Closing Recap 4:10PM EST

Monday, September 29, 14

Index Up/Down % Last
DJ Industrials -41.93 0.25% 17,071
S&P 500 -5.04 0.25% 1,977
Nasdaq -6.34 0.14% 4,505
Russell 2000 -1.43 0.18% 1,117


Equity Market Recap
Big bounce for major averages (Dow was down 178 points, closes only -0.3%)equity markets
were weak globally, smashed in Brazil overnight (-4%) ahead of upcoming elections, weaker in
Hong Kong (-2%) after thousands protesting, Europe falls ahead of ECB meeting (euro remains
near 2-year lows against the dollar), and U.S. markets, which fell more than 1% last week (tried
to bounce midday) fall, but off its worst levels in a late day bounce. Commodity prices mixed, but
energy stocks/metals remain weak amid stronger US dollar/global growth concerns; volatility
rises, with VIX up more than 10% early (high 17.08), but pares gains into end of day with market
really off lows
Emerging markets fell, ahead of Brazil elections (note the EWZ fell as much as -7%), led by
Ibovespa, after support for President Dilma Rousseff in the 2nd round of Oct. election rose to
47% from 46% and support for Marina Silva fell to 43% from 44% from prior results (Oct 5th
vote). The real fell vs. the dollar, to weakest level since 2008. A Datafolha poll published on Sept.
26 showed Rousseffs support rose to 40% for the first-round vote, up from 37%in the previous
survey released Sept. 19. Note, Brazils benchmark equity index has dropped 7.5% since this
years high on Sept. 3 as Rousseff climbed in polls
Asian markets were mostly lower, led by Hang Seng (down about 2%), as tens of thousands of
pro-democracy protesters poured back into the streets of Hong Kong to press demands for free
and open elections. European markets closed lower, but pared losses into the close, with Stoxx
600 -0.4%, though Germanys Dax dropped below the 50/200 moving day averages
Couple of key upcoming events this weekECB Meeting this Thursday, Monthly jobs data on
Friday, Brazil elections in the next week, see how Hong Kong protests effect businesses

Economic Data
U.S. Aug. Personal Income rose 0.3%, in-line with consensus expectations; while Aug Personal
Spending rose 0.5% above est. 0.4%; Core inflation rose 0.1% MoM vs. est. 0.0% (up 1.5% YoY),
while the savings rate at 5.4% in Aug. vs 5.6% the prior month
Pending home sales for August fell (-1%) MoM vs. est. (-0.5%); Northeast fell 3% (July rose 6.2%),
Midwest fell 2.1% (July fell 0.4%), South -1.4% (July rose 3.9%) and West up 2.6% (July rose 4%)
U.S. Sept Dallas Fed Manufacturing rose to 10.8 from 7.1 prior (est. 10.5)

Commodities
Gold prices end slightly better, trading in fairly narrow range, but settled higher by $3.40 to
$1,218.80 an ounce; copper prices also gain about 0.5% to 3.04 per pound
Oil prices move higher, adding on to last week gains, with WTI up over 1% to $94.57 per barrel;
Natural Gas prices surge again, up nearly 0.10 to $4.124 mln BTU; short covering? Have oil prices
found a current low? Up the past few days

Currencies
The dollar index was lower (to 85.463), before paring losses to trade off -0.05 to 85.59
(overnight high 85.798); New Zealands dollar was set for its biggest three-day drop since 2011
after the Reserve Bank said its currency sales in August were the most in seven years; the
greenback extended its biggest monthly gain since 2012; euro dropped to a 22-month low versus
the U.S. dollar before the European Central Bank meets on Oct. 2; yen still weaker vs. US dollar
(trades to 109.44)

Bond Market
Treasury markets stronger, led by geopolitical fears, softer housing data (though personal
spending/income was better/in-line); 10-year rises, sending the yield back below 2.50% (3-week
lows), while the 30-year yield drops to 3.17% (short end of curve also big moves); bond gains
came ahead of Fridays highly anticipated jobs report for September for further signs that growth
is gaining traction

Macro Up/Down Last
WTI Crude 1.03 94.57
Brent 0.20 97.20
Gold 3.40 1,218.80
EUR/USD 0.0006 1.2689
JPY/USD 0.14 109.43
10-Year Note -0.042 2.493%

Sector News Breakdown
Consumer
Retailers; NKE upside early after last weeks blowout earnings (upgraded today at Credit Suisse)
but fell late morning with overall market; CHS rises after analyst upgrade; BBY rises on positive
analyst commentary; rental names get a lift, led by RCII after KeyBanc upgraded to buy; apparel
retailers mixed on the day (URBN, AEO, ANF, GPS, ARO)
Casinos, Gaming and Leisure; shares of casino stocks fall given the turmoil in Hong Kong with
over 10K protesting; China also starts holiday week; shares of WYNN, MPEL, LVS fall
Homebuilder stocks fall; another weak data point today, with pending home sales data for
August missing expectations; shares of RYL, KBH, DHI, LEN decline (CaseShiller data tomorrow)
Restaurants; BAGL to be bought by JAB Holding Co for $20.25/deal valued at $374M
http://goo.gl/ljL0Fg ; JACK reit buy at KeyBanc and upped tgt to $80 after recent mgmt.
meetings; other restaurant names mixed MCD, YUM, CMG, SBUX
Auto news/movers; Ford (F) says its North American margins will be at the low end of its previous
8%-9% guidance (Reuters); SAH upgraded to Overweight at Morgan Stanley and increasing price
target from $22 to $30 (follows pullback in retail autos after KMX earnings last week); GM
ignition switch defect deaths rise to 23, Reuters reported
Staples; STZ cautious mention in Barrons saying shares poised to fall; on flip side, TAP shares rise
amid positive Barrons mention; protein stocks higher, led by TSN (positive mention on chicken
margins at BMO today) shares of SAFM, PPC also rise;



Energy
Oil & Gas space; ECA agreed to acquire ATHL for $5.93B in cash (and assume $1.15B in debt),
paying $58.50 per share, now spending about $1B in the Permian basin in Texas next year, raising
production to 50K barrels per day http://goo.gl/c7IzRG ; shares of other stocks leveraged to
Permian Basin (FANG, CPE, LPI, REN, EGN) active today
S&P Energy sector worst performer, down about another 1%, led by major oils (CVX), drillers
(DO), services (BHI), refiners little changed despite narrowing of WTI/Brent
Stock movers on news; CVEO shares plunged after it completed assessment of alternatives/to
redomicile to Canada/wont convert to REIT and gives weaker outlook; PBR shares fell as South
American markets plunge regarding election outlook; Solar names generally quiet, but rises after
filing for emerging market YieldCo IPO
Utilities; NI announced plan to split its utility and natural gas midstream operations into two
separate public co.s; utility names mixed to better as bond yields fall
Oil drillers selling momentum continues; after small bounce Friday - seeing oil drillers back under
pressure led by RIG, NE, ESV, DO; Iberia said DO likely to cut dividend or raise debt; Jefferies also
said today sees continued negative Offshore Drilling trends - stays cautious on group
Coal names have been crushed, trading to more than 10-year lows last week on
financials/pricing/low demand issues) group gets relief rally today, led by WLT, ANR, CNX, ARLP

Financials
Very quiet in financial space regarding news; a couple of analyst changes as VOYA was upgraded
to Strong Buy at Raymond James; NSM upgraded to buy at Sterne Agee and raise tgt to $42; the
pullback in yield prices today, weigh on banks/regionals; JNS pares some of Fridays gains after
the news Bill Gross was moving to the company from Pimco

Healthcare
Biotech movers (group up early/reverses lower midday); Daiichi Sankyo to buy AMBI for $15 per
share/$410M to strengthen its cancer drug pipeline http://goo.gl/syRRh8 ; AMAG to acquire
privately held Lumara for up to $1.03B, which markets Makena): $600M in cash, $75M stock,
$350M on milestones http://goo.gl/wuttwC ; SGEN falls as one analyst suggests investors
apparently reacting to disclosure that pre-planned interim overall survival analysis wasnt
statistically significant; PBYI shares weaker after neratinib combo treatment results
ALIM wins FDA approval for eye drug Iluvien/broad label (PSDV entitled to 20% US sales); EXEL
reports positive results from Phase 3 pivotal trial of Cobimetinib; INSY gets FDA orphan drug
designation for Pharmaceutical Cannabidiol for Glioma; ECYT gains after ESMO data; ELGX cuts its
year EPS/rev view as sees continued softness in Japan; ISRG received FDA clearance for da Vinci
SI needle driver; ADHDH falls ahead of MDX data expected
Large cap Pharma/Managed care; BMY rises as Nivolumab gets priority review/said showed a
32% objective response rate vs 11% in chemo-treated advanced melanoma patients in a Phase 3
study; Roches Genentechs unit said Perjeta regimen extended lives in latest studies; MRK
immunotherapy drug shows promise in bladder cancer; MCK initiated OW at Barclays
U.S. medical device maker MDT is likely to try to renegotiate the structure and terms of its $42.9
billion deal to buy Ireland's COV in response to new U.S. tax rules, according to people familiar
with the situation http://goo.gl/xtjmyU

Industrials & Materials
Transport movers; group bounces; FDX upgraded to Outperform at Cowen; airlines weaker,
though JBLU positive Barrons mention this weekend; truckers mixed (UACL rises on guidance)
Metals & Mining; CLF shares trade lower for a 9
th
straight day (longest streak since 2012), as
plunging iron pre prices/demand weighs; steel names downward momentum continues from last
week (dollar weighing on metals) group also has had good run (X, AKS)
Ag stocks/sector; shares of DE, POT, MON mentioned in Barrons saying shares may be hit as
lowest commodity prices in 7-yrs force U.S. farmers to delay purchases of equipment, seeds and
fertilizer;
Containerboard fundamentals could be pressured over the next 4-6 months said BMO Capital,
citing seasonal drop in volumes, capacity increases, and falling OCC costs also notes a stronger
dollar could create headwinds for ATR, CCK, OI, and SEE among the non-paper packagers; in
paper stocks, KS downgraded to hold at KeyBanc (UFS, IP lower)
Frack sand stocks; Miller Tabak extremely bullish on outlook for frack sand market, sees
demand reaching 84m tons by 2016; initiates SLCA with buy and $82 tgt (has buy on EMES), and
says HCLP worst way to play sector strength

Technology, Media & Telecom
AAPL in the news as European Union will probe the iPad makers tax breaks in Ireland
http://goo.gl/SOuwct ; INVN may be at risk of losing 50%-100% of accelerometer/gyroscope
socket in Apples iPhone 6 and 6 Plus, Rosenblatt Securities said;
Software/Hardware movers; TIBX to be acquired by Vista Equity for $4.3B, $24 per share
http://goo.gl/l4BM4g ; TXTR shares fell midday after negative mention in Citronresearch.com;
ORCL OpenWorld started today; IRM jumped on reports is in talks to acquire Recall Holdings Ltd.
for more than $2 billion http://goo.gl/nCg1Qv ; CSC shares spiked late day on reports it said to
explore leveraged buyout, Bloomberg reported http://goo.gl/OcycLd
Internet movers; BIDU upgraded to buy w $272 target at UBS; BABA options started trading
today; YHOO flattish as BABA options open today (YHOO upgraded at Needham); high beta
names under pressure with broader market
Semiconductors; INTC rises as Bank America reiterates as top pick and ups target to $43; MXIM
cautious mention at Morgan Stanley saying it sees ongoing pressure in Smartphones; other semi
names (MU, SNDK) mostly higher
Momentum movers; GPRO momentum continues as shares push to new all-time highs/reveals
new camera line-up (AMBA, a supplier to GPRO, rising in sympathy) GPRO rises a 7
th
day
Media/Telco news; DWA shares rose on reports Japan's SoftBank Corp is in talks to acquire the
company, which was first reported by the Hollywood Reporter, saying a buyout would value
DreamWorks at $3.4 billion, or $32 per share http://goo.gl/6CWxTg ; LGF shares moved up in
sympathy





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