Mid-Morning Look: February 15, 2019

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Mid-Morning Look

Friday, February 15, 2019

Index

Up/Down

%

Last

 

DJ Industrials

339.66

1.33%

25,777

S&P 500

24.30

0.89%

2,770

Nasdaq

37.51

0.48%

7,462

Russell 2000

14.24

0.92%

1,559

 

 

U.S. equities extend weekly gains, getting a boost (all-week) amid positive headlines surrounding the U.S.-China trade talks (though no deal was formulated over the last few days) as both countries pledged to keep negotiating next week in Washington. Markets also dealing with a heavy dose of economic data today as empire manufacturing came in slightly above views (but down YoY), import prices fell more than expected, and industrial production fell significantly lower-than-expected over the last month. The other big story remains the spending deal out of Washington as President Trump will use emergency powers to redirect around $7 billion in federal funds to building his border barrier after Congress came up short, a White House official said. The S&P 500 and Dow (rises more than 300-points) move further above their 200-day moving average levels, rising to their best levels in over 2-months while the Nasdaq rises around its 200-day MA resistance at 7,465 – (hasn’t been above the 200-day MA since early November) in what has been a good run for stocks since the December lows. Earnings plentiful overnight and this morning with top movers noted below (and once again next week in a holiday shortened week with markets closed Monday for President’s day).

 

Treasuries, Currencies and Commodities

·     In currency markets, the euro fell to 3-month lows against the US dollar around 1.1234 after a top European Central Bank official floated the possibility of another round of long-term loans to banks and noted the Eurozone’s slowdown. The dollar index (DXY) touched intraday highs of 97.36, back near 2019 highs, but pared gains after mixed US data. Commodity prices are generally higher, as oil prices look to make it a 4th straight day of gains while gold prices bounce as well. Treasury market’s slip as yields edge higher as the 10-year rises slightly after the mixed economic data today and as markets digest the trade and spending news out of Washington.

 

Economic Data

·     The Empire State manufacturing index rebounded in February rising 4.9 points to 8.8 and was above the reading estimate of 7.0; the index remains well below levels seen last year, such as the 21.4 reading seen as recently as November. General business conditions were 3.9 in the last month while prices paid fell to 27.1 vs 35.9 and new orders rose to 7.5 vs 3.5; six-month general business conditions rose to 32.3 vs 17.8

·     Import Prices for January fell (-0.5%) MoM vs. est. down (-0.2%) and after falling (-1%) in December; Import prices fell 1.7% y/y in January and import prices ex-fuels fell 0.2% after no change in Dec.; Import prices ex-petroleum fell 0.7% after rising 0.3% in December

·     Industrial production for January fell (-0.6%) MoM after rising 0.1% in December its largest decline since May while it was revised down to 0.1% from 0.3% in December. Capacity utilization fell to 78.2% from 78.8% in December and revised up from 78.7%

·     The Preliminary Feb. Michigan Sentiment rose to 95.5 from 91.2 in the prior month and topped estimates for a 93.7 reading; the current economic conditions index rose to 110.0 vs. 108.8 last month and the expectations index rose to 86.2 (highest level since Jan 2002) vs. 79.9 last month.

 

 

Macro

Up/Down

Last

 

WTI Crude

0.93

55.34

Brent

0.93

65.50

Gold

5.70

1,319.60

EUR/USD

-0.0028

1.1267

JPY/USD

-0.03

110.45

10-Year Note

0.008

2.663%

 

 

Sector Movers Today

·     Master Trust monthly credit card data: SYF January net charge offs 4.72% vs. 4.86% in December while delinquencies 2.93% vs. 2.87% MoM; ADS January net charge offs 6.6% vs. 5.4% MoM and the delinquency rate 5.8% vs. 5.7% last month; COF January charge-offs 5.08% vs. 4.95% last month and said 30-plus day performing delinquencies 4.16% vs. 4.04% last month; BAC January net charge offs 2.65% vs. 2.63% MoM and delinquencies 1.69% vs. 1.68% in December

·     Auto’s; TRUE shares dropped sharply after its 4Q results and 1Q outlook fell below the lowest estimates, amid flagging traffic challenges and operational and execution problems (2019 revenue is expected to range from $371-$378MM, missing consensus of $410MM by about 9%); in auto suppliers, AXL reported a Q4 EPS and sales beat while 2019 sales view of $7.3B-$7.4B topped the $7.22B estimate while DAN also posted a Q4 beat (71c/$1.97B vs. est. 66c/$1.92B) and affirmed its 2019 financial targets (LEA, BWA, VC active in sympathy)

·     Consumer Staples; sector dropped on Thursday after weaker KO outlook sunk beverage stocks wile today, PEP posted a Q4 revenue beat and lackluster 2019 guidance as company cited the lower EPS outlook on incremental investments, the absence of last year’s strategic asset sales and refranchising gains and higher taxes; NWL shares dropped after beating Q4 profit expectations but missed on sales, and provided a downbeat outlook; WTW tgt cut to $40 from $98 at Oppenheimer but stay outperform saying sentiment has deteriorated significantly lately, as investors have increasingly fretted over the potential for waning subscriber growth

 

Stock GAINERS

·     ANET +10%; Q4 top and bottom line results beat estimates and issued Q1 revs above views ($588M-$598M vs. est. $589.67M) amid demand from Cloud and Enterprise customers

·     AXL +10%; reported a Q4 EPS and sales beat while 2019 sales view of $7.3B-$7.4B topped the $7.22B estimate

·     GLOB +2%; 52-week highs as reported strong top-line quarterly results as its high potential accounts performed well, and it issued 2019 revenue and EPS guidance

·     NVDA +2%; after a Q4 top and bottom line beat and predicted stronger fiscal 2020 sales than analysts had estimated (flat to down slightly vs. est. 7% drop)

·     TLND +20%; after results, trades to its best levels since November as tops its 100-day MA around the $46 level after jump in shares/posted in-line revs and guidance from pre-announced range

·     TNDM +2%; adding to yesterday gains after the FDA allowed marketing of its t:Slim X2 insulin pump with interoperable technology for delivering insulin under the skin for children and adults with diabetes

 

Stock LAGGARDS

·     AMAT -4%; offered soft F2Q guidance as demand remains impacted by end-market weakness from cloud, smartphones, PCs, autos, China/guided Q2 EPS 62c-70c on revs $3.33B-$3.63B below est. 78c/$3.69B

·     AMN -15%; dropped on mixed Q4 results as EPS beat but revenues fell short of consensus while guides Q1 revs $520M-$528M below est. $559.99M)

·     DE -1%; posted Q1 EPS below estimates (Q1 EPS $1.54/$6.94B vs. est. $1.75/$6.95B) while lowers its 2019 cash flow from equipment operations to about $4.4B from prior view of $4.8B

·     LOGM -12%; reported better than expected Q4 results above the high end of guidance, yet announced a multiyear initiative to heavily invest spending in the Company’s core growth drivers in UCC, Identity, and Customer Engagement, weighing on shares (downgraded at OpCo)

·     NWL -16%; after Q4 profit topped expectations but missed on sales, and provided a downbeat outlook as continues to reorganize its business

·     TREX -9%; shares dropped on mixed results as EPS beat by 7c but revs of $176M missed the $189M estimate

·     TRUE -22%; reported soft 4Q18 results and issued 2019 guidance that was significantly below expectations (FY19 revs seen $371-$378MM, missing consensus of $410MM by about 9%)

·     XPO -15%; Q4 profit and sales fell short of the lowest analysts’ estimates, while its 2019 adjusted Ebitda view also lagged noting headwinds in France and the UK during the fourth quarter

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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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