Mid-Day Outlook: March 28th, 2017

eOptionDaily Market Report

U.S equities are mixed early, trying to rebound after early losses and help the Dow Industrials snap its current losing streak. The Dow came in to today with an 8-day decline, longest since 2011. However, if the Dow closes lower today for a 9th day, it would be the longest such streak since 1978 according to CNBC. The key narrative for the stock/bond market remains Washington. The failed GOP Healthcare Bill on Friday has put pressure on prospects of future pro-growth stimulus plans by the Trump Administration regarding tax reform, de-regulation, and spending measures, hitting stocks over the last few days (though tech heavy NASDAQ has performed well). Today we are seeing a bit of the “beaten” up sectors over the last few days (Trump trades such as financials industrials and materials) rebound and defensive assets slip (Telco, REITs). A much stronger than expected consumer confidence report has helped push major averages higher mid-morning.

 

Treasuries, Currencies and Commodities

  • In currency markets, the dollar is little changed after several weeks of declines; dollar falls to lows against the yen – down at 110.32 (-0.3%)…yesterday low was 110.11, while hold steady vs. euro
  • Precious metals holding steady around the $1,260 an ounce level, helped by dollar weakness; investors continue to weigh the outlook for the Trump administration’s fiscal-policy agenda following last week’s failed effort at repealing Obamacare
  • Energy prices are rebounding after holding lows of $47 per barrel yesterday; back above $48 per barrel early in the session ahead of API inventory data tonight
  • Treasury yields slipped initially as investors looked to the safety of bonds early, but as stocks rebounded following the better consumer confidence report, bonds pared gains and yields bounced; the yield on the 10-year dropped below 2.36% early, but is back near closing levels of 2.37%

Economic Data

  • Consumer Confidence for March rose to 125.6, well above consensus est. 114.0 and above the 116.1 prior month. The Present situation confidence rose to 143.1 vs. 134.4 last month and the expectations index rose to 113.8 vs. 103.9 last month.
  • Advanced trade deficit of goods for February narrowed to (-$64.8B) from (-$68.8B) in prior month; imports fell 2.1% in Feb. to $191.597B from $195.78Bb in January, while exports fell 0.1% in Feb. to $126.809B from $126.941B in January
  • S&P CoreLogic Case-Shiller 20-City Index rises 5.73% YoY in January after rising 5.66% in prior month ; the S&P/Case-Shiller 20-city NSA index at 192.81 after 192.41 in December; and 20-city SA index rose 0.86% m/m in Jan. after rising 0.93% the prior month
  • Richmond Fed’s March Manufacturing Survey at 22, above est. for reading of 15; breakdown showed: shipments rose to 17 after 16 the prior month, new order volume increased to 26 after 24 the prior month and order backlogs rose to 14 after 8 the prior month

Sector Movers Today

  • Dry bulk shippers; strong day for sector after Morgan Stanley upgraded SB, SBLK, GOLG to overweight, GNK upgraded to equal-weight and SALT initiated at equal-weight as the firm says it see more upside as freight rates have lagged steel prices by ~30% & as companies approach dividend payout. The dry bulk market has passed through its cyclical lows and is headed toward profitability. Separately today, the Baltic Dry Index jumped 4% to 1,333 in London
  • Large Cap Pharma; A Senate committee is investigating whether practices at the top five makers of opioids in the United States fueled an epidemic of painkiller abuse that has led to the fatal overdoses of tens of thousands of Americans. Sen. Claire McCaskill (D) sent letters to Purdue Pharma, JNJ’s Janssen, INSY, MYL and DEPO seeking information about sales and marketing materials, internal studies on addictions, details on their compliance with legal settlements and donations to advocacy groups
  • CRISPR companies; Chardan Capital Markets initiated coverage on sector: CRSP (Buy), EDIT (Buy), NTLA (Buy), and ToolGen (Buy). While broadly positive on the CRISPR sector, due to the technology’s vast potential utility to inactivate toxic genes or replace or repair non-functional genes, they see greater upside potential for Editas and ToolGen, and more modest upside potential for CRISPR Tx and Intellia

Stock GAINERS

  • CARA +6%; as its lead product candidate was successful in mid-stage study
  • CBIO +239%; announce IND approval in South Korea for next-gen subcutaneous factor IX program
  • CCL +1%; as Q3 EPS beat by 3c on slightly better revenue and raised year view
  • DECK +3%; as holder Red Mountain Capital sent a letter to company asking it to explore a sale
  • DRI +7%; announced solid Q3 results and raised its ’17 outlook/also announced it will acquire Cheddar’s for $780M; Olive Garden comps above consensus, reflecting continued momentum
  • PSIX +51%; after Chinese firm Weichai commits to $60M strategic investment
  • RHT +6%; Q4 results beat, highlighted by reported billings of $986M, well above $879M est
  • TSRO +1%; as its ovarian cancer drug Zejula, also called niraparib, had been approved by the FDA

Stock LAGGARDS

  • DEPO -4%; after Senator seeks information from various opioid makers
  • HCA -1%; profit taking in hospital sector and recent rally on Healthcare Bill failure
  • FDS -4%; after guidance mid-point missed views
  • SNAP -5%; after FB redesigns mobile app for a ‘video first’ world with Facebook Stories, quick-access interactive camera
  • SNX -6%; after quarterly results

Syndicate

  • Cryoport (CYRX) 5.5M share Spot Secondary priced at $2.00
  • Evolent Health (EVH) 7.5M share Spot Secondary priced at $20.00
  • STORE Capital (STOR) 8.65M share Spot Secondary priced at $23.10

 

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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