Mid-Morning Look: February 21, 2019

Auto PostDaily Market Report

Mid-Morning Look

Thursday, February 21, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities are under pressure following a combination of mixed economic data points, Fed comments and developments in global trade. The Nasdaq Composite appears in jeopardy of snapping its 8-day win streak as stocks fall broadly. In addition to trade headlines (see below), markets are also dealing with a mixed batch of economic data points as: 1) the Philly Fed survey declines -4.1 in February versus +17 in January (and vs. up 14 reading est.) for the biggest MoM drop in seven and a half years with new orders dropping to the lowest since May 2016; 2) Durable goods orders grew less than expected (Core durable-goods orders fell in December for a fourth time in the past five months) and, 3) existing home sales unexpectedly fell. The latest batch of data has pushed economic GDP estimates lower to around the mid 1% levels. Lots of moving parts related to trade talks between the US and China moving markets today: 1) Reuters said agreements in principle are being drawn up on six key areas: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade. The report suggested the outline is the most significant progress made so far. 2) Bloomberg reported this morning that China is proposing that it could buy an additional $30 billion a year of U.S. agricultural products including soybeans, corn and wheat as part of a possible trade deal being negotiated by the two countries. After the mixed message from the Fed minutes yesterday, which showed the policy-setting committee was split on the path for interest rates, the Fed’s Bullard today declared that the end is near for the rate hike cycle and balance sheet reduction.


Treasuries, Currencies and Commodities

·     In currency markets, the dollar modestly higher overall as investors deal with another round of weaker economic data, and mixed messages from the Fed yesterday in its January meeting minutes showing they were split on interest rate direction; Brexit concerns in UK also playing a part in movement between the Pound/dollar. Commodity prices slipping after their recent run, with gold prices dropping from 10-month highs while oil dips after its recent run to 3-month highs. Treasury market’s slide as yields jump with the 2-year Treasury yield up 3.3 basis points at 2.529% while the 10-year yield also up over 3 bps to 2.68% with markets digesting the Fed, economic data and trade.


Economic Data

·     Philadelphia Fed Index for February falls to -4.1, well below the expected rise reading of 14.0; general business conditions were 17 in the prior month; prices paid fell to 21.8 vs 32.7 while new orders fell to -2.4 (lowest reading since May 2016) vs 21.3, while employment rose to 14.5 vs 9.6; shipments fell to -5.3 vs 11.4 and inventories rose to 3.3 vs -7.6

·     Durable Goods Orders rise 1.2% vs. est. 1.7%; durable goods new orders revised up to 1% gain for Nov. from 0.7% gain; new orders ex-trans. rose 0.1% in Dec. after 0.2% fall; new orders ex-defense rose 1.8% in Dec. after being unchanged

·     Weekly Jobless Claims fell 23K to 216K, below the 228K estimate while the prior week claims week unrevised at 239K; the four-week jobless claims average rises 4,000 to 235,750; continuing claims fell 55k to 1.725m in the week ending Feb. 9

·     Existing-Home Sales fell (-1.2%) to 4.94M rate vs. est. of 5M; existing-home sales fell 1.2% after falling 4% prior month; 3.9 month’s supply in Jan. vs. 3.7 in December; 4.4 months’ supply seasonally adjusted in Jan. vs. 4.3 in Dec. seasonally adjusted; Inventory rose 3.9% to 1.59M

·     U.S. leading index (LEI) dipped -0.1% to 111.3 in January after an unchanged reading of 111.4 in December (revised from 111.7). However, the index was at 107.5 last January, and was at an all-time high of 111.9 in September.







WTI Crude















10-Year Note





Sector Movers Today

·     Consumer Staples; in tobacco, Wells Fargo said MO raised wholesale list prices increase on all its cigarette brands that was about 1 cent per pack more than expected and a month earlier,; in beverages, SAM 4Q EPS of $1.84 beat as better margins and tax benefit offset higher operating expenses (follows cautious guidance yesterday from STZ that sunk spirit makers); BG drops after grains merchant’s quarterly profit misses estimates due to declining soybean prices in Brazil and also missed Q4 profit estimates; HRL missed Q1 estimates and reaffirms FY2019 guidance

·     Restaurants; busy sector today after earnings: DPZ shares fall as 4Q adjusted EPS and comp sales missed estimate (comps 5.6% vs. est. 7.2%); JACK rises after its Q4 EPS and sales topped consensus; CAKE with a mixed Q4 report as EPS slightly below street, restaurant margins inline and comp. sales above estimates and expects comp. sales growth of 1%-2% at The Cheesecake Factory restaurants, in line with co.’s long-term target; DIN 4Q adjusted EPS and sales beat; mid-point of year adj. EPS view also topped views (mixed comp sales as Applebee’s comps miss while iHop better); WEN Q4 sales and comp. sales trailed estimates (4Q North America comp. sales rose 0.2% vs est. +0.6%)

·     Consumer finance and lending; AAPL and Goldman Sachs have teamed up to issue credit cards that will be paired with iPhones and will help users manage their money, the Wall Street Journal reported on Wednesday; NAVI shares active after Canyon Capital Advisors withdraws its initial expression of interest to buy NAVI saying it doesn’t plan to take part in any acquisition process “at this time.” https://on.wsj.com/2BLmkam ; GDOT slides as slowing growth in its active card users disappointed offsetting the Q4 results

·     Metals & Materials; Copper prices slipped from seven-month highs on profit taking and as the dollar firmed (3-month copper on the LME touched highest since July 10 at $6,426.50 yesterday); gold miner NEM beat Q4 earnings and revenue expectations, helped by higher gold production in its Colorado and Ghana mines and lower costs/says its Q4 gold production rose nearly 8%; X was upgraded to buy at Berenberg saying steel prices are poised to recover just when consensus has become overly bearish on the sector

·     Education stocks were big winners as LOPE Q4 EPS beat on better revs and Q1 guidance $1.49 beat the $1.40 view; CECO another education name higher after its Q4 results topped views on better guidance (BPI, STRA higher)



·     ALB +7%; as overall, quarterly sales guidance exceeds consensus, while EPS and EBITDA numbers bracket consensus

·     ATTU +16%; to be acquired by Qlik for $23.50 per share in deal valued at about $650M https://yhoo.it/2Nh3tIE

·     CAR +12%; after Q4 results easily topped consensus along with strong pricing and an upbeat outlook for the year lifting car rental stocks

·     CYH +18%; as posted a smaller than expected Q4 EPS loss on better operating revs of $3.45B

·     DLPH +15%; 2019 profit and sales outlook, even though it missed estimates, was not nearly as bad as many analysts had feared

·     IMDZ +309%; as MRK agrees to acquire for $5.85 per share https://yhoo.it/2DZSP55

·     NCLH +3%; Q4 results mixed (EPS beat, revs small miss) but issues a confident outlook for Q1 and 2019

·     SAM +11%; 4Q EPS of $1.84 beat as better margins and tax benefit offset higher operating expenses



·     BG -5%; after grains merchant’s quarterly profit misses estimates due to declining soybean prices in Brazil and also missed Q4 profit estimates

·     BIIB -3%; downgraded to hold at Stifel saying the stock has been remarkably resilient in the wake of two recent events – Roche crenezumab futility, Tecfidera IPR institution which elevate risk to the long-term bull case

·     CBLK -22%; shares plunged after a weak quarter and lower guidance prompting an analyst downgrade at JPMorgan

·     CONE -5%; results fell short of expectations and consensus on revenue and EBITDA for C4Q, while bookings were light in aggregate with mixed takeaways

·     FTI -6%; after posted two unexpected charges ($280M provision and $1.9B of goodwill and other charges) as well as a sales and EBITDA margin miss on Q4

·     JNJ -1%; said it has received subpoenas and inquiries on its talc baby-powder products from federal prosecutors and securities regulators

·     MIC -9%; downgraded at RBC Capital after 4Q Ebitda missed estimates citing that 2019 guidance implies further deterioration in International-Matex Tank Terminals

·     NAVI -5%; as Canyon Capital Advisors withdraws its initial expression of interest to buy NAVI saying it doesn’t plan to take part in any acquisition process “at this time.” https://on.wsj.com/2BLmkam

·     SPTN -14%; misses Q4 EPS by 6c on a rev miss and guides year EPS $1.70-$1.80, below the consensus of $1.90


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