BILL YIELD: 0.16%
  • YIELD CURVE: 2.12 from 2.11

COMMODITY/GROWTH EXPECTATION:

  • CRB: 285.69 -0.41% - first down day in seven
  • Oil: 81.58 +2.01% - up 6.65% last week
  • COPPER: 369.05 +1.07%
  • GOLD: 1,315.55 +0.61%

CURRENCIES:

  • EURO: 1.3791, +1.25%
  • DOLLAR: 78.08 -0.80% - down 1.65% last week

OVERSEAS MARKETS:

 

Europe

  • European markets: FTSE 100: (0.70%); DAX (1.20%); CAC 40 (1.28%)
  • Major indices are weaker in a quiet start to the trading week with all sectors showing losses although Autos are underperforming (2.4%) amid speculation that improving economic data will reduce the need for governments to stimulate growth
  • Sanofi goes hostile in bid for Genzyme
  • Chinese Premier has restated that they do not intend to reduce their holdings of European government bonds
  • Eurozone Aug PPI +3.6% y/y vs consensus +3.6%

 

Asia

  • Asian markets: Nikkei (0.25%); Shanghai Composite (closed)
  • Markets were mixed in a follow-through to Friday's US data, but volumes remain light on account of the holiday in China.
  • The Nikkei initially traded lower, but finished the morning session higher as the euro strengthened vs the yen before giving back some earlier gains during the afternoon session.
  • The Hang Seng, which was closed Friday, saw resource stocks advance with higher commodity prices and property stocks higher after strong weekend sales 

Howard Penney

 

Managing Director 

 

THE DAILY OUTLOOK - levels and trends

 

THE DAILY OUTLOOK - S P

 

THE DAILY OUTLOOK - VIX

 

THE DAILY OUTLOOK - DOLLAR

 

THE DAILY OUTLOOK - OIL

 

THE DAILY OUTLOOK - GOLD

 

THE DAILY OUTLOOK - COPPER


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

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more