Mid-Day Outlook

eOptionDaily Market Report

Equities trade mixed as the ECB boosted its growth forecasts, while energy sector remains weak after oil trades below $50 per barrel since December. Financials, Telecom and Utilities leading major averages higher early, while Energy was the biggest decliner. Back to the ECB, the bank left all three rates unchanged (main refinancing rate at 0.00%, deposit facility rate at -0.40% and marginal lending rate at 0.25%) while confirms asset purchase program at EU80B a month in March, EU60B a month from April through at least December. The euro dropped after ECB President Draghi signals no further rate cuts noting that the ECB no longer feels it needs to convey a “sense of urgency” in taking further action to ease policy. Outside of ECB, the story again was oil, as WTI crude dropped around 3% to a low of $48.79 a barrel this morning after settling lower by 5.4% yesterday for its worst one-day showing in more than a year after data from the EIA showed inventories rose by 8.2M barrels for its ninth straight weekly increase.

Treasuries, Currencies and Commodities

·      In Currency markets, the dollar earlier jumped to a 3-week high of 114.94 against the yen. However, the euro popped above the 1.06 level vs. the dollar after signals from ECB President Mario Draghi that interest rates are unlikely to be cut further. The euro traded as high as $1.0617, its highest level since last Friday after touching $1.0542 late Wednesday. The British Pound falls to 7-weel lows against the dollar (Brexit fears)
·      Commodity prices lower; Precious metals lower as gold heads toward 8th-straight loss as oil slides, dollar steadies; though gold has pared early losses. Energy futures are trading lower given the recent oversupply in inventories – crude trades under $50 per barrel today
·      Treasury markets lose ground, as the yield on the 10-year tops 2.58%, moving to the highs of the day, as investors continue to prepare for a rate hike by the FOMC when they meet next week. Yesterday’s surprisingly strong ADP employment report pushed 10-year U.S. Treasury yields to the highest level since December, and market-implied odds of a rate hike from the Federal Reserve next week to 100 percent.

Economic Data

·      Import prices for Feb rose 0.2% MoM after rising 0.6% in January, but was slightly above the est. of up 0.1% MoM; import prices ex-fuels rose 0.3% after falling 0.1% in Jan; auto prices unchanged after falling 0.5% in Jan; export prices rose 0.3% after rising 0.2% in January
·      Weekly Jobless Claims rose 20K to 243K, slightly above the 238K estimate (prior week claims unrevised from 223K; the Four-week claims average rises 2,250 to 236,500; continuing claims fell 6k to 2.058m in the week ending Feb. 25
·      U.S. Challenger Job-Cut Announcements fell 40% YoY in February as announced 36,957 job cuts in Feb.; 82,891 year to date
·      The 30-year fixed mortgage rate for week ended today rose to 4.21% from 4.10%, Freddie Mac said; the 15-year rate avg 3.42%, up from 3.32% a week earlier.

Sector Movers Today

·      Oil & gas stocks slammed for a second day as crude oil breaks below recent trading range of $50-$55 per barrel as oversupply fears weigh on sector
·      Frac-sand sector; FMSA 4Q revenue missed the lowest Street estimate (shares of SLCA, EMES, HCLP also active on report); RBC analyst noted investors likely view the operational miss and weaker than expected volumes negatively; sees stock underperforming
·      Chemicals; Dutch paints and chemicals maker Akzo Nobel NV rejected an unsolicited EUR20.9B ($22.1 billion) offer from U.S. peer PPG https://goo.gl/wFEjME ; Bayer and MON launch $2.5B in asset sales to get merger approval, Reuters reported
·      Retailers; retailers got a lift off beaten down levels yesterday, despite a handful of missed earnings results; today, several retailers downgraded at Mizuho as cuts DSW, EXPR, FINL and TLRD to Neutral from Buy and GES to Underperform citing increasingly worrisome traffic and KPI metrics surfacing for the spring season that may persist throughout FY17SIGvolatile after earnings and comments on conference call related to sexual harassment charges/guidance


·      AIG +1%; said CEO Peter D. Hancock has informed board of his intention to resign
·      APRI +1%; as completes sale of ex-U.S. rights to Vitaros to Ferring/upfront payment $11.5M
·      BETR +21%; mixed Q4 as sales beat/EPS missed on mixed guidance (revs better/EPS lower)
·      CMTL +15%; after earnings results
·      ELF +22%; mixed Q4 as EPS beat by 6c/sales miss, but year guidance tops views
·      MRO +3%; announced $2.5B Canadian Oil Sands divestiture & $1.1B Permian Basin acquisition
·      POT +2%; after Interfax reported Belarus is ready to cooperate with Uralkali provided that country’s interests are met, citing President Alexander Lukashenko
·      SHLD +4%; after quarterly results and announcing a restructuring program


·      AAL -2%; lowered its Q1 Trasm view to up 1.5%-3.5%, down from prior view of up 2.5%-4.5%
·      ESRX -1%; on lost contract fears according to Cleveland Research
·      FMSA -14%; 4Q revenue missed the lowest Street estimate
·      IGT –10%; after yearly Ebitda missed estimates
·      RATE -8%; issues better year revenue guidance, but still posted Q4 EPS and sales miss
·      SSYS -7%; guides 2017 EPS and revenue below consensus despite beating top/bottom line for Q4
·      TLRD -32%; sees FY17 EPS $1.45-$1.75, below consensus $2.10


·      BeyondSpring (BYSI) 174K share IPO priced at $20.00
·      Equinix (EQIX) 5.278M share Secondary priced at $360.00
·      J. Jill (JILL) 11.7M share IPO priced at $13.00
·      Patrick Industries (PATK) 1.35M share Secondary priced at $73.00
·      Planet Fitness (PLNT) 15M share Spot Secondary priced at $20.50
·      TG Therapeutics (TGTX) 5.1M share Spot Secondary priced at $9.75

Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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