Mid-Morning Look 11:15AM EST

Wednesday, September 17, 14

Index Up/Down % Last
DJ Industrials 22.38 0.513% 17,154
S&P 500 2.01 0.10% 2,000
Nasdaq 4.11 0.09% 4,556
Russell 2000 5.89 0.50% 1,156


Major averages little changed, as expected, ahead of the FOMC meeting results today at 2:00 pm (with
press conference to follow after). Lot of corporate news today with transports up on FDX results (lifting
Dow transports by 100 points), ADBE falls on guidance, M&A news in specialty healthcare sector (ENDP
offers to buy AUXL), steels rising on X/NUE guidance, and housing stocks rise on better LEN data/housing
eco data. But despite the amount of news, commentary from Yellen later will likely dictate how stock
finish today. In other important news, Alibaba IPO set to price Thursday night and Scottish referendum
also expected late week

European shares rise for first session in nine; Asia was mixed, though Shanghai recovers some of
Mondays -1.8% drop (up 0.5% overnight), rising after The Peoples Bank of China is injecting 500 billion
yuan ($81 billion) into the nations five largest banks (news hit midday yesterday in U.S., part of the
reason for the surge in commodity prices)

Ahead of FOMC, few data points out today; U.S. consumer prices fell in August for the first time in 16
months (mostly on decline in energy prices); the CPI dropped a seasonally adjusted (-0.2%) in Aug vs.
expectations to be flat. Energy costs fell (-2.6%) amid declines in gasoline and natural gas (though food
prices rose 0.2%). Ex-food and energy categories, consumer prices were unchanged (vs. est. 0.2% rise).
In another report, U.S. NAHB homebuilder sentiment index climbed to 59 in September after rising 2
points to 55 in August (revised from 55). It's a fourth consecutive monthly increase and is the highest
level since 2005.


Treasuries, Currencies and Commodities
In Currency markets, the dollar index little changed, to down slightly ahead of the Fed (DXY 84.04
off recent highs a week ago around 84.50 level); euro edges back down to 1.2955, while dollar
rises further vs. the yen to around 107.50
Precious metals barely unchanged; gold holding around 8-month lows of $1,235 an ounce
Energy futures were initially higher after jumping yesterday (oil prices surged Tuesday three fold:
1) OPEC said may cut oil output in 15 by 500,000B/d, the US Dollar weakened, and Peoples Bank
of China provides liquidity to its top 5 banks (lifted commodity prices); but now, oil moves lower
after bearish inventory data (unexpected weekly build 0f 3.67M barrels vs. DoE est. -1.5M
drawdown) though gasoline inventory data was bullish
Treasury markets slightly stronger after low inflation reading from CPI early today (fell -0.2%),
first drop in 16-months, but all eyes on Fed. 10-yr yield down at 2.576%, 30-yr at 3.345% mid-
morning


Macro Up/Down Last
WTI Crude -0.89 93.99
Brent -0.43 98.62
Gold -0.50 1,236.50
EUR/USD -0.0003 1.2956
JPY/USD 0.33 107.46
10-Year Note -0.015 2.574%


Sector Movers Today
Housing stocks higher after LEN reported Q3 eps & revs above views and said orders rose 23% (vs.
est. 18%); also said the average sales price $332k vs $291k YoY; shares of other builders TOL,
PHM, KBH, PHM rise early in reaction
Steel stocks surging early; X sees Q3 ex-items EPS 'significantly higher' than current
consensus,/makes strategic changes; NUE guides Q3 eps 72c-77c ex-charges, above est. 60c;
shares of AKS, STLD, active
Macau Gaming sector comments at Credit Suisse as downgraded Galaxy and Wynn Macau to
neutral and revising estimates and TPs saying the market could react on short-term news
flow/data point and is likely to overshoot on the downside
Transports getting a lift on FDX and GBX; FDX jumps after Q1 eps/revs top consensus views (UPS
up in reaction); GBX reported 15K railcar order valued at $1.37B (says backlog extends to 16)
shares of TRN, RAIL up in sympathy; also seeing a rise in rail stocks on reports (NSC, UNP, CSX)
recall KSU better guidance yesterday
Solar names better on 2-sell side calls; FBR positive on solar, raising tgt on CSIQ to $45, as
believes most of the Chinese solar companies are not fully pricing in the long-term value potential
of their respective pipelines; Deutsche also + on group, saying checks suggest strong pick up in
china (firm reiterates buy on YGE and TSL)




Stock GAINERS
AUXL +41%; ENDP offers to buy AUXL for $28.10/deal valued about $2.2B http://goo.gl/tGdq0F
DD +4%; Trian Partners said co structure 'destroying shareholder value,' wants DD to split-up
DFS +1%; AAPL reportedly held internal discussions to acquire/partner w/DFS http://goo.gl/iSYIyS
FDX +3.5%; rpts Q1 EPS/revs above views/reaffirms forecasts
GOGO +2%; announces in-flight partnership with Virgin Atlantic
LEN +5.9%; rpts Q3 eps & revs above views and orders rose 23% (vs. est. 18%)
NSPR +9%; announced 'positive' trial results for its CGuard EPS
NUE +3.5%; guides Q3 eps 72c-77c ex-charges, above est. 60c
PERI +4%; receives takeover offer of over $500M from IACI http://goo.gl/3ZTlsR
TKAI ; IPO opens higher after pricing 6.48M shares at $18
X +8%; sees Q3 EPS 'significantly higher' than current consensus,/makes strategic changes
YRCW +16%; to revise leverage ratio covenant through Q416

Stock LAGGARDS
ADBE -4%; Q3 revs misses ests., as does Q4 guidance for revs; higher costs/weaker margins
ASML -0.6%; CLSA cautious commentary
CBRL -1%; rpts Q4 eps/revs above views, but guides year eps below views
GILD -2%; CVS said new scripts for GILDs 84K hep C drug Sovaldi are declining
GIS -3.5%; reports Q1 EPS/revs below consensus; reaffirms forecast
MA ; said it sees 2014 revenue growth at lower end of 3-year range
OI -5%; sees Q3 adjusted EPS down at least 5% from a year ago
QLTI -13%; not being mentioned in ENDP/AUXL deal (in June, AUXL offered to merge with QLTI)
RAX -15%; said it will remain independent, and ended review of alternatives/names new CEO
SNE -7%; lowers FY14 net loss estimate to 230B from 50B yen; wont pay dividend




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