Thursday, December 7, 17
Equities posting gains early, led by a further bounce in tech after good results from AVGO lifts the beaten up semiconductor industry, as markets await tax news. The S&P 500 index comes into the day with a 4-day losing streak (longest streak since March), while the Nasdaq Comp rises 0.5% after snapping its 3-day losing streak yesterday. The dollar rises to 2-week highs, gaining momentum on tax reform passage hopes between the two chambers; gold falls to month lows, while oil rebounds after 3% decline yesterday. Bitcoin mania pushes prices up nearly 20%, topping the $16,000 level (up 38% the last 2-days alone); several stocks moving higher on earnings (AVGO, TLRD, CONN, DG, LULU); semi’s rebound on AVGO results; retail benefits from LULU and DG and positive analyst comments in space; optical space active on CIEN earnings and ahead of FNSR tonight; transports resume upward momentum outperforming led by airlines; another reason for eyes to turn to Washington (outside of tax reform) was the potential for a U.S. government shutdown; economic data was in-line; wildfires in California continuing to burn, destroying land, businesses and homes.
Treasuries, Currencies and Commodities
· In currency markets, the dollar looking to advance for a 4th session ahead of expected resolution of the tax bill out of Washington between Senate and Congress; the British Pound rises on some more Brexit headlines saying “stumbling block in Brexit talks said to be resolved”; the euro little changed while the dollar up against the yen.
· Bitcoin no slowing as a day after rising more than 12% on Wednesday, passing both the $13,000 and $14,000 milestones it has now topped the $15,000 and $16,000 level, up over 18% alone
· Commodity prices are mixed as oil prices look to rebound following yesterday’s near 3% decline on bearish inventory data, trading back around $56.50 per barrel, while natural gas prices slump over 4% on warm weather forecasts; precious metals prices resume downward spiral (down -0.8% at $1,255 an ounce) on dollar strength and easing geopolitical tensions
· Treasury markets unchanged from yesterday closing levels for the 10-year, with yield holding aroun2.33% while the 2-yr also little changed at 1.8%
· Weekly jobless claims fell by 2K to 236K in the latest week below the 240K estimate while the prior week was unrevised at 238K; the 4-week moving average slipped by 750 to 241,500; continuing claims, or people already collecting unemployment benefits, declined by 52,000 to 1.91 million.
· U.S. Challenger Gray & Christmas announced 35,038 job cuts in Nov.; 386,347 year to date; over 2,000 jobs cut due to hurricanes Irma and Harvey; 800 due to immigration raids; announced holiday hiring at 608,129 this year, lowest level since 2013
· Bloomberg’s consumer comfort index ticked up to 52.3, holding ever so close to the 16-year high set during the week of August 27th
Sector Movers Today
· Online travel stocks weak after analyst downgrades; MKM Partners downgraded both EXPE (tgt to $115 from $170) and PCLN (tgt to $1,850 from $2,225) as sees a multitude of uncertainties surrounding the online travel sector, most of which they think will take several quarters to resolve; CTRP downgraded to neutral at JP Morgan and cut tgt to $45 on worse than expected financial impact from VAS cross-sale de-bundling
· Optical sector; CIEN Q4 EPS missed by 4c though revs of $744.3M tops $737M est. on lower margins of 44.2% and to buy back up to $300M in shares; AAOI tgt cut to $60 from $74 and estimates lowered at Cowen, but reiterate outperform, saying while they see incremental near-term risks to AAOI from the 40G transceiver roll-over at AMZN, we continue to see AAOI maintaining strong position with other key DC customers; FNSR reports tonight
· In lodging sector, MKM Research upgraded Hyatt (H) to buy and reiterated buys on MAR/HLT on stronger business travel in 2018 – said GDP growth as well as leading economic indicators for corporate profitability all point to stronger corporate trends in 2018.
· Industrial & Machinery; GE has announced plans to slice 12,000 jobs as part of an effort to cut $1B in costs; CMI initiated outperform and $192 tgt as view Cummins as a secular net beneficiary of more stringent global emissions standards; MTZ should be a significant winner should the current tax reform bill become law said Craig Hallum noting 2019 EPS estimate could increase 27-30% should the corporate tax rate be lowered to 20-22%; JCI boosts stock buyback by $1B
· Media & Telecom; CTL said a special Committee’s investigation did not reveal evidence to conclude any member of management engaged in fraud or wrongdoing; AMTsaid it would buy back up to $2B in stock; IMAX and FOXA announced a new multi-picture agreement – beginning this year and extending through 2019.
· AKS +5%; upgraded to overweight at JP Morgan saying the Vietnam steel circumvention decision “very positive” for the domestic steel industry
· AVGO +2%; quarter was strong with revenues and EPS ($4,848M/$4.59) above consensus ($4,828M$4.52) and consistent with the company’s preannouncement/raises dividend
· CONN +19%; Q3 EPS top estimates by 14c on better sales and comps fell less than expected
· DG +3%; trades to 52-week highs after earnings beat
· DPW +42%; which makes bitcoin mining technology and is also in the defense business, raises its 2018 revenue guidance 50%; also helped by jump in Bitcoin prices
· ENTL +49%; to be bought by SYK for $24 per share, in deal valued at about $662M https://goo.gl/FzWF8S
· LULU +7%; posts strong Q3 results as Q3 as comp sales beat and boosted its year guidance
· MRNS +16%; rises after Sage reports major depressive disorder trial data
· SAGE +70%; as reports positive top-line results from phase 2 placebo-controlled trial of SAGE-217 in major depressive disorder
· SEAC +23%; as Q3 EPS topped the highest Street estimate
· TLRD +15%; after 3Q EPS, sales and full year guidance topped estimates
· CIEN -4%; big reversal lower off earlier highs after earnings results
· EXPE -1%; downgraded to hold along with PCLN at MKM Research as cautious on OTAs
· IPHI -4%; cut to Neutral at Rosenblatt due to mixed data points from China regarding 2018 100G module dollar content and potential data center lumpiness in North American deployments
· LC -13%; as 2018 revenue guidance mid-point falls short of consensus views
· YELP -1%; downgraded to underweight at Piper
· At Home Group (ATHM) 5M share Secondary priced at $24.50
· CURO (CURO) 6.666M share IPO priced at $14.00
· GW Pharmaceuticals (GWPH) 2.4M share Secondary priced at $115.00
· Odonate Therapeutics (ODT) 6.25M share IPO priced at $24.00
· Quanterix (QTRX) 4.25M share IPO priced at $15.00
· Revance (RVNC) 5.4M share Secondary priced at $31.00
· Viking Therapeutics (VKTX) 5.13M share Secondary priced at $2.50
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.