Mid-Day Outlook: September 19, 2017

Regal HelpdeskDaily Market Report

Mid-Morning Look
Tuesday, September 19, 17
U.S. equities are in a holding pattern, coming into the day at record all-time highs for the Dow Industrials (7-straight days of gains), the S&P 500 and the Nasdaq Composite, ahead of the two day FOMC meeting which started today and concludes tomorrow afternoon. The Dow Industrials enter the day with 5-straight days of record gains (and has hit 40 record highs this year coming into the day). The central bank is expected to announce details on how and when it’ll start reducing its $4.5 trillion portfolio of government securities, but also expected to keep interest rates unchanged…but will it signal a potential rate hike at its December meeting? In addition to the FOMC, there are two storm systems for markets to watch, with Jose expected to hit the Northeast over the next day, while Hurricane Maria picks up strength as it hits the Caribbean and heads towards Puerto Rico and the Virgin Islands. There are also a handful of earnings reports worth watching tonight from ADBE, BBBY and FDX. Bonds, the dollar, gold and oil prices are steady ahead of the FOMC. 
Treasuries, Currencies and Commodities
·      In currency markets, The ICE Dollar index (DXY) fell 0.2% to 91.89, helping to lift gold, after moving 0.2% higher in Monday’s session. After volatile moves against the Canadian dollar and British Pound the last few days, currency markets are in wait and see mode
·      Precious metals looking to snap recent slide, up slightly ahead of the FOMC two-day meeting
·      Energy futures rise over 1% early after Iraq suggests oil producers are contemplating longer or deeper output cuts, before paring gains. Iraq said on Tuesday it had cut output by about 260,000 barrels per day (bpd), exceeding cuts agreed under the OPEC-led pact – also later, API data due with U.S. crude stockpiles seen rising…prices have since dipped back under $50, down on the day
·      Treasury markets little changed, with the 10-year yield around 2.23% ahead of the FOMC
Economic Data
·      Housing starts slipped (-0.8%), the 2nd straight negative month, to an annual rate of 1.18M from an upwardly revised 1.19M in July and was mostly in-line with consensus of 1.174M; although housing starts fell 7.9% in the South, hurricane Harvey had very little impact, the government said; building permits to build new homes jumped 5.7% to a 1.3M rate, above the 1.22M estimate
·      Import prices for August rose 0.6% MoM, topping the 0.4% estimate and after falling (-0.1%) in July; import prices ex-fuels rose 0.3% after falling 0.1% in July
·      The U.S. current-account deficit jumped 8.5% in the second quarter to (-$123.1B). The increase stemmed mostly from lower secondary income. The federal government collected fewer fines and penalties from foreign sources. The deficit in the first quarter, meanwhile, was revised down to $113.5 billion from $116.8 billion.
Sector Movers Today
·      Homebuilders and home furnishing; Mizuho lowered its FY17/FY18 EPS estimates for homebuilder coverage, as they shift a portion of previously assumed late 2017 closings into early 2018 following hurricanes Harvey/Irma. The firm is also lowering 2017/18 gross margin, SG&A margin and orders expectations and downgraded LEN as has greatest exposure; in furnishing,BBBY reports earnings after the close (watch PIR, RH, WSM)
·      Retailers; several analyst changes today; NKE downgraded to neutral at Susquehanna ahead of earnings next week on mounting concerns over weakness in the business; GPS upgraded to neutral at Credit Suisse as brick-and-mortar real estate analysis indicates it is better positioned than thought; KORS upgraded to outperform at OpCo with $55 tgt saying turnaround in retail is just starting; Wells Fargo cut ests for 4 of our athletic-focused retailers (UAA, NKE, LULU, FINL), while also downgrading shares of UAA to Underperform
·      Media movers; Cowen said large cap media companies face declining affiliate and advertising growth, which is leading to downward margin pressure, and lowered price targets for several names/said TV networks appear on track for a 128 basis point decline in Ebitda margin on average in 2017, vs a 56 bps per year 2013-2016 (cuts price targets: AMCX to $53 from $64,DISCA to $19 from $25, VIAB to $31 from $41, CBS to $69 from $70, DIS to $94 from $95, FOXA to $29 from $32)
·      Chemicals; BAYRY said that it submitted an application on Monday to extend the European Commission review deadline for its planned acquisition of MON and that it now expects the deal to close in early 2018. https://goo.gl/WkN8hQ ; a group of U.S. activist investors threatened to vote against the proposed merger between Swiss chemicals company Clariant AG and U.S.-based HUN unless alternatives are explored, jeopardizing a deal https://goo.gl/jM3S7K ; BASFY said it would buy Solvay SA’s polyamides business for 1.6B euros ($1.92B https://goo.gl/tej2gQ
·      AAPL +0.5%; tgt raised to $194 from $182 by Morgan Stanley citing higher estimates for FY18 average selling prices (ASPs) after Apple’s introduction of new devices last week
·      BOBE +5%; to be acquired by POST for $77 per share/$1.5B deal https://goo.gl/rWhQvX
·      KORS +3%; upgraded to outperform at OpCo w/$55 tgt saying turnaround in retail is just starting
·      KSS +5%; to accept Amazon returns in 82 stores
·      NTAP +3%; upgraded to buy from neutral at UBS and raise price target from $42 to $45
·      QDEL +9%; adds to yesterday gains after rising 14% yesterday/Piper upgraded today
·      +6%; CNBC’s David Faber said Sprint (S) and TMUS are in active merger talks https://goo.gl/WFkTDo
·      ALDX -19%; 3.45M share Spot Secondary priced at $7.25
·      AYI -6%; falls to 52-week lows after Baird downgraded to neutral
·      BBY -7%; after issuing long-term financial targets at its investor day
·      GGP -1%; mall REITs GGP, MAC, TCO, SKT weakened on Toys R us bankruptcy
·      EFX -1%; said to have experienced a hack attack prior to date disclosed
·      PTLA -5%; after Adam Feuerstein article citing risk to Bevyxxa sales from new usage guidelines
·      SNCR -19%; after its largest shareholder, Siris Capital Group, disclosed that it was no longer interested in pursuing an all-cash buyout
·      SUPN -14%; late-stage study supporting IA candidate SPN-810 to continue as planned, lower dose eliminated – downgraded at Stifel
·      TSLA –2%; initiated with an underperform rating and $280 PT at Jefferies
·      WBA -2%; gets regulatory clearance for an amended/restated asset purchase agreement to purchase 1,932 RAD stores for $4.375B (prior plan to spend about $5.18B/2,186 stores)
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.

Live Trading

Open an Account

Paper Trading