Mid-Day Outlook: September 26, 2017

Regal HelpdeskDaily Market Report

Mid-Morning Look
Tuesday, September 26, 17
Equities attempting small rebound after sliding yesterday, with all three major averages higher, led by small caps again as the Russell 2000 trades to fresh intraday high. Technology bounces following underperformance Monday, while energy takes a breather as oil slips for the first day in five. The euro extended its decline in the wake of the German election, lending support to a dollar which trades to a 1-month high vs. the currency. There are a few Fed speakers today that could move markets if they touch upon monetary policy, while economic data came in slightly below consensus views in housing and confidence reports, while manufacturing slightly better. Gold retreated, giving up part of Monday’s leap that came as North Korean tensions ramped up again. Few individual stocks moving after earnings results (ASNA, DRI, RHT, SNX, CCL, INFO), while markets await earnings results from Dow component NKE tonight after the close and MU in the semiconductor sector.
Treasuries, Currencies and Commodities
·      In currency markets, the dollar on the rise again, topping the 93 level for the DXY for the first time since late August as economic data remains steady, and also 1-month highs vs. the euro following the German election results yesterday and ahead of a Yellen speech later today; dollar moves back above the 112 level against the yen (off 9/8 lows 107.32); dollar highest vs. euro since Aug. 24, with the shared currency under $1.18, down from $1.1850 late Monday
·      Commodity prices; Precious metals pare some of yesterday’s more than 1% gains after the North Korea threat;  Energy futures decline for the first day in five ahead of API inventory data tonight and the EIA stockpile report tomorrow; WTI crude holds above $51.70 per barrel
·      Treasury markets remain steady after sliding 2-weeks ago; the yield on the 10-year holding in range of 2.20%-2.3% since then; the shorter-term 2-yr yield holding at 9-year highs around 1.44%; economic data mixed today, but recent hawkish commentary from FOMC boosting rate expectations for this and next year
Economic Data
·      New Home Sales for August fell (-3.4%) to 560K (8-month low) below est. of 585K; the previous three months’ new home sales data revised down by 19K; Median new home price rose 0.4% y/y to $300,200; average selling price at $368,100
·      Consumer Confidence for September fell to 119.8 from 120.4 last month but mostly in-line with the 120.0 estimate; the present situation confidence fell to 146.1 vs. 148.4 last month while the expectations index rose to 102.2 vs. 101.7 last month
·      Richmond Fed’s Manufacturing Survey for Sept up at 19 reading, topping estimate of 13 and above prior month of 14; shipments rose to 22 after 8 the prior month, new order volume increased to 20 after 17 prior and order backlogs fell to 8 after 11 the prior month
·      S&P CoreLogic Case-Shiller 20-City Index was up 5.81% YoY vs. est. 5.70%; S&P CoreLogic Case-Shiller National Home Price index rose 5.94% YoY in July after rising 5.82% in prior month; S&P/Case-Shiller 20-city NSA index at 201.99 after 200.53 in June
Sector Movers Today
·      Restaurants; DRI reports mostly in-line Q1 sales/EPS, but comp sales of 1.7% missed the 2.2% estimate, led by weaker Olive garden comps of 1.9% with 2-year trends + traffic decelerating sequentially; Wedbush downgraded three restaurants (CAKE, HABT, SHAK) to neutral saying given continued top line pressure, they believe fast casual and casual dining margin expectations are at risk and downgrade three names
·      Retailers; all eyes on Dow component and footwear retailing giant NKE as they report earnings tonight (follows weak outlooks from FL and FINL last few weeks); KORS positive mention at Wells Fargo saying story finally showing some signs of bottoming, and the setup in the stock seems to have improved; ASNA shares jump on earnings and sales beat; LB upgraded to overweight at Atlantic Securities; KSS CEO Kevin Mansell to retire, Michelle Gass to succeed
·      Medical equipment and devices; CTLT files for $250M in common stock sale; life science tools assumed coverage at Goldman Sachs with broader neutral rating, but buy rated on TMO (and added to conviction list), MTD (with $690 tgt), while sell rated onBRKR (neutral on A, DHR, ILMN, PKI and WAT)
·      Insurance; Hurricane Maria devastated the Caribbean. Modeling firm AIR estimates $40-85B industry losses, ~85% of which is in Puerto Rico alone. The estimate exceeds those from Hurricanes Harvey and Irma, and could rival Katrina (~$80B); AFL was downgraded to sell at Citigroup saying company is at an inflection point as Aflac Japan is too large to show meaningful growth and Aflac U.S. is “too small to move the growth needle (ahead of investor day Thursday)
·      AAPL +1%; the top Dow gainer, up 1.3% as looks to snap 4-day losing streak
·      ACTA +24%; entered into separate agreements to sell its three majority-owned businesses for an aggregate of $549M in cash
·      ASNA +5%; shares jump on earnings and sales beat, and comp sales fell a less than expected 4%
·      CCL +2%; quarterly earnings/revenue top consensus, with weaker guidance
·      GHL +15%; said it will borrow $300M and use the loan to buy back about 30% of its shares as it aims to reduce taxes/increase EPS/slashes dividend
·      RHT +3%; posted quarterly beats vs. tough y/y comparisons and driving upside to consensus estimates on virtually all metrics
·      SNX +6%; shares rise on Q3 EPS/revs beat and issued Q4 guidance above consensus
·      AFL -1%; downgraded to sell at Citigroup saying company is at an inflection point
·      AXON -72%; after saying patients treated with its experimental Alzheimer’s drug failed to show significant improvement in a late-stage study
·      BIIB -1%; as its aducanumab seen as most similar to AXON’s failed intepirdine in Alzheimer
·      DRI -6%; comp sales of 1.7% missed the 2.2% estimate, led by weaker Olive garden comps of 1.9% with 2-year trends + traffic decelerating sequentially
·      EFX -2%; CEO Richard Smith leaves company after massive data breach
·      GNCA -67%; announces 40% workforce reduction/bails on genital herpes vaccine, shifts to cancer
·      INFO -7%; after reports better Q3 EPS/sales, but Ebitda misses views
·      PTCT -21%; after FDA documents show Translarna will answer questions over efficacy on its experimental therapy as a therapy in a select group of patients with a rare disease known as Duchenne muscular dystrophy (DMD)
·      QEP -9%; reduced FY17 oil production by ~7% and 2018 guided growth to 15% (15%-20% prior)
·      SHAK -6%; three restaurants (HABT, SHAK, CAKE) downgraded at Wedbush
·      Sabra Health Care (SBRA) 16M share Spot Secondary priced at $21.00
·      TherapeuticsMD (TXMD) 12.4M share Spot Secondary priced at $5.65
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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