Monday, March 12, 18
After equities opened higher in broad fashion, with nearly all 11-S&P sectors advancing as investors continue to view last week’s jobs report an ideal environment for “risk-on” appetite, stocks have since pared gains, with industrials and healthcare among the weakest sectors (Dow Industrials flat after rising as much as 113 points earlier). Inflation data on Friday (wages) was less “hawkish” than prior, easing market fears, though we could see choppy trading over the next few days/week as CPI results are out tomorrow and PPI the following day regarding inflation outlook, with the March 21st FOMC meeting next week on the 21st (where a rate hike is expected). Nasdaq Composite trades to new all-time intraday record highs of 7,596, up over 35 points, led by surging semiconductor companies. The Russell 2000 Index is less than 1% from its record high of 1,615 on January 24th, surging over the last two-weeks, as the group is seen as defensive with respect to potential fall-out from President Trump’s trade war fears related to recent tariffs. On Friday, the Dow Industrial Average spiked over 440 points marking the first time the blue-chip index has finished above 25,000 since Feb. 28 as the index gained 3.3% for the week. The Nasdaq Composite climbed 4.2% for the week, and S&P 500 Index 3.5% for the week. There are no major U.S. economic data points today, as bonds and the dollar are quiet, while commodity prices slip.
Treasuries, Currencies and Commodities
· In currency markets, the dollar index (DXY) erases earlier gains, to trade down slightly, but holding around the 90 level (dollar index advanced last week, its 3rd straight week of gains). After falling about 20% last week, Bitcoin up more than 6% early.
· Commodity prices; After gains last week for oil and gold (modest), prices start the new week on the defensive, with both commodities edging lower; gold prices down a few dollars, while WTI crude slides over 70c to around $61.30 per barrel
· Treasury markets steady ahead of a busy day of debt sales; The Treasury Department will sell $28 billion of 3-year notes and $21 billion of 10-year notes later today; 10-yr yield down less than 1 bps at 2.886% while the 2-yr yield little changed at 2.262%
Sector Movers Today
· Optical space in focus amid one M&A deal; LITE said it would buy optical company OCLR for $1.8B in cash and stock; the offer price of $9.99 per share, represents a premium of 27.3% to Oclaro’s closing price of $7.85. https://goo.gl/GcRPi1 (shares of NPTN, ACIA, AAOI, IIVI, FNSR were all active following the deal news); one analyst noted FN weakness as sees deal a negative coming from the combination of its two biggest customers
· REITs: Data Centers upgraded at Raymond James saying they are incrementally more positive on the data center sector over the next 12 months following Q4 earnings (aside from SWCH, which reports on March 29), recent meetings with companies and conversations with private data centers (upgraded COR, DLR, SWCH); COR was upgraded to overweight at KeyBanc as well
· Biotech movers; REGN and SNY said they will cut the price of their cholesterol-lowering drug, Praluent, after a study showed the drug reduced heart risks by 15% in a long-term cardiovascular outcomes study. REGN/SNY study fallout: shares of ESPR fell which is working on cheaper/less potent comp); MDCO and ALNY are also developing a similar drug to Praluent; rival AMGN has Repatha, the main competitor to Praluent
· Alternative Asset Managers; Citigroup upgraded APO and CG saying they believe ARES’ PTP to C-Corp conversion is a net positive for Alternative Asset Managers, regardless of subsequent conversions. Read through for the Sector should be higher structural FRE multiples
· AVGO +2%; WSJ reported late Friday that INTC is considering a potential bid for AVGO in reaction to AVGO’s bid for QCOM https://goo.gl/uBAmRM
· CENX +4%; upgraded to outperform at BMO Capital
· MU +7%; tgt was raised to Street high $100 at Nomura ahead of what they believe to be a major breakout for the shares
· OCLR +26%; to be acquired by LITE for $1.8B in cash and stock; the offer price of $9.99 per share, represents a premium of 27.3% to Oclaro’s closing price of $7.85.https://goo.gl/GcRPi1
· SRPT +4%; said it intends to complete a rolling NDA submission for its Duchenne muscular dystrophy therapeutic candidate by the end of 2018
· ANTH -80%; said it would suspend further development of Sollpura after a phase 3 study of exocrine pancreatic insufficiency due to cystic fibrosis failed to meet its primary endpoint
· DECK -8%; downgraded to hold at Pivotal because the risk/reward no longer appears favorable
· ESPR -4%; declines in reaction to positive results from REGN/SNY cholesterol drug news, as co working on cheaper/less potent comp
· MOS -1%; after rallying Friday as miner Belaruskali, said it continues to operate Belarus potash mines in “normal mode” after report of accident at a mine in Belarus
· VYGR -14%; adds to last week’s losses, downgraded at Wedbush and Evercore ISI
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.