Mid-Day Outlook: April 18th, 2017

eOptionDaily Market Report

Equities fall (after a brief rebound off lows) as investors get a heavy dose of earnings from Dow components GS (lower on miss), JNJ (lower on mixed results) which weigh on markets (Dow name UNH rises on beat). The Nasdaq Composite turned positive, rising more than 25 points off the lows, despite shares of NFLX falling on quarterly results, but the index has since declined again. Despite markets focusing on fundamentals today/going forward, the macro picture remains cloudy, with tensions between the U.S./North Korea, French elections, FOMC rate increase pace, and Trump policy (Mnuchin said yesterday tax reform policy likely pushed out due to failed Healthcare bill). Also of note lately, weaker economic data as housing starts data missed today, which followed weaker-than-expected Empire Manufacturing, consumer prices and retail sales reported the past few days. In Europe, the FTSE 100 drops sharply after PM Teresa May calls for snap elections (Pound jumps on the headlines).

Treasuries, Currencies and Commodities

  • In currency markets, the U.S. dollar is lower, down the most against the British Pound. The Pound is higher by 1.4% against the dollar, on its way to biggest one-day gain since January. The move fueled in part by PM May’s announcement today, saying that a June election was the only way to resolve the political impasse the U.K. government faces in conducting Brexit talks. The dollar index (DXY) falls to near 3-week lows below 100 level
  • Precious metals slide after touching 5-month highs recently (bit of profit taking); gold prices dropped around -0.8% to $1,282 an ounce; lower yields (as bond rise) fail to lift gold prices early, in what appears to be a bout of profit taking in the yellow metal (as cautious macro env’t, and weaker housing data today are likely positive for gold)
  • Energy futures are little changed, with WTI crude holding below $53 per barrel (after good run higher for oil the last week or so), ahead of inventory data tonight
  • Treasury market’s rise as yields trade around their lowest since November; the yield on the 30-yr slips to 2.863%, its lowest levels since December, while the benchmark 10-yr drops to 2.20% (its lowest levels of 2017 as well) all moving as stocks move to the lows.

Economic Data

  • Housing Starts for March fell a greater (-6.8%) to 1,215k annualized, below est. of 1,250k (and down from 1,303k in the prior month when it rose 5%); single family starts fell to 821k; multifamily starts fell to 394k in March. Building permits rose to 1,260k vs 1,216k in Feb. and came in above est. 1,250k (permits rose 3.6% in March after falling 6.0% the prior month)
  • Industrial Production for March rose 0.5%, in-line with estimates after rising 0.1% in February. Capacity utilization rose to 76.1% from 75.7% in Feb (which was revised down from 75.9%)

Sector Movers Today

  • Metals & Mining; iron ore prices slide again, weigh on industrial metals (CLF, VAL, BHP, X); the price of iron ore falls 5% to a near six-month low, slammed by a decline in Chinese steel prices and concern about a supply glut. Benchmark Australian ore for immediate delivery into China was down $3.10 to $61.50/metric ton, and has slumped by a third since hitting $94.50 two months ago, as steel production in China has continued to rise (group has since rebounded from earlier losses to trade higher). FCX Indonesia received preliminary approval to resume copper concentrate exports; now finalizing export permit
  • Large Cap banks/Brokers; Dow component GS shares slide after reported 1Q FICC sales & trading revs of $1.69B, below Bloomberg est. $2.03B/investment baking and equity sales trading topped views, though overall EPS missed estimates saying the operating environment was mixed, with client activity “challenged” in certain market-making businesses; BAC operating EPS beat by 4c as both NII and fee income beat, and provision expense and NIM better at 2.41%; SCHW Q1 EPS beat by 2c on slightly better revs of $2.08B as new retail brokerage accounts for the quarter totaled approximately 235,000, up 44% year-over-year
  • Regional banks; RF Q1 EPS beat by 1c on in-line revs $1.39B and NIM 3.25% but higher NCO’s of $100M; CMA Q1 EPS 6c better, while provisions for losses $16M (better), and NCO’s $33M also better than estimates; SNV Q1 EPS beat by 4c driven mostly by a higher NIM
  • Heavy duty trucks; Piper downgraded CMI and PCAR to neutral from overweight on valuations as well as potential pressure from Tesla, who is expected to unveil a fully-electric Class 8 truck in September. Now has overall cautious stance on truck stocks as cyclical optimism is already priced in; says underweight-rated ALSN faces the greatest risk of disruption from electric vehicles; OTR Global upgraded shares of NAV and PCAR in the sector


  • AUPH +2%; granted Merck Animal Health global rights to develop and sell patented nanomicellar voclosporin ophthalmic solution to treat dry eye syndrome in dogs
  • BUFF +5%; raised to top pick at Citigroup and add to US focus list
  • CAB +6%; to be bought by Bass Pro shops for lower price of $61.50 https://goo.gl/s9GbwS
  • GNC +21%; Q1 EPS/comps/sales top estimates, began GNC storefront on Amazon in early 1Q
  • SSYS +9%; upgraded to overweight at Piper and tgt to $28 after positive reseller survey
  • UNH +1%; reported 1Q earnings and guidance that topped estimates
  • XOMA +15%; as its PTH1R antibody shows encouraging action in preclinical testing


  • CAH -11%; expects FY17 EPS at the bottom end of prior forecast range $5.35-$5.50 vs. est. $5.42
  • CUDA -17%; FQ4 results topped views but FY18 guidance was a little light relative to consensus
  • GS -4%; reported 1Q FICC sales & trading revs of $1.69B, below Bloomberg est. $2.03B
  • GWW -7%; Q1 EPS missed by 11c on lower sales and cut its year EPS and sales forecast
  • HOG -3%; Q1 EPS beat by 3c, revs miss), while said Q1 motorcycle shipments fell (-14.7%)
  • KATE -7%; Q1 EPS missed by 2c on slightly revenue miss and direct-to-consumer comp sales fell
  • NFLX -2%; EPS beat for quarter, but sub adds for domestic/int’l both miss views


  • Arena Pharmaceuticals (ARNA) 60M share Spot Secondary priced at $1.15
  • Galapagos NV (GLPG) 3.75M share Spot Secondary priced at $90.00
  • WWE (WWE) 1.6M share Block Trade priced at $21.15

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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