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 -0.94% (2047.2), D -1.02% (17530.0), N -1.32% (4322.6), CL1 +1.24% (48.31), Copper +0.07% (209.05), Gold +0.03% (1279.30) 10YrYld +0.02 (1.7723), DXY -0.01% (94.56), Vix +6.06% (15.57).

The S&P closed down 65bps from the European close including a 30bps move off the day’s lows in the last half hour. Volumes popping up over 15% today to 7.6bln shares moving back above avg fo 7.2bln. Dollars traded up close to 20% to $280bln, $20bln above avg. A little better than 60-40 down volume over up volume.

The Fed flexes its muscles a bit today w/ the backing of economic data, and the market seems forced to recalculate a bit. Futures started the day fading overnight strength into the US open as the Wall Street Journal’s widely followed Fed watcher discusses the apparent “disconnect” between the market’s view of the economy and the Fed’s view. This, along with data today that showed inflation rising at the fastest pace since 2013 – what has been the lagging component of the Fed’s calculus – was enough wipe out virtually all of yesterday’s gains. Out of the gate this morning most-shorted names strongly outperformed and more defensive/higher yielding recent winners were sold. Stocks made a decisive turn for the worse after Fed-speak from Williams/Lockhart with both seeing 2, maybe 3 hikes this year. June expectations rose from 6% probability of a hike this morning to 14% by the end of the day, September mtgs on now from just under 50% to nearly 2/3 probability for December. In short the market today did seem to close some of that gap in its view vs the Fed’s cited early this morning in the Journal. With minutes from the prior mtg due tomorrow seemed like a bit of scramble to take some profits in case more hints to come. Dollar Index net, net flat on the day, yields fluctuated but end up closing the highs of the day, exceeding the post-data morning spike to 1.77% on the 10yr though the yield curve continues to make multiyear lows with the long-end unconvinced that a move or two this year commences a bona fide tightening cycle. Interesting that large cap banks strongly outperformed, down just 22bps, while small/mid cap banks underperformed. Suggests to me a lot of shorts expressed in the bigger more liquid names. Gold up 40bps in the end today and crude a new high for the move up 1.7%, 85% from its lows. We see the path there higher still: LYONDELLBASELL (QCC) +75bps best performer in the QCC basket, a quality play on higher oil in our view (and higher crude marginally not good for FIAT CHRYSLER (NTS Sell) -6.7%). Also in the QCC, HOME DEPOT -2.5% and TJX +50bps both deliver w/ results and demonstrate the resiliency of their business models and the fact that they largely don’t compete w/ AMAZON -2.2%. Speaking of Amazon, as it holds its annual meeting today , the “Amazon effect” continues to seen across names. Today it’s GRUBHUB (NTS Sell) -7.8% in focus as Amazon launches food delivery in Manhattan & Dallas. Profit taking today in the e-gaming space but positives continue to be observed globally and TAKE-TWO #s tomm night likely to be another positive catalyst for the likes of ACTIVISION -3.2% & NVIDIA +20bps (both NTS Buys). Within today’s econ data was better housing starts; that and commentary on the call from HD reinforces our positive view of US housing and LENNAR (NTS Buy) looks to be at level to resume outperformance.

OUTPERFORMERS: Metals/Mining +4.3%, Coal +3%, Drillers +1.5%, Gold Miners +1.3%, Oil Services +1.2%

UNDERPERFORMERS: Packaged Foods -2.9%, Steel -2.6%, Food/Bev/Tobacco -2%, Dept Stores -1.9%, Food/Staples Retailers -1.9%

COMMODS: Gasoline +2.4%, Heating Oil +2.3%, OJ +2%, Cotton +2%, Crude +1.7%…..Cocoa -1%, Coffee -70bps, Sugar -40bps, Copper -5bps, Lean Hogs +5bps

ECON: Housing Starts 1172k vs 1125k est, +6.6% m/m vs 3.3% est, Bldg Permits 1116k vs 1135k est, +3.6% vs 5.5% est, CPI +0.4% vs 0.3% est m/m, ex-food/energy +0.2% inline and y/y +1.1% & 2.1% respectively both inline, Industrial Production +0.7% vs 0.3% est m/m, Capacity Utilization 75.4% vs 75% est

AFTER-HRS NEWS/MOVES:

VIPSHOP -11.6% q1 inline, q2 revs seen below est
ACXIOM -7.5% q4 beats but fy view disappoints

ACTIVE TODAY:

TMT
INTEL -1.4% to supply 50% of upcoming iPhone modem chips per press, QUALCOMM +15bps the incumbent
F5 NETWORKS -3.3% d/g @ Pacific Crest
PANDORA +6.1% holder urges sale
XILINX +5bps $1bln b/b
T-MOBILE US +25bps mkt talk of possible COMCAST -2.5% interest
GRUBHUB -7.8% delivery service started in NYC/Dallas by AMAZON -2.2% which holds annual mtg
SQUARE +20bps as lock up expires, u/g @ Compass Point

CONSUMER
HOME DEPOT +2.5% q1 beat, raises fy view
TJX +50bps q1 beat, fy view below est
FOGO DE CHAO -4.9% d/g @ JPMorgan
DARDEN +1% u/g @ Piper Jafffray
WALGREENS BOOTS ALLIANCE -3% 6mm share sale for holder
AMPLIFY SNACKS -4.4% 10mm share secondary for hldrs
MERITAGE HOMES +2.3% sees q2/fy at or above est
OFFICE DEPOT -3.2% exploring shareholder return alternatives
PERFORMANCE FOOD GROUP -5.9% 12mm share offering for holders
CHILDRENS PLACE +4.1% q1 beat, raises fy view
FRANCESCA’S -29.6% CEO out prelim q1 below est
RED ROBIN -18.2% q1 eps beat, revs miss
NIKE -10bps positive comments @ Citi
HERTZ +12.6% insider purhchases

FINANCIALS
HARTFORD FINANCIAL -1.3% d/g @ Wells Fargo
AIG +20bps u/g @ Wells Fargo
LENDING CLUB -8.6% 10-Q disclosure of grand jury subpoena
ICAHN ENTERPRIES -40bps cut to junk by S&P

REIT
DIGITAL REALTY -1.9% joins S&P 500

HEALTHCARE
ALIGN TECHNOLOGY -1.3% p/t raised @ Piper
AGILENT +3.4% q2 beat, fy raise
AEGERION PHARMA -18.2% q1 miss
RELYPSA -1.2% April drug data
ABBVIE -3.5% patent challenge to be considered by agency
VALEANT +7.5% media appearance by vocal short turned long
EDWARDS LIFESCIENCE -3.1% cautious comments @ Cowen

CAPITAL GOODS
UNITED TECHNOLOGIES -1.7% reaffirms ahead of investor mtg
UNITED RENTALS +5.5% positive comments @ Citi

MATERIALS
FREEPORT MCMORAN +4.3% u/g @ Jefferies
BEACON ROOFING -5.3% spot secondary trades

ENERGY
HALLIBURTON +2.5% u/g @ FBR Capital
TALL GRASS ENERGY GP +12.4% updates guidance
GASTAR +1.4% d/g @ SunTrust
CHEVRON -1.5% p/t raised @ Argus