Mid-Morning Look: February 08, 2019

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*** Please note this will be the final note of the day – service will resume normally on Monday.

***Have a great weekend!








Mid-Morning Look

Friday, February 08, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities open lower, sliding for a third day and threatening to erase this week’s modest gains as concerns about slowing global economic growth (follows weak German data, EC lowered growth forecast and recent weak China data) and renewed trade tensions weigh on sentiment, while there’s just a week left to pass a spending bill to avert another government shutdown. Trade concerns reared its ugly head again yesterday after President Trump said he won’t meet Chinese President Xi Jinping before the March 1st deadline to avert higher U.S. tariffs on Chinese goods. Meanwhile, Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin prepare for trade talks next week with markets hoping for positive news. With today’s pullback, the Dow Industrial Average dropped below the 25,000 level, while the S&P 500 index falls below the 2,700 level (falling below its 100-day MA support of 2,702). IN one of the more interesting stories, AMZN CEO Jeff Bezos says he was the target of “extortion and blackmail” by the publisher of the National Enquirer, which he said threatened to publish revealing personal photos of him unless he stopped investigating how the tabloid obtained his private exchanges with his mistress (AMZN shares lower on the day). There was no U.S. economic data today to move the market as focus remains on earnings, trade, and possible government shutdown (with the FOMC after comments last week and Brexit still factors – but taking a back seat today).


Treasuries, Currencies and Commodities

·     In currency markets, the dollar index looks to make it a 7th straight day of gains, trading little changed on the session thus far, but has risen 1% on the week despite the dovish outlook from the Fed on interest rates and mixed economic data. The rally has been more a product of weaker currencies overseas, amid weak Euro and Asian region data – rotating into the greenback.

·     Commodity prices are looking to recover after declines this week; gold prices on track to snap its current 5-day losing streak, recovering back near the $1,320 an ounce level while oil prices are little changed after falling over 2.5% yesterday on global growth concerns and dollar strength.

·     Treasury market’s extend their recent rally as yields fall to weekly lows amid declining stocks as investors rotate into safe-haven assets ahead of the possible new gov’t shutdown next week, and the expiration of the China of the US/China trade truce (set for March 1st). The yield on the 10-year falls to 2.63% today and the 2-year yield down at 2.47%.








WTI Crude















10-Year Note





Sector Movers Today

·     Auto sector was punished yesterday following weak guidance from auto maker FCAU and auto supplier ADNT as well as trade fears weighing on the group. Overall it’s been a tough earnings season for autos with F, DDAIF and TM all issuing cautious outlooks. Overnight, Tata Motors (TTM) shares plunged after the company unveiled a write-down in its luxury Jaguar Land Rover Automotive Plc unit saying plummeting sales in China are compounding challenges; in auto retailers, AZO and ORLY were both downgraded at Oppenheimer

·     Semiconductors; QRVO results roughly in line with their previously lowered guidance and guided below the Street (more Apple/China weakness); SYNA with strong December results with March guidance well below estimates/downgraded to neutral at JPMorgan pending better visibility into the next OEM product cycles and resolution of the US-China trade dispute; AMSC delivered a healthy FQ3 and mostly inline FQ4 guidance; POWI missed its 4Q revs, guided lower for 1Q, while showed improvements in bookings YTD indicate potential for q/q growth in 2Q19/2H19; Goldman Sachs lowered its CY19 EPS estimates for WDC and MU citing memory pricing that remains very weak as thinks Q3 gross margins will fall on the quarter; NXPI was downgraded at Mizuho citing continued challenges in China and Europe with auto and industrial headwinds limiting upside

·     Regional Mall REITs sector downgraded from Overweight to Market Weight at Wells Fargo as they believe the on-going revenue disruption from small-shop and anchor turnover combined with the anchor redevelopment initiatives will be a persistent source of earnings pressure in 19-20. In the face of low and decelerating core earnings growth vis-à-vis other property types, they believe all but the very best capitalized companies may continue to trade as value ideas (low multiple, higher yield) until there is a clearer path to earnings growth acceleration.

·     Healthcare sector; Notable weakness in the hospital sector early on – CYH, THC, UHS, HCA all trading lower; LLY launches exchange offer for ELAN shares; WBA falls a second day after the FDA warned on Thursday as top violator of youth tobacco sales; ARWR shares jump after earnings results while SGEN shares drop after Adcetris view misses estimates

·     Media movers; busy day of earnings in the media sector with shares of LGFamong those moving on results



·     CLF +9%; Q4 adjusted EBITDA rose 40% Y/Y to $188M while revenues rose 36% but fell short of analyst expectations/but rising prices of iron ore due to VALE recent accident keeps stock up

·     COLM +17%; 4Q18 beat consensus across all lines with EPS above expectations by 41c as the company saw strong +DD sales gains across regions said one analyst

·     COTY +27%; surges after Q2 EPS and sales topped consensus on better margins (62.1%) while sees profit trend recovery in 2H

·     EA +10%; after its free-to-play battle royale game, has reached 10M players in just three days, which he said is faster than Fortnite, which required two weeks to get to that level, according to analyst at Buckingham

·     EXPE +4%; reported room night growth below expectations, but EBITDA beat consensus by 7% ex-Trivago. Overall EBITDA guidance was encouraging at 12.5% growth midpoint

·     MAT +23%; as reported a surprise Q4 profit, topping expectations across the board on strength in Barbie and Hot Wheels, and benefits from its structural simplification plan

·     PSX +1%; easily surpassed Q4 earnings and revenues estimates, as PSX the latest refiner to report soaring margins/Q4 realized refining margins skyrocketed 84% to $16.53/bbl from $8.98/bbl YoY

·     RPD +11%; reported 4Q18 results that came in ahead of consensus expectations across all major financial metrics, a beat highlighted by the 52.7% y/y growth in ARR posted during the period

·     SKX +17%; as topped earnings expectations for 4Q and guided above consensus for 1Q19, despite revenue light of expectations in both periods



·     ARNC -5%; to separate portfolio into engineered products and forgings and global rolled products; expects to cut its quarterly dividend to 2c form 6c; to buy back $500M of previously authorized shares in the first half

·     CARB -18%; posted weaker-than-expected top-line results and forward guidance that missed consensus estimates and also agreed to acquire privately-held Webroot for $618.5M

·     HAS -5%; Q4 EPS and revenues well below consensus with the company citing Toys R Us impact and suggesting that retailer inventories declined significantly in the US and Europe

·     INGN -6%; after a negative mention by short seller Muddy Waters according to Bloomberg

·     QRVO -4%; reported a good DecQ but guided to a much weaker MarQ down 19% q/q

·     SGEN -12%; Q4 EPS loss (75c)/$174.5M vs. est. loss (42c)/$163.7M; full-year guidance and Adcetris view missed estimates; sees FY revenue $790.0M-$840M below est. $861.6M;

·     SYNA -8%; reported a good DecQ above consensus with rev/EPS of $426M/$1.55, but guided weaker MarQ to ~$360M, down ~15% q/q below consensus

·     URBN -1%; disappointing 4Q comps, up 3% for the total company vs. est. 4.5%, and Holiday 5%, implies a significant deceleration in January, most notably at Anthro

·     WCAGY -21%; as Munich prosecutors have opened a probe into alleged criminal activities of Wirecard management but for now don’t see a reason to investigate



·     Gossamer Bio (GOSS) 17.25M share IPO priced at $16.00

·     Harpoon Therapeutics (HARP) 5.4M share IPO priced at $14.00

·     Myomo (MYO) 3.95M share Spot Secondary priced at $1.40

·     OncoCyte (OCX) 9.33M share Spot Secondary priced at $3.75

·     Presidio (PSDO) 4M share Block Trade priced at $15.25

·     Pinduoduo (PDD) 51.8M share Spot Secondary priced at $25.00

·     Taronis Technologies (MNGA) 10.8M share Spot Secondary priced at $1.25


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.

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