Mid-Morning Look: April 18, 2019

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Mid-Morning Look

Thursday, April 18, 2019






DJ Industrials




S&P 500








Russell 2000






U.S. equities are mixed, with the tech sector giving back recent gains (Nasdaq 100 had traded to all-time highs yesterday), while the punishment in the healthcare sector continues with Pharma and Biotech sliding to fresh lows as policy fear changes in Washington for expanding Medicare to all Americans boosts concerns. Mixed economic data today as jobless claims slide (better) to fresh 50-year lows and retail sales jump 1.6% vs. est. 1%, though Philly Fed data misses at 8.5 below the 11 estimate. Metals pressured after aluminum giant AA lowers its global demand outlook for the metal. Cloud and software related names slipped after TEAM EPS/rev results beat but softer billings growth hurt sentiment. The yields on 10-year Treasuries and European bonds slipped, but pared some of the move after the U.S. data. Attorney General William Barr held a press conference this morning before he publishes a redacted version of Special Counsel Robert Mueller’s final report to Congress later today. The abbreviated trading week (closed tomorrow for Good Friday) has been chock full of big news, with better China GDP, signs of improved trade deal with China (expected the end of May), the busiest IPO week of the year so far (over 8-deals), and of course a busy week of large cap earnings – keeping major averages not far from all-time highs – though seeing a pullback today. Note coming into today, the NASDAQ was just about 50 points shy of record close, the S&P 500 15 points shy, and Dow stood less than 400 points away.


Treasuries, Currencies and Commodities

·     In currency markets, the dollar rallied following the mix of data, where retail sales were better than expected, jobless claims printed another record low, and the Philly Fed index was a bit weaker than expected; the euro sank on weaker PMI data overseas, for its largest decrease in about a month. Treasury market’s rally as yields slip near lowest level in a few days as stocks slip from highs, mixed US data and weaker EuroZone PMI data keeps concern about slowing global growth on the table; the 10-year yield slides under 2.55%. Gold little changed, oil up slightly.


Economic Data

·     Weekly Jobless Claims fell 5K to 192K, below the 205K estimate, a new 50-year low, while the prior week claims revised up to 197K from 196K; the 4-week moving average stood at 201.3K in the week ending April 13, falling 6K; continuing claims fell 63K to 1.653M in the latest week

·     Retail Sales for March were strong, rising 1.6% and topping the 1.0% estimate as retail sales less autos rose 1.2% in March, vs. est. 0.7% gain; the gain of 1.6% was the largest since Sept. 2017

·     The Philadelphia Fed Index falls to 8.5 from 13.7 in the prior month and below the 11.0 estimate; April prices paid rose to 21.6 vs 19.7 prior, new orders rose to 15.7 vs 1.9 and employment rose to 14.7 vs 9.6 last month; shipments fell to 18.4 vs 20.0

·     Business Inventories for February rose 0.3% MoM, in-line with estimates while Business sales rose 0.1% in Feb. after rising 0.3% the prior month; Wholesalers inventories rose 0.2% m/m in Feb. after rising 1.2% prior month and retailers inventories rose 0.3% m/m in Feb. after rising 0.8% prior month

·     The 30-year fixed mortgage rate for week ended today rose to 4.17% from 4.12%, its third straight weekly advance while the 15-year rate avg 3.62%, up from 3.60% a week earlier.







WTI Crude















10-Year Note





Sector Movers Today

·     Bank movers; many regional banks reporting; KEY Q1 EPS missed by 2c as fee income declined due to lower capital markets income; STI Q1 EPS beat by 3c as average loan balances of $153.7B rose 3% Q/Q and 8% Y/Y; UMPQ shares dropped after Q1 EPS of 34c missed estimates by 3c; CATY delivered a mixed quarter as core EPS missed estimate by a penny and the net interest margin was shy of some ests but posted loan and deposit growth; RF shares slide as EPS was in-line on mostly in-line revs but Q1 net interest income and other financing income-FTE of $961M falls 1% Q/Q and rises 4.2% Y/Y

·     Consumer finance and lending; Dow component AXP Q1 adjusted EPS of $2.01 beats ests by 4c and up YoY while Q1 total revenue net of interest expense of $10.4B rose 7% from $9.72B a year ago; SYF Q1 EPS beat by 10c while net interest income rose 10% Y/Y to $4.23B, primarily driven by the PayPal Credit program acquisition and loan receivables growth; ALLY posted a top and bottom line quarterly beat; SLM Q1 core EPS beat by 4c and reiterated guidance for originations of $5.7B and non-GAAP efficiency ratio of 35-36%.

·     Tobacco, PM cut its earnings per share forecast for the full year to at least $4.87, (saw at least $4.90) well below est. $5.18 as 1Q cigarette shipment volume 0%; group also slides (PM, BTI, MO) after Senate Majority Leader Mitch McConnell said he wants Congress to raise the minimum age for tobacco products, including vaping devices, to 21 from 18 nationwide

·     Chemicals; DWDP said it sees 1q total company results in line with guidance provided March 28 and sees better-than-expected results from Specialty Products, Materials Science results; AVY was downgraded to underweight at JPMorgan after its 26% YTD advance; PPG mixed as Q1 EPS beat while Q2 guidance weaker but reaffirms year outlook; CF was downgraded to underperform at Bank America with $38 target; VNTR was upgraded at RBC Capital saying the TiO2 cycle is turning with destocking activity nearing completion amid improving global demand and pricing

·     Software movers; cloud software names slipped after TEAM posted Q3 rev and EPS upside but billings were below consensus ($325M versus $332M), and saw a large deceleration in billings growth to 31% from 49% in F2Q19 (WDAY, ZEN, NOW active in reaction); CHKP Q1 results that narrowly beat EPS and revenue estimates but missed on Product and Licenses revenue with $112.8M vs. $113.8M consensus; LLNW results came in below consensus and FY’19 guidance was reiterated/revs miss due to late ’18 contract renegotiations with 6 of 10 largest customers



·     BX +6%; said it plans to convert to a corporation from a publicly traded partnership after watching two of its rivals benefit from the move

·     CGC +9%; agreed to acquire Acreage Holdings (ACRGF) for $300M in cash plus 0.5818 CGC common shares for each Acreage share/deal valued at $3.4B https://on.mktw.net/2VPttOJ

·     ETFC +2%; posted EPS beat as well as revenue beat from both fee revenue & net interest revenue coupled with well-controlled expenses

·     HON +3%; EPS was 7c above the high end of the company’s Q1 outlook and up 13% excluding the impact of the spin-offs while segment margin was above 20%

·     LVS 2%; reported solid 1Q19 results, with adjusted EBITDA ahead of consensus in both Macau and Singapore, and only slightly below in Las Vegas

·     SNA +8%; mixed Q1 results as EPS beat while revs fell short of views, though CEO said was encouraged by results, which included a continuing recovery in our U.S. franchise network

·     UNP +4%; quarterly profit beats estimates on price hikes and Q1 operating ratio 63.6%, up 1.0 point, though said Q1 business volumes down 2%

·     URI +9%; reported 1Q profit and revenue above analysts’ estimates, and reaffirmed its full-year outlook after saying customer sentiment remained positive

·     TRV and TMK +3% – in the insurance sector – TRV reported Q1 revs of $7.67B, slightly above views while reports record gross written premiums of $7.84B in Q1, up 6% Y/Y, with growth in all segments; TMK Q1 results beat estimates, while operating fundamentals were strong



·     AA -2%; cut its global aluminum deficit forecast for the full year to 1.5M-1.9M metric tons, from prior 1.7M-2.1M; and sees FY19 global aluminum demand growth 2-3%, down from 3-4%

·     ANGO -5%; announced the sale of its NAMIC Fluid Management business to Medline for ~$168M which KeyBanc noted heavy EPS dilution (but firm said was a buying oppty)

·     SKX -14%; Q1 EPS and sales just missed estimates and guided next quarter below views as sees Q2 EPS 30c-35c on sales $1.2B-$1.23B vs. est. 38c/$1.23B

·     SNBR -13%; reported 1Q EPS that was strong, coupled with healthy comps, albeit slightly below Street expectations/2019 EPS was reiterated, though 2Q EPS was guided just below consensus

·     TEAM -9%; posted Q3 rev and EPS upside but billings were below consensus ($325M versus $332M), and saw a large deceleration in billings growth to 31% from 49% in F2Q19



·     Aqua America (WTR) 32.5M share Secondary priced at $34.62

·     Brigham Minerals (MNRL) 14.5M share IPO priced at $18.00

·     Eiger BioPharmaceuticals (EIGR) 4.5M share Spot Secondary priced at $11.00

·     Endava (DAVA) 5M share Secondary priced at $27.25

·     Greenlane (GNLN) 6M share IPO priced at $17.00

·     Hookipa Pharma (HOOK) 6M share IPO priced at $14.00

·     Natera (NTRA) 5.3M share Secondary priced at $19.00

·     Pinterest (PINS) 75M share IPO priced at $19.00

·     Zoom Video (ZM) prices 20.9M share IPO at $36, above the recently raised $33-$35 range


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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