Mid-Morning Look: March 18, 2019

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Mid-Morning Look

Monday, March 18, 2019

Index

Up/Down

%

Last

 

DJ Industrials

1.53

0.01%

25,850

S&P 500

9.58

0.34%

2,832

Nasdaq

38.04

0.49%

7,726

Russell 2000

10.08

0.65%

1,563

 

 

U.S. equities are mostly higher, led once again by strength in technology as the Nasdaq Comp trades to highs above 7,733 – best levels since early October, while the Dow lags again thanks to weakness in Boeing shares on news of further investigations. We may see markets trade sideways the next few days ahead of the FOMC meeting results on Wednesday (expected to hold interest rates steady, announce the end of asset roll-off from its balance sheet, and lower rate hike projections), with few earnings or economic data to shake markets that are hovering around their best levels in about 6-months. There are a handful of biotech/pharma names moving following trial results this weekend at various conferences, while M&A news also shaking up a few sectors (consumer finance, gaming, media). Regarding Brexit, on Tuesday, 10 days before the U.K. is set to leave the European Union, the British Parliament is set to vote on Prime Minister Theresa May withdrawal deal for the third time. It was previously rejected in January and last week. If Parliament supports her deal now, the Brexit deadline will be extended until June 30 to allow time to pass the necessary legislation. The dollar slips early extending last week losses while Treasury yields inch higher. For now, markets steadily higher into the FOMC.

 

Treasuries, Currencies and Commodities

·     In currency markets, the dollar index (DXY) slips after falling just under 1% overall last week, ahead of the FOMC meeting mid-week (no changes to rates expected but markets will look for signs of futures hikes with outlook); the euro with early gains vs. the dollar while the pound and yen slip vs. the greenback. Commodity prices are generally higher as oil and gold trade to the upside on weaker dollar (OPEC comments as well). Treasury market’s slip as stocks advance to start the week, pushing Treasury yields off last week closing lows – but 10-year still around 2.60%.

 

 

Macro

Up/Down

Last

 

WTI Crude

0.47

58.99

Brent

0.31

67.47

Gold

1.80

1,304.70

EUR/USD

0.0017

1.1342

JPY/USD

0.06

111.54

10-Year Note

0.01

2.596%

 

 

Sector Movers Today

·     Consumer finance and lending; FIS said it will buy e-commerce and payments group WP in a cash and stock deal that is valued at $43B/under terms of the deal, which includes the assumption of debt, WP holders will receive 0.9287 FIS shares and $11 in cash https://on.mktw.net/2JyVTv5 ; XRX said it’s exploring a possible “strategic transaction” for its customer financing business; QD 4Q total revenues increased by 20.9% year-on-year to RMB1.8B (US$268.6M)/Q4 net income increased by 42.1% y/y to RMB767.5M ($114.4M)

·     Metals & Materials; HUN lowered its Q1 adjusted Ebitda 10% or so below its Q4 results, down from a previous view of in like with 4Q citing slower seasonal pickup in North America and a softer European economy for the guidance cut/also expects Q1 performance products results will come in flat to down from Q4 2018, vs. its previous guidance of flat to up; NWL to sell process solutions business for $500M to One Rock Capital; in steel sector, STLD guided Q1 EPS 88c-92c, below the $1.08 estimate (follows softer guidance from NUE last week)

·     Industrial & Machinery; JCI was upgraded to outperform and raise tgt to a street high of $42 at Wells Fargo saying the timing is now better for the story to play out/expectations and sentiment are pretty low, even as fundamentals are picking up; IR was downgraded to market perform at Wells Fargo saying their bull-bear analysis indicates risk reward is skewed to the downside ($123 bull case scenario – 16% upside potential and $79 bear scenario – 25% downside risk)

·     Medical equipment and devices; DGX was downgraded to neutral at Credit Suisse; SRDX said it was working with the FDA to clarify how the agency’s Friday warning about paclitaxel-coated balloons and paclitaxel-eluting stents would affect the company’s clinical trial evaluating SurVeil; EW shares among top gainers in the S&P after data presented at the American College of Cardiology Annual Scientific Sessions showed its Phase III clinical trial, PARTNER 3, evaluating SAPIEN 3 mitral valve showed its superiority to surgery

 

Stock GAINERS

·     DERM +112%; following successful results from a Phase 2b dose-ranging study of lebrikizumab in patients with moderate-to-severe atopic dermatitis (AD)/all three doses evaluated beat placebo at week 16 as measured by an AD severity scale called EASI

·     EW +7%; following results from its Phase III clinical trial, PARTNER 3, evaluating SAPIEN 3 mitral valve in patients with severe symptomatic aortic stenosis showed its superiority to surgery

·     LPTX +18%; in reaction to positive data on lead candidate DKN-01 in women with advanced gynecological cancers presented at the Society of Gynecologic Oncology Annual Meeting

·     MSGN +5% after the NY Post reported late Friday John Malone, the billionaire owner of Liberty Sirius XM and Liberty Braves Group, may be eyeing a bid https://nyp.st/2HtmasG

·     PHAS +98%; after positive Phase 1 data on PB2452, a reversal agent for AZN’s anticoagulant Brilinta (ticagrelor) as results were just published online in the New England Journal of Medicine

·     WP +10%; FIS said it will buy e-commerce and payments group Worldpay Inc. (WP) in a cash and stock deal that is valued at $43B https://on.mktw.net/2JyVTv5

 

Stock LAGGARDS

·     ARPO -64%; shares fell after its lead candidate AKB-9778 failed a Phase 2b clinical trial in patients with moderate-to-severe non proliferative diabetic retinopathy

·     BA -3%; following reports of increased scrutiny by regulators and prosecutors over whether the approval process for the company’s 737 Max jetliner was flawed

·     FB -2%; downgraded to hold at Needham citing uncertainty after its CEO Zuckerberg disclosed a vision that is more sensitive to investors’ privacy concern

·     HUN -2%; lowered its Q1 adjusted Ebitda 10% or so below its Q4 results, down from a previous view of in like with 4Q citing slower seasonal pickup in North America and a softer European economy for the guidance cut/also expects Q1 performance products results will come in flat to down from Q4 2018, vs. its previous guidance of flat to up

·     KHC -1%; after receiving a compliance letter from Nasdaq related to its late 10-K filing/company says it expects to file the 10-K within a few weeks

·     LL -9%; as CFO resigned after about two-and-a-half years, to take up a new role in a Florida-based company while posted Q4 sales of over $268M, below consensus views

·     OSTK -10%; after wider-than-expected loss, surprise revenue decline/total revs fell to $452.5M from $456.3M (below est. $474.1M)/said orders declined 4%, as sales and marketing expenses declined 13%, and that promotional activities increased

·     SYNA -19%; CEO Richard Bergman has departed, effective immediately and guided Q3 revs to the lower end of the prior guidance that put revenue from $340M-$380M and EPS from $0.70 to $1.00 (vs. est. $356.4M/83c)/downgraded at Mizuho

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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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