Mid-Morning Look: February 13, 2019

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Mid-Morning Look

Wednesday, February 13, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities are on the rise again, with the S&P 500 index now firmly above its 200-day MA resistance (of 2,743) as stocks rise to their best levels in a few months after President Donald Trump said yesterday he’s open to extending the March 1 deadline to raise tariffs on China. Also a welcome sign of relief, reports indicating that President Donald Trump is looking to avoid another government shutdown where he would reluctantly accept yesterday’s Congressional border-security deal and attempt to tap other funds for his wall. Markets also hopeful ahead of US/China trade talks tomorrow where Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer are expected to have more high-level discussions. Inflation data this morning was subdued as CPI data MoM was mostly in-line, while YoY levels topped estimates, but were down from prior readings. One more week of hectic earnings results before it slows down and retailers begin to report. After hitting its lowest level since early October yesterday (around 15), the CBOE Volatility Index (VIX) inches higher this morning. The S&P 500 index and Nasdaq Composite looking to make it a 4th straight day of gains.


Treasuries, Currencies and Commodities

·     After snapping its 8-day win streak yesterday, the US dollar jumps this morning, with the dollar index (DXY) touching highs of 97.01 before paring gains on mixed data and positive macro headlines. Commodity prices advance, led by strong gains in oil and precious metals with WTI crude getting a lift above $54 per barrel for WTI after API data showed drawdowns in crude …though the EIA with bearish data as stockpiles rose 3.63M barrels vs. the 2.4M est. though gasoline a smaller build of 408K barrels vs. est. +1.4M. Treasury market’s slip as the yield on the 10-year moves back above the 2.70% level, the 30-year yield 3.03% and 2-year above 2.53%. Currency, bond and commodity markets closely watching the trade talks the next few days.


Economic Data

·     The Consumer Price Index (CPI) for January was unchanged vs est. up 0.1% while core CPI (ex: food & energy) MoM rose an in-line 0.2%. The CPI YoY rose to 1.6% vs. est. 1.5% and core CPI YoY was 2.2%, in-line with prior reading but slightly above the 2.1% estimate. With this release, the BLS has incorporated revised seasonal adjustment factors for the five previous years







WTI Crude















10-Year Note





Sector Movers Today

·     Lodging sector; RRR delivered stronger-than-expected 4Q results a adjusted EBITDA of $135M topped the $125M est. as a result of margin upside and higher-than-expected flow-through/Las Vegas EBITDA of $121M drove the beat and same -store revenues; HLT shares outperform after Q4 EPS, rev and Ebitda beat while guidance for Q1 (73c-78c well above 59c est.); WYND shares active after earnings results

·     Software movers; CSOD Q4 subscription revenues outperform guidance and ARR end the year at the high end of guidance/but operating margins and FCF guidance below consensus; HUBS results beat consensus across the board, with above consensus revenue guidance, though Jefferies noted net customer adds were slightly below target; DOCU was upgraded to buy at Deutsche Bank; TWLO posted a $19M revenue beat on a growth rate of 77% y/y as several analysts raise tgt prices on results/guidance (Deutsche to $130, Canaccord to $125)

·     Metals & Materials; FCX was upgraded to overweight at Morgan Stanley as firm expects copper market tightness to emerge beginning in Q2, given falling global production, low visible inventories and improved demand from China; ARNC said it is planning to invest $100 million to expand its hot mill capacity and add downstream equipment capabilities to industrial and automotive products at its Tennessee operation; UBS said net sentiment for their US steel coverage declined q/q and y/y in Q4 on average, w/highest net sentiment scores at STLD & NUE; gold miner GOLD posted in-line Q4 earnings and a 15% Y/Y revenue decline, as its average realized gold price fell 4% from the prior-year period to $1,223/oz/Q4 gold production fell 6% Y/Y

·     Industrial & Machinery; DE downgraded to hold at Bank America as risk reward appears more balanced heading into this Friday’s FQ1 earnings release/while FY19 outlook seems achievable, a guide raise seems unlikely as the global trade situation remains unclear; CAT January World rolling 3-months machine sales +9% and January N.A. rolling 3-months machine sales +20%; MDR said it expects to report an adverse change in the estimate of its Cameron LNG project of about $168M, due to unfavorable labor productivity and increases in subcontract, commissioning and construction management costs



·     ATVI +6%; ATVI shares up over 6% as announced plans to slash costs across the company after reporting Q4 sales that missed estimates and delivering a disappointing forecast

·     DBD +30%; after mixed Q4 results that beat revenue estimates with $1.29B but missed on EPS and issued downside FY19 rev guidance of $4.4B-$4.5B (est. $4.56B)

·     FCX +6%; upgraded to overweight at Morgan Stanley as firm expects copper market tightness to emerge beginning in Q2

·     HES +3%; as energy stocks rising amid a bounce in oil (NOV, DVN, CXO, NBL higher)

·     HLT +6%; outperform after Q4 EPS, rev and Ebitda beat while guidance for Q1 (73c-78c well above 59c est.), though CEO said on call lowering RevPAR view on macro forecasts

·     LSCC +23%; reported in-line 4Q18 results and provided a 1Q19 revenue outlook above consensus (sees Q1 revenue $94M-$98M vs. est. $93.72M)

·     UIS +17%; shares outperform following beat on Q4 EPS and revenue



·     AQ -23%; downgraded by at least two analysts delivered a disappointing quarter and guide, as inventory burn at its two largest customers (INTC and CSCO) is expected to continue to have an impact on its near term results according to Deutsche Bank

·     BABY -14%; shares plunge after Q4 EPS of 43c missed by 6c and guided year profit to $1.12-$1.49, well below the $1.72 estimate 

·     DISH -5%; Q4 revenue fell 4.9% to $3.31B (vs. est. $3.28B) but EPS missed by 3c/said the number of TV subscribers fell by 334,000, adding to the 341,000 lost QoQ

·     GRPN -13%; after missing Q4 earnings and as 2019 guidance missed analyst estimates citing a challenging operating environment, driven by accelerating headwinds from email and changes in Google search impacting traffic and engagement

·     MDR -24%; said it expects to report an adverse change in the estimate of its Cameron LNG project of about $168M, due to unfavorable labor productivity and increases in subcontract costs

·     QLYS -13%; downgraded by several analysts after weaker earnings and cut the 2019 revenue growth estimate from the previously guided +20% to 15% to 16%

·     TEVA -6%; after forecasting 2019 earnings that missed lowest estimates ($2.20-$2.50 below the $2.81 est.) and weak rev outlook of $17B-$17.4B vs. est. $17.93B

·     TRIP -7%; Q4’18 results beat with total revenue and EBITDA ahead of the Street as revenue per hotel shopper increased 14% YoY but click-based & transaction revenue and Hotel revenue, were below expectations (said Piper)


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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