TODAY’S S&P 500 SET-UP - October 5, 2010

As we look at today’s set up for the S&P 500, the range is 18 points or -0.97% downside to 1126 and 0.61% upside to 1144. Equity futures are trading above fair value in the wake of the Bank of Japan's decision to cut its interest rate to almost zero and announced intentions to set up a ¥5TN QE fund to increase liquidity in its financial system. Today's macro highlights include; September ISM Non-Manufacturing Index and related sub-components.

  • Chevron (CVX) said it will begin buybacks in 4Q under previously announced repurchase program
  • Equifax (EFX) completed purchase of Anakam on October 1; terms not disclosed
  • First Midwest Bancorp (FMBI) said CEO Thomas J. Schwartz plans to retire by 1Q 2012
  • MaxLinear (MXL) gave preliminary 3Q revenue forecast $18.4m-$18.6m vs previous $20m-$20.5m forecast, estimate $20.3m
  • MEMC Electronic Materials (WFR) subsidiary SunEdison sold plant in Italy to First Reserve; sees total price EU276m 
  • Mosaic (MOS) posted 1Q EPS 67c vs estimate 71c


  • One day: Dow (0.72%), S&P (0.80%), Nasdaq (1.11%), Russell (1.45%)
  • Month/Quarter-to-date: Dow (0.37%), S&P (0.4%), Nasdaq (1.03%), Russell (0.97%)
  • Year-to-date: Dow +3.07%, S&P +1.94%, Nasdaq +3.31%, Russell +7.06%


  • ADVANCE/DECLINE LINE: -1347 (-2460)
  • VOLUME: NYSE - 943.71 (-11.99%)  
  • SECTOR PERFORMANCE: Every sector declined yesterday - European debt worries remain elevated as Ireland’s central bank cut growth forecasts for 2010 and 2011 and as the government’s budget proposal in Greece showed expectations of GDP contractions in 2010 and 2011.
  •  MARKET LEADING/LAGGING STOCKS YESTERDAY: Sara Lee 7.22%, Ford +4.73% and Wynn +3.93%/CCE -30.79, American Express -6.53% and Micron -4.12%
  • VIX: 23.53 -4.58% - YTD PERFORMANCE: (8.53%)
  • SPX PUT/CALL RATIO: 1.48 from 1.32 +12.18%


  • TED SPREAD: 17.40, 3.043 (21.199%)
  • 3-MONTH T-BILL YIELD: 0.13% -0.03%
  • YIELD CURVE: 2.09 from 2.19


  • CRB: 283.99 -0.60%
  • Oil: 81.75 -0.13%
  • COPPER: 366.40 -0.72%
  • GOLD: 1,314.70 -0.06%


  • EURO: 1.3691 -0.73%
  • DOLLAR: 78.44 +0.46%




  • European Markets: FTSE 100: +0.27%; DAX: +0.10%; CAC 40: +0.66%
  • European markets after a cautious open have moved higher.
  • Fixed income markets were initially helped by Bank of Japan cutting interest rates and setting up an asset purchase fund, though this was tempered by Moody's comments that they may downgrade Ireland's sovereign credit rating further.
  • EuroZone economic leaders met with China's Prime Minister and in a news conference indicated they had urged China to allow an orderly and broad-based appreciation in the yuan though say China doesn't share the regions view for quicker yuan appreciation.
  • Major indices moved higher supported by generally constructive revisions to the regions Services PMI data with financials amongst the leading gainers and all sectors trading up on the day.
  • French Sep Final services PMI 58.2 vs preliminary 58.8
  • Germany Sep Final Services PMI 54.9 vs preliminary 54.6
  • EuroZone Sep Final Services PMI 54.1 vs preliminary 53.6
  • UK Sep Services PMI 52.8 vs consensus 51.0 and prior 51.3


  • Most Asian indices ended the day higher after the Bank of Japan cut its overnight rate target to between zero and 0.1%, from 0.1% and announced that it will create a fund to buy JGBs and other assets. It will buy up to ¥3.5T ($42B) of long-term JGBs and Treasury bills within one year of beginning the fund and will buy approximately ¥1T ($12B) of commercial paper, asset-backed commercial paper, and corporate bonds within one year.
  • The Reserve Bank of Australia unexpectedly kept its cash-rate target unchanged at 4.5%. Many economists had expected the RBA to raise rates following a hawkish speech by RBA Governor Glenn Stevens last month. Shanghai markets are closed
  • Euro area urged China to allow an orderly, significant and broad-based appreciation of its currency and added the Chinese authorities do not share the same view

Howard Penney
Managing Director


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