Mid-Day Outlook: September 13, 2017

Regal HelpdeskDaily Market Report

Wednesday, September 13, 17
Equities are little changed just a day after all three major indices trade to record all-time highs, as a rebound in retailers and consumer discretionary and strength in oil stocks (on oil price strength) are keeping markets near their peaks. Today House Budget Chairman Kevin Brady confirms release of tax plan the week of Sept 25th (and has been confirmed by several other members including House Chair Paul Ryan), which is helping sentiment. Tech is mixed, while utilities extend recent slide after trading to record highs earlier this week. Bonds slide a third day as 10-year yield up about 15 bps from last week lows. Oil prices jump on IEA demand forecast and inventory data, while gold slips on a stronger dollar following inflation data (PPI today – CPI tomorrow). AAPL shares trade lower following analysis of its product event yesterday revealing 3-new iPhones (analysts note products in-line with speculation). Outside of the CPI tomorrow, quiet on the macro front until FOMC meeting mid-next week.
 
Treasuries, Currencies and Commodities
·      In currency markets, the dollar showing early strength, with the euro falling -0.5% to new lows at 1.191 vs. dollar; further roll for the safe-haven yen, as the dollar nears 110.50 (up over 2.4% the last 4-days); British Pound pares recent gains vs. dollar; Bitcoin tumbles over 10%, trading under $3,800 after negative comments by JPM CEO Dimon yesterday (all-time high $4,921 on 9/1)
·      Commodity prices; precious metals slide, erasing earlier gains as the dollar bounce (gold falls back below $1,330 an ounce after 1-year highs last week). Energy futures rise on inventory data/ after the IEA said demand will grow this year by the most since 2015. Any decision on extending OPEC cuts could take until early 2018, according to Kuwait. Brent tops $54.50 per barrel, while WTI crude nears $49 per barrel. WTI maintains gains after EIA data shows U.S. gasoline inventories tumbled by 8.43M barrels last week, the biggest decline in data going back to 1990
·      Treasury yields hold declines after producer price inflation data; bonds looking to make it a 3rd straight day of losses; the 10-year yield bounces to 2.18% after testing lows around 2% last week; easing North Korea tensions, rotation back into stocks, debt ceiling default fears ease with extension all among factors lifting bond yields
 
Economic Data
·      Producer Prices (PPI) for August rose 0.2%, above prior month decline of (-0.1%), but below the 0.3% economist estimate; core prices (ex: food and energy) rose 0.2%, topping views for a 0.1% increase (last month was -0.1%); final demand ex: food/energy rose 2% YoY vs. 2.1% est. The data comes ahead of August reading for Consumer Prices (CPI) tomorrow morning.
Sector Movers Today
·      Retailers; JWN shares lift department stores early after reports overnight the Nordstrom family is leaning toward a partnership with private equity firm Leonard Green to assist its bid to take the department store private https://goo.gl/xKPwKU (M, KSS, JCPactive); GCO report indicated falling mall traffic and pro sports outcomes are proving more challenging than expected, said Morgan Stanley; FINL was upgraded to positive at Susquehanna on higher M&A likelihood
·      Asset managers; monthly AUM data out: LM preliminary assets under management (AUM) of approximately $752.4B as of August 31, 2017; IVZ preliminary month-end assets under management (AUM) of $906.7B, an increase of 3.4% MoM; TROWprelim AUM were $934B vs. $927B MoM; AB preliminary assets under management increased 0.6% to $529B during August 2017 from $526B at the end of July; APAM assets under management (AUM) as of August 31, 2017 totaled $111.3B
·      Semiconductors; MU upgraded to buy at Goldman Sachs and raised tgt to $40 from $33 saying DRAM pricing could rise in Q4 and the cycle could remain tight in 2018, while firm downgraded ON to neutral citing the stock’s relative outperformance and lack of catalysts over the next year; in semi-equipment, Goldman Sachs upgraded AMAT to buy and downgraded KLAC to neutral citing better-than-feared trends for DRAM (higher gross wafer capacity) and NAND; according to various analyst this morning,MU, SWKS, AVGO seen among winners from Apple phones
 
Stock GAINERS
·      CBRL +3%; mixed Q4 as EPS beat/sales miss on cops down (-0.8%)/year guidance above views
·      CHK +6%; as natural gas levered plays rise with prices
·      CNC +6%; to buy New York Insurer Fidelis for $3.75B https://goo.gl/wHeJrG;
·      EGO +14%; after Athens News Agency reported that Environment ministry issued two licenses and Canada’s trade minister said will intervene on Eldorado’s behalf in Greece
·      JWN +4%; on reports is leaning toward a partnership with private equity firm Leonard Green to assist its bid to take the department store private https://goo.gl/xKPwKU
·      SNAK +24%; to sell its frozen foods operations for $50M
·      ZAGG +7%; as mophie Introduces Wireless Charging Base For iPhone 8, iPhone 8
 
Stock LAGGARDS
·      AGTC -16%; after earnings results
·      EFX -3%; continues to extend losses after data breach affects 143M Americans last week
·      ICPT -4%; remains under pressure after the company yesterday sent a warning letter to health care providers regarding post-marketing reports of liver issues and death in certain PBC patients
·      LXRX -11%; as diabetes drug with SNY raised risk of serious complications
·      MNK -4%; downgraded to neutral at Mizuho and cut tgt to $40 from $70
·      POWI -5%; after Rosenblatt sees limited growth potential/says AAPL orders at risk
·      RLGT -8%; falls on earnings results
·      WDC -5%; a group including private-equity firm Bain Capital and AAPL signed a letter of intent to buy Toshiba Corp.’s chip business for more than $18B https://goo.gl/LwFyKm
·      ZG -4%; as Susquehanna analyzes impact of CFPB issues/says may see significant amount of Ebitda at risk
 
Syndicate
·      AGNC Investment (AGNC) 24.5M share Spot Secondary priced at $20.85
·      BioCryst (BCRX) 15.534M share Secondary priced at $5.15
·      Grupo Supervielle (SUPV) 20.6M ADS Secondary priced at $20.00
·      Portola Pharmaceuticals (PTLA) 6.35M share Secondary priced at $55.00
·      Tactile Systems (TCMD) 3.3M share secondary priced at $33.00
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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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