Mid-Morning Look: November 11, 2019

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Mid-Morning Look

Monday, November 11, 2019

Index

Up/Down

%

Last

 

DJ Industrials

-104.82

0.38%

27,576

S&P 500

-8.75

0.28%

3,084

Nasdaq

-20.97

0.25%

8,453

Russell 2000

-5.08

0.32%

1,593

 

 

U.S. equities pulling back modestly from record closing highs last Friday for all major averages, as the S&P with a small drop off highs (fell over 15-points, biggest drop since October 8th) with bond markets closed in observance of Veteran’s Day and both Asian and European markets sinking amid more unrest in Hong Kong (those markets fell nearly 3%). Trading volumes in the U.S. remain subdued due to the Veteran’s Day holiday, lack of economic data or earnings and quiet trade talk to start the week. Last Friday, President Donald Trump shot down speculation of a rollback on tariffs, saying he has not yet agreed to remove tariffs on Chinese goods, though Beijing would like him to. Overall a very quiet start to the week with light volumes and news.

 

Treasuries, Currencies and Commodities

·     In currency markets, the U.S. dollar giving back some of last week’s gains, dropping vs. the British pound (up 0.8% to 1.2875) after Brexit Party leader Nigel Farage said his party won’t contest seats captured by the ruling Conservative Party in the last election, a boost for Prime Minister Boris Johnson’s party; the dollar also slipped vs. the euro after matching a four-week low earlier; the buck slipped vs. the safe haven yen. Treasury markets are closed due to Veterans Day, and no economic data in the U.S. as well. Commodity prices are mixed as gold prices extend last week declines, falling below $1,460 an ounce while oil prices rebound off earlier declines.

 

 

Macro

Up/Down

Last

 

WTI Crude

-0.12

57.12

Brent

0.02

62.53

Gold

-3.60

1,459.30

EUR/USD

0.0018

1.1036

JPY/USD

-0.27

108.99

10-Year Note

was

closed

 

 

Sector Movers Today

·     Energy stocks busy following several macro stories including reports that Saudi Arabia raised its oil output in October to 10.3M barrels per day but kept its supply to the oil markets below its OPEC output target, Reuters said citing a Saudi industry source. Saudi Arabia, the world’s largest oil exporter, told OPEC that its production in September fell by 660,000 barrels per day (bpd) from August to 9.13 million bpd in the wake of attacks on its energy installations. Iran said it found a new oil field with over 50B barrels, a find that could boost the country’s proven reserves by a third as it struggles to sell energy abroad over U.S. sanctions; CRR shares lower after its larger than expected quarterly loss; NINE shares edge higher after earnings results

·     Metals & Materials; VALE lowered its iron ore sales guidance for this year as expects to sell between 307 million and 312 million metric tons, down from a previous range that went as high as 332 million, designed to give “more visibility” on sales expected for the last quarter; TMST downgraded to underweight at JPMorgan with $5 tgt; industrial metals (copper, steel, aluminum) are pulling back after strong gains last week on improved trade talk optimism

·     Semiconductors; NVDA tgt raised to $240 from $195 at UBS ahead of earnings this week (11/14); QCOM was downgraded at Morgan Stanley saying valuation gap to semiconductor peers has closed, and market appears to: 1) assign a high probability of a China/US trade agreement, 2) downplay the FTC case, and 3) expect 5G acceleration; semi index (SOX) pulls back from its all-time highs reached last Thursday of 1,745 in tech profit taking

 

Stock GAINERS

·     ADS +2%; upgraded at Oppenheimer noting sees the card services segment net of corporate drag as worth at least $119 using a 2.95x P/TBV multiple, and says total Alliance Data including LoyaltyOne could be worth $131

·     CARB +24%; to be acquired by OTEX in cash deal with an enterprise value of about $1.42B, with holders to receive $23 per share https://on.mktw.net/2qKZBZa

·     NKTR +3%; said data from the melanoma study showed the potential of NKTR-255 to enhance the ability of antibody-dependent cells to destroy the tumor cells and said NKTR-358 was safe and well-tolerated with no anti-drug antibodies detected

·     QRTEA +12%; following quarterly earnings results

·     SPWR +8%; said it would split into two separate publicly traded companies; the companies will be called SunPower and Maxeon Solar Technologies

·     WBA +5%; on a Bloomberg report that KKR has approached $WBA with an offer that could mark the largest leveraged buyout in history https://on.mktw.net/2NE58tU

 

Stock LAGGARDS

·     LB -2%; downgraded to hold at Deutsche Bank while slashed tgt to $20 from $31 saying monthly promo watch indicates promotions remain at elevated levels

·     LPCN -69%; after saying the FDA declined to approve its testosterone drug, Tlando, noting that a clinical trial of the drug failed to meet three secondary goals

·     MATW -10%; shares dropped following lower guidance late Friday and recorded a $78M goodwill write-down at its Graphics Imaging reporting unit

·     NXTC -50%; following updated results from the first part of its Phase 1/2 clinical trial evaluating NC318, a Siglec-15 (S15)-targeting monoclonal antibody, in patients with solid tumors

·     RLGY -6%; Susquehanna downgraded to negative as sees 2020 EBITDA coming in below consensus/continued market share decline, USAA affinity loss provide continued headwinds

·     TUP -3%; after suspends its quarterly common dividend saying it is working to improve financial flexibility and drive profitability in the short term

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Content is provided by Hammerstone Inc., which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the Hammerstone content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.

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