Mid-Day Outlook: September 12, 2017

Regal HelpdeskDaily Market Report

Mid-Morning Look
Tuesday, September 12, 17
Equity rally continues early (though major averages paring gains) as all three U.S. stock benchmarks were in record territory in early trade, with 52-week highs for six Dow components today (CAT, DWDP, KO, MSFT, PFE and V). Investors also await the product presentation later this afternoon from Dow component AAPL, where it is expected to unveil its latest iPhone. Some stocks active as hedge fund managers speaking today at CNBC Institutional Investor Delivering Alpha conference (names like Dalio, Cooperman, Robertson, Chanos, others). Another day of no major economic data, as the dollar extends recent bounce (off recent 2 ½ year lows), while bonds and gold extend losses. More analysis of economic impact from Hurricanes continues, with banks and insurers rebounding further from last week losses (higher rates also helping banks). Energy stocks rising early as oil inches higher on OPEC comments and ahead of inventory data. Overall, stocks are coming off their best one day return since late April, as tensions between the U.S. and North Korea didn’t get any worse, and Hurricane Irma weakened to a tropical storm, doing tremendous damage, but not at the economic level many expected.
Treasuries, Currencies and Commodities
·      In currency markets, the U.S. dollar trades above 110 vs. Yen, rising another 0.5% as extends yesterday gains (has since pulled back under 110); dollar is little changed vs. the euro while falls against the British Pound after UK CPI inflation came in above estimates (highs 1.3288); Bitcoin prices rise over 2% after falling over 8% the last few days
·      Precious metals slip for a second session as the dollar steadies, with the precious metal pulling back from recent 1-year highs last week. Quiet news out of North Korea also easing market fears for time being/weighing on gold as safe-haven
·      Energy futures rise on two reports: 1) report that showed oil production from the cartel fell last month as OPEC said in its closely watched monthly report that output in August fell by 79,000 barrels a day to 32.76 million, driven mainly by a decline in Libya, Gabon, Venezuela and Iraq; 2) a Bloomberg report that OPEC is said to discuss output-cut extension longer than 3-months – note API weekly inventory data reported after the close and the EIA tomorrow morning
·      Treasury market’s fall further, with the yield on the 10-yr up around 2.16% after threatening to drop below 2% last week
Sector Movers Today
·      Metals & Mining; busy day of analyst research as aluminum names positive at Deutsche Bank, as firm upgraded AA to buy from hold (with upped $60 tgt) after the firm raised aluminum-chain commodity estimates based on capacity curtailments in China, reducing domestic surplus and exports of aluminum products to Rest of World (also raised tgts on CENX). Steel industry view cut to in-line from attractive at Morgan Stanley, with NUE and STLD downgraded citing weakening U.S. demand outweighing the positive effect of China supply side reforms.
·      Agricultural space; Fertilizer sector upgraded to Mixed from Negative at OTR Global following checks that indicate US dealers have taken advantage of attractive summer prices to maintain or increase positions in most nutrients year-over-year (POT, AGU, MOS, CF); note the monthly USDA WASDE grain report out later today; LMNR shares fall on in-line EPS/revs beat after touching 52-week highs; BG was downgraded at Vertical saying purchase of 70% stake in IOI Loders Croklaan for $946M makes takeover less likely
·      Paper & Packaging stocks rise; Jefferies reported overnight that Georgia Pacific has reportedly raised linerboard prices by $50/ton and $60/ton price for corrugated medium, citing industry contacts; said a full $50/ton containerboard price increase would boost earnings by more than 25% for IP, WRK, PKG according to Jefferies
·      Media & Telecom; CMCSA upgraded to buy from neutral by MoffettNathanson as shares have fallen by more than 9% vs the S&P in less than a week since the company warned on Q3 video net losses; ATUS said at conference it expects to double U.S. cable footprint in next 5-years; Hurricane Irma knocked out landline service to 7.6 million customers and about 27% of the cell sites in Florida’s disaster area according to FC report; FOXA’s proposed $15B buyout of the rest of pay-TV group Sky PLC it doesn’t already own will be referred to Britain’s competition regulator. https://goo.gl/Fdk3t1
·      ALDX +54%; reported positive results from a phase 2a trial of its treatment for dry eye disease
·      DWDP +2%; alters its spin-off plan/also added to US 1 list at Bank America
·      GPS +4%; added to franchise picks list at Jefferies saying its Old Navy unit alone is worth ~30% more than total company enterprise value
·      INOV +16%; upgraded at Morgan Stanley following presentation at firm yesterday
·      LAYN +3%; after earnings results last night
·      MTZ +5%; upgraded to buy at Deutsche Bank and raised tgt to $50
·      PRGS +3%; better-than-expected Q3 results as EPS beats and tops prior guidance on higher revs
·      TA +6%; won the breach of contract lawsuit versus Comdata which will allow them to go back to paying a lower fee (~$900K/month less) and it is entitled to legal expenses
·      TEVA +5%; sells its ParaGard Women’s Health business to COO for $1.1B https://goo.gl/swYEHy
·      AAP ; downgraded to sell at Citigroup saying turnaround seems to be taking longer
·      ALXN -1%; said it plans to fire 20% of its global workforce as part of a restructuring
·      BG -6%; downgraded at Vertical saying purchase of 70% stake in IOI Loders Croklaan for $946M makes takeover less likely/hurts value as it increases leverage” for no near-term EPS accretion
·      FDC -3%; as files to sell 85M shares for holders
·      HIIQ -17%; as investor call to refute allegations fails to quell market concerns
·      ICPT -18%; after sending a letter to health care providers warning of liver injury if it’s primary biliary cholangitis (PBC) treatment, Ocaliva, is “dosed more frequently than recommended.”
·      MCD -2%; as M Science with cautious comments when compared to SBUX
·      NUE -3%; downgraded along with STLD at Morgan Stanley on margin concerns in steel
·      SAGE -17%; as its lead product candidate fails late-stage SRSE STATUS study/misses endpoint
·      Brookfield Infrastructure (BIP) 16.6M share Spot Secondary priced at $42.10
·      Camden Property (CPT) 4.75M share Spot Secondary priced at $93.75
·      Sucampo (SCMP) 2M share Block Trade priced at $12.50
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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