Mid-Morning Look: February 05, 2019

Auto PostDaily Market Report

Mid-Morning Look

Tuesday, February 05, 2019

Index

Up/Down

%

Last

 

DJ Industrials

128.37

0.51%

25,367

S&P 500

9.54

0.35%

2,734

Nasdaq

50.46

0.68%

7,397

Russell 2000

6.45

0.42%

1,523

 

 

U.S. equities off to another strong start, rising for a 5th straight day ahead of tonight’s State of the Union address from President Trump as technology, consumer discretionary names help pace gains. Rising costs and thinner margins weighed on GOOGL results overnight (similar to FB), but shares bounce off lows as quarterly results beat while managed care names rally behind earnings (CNC, WCG). Major oil stocks get another good earnings result, as BP tops views (follows recent beats from CVX, XOM, and RDSA). Earnings barrage continues again tonight with Bespoke noting equities haven’t been reacting this positively to earnings since early 2009. Last night, Federal Reserve Chairman Jerome Powell and Vice Chairman Richard Clarida had dinner with President Donald Trump to “discuss recent economic developments and the outlook for growth, employment and inflation,” the Fed said in a statement, which grabbed some headlines this morning. Economic data was mixed, commodity prices down slightly and the dollar rises to best levels in a few weeks.

 

Treasuries, Currencies and Commodities

·     In currency markets, the dollar extends yesterday gains, as the dollar index (DXY) rises to best levels since late January – erasing last week declines following the dovish commentary on rates from the FOMC (dollar index rises near the 96 level). British Pound extends losses to 2-week lows of $1.2938, while the euro falls back near the $1.14 level. Treasury market’s bounce, as yields pull back from recent highs following mixed data and ahead of President Trump State of the Union address; 10-year yield dips back under 2.70%. After falling yesterday on the dollar bounce, commodity prices (oil and gold) are little changed early.

 

Economic Data

·     ISM Non-Manufacturing index for January fell to 56.7 (lowest reading since July) from 58 in the prior month and below the 57.1 estimate; Business activity fell to 59.7 vs 61.2 prior month while new orders fell to 57.7 vs 62.7 (largest decline since Aug. 2016), while employment rose to 57.8 vs 56.6; prices paid rose to 59.4 vs 58.0

·     U.S. IBD/TIPP Feb. Economic Optimism fell 2 points to 50.3 from a month earlier, marking the lowest reading since Oct. 2017; the six-month economic outlook fell to 44.5 vs 46.8 last month; personal finance fell to 60 vs 61.0 prior

 

 

Macro

Up/Down

Last

 

WTI Crude

-0.20

54.36

Brent

0.01

62.52

Gold

0.70

1,320.00

EUR/USD

-0.0029

1.1408

JPY/USD

-0.02

109.87

10-Year Note

-0.026

2.698%

 

 

Sector Movers Today

·     Consumer Staples; EL shares jumped after Q2 adjusted EPS handily beat the most bullish estimates and after the company boosted its full-year profit outlook on booming sales in Asia; KHC was downgraded to hold at Deutsche Bank citing cloudy profit visibility and in particular sees margin pressure due to heightened promotional activity; ARMK raised its outlook and beat on the top and bottom line, following SYY’s beat of expectations Monday; CHD Q4 results were mostly in-line with consensus but guides year EPS $2.43-$2.47 below the $2.48 analyst estimate

·     Asset managers and advisors; LM was upgraded to buy at Citigroup despite its Q3 miss, as analyst positive on LM’s plan to invest in a global operating platform expected to save about $100 million annually; LAZ Q4 net revenue rose 10% Q/Q and 2% Y/Y as financial advisory revenue more than offset a decline in asset management revenue/Q4 total revenue of $704.3M beat and financial advisory revenue of $398.6M jumped 31% from Q3 and increased 19% from Q4 2017; IVZ prices common stock offering of 14M shares at $15.73/share for gross proceeds of $220.2M; APAM reported in-line Q4 earnings and revenue; JHG profit misses estimates on higher net outflows

·     Medical equipment and devices; group pressured on earnings as HAE shares slump on mixed Q3 results as EPS beats but revs miss while backs year outlook; LMNX 4Q18 revenues and initial 2019 revenue guidance were consistent with the January 7 preannouncement, but shares fell; ABMD defended by analysts after falling yesterday nearly 6% yesterday FDA issued a Dear Doctor letter notifying cardiologists, cardiothoracic surgeons and transplant surgeons of higher mortality rates in the Impella RP system’s post-approval study

·     Cannabis sector; AMRS rises after announcing plans to develop, license and commercialize cannabis compounds with a confidential partner/valued at up to $255M plus royalties; GMP Securities downgraded CRON downgraded to hold as shares reached an all-time high of $32.95 yesterday on strong volume and have surged ~110% year-to-date on no material news and have outperformed the HMMJ cannabis index by a factor of 2; Piper said some emerging US brands appear to have early consumer traction, but the US market is highly fragmented, leaving room for Canadian operators like CGC and TLRY to enter post-prohibition

 

Stock GAINERS

·     ABMD +4%; defended by analysts after falling yesterday nearly 6% yesterday FDA issued a Dear Doctor letter notifying cardiologists, cardiothoracic surgeons and transplant surgeons of higher mortality rates in the Impella RP system’s post-approval study

·     AMRS +33%; after announcing plans to develop, license and commercialize cannabis compounds with a confidential partner/partnership valued at up to $255M plus royalties

·     BP +5%; Q4 earnings easily topped analyst expectations amid a strong operating performance across all its business segments

·     CDXS +13%; after saying it signed a new agreement with MRK to upgrade its protein-engineering technology platform.

·     EL +13%; after Q2 adjusted EPS handily beat the most bullish estimates and after the company boosted its full-year profit outlook on booming sales in Asia

·     LEG +9%; after better than expected Q4 results

·     RL +11%; after topping Q3 estimates as sales were up 6.3% during the quarter on a constant currency basis, led by a 13% jump in Europe, reports GM at 61.6% of sales vs. 60.7% a year ago and boosts FY19 rev view above prior guidance

 

Stock LAGGARDS

·     ADM -4%; as Q4 revenue was down 0.8% Y/Y during the quarter while operating profit in the origination, nutrition segments all trailed the consensus estimate

·     CBT -8%; after Q1 EPS missed by 6c on better revs and lowers outlook saying faced softer auto demand, inventory destocking

·     CHD -6% as Q4 results were mostly in-line with consensus but guides year EPS $2.43-$2.47 below the $2.48 analyst estimate

·     CTL -3%; downgraded to sell at Citigroup as they see headwinds on revenue and cash flow, a possible dividend cut, and the likelihood for capex upgrades to lead to further multiple contraction

·     CTRL -18%; Q4 results that beat on EPS but missed on revenue despite a 7% Y/Y revenue growth while Q1 rev guidance of $61M-$63M missed the $63.9M est.

·     GILD -3%; Q4 revenue beat from HIV and Letairis but non-GAAP EPS of $1.44 missed consensus of $1.70 after an $820M write-down to R&D in Q4, largely related to its anti-BCMA CAR-T being developed by its Kite Pharma unit

·     GLUU -12%; reported strong Q4 results with bookings and adj. EBITDA both ahead of Street expectations while Q1 guidance is below consensus, primarily due to Tap Sports Baseball seasonality/FY19 bookings and adj. EBITDA guidance were below consensus

·     GOOGL -2%; after reported Q4 revenue that beat expectations, but an increase in spending to expand its cloud and YouTube businesses resulted in thinner profit margins which weighed on sentiment

·     GPI -3%; as Q4 profit missed expectations, hurt by new vehicle supply shortages year in the U.K.

 

Syndicate

·     AMD (AMD) 34.9M share Spot Secondary priced at $23.65

·     GCI Liberty (GLIBA) 1.045M share Block Trade priced at $51.60

·     Invesco Mortgage (IVZ) 14M share Block Trade priced at $15.73

·     Marcus (MCS) 1.5M share Block Trade priced at $40.25

_________________________________________________________________

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.

Live Trading

Open an Account

Paper Trading

Register