Mid-Day Outlook: October 9, 2017

Regal HelpdeskDaily Market Report

Mid-Morning Look
Monday, October 9, 17
Equities are little changed, with the Dow Industrials and Nasdaq Composite each touching fresh intraday record highs, though the S&P and Russell 2000 fail to set new highs on this light volume holiday, with bond markets closed and no economic data or earnings results. The Nasdaq Comp touched new record highs, led by gains in semiconductors with the Philly semi index (SOX) nearing 1,200 level (new 17-year highs today) led by AMD, NVDA, MRVL, IDTI. GE weighs on the Dow Industrials following cautious analyst comments as company announced several management changes Friday after the close. Nasdaq Comp looks to make it a tenth-straight day of gains. Currency markets quiet give then lack of data on day after the strong underlying details of jobs report Friday (missed headline consensus, but wages surged and unemployment fell to 16-year low). Fed rate hike expectations continue to rise on data and hawkish Fed commentary over the last few weeks. Markets prepare for start of earnings later this week, led by the large cap banks Thursday and Friday…then gets busy the next few weeks.
 
Treasuries, Currencies and Commodities
·      In currency markets, not much movement given the lack of economic data given the Columbus Day Holiday, with the dollar index little changed after rising little less than 1% last week; the euro and yen little changed, while Turkish Lira fell amid spat with U.S.; Bitcoin pops to highs up over 7% at $4,650
·      Commodity prices; are edging higher, led by gains in gold after another weekly decline last Friday on rising rate hike expectations; gold up around 0.6% as tops the $1,280 an ounce level. Oil prices look to rebound after sliding 3% on Friday (and down over 4.6% last week). Earlier today, Bloomberg reported State-run Saudi Arabian Oil Co. Aramco, will make an “unprecedented” cut of 560,000 barrels a day in its allocations to customers next month, the Saudi energy ministry said
·      Treasury markets closed for Columbus Day holiday
Sector Movers Today
·      Video gamers; Cowen downgraded video game stocks saying the video game stocks are headed into choppy waters as implied buy-side expectations for next year suggest highly unrealistic level of aggregate growth/firm downgraded ATVI, TTWO and Ubisoft to market perform from outperform and EA kept at market perform
·      Refiners; PSX announced a new $3B stock buyback; Tudor Pickering upgraded CVRR and HFC to buy from hold on implied valuation upside as taking a more bullish stance on prospects for US refiners into 2018 given the recent positive momentum of key fundamentals
·      Brokers & exchanges; Bank America with a few ratings changes in sector ahead of Q3 earnings as firm said they expect a decent qtr, but rising expectations, few outliers/Bank America upgraded ETFC to buy and VRTS to neutral and downgraded AMTD to neutral and cut NDAQ to underperform/they shake out 3% above consensus, with our alt ests 6% higher & asset managers 2% higher, while brokers are 1% lower/likes CG, IVZ, AMG, & NTRS into 3Q results, while saying BX, WETF, CBOE, & STT could disappoint
·      Medical devices & equipment; KTWO shares fall after guides Q3 prelim revs about $62.7M, below est. $67.6M and lowered year sales view; CDNA tgt raised to Street high $10 at Craig Hallum anticipating that the uptake for its AlloSure non-invasive kidney transplant surveillance test will lead to profitability in the next 12+ months; the FDA approved extended use for MDT’s Endurant stent for aortic aneurysms; MDT downgraded at Wells Fargo; MZOR sees Q3  revenue above consensus at $17.2M/received 22 system orders during Q3
·      Semiconductors; Philly semi index (SOX) nears 1,200 level (new 17-year highs today) led by AMDNVDA, MRVL, IDTIMLNXdowngraded at Barclay’s to underweight from overweight, seeing competitors outpacing the stock “on relative basis from here;SYNA downgraded to neutral at Mizuho saying continue to see challenges to its core business model with declining LCD and driver IC revenue, a declining iPhone 8 mix, and increased competition in TDDI
 
Stock GAINERS
·      AMD +3%; as semi’s outperform in tech/Bitcoin prices rise (NVDA also higher)
·      CGEN +6%; data show potential of CGEN-15032 as a target for development of first-in-class immuno-oncology therapy
·      DIS +1%; upgraded to RBC Capital Markets top pick as company reaches turning point with ESPN
·      MZOR +9%; sees Q3  revenue above consensus at $17.2M/received 22 system orders during Q3
·      OMF +10%; after a report late Friday the subprime lender has put itself up for sale and is running an auction to solicit takeover bids https://goo.gl/hLNwA7
·      PM +1%; amid strength in tobacco stocks early (MO, BTI)
 
Stock LAGGARDS
·      AMC -6%; weakness in movie theatre’s after soft weekend of box office sales
·      AXTA -3%; guides below views as sees Q3 sales $1.08B-$1.10B vs. est. $1.13B
·      DVA -7%; downgraded to Underweight from Neutral at JPMorgan with $51 tgt
·      ESRX -5%; downgraded to Underperform at Raymond James
·      GE -1%; announced the departures of 3 Vice-Chairs on Friday, after the close
·      KTWO -15%; guides Q3 prelim revs to $62.7M, below est. $67.6M and lowered year sales view
·      PTCT -8%; JP Morgan downgraded to underweight and cut tgt to $15 from $23
·      SYNA -3%; cut to neutral at Mizuho on challenges w/iPhone 8 declines and TDDI competition
·      TSLA -2%; said it will push back its Tesla Semi reveal event until November 16 to focus on Model 3 bottlenecks and its energy aid to Puerto Rico
·      VIAB -5%; downgraded to sell at Citigroup as firm believes CHTR is apt to drop (or significantly curtail) distribution of Viacom’s content
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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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