Mid-Morning Look: February 12, 2019

Auto PostDaily Market Report

Mid-Morning Look

Tuesday, February 12, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities surge to start the trading session, rising on hopes of trade and news of a tentative deal in Washington to avert a second government shutdown in two months. Treasury yields, emerging markets and crude are all rising as investors roll into riskier assets. The Dow Industrials rise more than 1% topping the 25,300 level, while the S&P 500 nears its 200-day MA resistance a little higher at 2,743. Meanwhile the tech heavy Nasdaq Comp also up over 1% early. Overnight, GOP negotiators agreed to a border-security deal that will involve far less money for President Donald Trump’s border wall than the White House wanted, as the bipartisan plan includes $1.38 billion for fencing instead of the $5.7 billion Trump asked for. Meanwhile, trade talks resumed on Monday, while U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer arrived in Beijing on Tuesday, ahead of high-level talks scheduled later this week. Earnings have been a bright spot this quarter as about 71% of the S&P companies that have posted earnings have topped expectations, said Reuters…but analysts’ estimates for first-quarter earnings have turned negative for the first time since 2016. Still later today, Fed officials Powell and Mester speaking. In other news, Republican Sen. Marco Rubio supports a plan that would raise taxes on capital gains to discourage companies from pursuing share repurchases. Rubio chairs Senate Small Business Cmte, which is releasing a report arguing that higher taxes would discourage companies from buying back shares.


Treasuries, Currencies and Commodities

·     In currency markets, the dollar taking a breather after rising eight consecutive sessions coming into today (touching highest levels of 2019); emerging market currencies (Peso, Brazil real) bounce as investors’ appetite for riskier assets increased and the dollar’s rally lost steam. The dollar has rallied despite a dovish look on rates from the Fed, benefitting instead from weaker economic outlooks of European and Asian economies.

·     Commodity prices bouncing after several days of weakness, with WTI crude popping after OPEC said in its monthly report that the cartel’s production fell by nearly 800K bbl/day in January to 30.8M bbl/day, and Saudi Arabia pledges to cut output by at least 500K bbl/day more than it originally planned; Saudi Energy Minister al-Falih announced the move, which would reduce Saudi production to 9.8M bbl/day in March – FT reported

·     Treasury market’s slide as yields rally given the “risk-on” mentality for US stock markets amid hopes of a trade deal with China and a tentative deal in Washington to avert another government shutdown; the 10-year yield rises above 2.68%


Economic Data

·     The January small-business optimism index of the National Federation of Independent Business fell 3.2 points to a seasonally adjusted reading of 101.2, the worst reading since the election of President Donald Trump in Nov. 2016. The expectations components fell particularly sharply, with a 10%-point decline in those expecting the economy to improve

·     U.S. job openings rose 169K to 7.335M in December from 7.166M the prior month; Dec. job opening rate (job openings as a % of total employment plus openings) 4.7% vs 4.6% prior month; 3.482M people quit a job in Dec.; quit rate 2.3%







WTI Crude















10-Year Note





Sector Movers Today

·     Software movers; VRNS shares plunge after several analyst downgraded as FY19 outlook fails to meet consensus expectations (revs of $297M-$305M below $318.1M) while unexpectedly announced that the co will be transitioning from a perpetual license model to a subscription-based model in 2019; EA shares rise after saying more than 25 million players flocked to Apex Legends since its launch last week; TTWO downgraded at BMO Capital; RNG quarterly subscription revenue continuing to accelerate modestly (to +32%), well above the Street on revenue, margins and FCF, and more importantly issued 2019 guidance above expectations

·     Materials and Chemicals; CMP posted adjusted 4Q EPS $1.41 below the $1.72 est, driven by weaker salt segment results as snow events were lower yr/yr and occurred mainly in November, generating less demand for deicing salt/FY19 EBITDA guidance of $310M-$350M below $364M est.; LTHM Q4 top/bottom line results short of consensus while Q1 and year guidance also below estimates; HUN sees 2019 Ebitda down 5%-7% and Polyurethanes Ebitda down 8%-12%; FMC Q4 EPS beat by over 30c ahead of the recently announced upward revision to guidance, driven largely by better-than-expected operational results across Ag Solutions as well as lower taxes

·     Asset managers; APAM assets under management, or AUM, as of January 31 totaled $105.4B; BEN preliminary month-end assets under management of $678.3 billion at January 31, 2019, compared to $649.9 billion at December 31, 2018; IVZ preliminary month-end assets under management of $930.6B, an increase of 4.8%. The increase was driven by favorable market returns, foreign exchange, higher money market AUM and reinvested distributions; LM reports preliminary AUM $746.7B as of January 31, included net long-term outflows of $2B, driven by net outflows in fixed income of $2.4B, partially offset by alternative and equity inflows of $0.2B each; TROW reports preliminary AUM $1.04T at January 31; WDR assets under management of $70 billion for the month ended January 31, 2019, compared to $65.8 billion on December 31, 2018



·     CASM +50%; as EW agreed to acquire CASM for $2.45 per share ($100M) in cash https://yhoo.it/2UWRSkS

·     CHGG +7%; record highs – results showed strength in Chegg Services (35% y/y revenue growth and 38% y/y subscriber growth) and raised 2019 guidance for revenues and EBITDA

·     COTY +14%; JAB affiliate proposes to commence a tender offer in which JAB Cosmetics B.V. would acquire up to 150M additional shares for $11.65 per share in cash https://on.wsj.com/2GlA53n

·     EA +3%; after saying its Apex Legends game attracted more than 25 million players in its first week – faster than Fortnite or Activision’s Overwatch

·     ELLI +21%; to be acquired by Thoma Bravo in deal with equity value of about $3.7 billion, with holders to receive $99 per share https://on.mktw.net/2E5R6wh

·     MIME +18%; exceeded F3Q estimates as revenue growth accelerated and guidance for F4Q and F20 was above the Street

·     RNG +6%; reported quarterly results well above the Street on revenue, margins and FCF, and issued 2019 guidance above expectations

·     TROX +14%; has proposed selling all of Cristal’s North American TiO2 business, including its two-plant Ashtabula TiO2 complex, to Ineos Enterprises for $700 million in cash for FTC approval

·     VKTX +6%; benefits from GILD trial missing key goal in NASH liver disease



·     BRS -33%; after preliminary earnings and disclosing a material weakness in its internal controls and on news of a scrapped deal

·     CMP 5%; posted adjusted 4Q EPS $1.41 below the $1.72 est, driven by weaker salt segment results/FY19 EBITDA guidance of $310M-$350M below $364M est.

·     GILD -5%; said a late-stage, placebo-controlled study designed to evaluate a type of chronic liver disease drug, Selonsertib, did not meet its desired outcome without worsening the patients’ condition

·     LABL -16%; missed on core EPS by 37% in its F3Q19, reduced its FY19 core EPS guidance by ~15%, disclosed the loss of ~$50M of sales (3% of FY19E sales) from a large customer, and guided to flattish EBITDA in FY20

·     NKTR -9%; after reporting lower response rates in urothelial cancer patients than initially observed/results suggest a response rate of 38% in the added patients, which is lower than the pre-specified target rate of 45% said one analyst

·     NSANY -2%; cut its operating income forecast for the full year as sees FY operating income 450 billion yen, below prior view of 540.0 billion yen, and sees FY net income 410 billion yen, below prior view 500 billion yen

·     TAP -7%; said it concluded that its financial statements for the years ended Dec. 2016 and Dec. 2017 should be restated and no longer be relied upon

·     VRNS -17% after several analyst downgraded as FY19 outlook fails to meet consensus expectations (revs of $297M-$305M below $318.1M)


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