Mid-Morning Look: March 08, 2019

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Mid-Morning Look

Friday, March 08, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities slide following a double dose of negative headlines, putting the Dow, S&P 500 and Nasdaq Comp on track for their 5th straight day of losses. Overnight, Asian markets fell (Shanghai down 4.4%) after data showed China’s exports fell sharply last month, tumbling 20.7% from a year earlier in February, after jumping 9.1% in January, according to data. The negative sentiment intensified this morning after the February jobs report missed by a wide margin, adding only 20K jobs compared to the 180K economist estimate, while private payrolls added 25K vs. est. 170K. Wages were higher, and unemployment dipped, but the headline payroll figures threw up red flags on the economy. Also in Europe, German manufacturing orders plunged 2.6% month-to-month in January, well below the expected gain of 0.5%. Coming into today’s action, the Nasdaq Comp is looking at a 2.2% drop for the week, while the Dow industrials and S&P 500 are off around 2% each. The Dow Transport index falling for an 11th straight day trying to hold above the 10K level. Energy and metal stocks are the biggest decliners with oil prices plunging on China data and general pullback in riskier assets.


Treasuries, Currencies and Commodities

·     After trading to its best levels of 2019 yesterday, the dollar index (DXY) pares gains following the surprisingly weak monthly jobs report, as it raises doubts about the strength of the US economy. Nonfarm payrolls for the month rose only 20,000, compared with a consensus forecast of 175,000The dollar jumped yesterday, particularly against the euro after the ECB lowered its growth projections for this and next year. The dollar giving up recent gains vs. the Aussie dollar, Canadian dollar and Japanese yen, but rises vs. the British Pound.

·     Commodity prices are mixed as gold benefits from the weaker jobs report and subsequent decline in the US dollar on expectations it gives the FOMC justification to keep rates steady for a longer period of time on economic concerns; gold trades up $10 to around $1,295 an ounce. Meanwhile, energy prices among the biggest drag in the commodity space early.

·     Treasury market’s rally and then drop following the jobs report; the 10-year yield fell as low as 2.61% after the weak jobs print, but has since rallied back above the 2.64% level, higher on the day; Treasury yields have slumped this week – giving back about all of last week’s 10 bps rise on weak global data (US, China, Germany) and the lower ECB growth forecasts


Economic Data

·     Jobs data well below consensus as hiring in the U.S. slowed in February, adding just 20,000 new jobs, the smallest increase in 17 months and well below the 180K estimate; only added 25K private payroll jobs vs. the 175K estimate, and 4K manufacturing jobs. The jobless rate fell to 3.8% in February from 4%, and was below the 3.9% estimate. Dec/Jan jobs were upwardly revised

·     Average Hourly earnings rose 0.4%, more than the expected 0.3% estimate while the 12-month rate of hourly wage gains climbed to 3.4% from 3.2%, the largest increase since April 2009. Hours worked each week fell 0.1 hour in February to 34.4 hours.

·     Housing starts for January rebounded from a big drop at the end of 2018, rising 18.6% to an annual pace of 1.23M, topping the 1.195M est.; single-family starts increased an even faster 25% in January to a 926,000 rate. Building Permits rose 1.4% to an annual rate of 1.35M, beating the 1.287M estimate/Dec housing starts were revised down to a 1.04M from 1.08M







WTI Crude















10-Year Note





Sector Movers Today

·     Internet; NFLX was downgraded to neutral at Buckingham citing the stock’s sensitivity to any market pullback, “investor angst” regarding “increasingly credible” competition from the Disney+ (DIS) streaming service and concerns that his model for Netflix’s long-term global membership growth may be optimistic given the rising competition; large cap tech under fire after the NY Times reported Massachusetts Democratic Senator Elizabeth Warren plans to release a proposal aimed at breaking up the largest technology companies, including AMZN, GOOGL and FB

·     Semiconductors; MU estimates lowered at Piper as we suspect ASP erosion and market oversupply, specifically in DRAM, are likely to persist into the second half of the year; MRVL Q4 results came in slightly better than its negatively preannounced estimates while guidance came in below consensus as the storage market continues to work through lower demand inventory; ON provided guidance at analyst day/the 2022 goal of $7.1 billion in sales implies 6% compound annual sales growth, while EPS is forecast at $3

·     Casino & Leisure movers; CZR active after Carl Icahn discloses holding a 15.53% stake in the casino company, including shares held via convertible bonds/previous reported position in the casino operator was 9.78%; SEAS was upgraded to outperform at Macquarie; AOBC Q4 top/bottom line beat, but Q1 guidance of 11c-15c and revs $162M-$172M missed estimates of 20c/$170.1M, sending shares lower



·     BIG +7%; Q4 EPS beat by wide margin on better comp sales (3.1% vs. est. 1%) and in-line sales, though Q1 guidance weak (65c-75c vs. est. 95c) – but in-line year view

·     COST +4%; mixed results as EPS topped estimates on in-line revenue and comp sales miss (5.4% vs. est. 5.7%)

·     TGTX +6%; following meetings with the Independent Data Safety Monitoring Boards (DSMBs) for its Phase 3 UNITY-CLL and Phase 2b UNITY-NHL studies/the DSMBs recommended the continuation of both trials without modifications

·     TNXP +38%; on the heels of a new European patent covering method of use for candidate TNX-601 for treating neurocognitive dysfunction associated with corticosteroid treatment

·     UPLD +13%; tgt raised by several analysts following Q4 results/guides year revs $194.8M-$198.8M above the $190.1M estimate



·     AOBC -7%; Q4 top/bottom line beat, but Q1 guidance of 11c-15c and revs $162M-$172M missed estimates of 20c/$170.1M, sending shares lower

·     EB -28%; shares fell after Q1 revenue guidance missed and said customer integration from a 2017 acquisition would lead to slower revenue growth

·     FIZZ -21%; downgraded to sell at Guggenheim after having “drastically reduced” his LaCroix sales growth expectations and cut his gross margin and EPS estimates

·     NAV -4%; despite Q4 revenue beat and boosts year rev guidance to $10.75B-$11.25B from prior $10.5B-$11B (est. $10.74B) – erased earlier gains

·     OKTA -8%; posted strong F4Q results and raised the FY20 outlook by more than the beat but shares dipped on lower profitability, though the L-T outlook remains firmly intact

·     OXY -4%; one of many E&P and energy related names falling with oil price declines

·     TLRY -5%; Jefferies initiated with an underperform rating and $61 tgt saying their 10-year discounted cash flow-driven valuation suggests the stock is “too expensive for its outlook.”


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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