Mid-Day Outlook: March 31st, 2017

eOptionDaily Market Report

Equities are again directionless, mixed in the early going as the Dow Industrial Average again underperforms major indexes, while the Nasdaq Comp is positive, and the S&P 6500 little changed. The Russell 2000 also little changed (Nasdaq Comp comes in with 5-day win streak, Russell with 6-day). Overall it has been a low volume, low volatility week for major averages, which have struggled for direction on a broader scale. Today marks the end of the week, month and quarter. The NASDAQ is set to log the best performance of the major U.S. indexes in March — a 1.5% rise, while the S&P is up around 0.4% coming into today) and the Dow down for the month (about -0.4%). For the first quarter, the Nasdaq is set to deliver a nearly 10% gain, the S&P 500 about a 5.8% rise and the Dow about a 5% return for the quarter (sixth-straight positive quarter and the longest winning streak since the fourth quarter of 2006). Economic data has been positive this week, helping push markets to the upside and helping erase last week’s declines. The Financial Times reported that Emerging Market stocks are poised for their best quarter in five years. The strong quarter has come despite the FOMC raising rates and forecasting at least two more this year, and as President Trump’s first big policy change (repeal/replace Obamacare) failed in its first try…but markets remain near all-time highs.

Treasuries, Currencies and Commodities

  • In currency markets, the dollar was little changed early, but over the last 30 minutes, the euro got a little lift, rising above the 1.07 level (highs 1.0702 and lows 1.0674), though the dollar is lower vs. the yen (lows of 111.38), while the British pound holds around 1.25
  • Precious metals are little changed with gold coming into the day with a 3-day losing streak as the dollar has rebounded. Oil prices are also little changed, though WTI crude is holding above the $50 per barrel mark into the weekly rig count data at 1:00 PM
  • Treasury markets are little changed despite several economic data points; the 10-year is just about unchanged from last week’s closing levels at around 2.407% (well off earlier week lows of about 2.34%)

Economic Data

  • Personal Income for February rose 0.4%, in-line with estimates while Personal Spending rose a slightly less than expected 0.1% (vs. est. 0.2%), while real personal spending fell (-0.1%) vs. est. up 0.1%. PCE core inflation rose 0.2% (in-line with 0.2% est.) and rose 1.8% YoY (vs. est. 1.7%). PCE prices rose 0.1% (in-line with estimate) and rose 2.1% YoY; the savings rate at 5.6% in Feb. vs 5.4% the prior month
  • University of Michigan Sentiment rose to 96.9 from 96.3 last month but below est. reading of 97.6; the expectations index unchanged at 86.5 and the current economic conditions index rose to 113.2 vs. 111.5 last month.
  • The Chicago PMI rose to 57.7 in March from 57.4 in February. The first-quarter average of 55.1 was the best showing since the fourth quarter of 2014. In March, 4 of the 5 components improved, with only employment falling, into contraction territory. The first-quarter average for prices paid is the highest since the third quarter of 2011, in a sign of inflationary pressure

Sector Movers Today

·      Housing & Building Products; KeyBanc said the latest regional U.S. permits data from Feb. continues to support our emphasis around Overweight-rated OC, BLD and DHI, which have greater exposure to more affordable, interior states where we see the strongest growth in new housing playing out (cautious n-t onTOL/LEN); OC was upgraded to outperform at Wedbush

·      Exchanges & Brokers; RBC Capital resumed coverage with CME with an outperform and $134 tgt as expects supportive volume levels with growth of 7% in 2017 versus consensus of 5%; resumed CBOE with outperform and $90 tgt saying proprietary product suite; resumed NDAQ with lower rating of sector perform on limited upside and resumed ICE sector perform on valuation

·      Oil services/E&P; Seaport Global upgraded CRZO, LPI, WPX and OAS to buy from neutral, but downgraded PXD, XEC and RICE to neutral from buy – says on space they think it’s time to add to your E&P exposure and take on added risk with respect to oil weighted names citing oil macro review produced a surprisingly robust outlook, think uninspiring FY17 guidance is a case of massive industrywide sandbagging and their E&P capital efficiency report reveals that the majority of the E&P space is now profitable at current prices

Stock GAINERS

  • AKTX +36%; said the FDA granted “fast track” designation for drug Coversin
  • BBRY +12%; as Q4 EPS beat by 4c on better revs saying all businesses profitable in Q4
  • DEPO +1%; after 13G discloses an 8.8% stake (5.49M shares) by investor Starboard Value
  • FMC +13%; to acquire DD’s Crop Protection business it must divest to comply with the EC ruling related to its merger with DOW for $1.2B cashhttps://goo.gl/Hov1rr
  • MLM +3%; and SUM both higher after Cleveland research said sees strong volumes to end qtr
  • SAGE +6%; tgt was raised to $103 from $65 at Goldman Sachs ahead of two pivotal CNS readouts
  • TTPH +4%; as drug candidate to get $4M in funding from Accelerator

Stock LAGGARDS

  • BOFI -1%; after the NY Post reports that the DOJ is looking at BofI for possible fraud https://goo.gl/5I827b
  • CONN -4%; after RCII declined contract renewal upon expiration on June 6
  • GLW -2%; downgraded to neutral at Citigroup on valuation
  • JELD -2%’ downgraded to neutral at Wedbush

 

Syndicate

  • AC Immune (ACIU) 1.9M share Block Trade priced at $11.00
  • BioLineRx (BLRX) 29.4M share Spot Secondary priced at 85c
  • Cara Therapeutics (CARA) 4.45M share Secondary priced at $18.00
  • CytoSorbents (CTSO) 2.2M share Spot Secondary priced at $4.50
  • DarioHealth (DRIO) 1.45M share Spot Secondary priced at $3.10
  • e.l.f. Beauty (ELF) 7M share Secondary priced at $27.00

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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