Mid-Morning Look: May 11, 2018

Terrie AmengualDaily Market Report

Mid-Morning Look
Friday, May 11, 2018

U.S equities are mostly higher, as the Dow Jones Industrial Average’s steady climb continues, rising over 100 points to its highest level since mid-March, and on track for a 7th straight day of gains as markets shake off recent worries about trade and geopolitics (Iran). The tamer inflation reading yesterday (CPI) sparked a rally as it gives the FOMC the ammo it needs to keep rates on a steady course of hikes vs. more aggressive to head off inflation risks. The S&P 500 index holding above its 100-day moving average after crossing it yesterday while the Nasdaq Composite Index traded flat at 7,404. All three benchmarks are poised to enjoy a weekly gain of at least 2% as the dollar pulls back from recent multi-month highs and as oil holds near its best levels in over 4-years.

Treasuries, Currencies and Commodities
· In currency markets, after the U.S. dollar touched 5-month highs earlier in the week, it has since declined three straight days, with the dollar index down a point from highs (dollar index to 92.40, down -0.25% today after highs of 93.41 on Tuesday). The Canadian dollar sinks vs. the greenback as Canadian data showed weaker-than-expected employment numbers
· Commodity prices are little changed early after a volatile week, with oil prices only down slightly, pulling back from November 2014 highs reached yesterday above $71 per barrel for WTI crude, while gold prices hold around 2-week highs after rallying yesterday on a dollar pullback
· Treasury markets little changed, with yields inching higher (bigger move higher on short end of curve with 2-yr yield up around 2.54%), as the 10-year holds around 2.97%, down from earlier week highs at 3.03%. Yield curve has flattened following the weaker-than-expected inflation report on consumer prices yesterday.

Economic Data
· Preliminary May Michigan Sentiment unchanged at 98.8, in line with last final reading of April while also above the 98.3 prelim estimate; the current economic conditions index fell to 113.3 vs. 114.9 last month; the expectations index rose to 89.5 vs. 88.4 last month.
· Import Prices for April rose 0.3% MoM below the 0.5% estimate but up after falling (-0.2%) in March. Import prices ex-fuels rose 0.2% after rising 0.1% in March. Export prices rose 0.6% after rising 0.3% in March

Sector Movers Today
· Healthcare/Biotech sector in focus today as President Trump’s is expected to give a speech on drug prices today. Shares of Pharmacy benefit managers and companies with drugs exposed to a Medicare program known as Part B (ESRX, MCK, ABC, and CAH) may come under pressure as further details of President Trump’s drug plan come to light on plan to lower prices.
· Retailers; KSS was downgraded to neutral at Credit Suisse saying it is more weather-sensitive than its peers, creating 1Q same-store sales risk; into earnings, JPMorgan says they are cautious on discretionary names that had a significant ramp in comps into the record 4Q holiday given unfavorable Spring weather, EPS weighting to the back half; GME said its CEO is resigning for personal reasons after just three months on the job, the second time the company lost its chief; dollar stores DG and DLTR downgraded at MoffettNathanson; FL downgraded at OTR Global
· Consumer Staples; in protein space, PPC Q1 results top on both lines of its report as adjusted EBITDA rose 18.9% Y/Y to $272M on stronger volume and said it’s slightly ahead of synergy targets for operational improvements initiatives; COTY was downgraded to hold at Deutsche Bank following COTY’s results and management’s generally uninspiring commentary this week; WTW 7.5M share Secondary priced at $69.00; ANFI surges on earnings results
· Telecom movers; UNIT 1Q results matched expectations across key categories, while also said it would acquire CTL fiber divestitures, and reiterated expectations to achieve 50% revenue diversification from Windstream by mid-2019 and increased 2018 AFFO/share guidance; VZ was upgraded to overweight at JPMorgan after meetings as came away with a better understanding that Verizon’s organic approach to wireless has the company on an increasingly stable footing
· Internet; TTD shares among top gainers after strong Q1 results and issued better Q2 outlook and raised its full year revenue and adjusted EBITDA guidance; YELP reported mixed 1Q results with the best quarter of net new PAA growth of all time yet a disappointing quarter in terms of sequential local ad dollar growth; BIDU was upgraded to market perform at Bernstein

Stock GAINERS
· AKCA +11%; FDA’s Endocrinologic and Metabolic Drugs Advisory Committee (EMDAC) voted in favor (12-8) of supporting the approval of volanesorsen (WAYLIVRA) for the treatment of patients with familial chylomicronemia syndrome
· FSCT +7%; after Q1 results that beat EPS and revenue estimates with a 42% Y/Y revenue growth and guided Q2 revs $61M-$64M vs. est. $59.3M
· GLOB +15%; reported strong top-line quarterly results and raised 2018 revenue and EPS guidance
· PPC +2%; Q1 results top on both lines of its report as adjusted EBITDA rose 18.9% Y/Y to $272M on stronger volume
· TTD +34%; among top gainers after strong Q1 results and issued better Q2 outlook and raised its full year revenue and adjusted EBITDA guidance
· VZ +3%; upgraded to overweight at JPMorgan saying n-t potential for a fixed broadband offering will help drive early cash flow on 5G investments

Stock LAGGARDS
· BSX -2%; as CBS’ 60 Minutes will feature a report this Sunday, May 13, on the 48K lawsuits facing Boston Scientific related to its transvaginal mesh device
· FLS -6%; after reporting weak Q1 orders and margins and reaffirming 2018 guidance
· GME -6%; said its CEO is resigning for personal reasons after just three months on the job, the second time the company lost its chief
· NVDA -3%; shares came into earnings at record highs, pullback on better results
· NWSA -6%; after quarterly results received mixed by the Street
· PSDO -21%; downgraded at RBC Capital following disappointing March-qtr results and FY18 guide
· SYMC -32%; downgraded by analysts citing the audit committee investigation announced in yesterday’s earnings report/company also issued guidance for next quarter well below consensus
· YELP -8%; as 1Q results were slightly ahead of the consensus on revenue and Adj. EBITDA, 2Q18 guidance bracketed the consensus, and full year guidance, although raised slightly

Syndicate
· IntercontinentalExchange (ICE) 3.8M share Block Trade priced at $70.50
· James River Group (JRVR) 3.3M share Spot Secondary priced at $36.50
· KBR (KBR) 1.7M share Block Trade priced at $16.80
· HUYA (HUYA) 15M share IPO priced at $12.00
· ProPetro Holding (PUMP) 12M share Spot Secondary priced at $19.10
· Virtu Financial (VIRT) 15M share Secondary priced at $28.00
· Weight Watchers (WTW) 7.5M share Secondary priced at $69.00

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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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