Northern Trust Securities: US Summary

The authors of the content on this page from Sept 2012 to June 2017 are:
Market Commentaries: Gary Paulin, Ameet Patel, Paul Moran, Douglas Morton, Oliver Sherman, Ben Brownette, Rob Arnott, James Santo, Neil Campling
Research: Ameet Patel, Paul Moran, Douglas Morton, Oliver Sherman, Rob Arnott, Neil Campling

S&P +0.49% (2109.4), D +0.64% (17920.3), N +0.31% (4523.6), CL1 +2.32% (49.74), Copper +0.21% (211.75), Gold +0.11% (1245.54) 10YrYld +0.03 (1.7349), DXY -0.04% (93.99), Vix +1.34% (13.65).

The S&P closed inline w/ the European close and a rare 20bps slide late day from the day’s highs but net, net 40bps off lows during Yellen’s speech (more below). Volumes 10% off Friday to 6.4bln shares slipping below avg of 6.9bln. Dollars traded off 12% to $225bln vs $250bln avg. Touch better than 3:1 up volume over down volume.

New high for the move for the S&P just shy of the November peak, as the Fed once again dominates the day with a highly anticipated, prev scheduled speech by Fed Chair Yellen mid-session following Friday’s clunker of a jobs report. Seen as the last word before a Fed ‘quite period’ into their June mtg. Net, net Yellen was about as dovish as can be in light of the collective rate hike jawboning we have heard from Fed members of late. June remains completely off the table as it was after Friday’s report, with market priced odds falling to 2% from 4%. July falling further too to 21.6% from 27%. The silver lining seen by Yellen from Friday is the possibility that the weakness in payrolls while there is wage growth is possibly indicative of full-employment-like conditions. It does seem, though, international developments (‘Brexit’ most prominent) are a bit more on the radar than they were as a mention during her speech of risks abroad coincided w/ the the only real, but minor, down move in stocks while she was speaking. But while seeing US economic and labor market developments as “largely favorable” any sort of time commitment to actually raising rates is as non-specific as it has been this year. Evidence of follow-through on wage growth seems a key trigger for Fed action. That said, the 10yr yield gains back about 1/3 of what it lost on Friday up to 1.73%, the 2yr getting back about 25% of Friday’s drop in yields leading to the 2nd straight day of curve steepening. The Dollar Index hits lows of the day in the immediate aftermath of the speech and while recovers somewhat remains negative, -10bps, on the day (GBP -43bps to 1.4455 speaking of Brexit concerns). Gold holds Friday’s spike up 10bps on the day. Other than the Fed, crude making headlines today, up 2.3%, as the chair of the Abu Dhabi Dept of Economic Development sees the global surplus shirking faster than expected. WTI highest level in more than 10 months, Brent >$50 best since November. In stocks energy shares the big winner w/ mid, small, lrg cap energy the 3 best performing groups. S&P High Beta, Large Cap Banks, Small Caps, Cap Goods, Materials also strong. Shorts scrambling this afternoon helping keep prices rising through the day w/ the most-shorted, +1.7% on the day, initially underperforming today, then off to the races for the rest of the day as Europe closed. Real Estate, Utilities, Retailers, Staples, Semis, Transports, Lrg Cap Growth all lagging. Also in the news is biotech w/ lots of headlines from the ASCO Conf. The equal weighted XBI biotech etf strong +2.5% with ACADIA +12.6%, EXELIXIS +10.9%, KITE +10.5%, JUNO +10.5% the winners. ABBVIE -3.5%, MEDIVATION -2.1% on conf developments. Elsewhere GRUBHUB (NTS Sell) +70bps on an u/g away. We gladly fade the rally. INTEL (NTS Sell) +15bps on an u/g as well. We see them losing their technology edge and prefer ARM HLDGS +90bps (NTS Buy) and TAIWAN SEMI -20bps (NTS Buy). Defense, a constant we’d be investing in, gets a late day boost as a spending bill advances through the necessary steps in Congress. Other movers BARRACUDA NETWORKS -9.6% on a d/g, NXP Semi -2% on a block trade placed, TYSON FOODS -3.7% on a d/g, Barron’s positive on WHOLE FOODS +2.5%, BEST BUY -3.2% as CEO cuts stake, CF INDUSTRIES +8.9% on an u/g. Relatively quiet economic week: final q1 readings tomorrow on non-farm productivity and unit labor costs.

OUTPERFORMERS: Oil Drillers +11.1%, Oil Services +7.8%, Metals/Mining +4.9%, Explorers +2.6%, Energy +2%

UNDERPERFORMERS: Coal -1.2%, Dept Stores -60bps, Packaged Foods -60bps, Real Estate -50bps, Semis -25bps

COMMODITIES: OJ +5.5%, Coffee +3.6%, Cotton +2.6%, NatGas +2.5%, Crude +2.3%…..Cattle -1.1%, Gasoline -1%, Sugar +15bps, Copper +24bps, Gold +40bps

ECON: Labor Market Condititions Index -4.8 vs -0.8 est

AFTER-HRS:

CASEY’S GENERAL STORES -1.8% q4 miss
ALEXION (halted) phase III study misses endpoint
UNITED NATURAL FOODS +8.9% q3 beat, raises fy view

ACTIVE TODAY:

TMT
GRUBHUB +45bps u/g @ Monness Crespi
TAIWAN SEMI -25bps full 16nm utilization seen per press
BARRACUDA -9.6% d/g @ JMP Securities
ACTIVISION -15bps positive comments @ Sterne Agee CRT
APPLE +75bps cautious comments @ Cleveland Research
INTEL +20bps best long idea @ Arete
FITBIT -1.9% cautious comments @ Cleveland Research
NXP SEMI -2% 14.8mm block trade prices

CONSUMER
WAL-MART +25bps u/g @ Jefferies
RALPH LAUREN +55bps positive comments @ UBS
STRUM RUGER -6.7% d/g @ BB&T
HARLEY-DAVIDSON -1.6% d/g @ Goldman
TYSON FOODS -3.7% / PILGRIM’S PRIDE -1.8% both d/g @ BMO
WHOLE FOODS MKT +2.5% positive comments in Barron’s
CABELA’S +3% time to take profits per Barron’s
HOME DEPOT / LOWES cautious comments @ Cleveland Research
CALLAWAY GOLF +2.2% positive comments @ Sterne Agee CRT
BEST BUY -3.2% CEO cuts stake by 44%

HEALTHCARE
ABBVIE -3.4% competitor presents positive data, d/g @ Cowen
EXELIXIS +11.2% positive reaction to study; looking to buy assets
ARRAY BIOPHARMA +1.3% reports phase II data to initiate phase III trial
JAZZ PHAMRA +1.9% init neutral @ Goldman
ENDO +2.1% init neutral @ Goldman
MEDICINES CO. -60bps $350mm convertible senior notes
JUNO THERAPEUTICS +10.5% reports phase I data
BRISTOL-MYERS +1.9% positive comments @ SunTrust
KITE PHARMA +10.3% positive phase I follow-up data

FINANCIALS
EVEREST RE -10bps defended @ Deutsche
REGIONS FINANCIAL +2.3% u/g @ Keefe Bruyette
VISA +75bps reinstated o/w @ JPMorgan
AFFILIATED MGRS +2.3% buying minority stakes in funds for $800mm from GOLDMAN SACHS +90bps

CAPITAL GOODS
DELPHI +70bps d/g off conviction buy @ Goldman
FASTENAL -80bps May daily sales +1.1%

MATERIALS
SQM +6.4% u/g @ Scotiabank
CF +8.9% u/g @ CLSA

ENERGY
HERCULES OFFSHORE -6.4% voluntary Chap 11
DEVON ENERGY +4.6% selling $1bln in assets
WPX ENERGY +7.7% 49.5mm spot secondary prices
WEATHERFORD +8.3% u/g @ Barclays
TRANSOCEAN +14.7% rallies w/ Brent >$50

UTILITIES
ENTERGY +10bps u/g to conviction buy @ Goldman
SEMPRA ENERGY -40bps d/g off conviction list @ Goldman