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Wednesday, November 5, 14
Index
Up/Down
Last
DJ Industrials
100.69
0.58%
17,484
S&P 500
11.45
0.57%
2,023
Nasdaq
-2.91
0.06%
4,620
Russell 2000
0.37
0.03%
1,165
Economic Data
Private-sector hiring picked up last month, reaching the strongest pace in four months, as ADP
reported employers added 230,000 private-sector jobs in October, compared with 225,000 in
September, and up from 196,000 in October 2013 (ests. were for 220,000). Private-sector job
gains have topped 200,000 in six of the past seven months.
The Oct. ISM Non-Manufacturing Index fell to 57.1, below est. 58.0) and below 58.6 prior
month; segment breakdown: Business activity fell to 60.0 from 62.9 prior month, New orders fell
to 59.1 from 61.0, (also drop in Prices Paid/backlog orders/inventories), though Employment rose
to 59.6 from 58.5 prior month
Commodities
Crude oil prices end higher, with WTI up about $1.50 to $78.68 per barrel, helped in part by
Republicans taking the Senate, bullish inventory data, and talk of a pipeline explosion. DoE said
crude inventories rose +460k barrels vs. est. +2.35m, though gasoline data bullish after -1.38M
weekly drawdown vs. est. -600k (distillates smaller drawdown)
Gold prices were weak from the onset, and stayed lower throughout, ending down $22.00, or
1.9% to close at $1,145.70 an ounce. Precious metals remain pressured from the resurgent
dollar, which is trading at 4-year highs (and 7-year highs against the yen). Gold mining stocks also
declined with the move in gold
Currencies
The U.S. dollar with another massive advance/yen plunging (up to around 115 from 109 level
last week after Japan QE announcement); it has been 7-years since we have been near the 115
level JPY/USD (114.84 high after Governor Kuroda said he saw no limit to the steps to defeat
deflation ); the dollar index rises again (new 4-year high), touching high 87.606, extending gains;
in other currency news, the euro fell to fresh session low of 1.2458 (before bouncing) vs. US
dollar (ahead of ECB tomorrow), while dollar breaks 45 vs. Russian rouble for first time (2%
move) on central banks decision to effectively end interventions
Bond Market
Another sluggish session for bonds, with yields up ever so slightly, but once again, listless action
ahead of the ECB and jobs data on Friday; 10-yr yield little changed most of the day, with yield
holding around 2.35%
Macro
Up/Down
Last
WTI Crude
1.49
78.68
Brent
0.50
83.32
Gold
-22.00
1,145.70
EUR/USD
-0.0071
1.2476
JPY/USD
1.08
114.68
+0.011
2.35%
10-Year Note
Gaming sector; Credit Suisse downgraded Sands China to neutral and Wynn and SJM to
underperform; MGM stay top pick; suggests investors trim position here post the rally (follows
drop in shares for group yesterday after Macau gambling fell 23.2% to 28B patacas ($3.5B) in
October (5th monthly decline and most since started records in 2005); LVS, WYNN, MPEL move
Autos; TM boosted its full-year profit forecasts after net income for Q12 topped views; KAR
announces $300M share buyback/Q3 eps beat/outlook raised; auto suppliers generally higher,
led by MGA earnings (JCI, BWA rise as well)
Energy
Oil E&P names; EOG rises after EPS beat; DVN Q3 eps beat and raised its 14 production forecast
(gains 11%); PXD sells 5.75M shares in offering/to divest Ford midstream business, but said
could deliver consistent annual production growth 16%-21% through 2016in a $70-$80 oil
price environment; CHK trades back to 50 day moving average on earnings/boosts low end of
production view for the year (group has been beaten up relief rally today)
Energy stocks in general also benefitting from Republicans winning the Senate overnight seen
as more friendly for big oil easing restrictions
Oil drillers relief bounce early; RDC Q3 eps/revs above views and added $1.2B new contract
backlog during Q3; offshore drillers also rise RIG, DO, NE, ESV rise
Coal stocks enjoy a post Republican election win; rises on hopes Congress will slow down EPA
rules on coal which have limited its use by utilities, and any approval for the Keystone XL
pipeline would mean more rail transport for coal (BTU, ANR, CNX, WLT rise)also lifted
LNG/pipeline stocks like GLOG, TRP, TE
MLPs; AM 40M share IPO priced at $25 per share; LINE and LNCO downgraded to neutral at
Credit Suisse; CLMT a winner on day after Q3 sales $1.68B vs. est. $1.37B but says no plan to
move forward in 2014 with MLP project
Utilities another new all-time high for Utility Index, led by strength in NEE, NRG, PPL, PEG
Financials
Not much in regards to individual stock stories in financials, with group trading with overall
market; GS lowered the top end on its range of "reasonably possible" legal losses to about $S2.5B
from about $S3.2B back in August, while WFC also cut the upper end of its possible legal losses
In stock news; STL and HVB agreed to merge in a deal valued at $539 million
http://goo.gl/S01LFX ; CLNY jumped after signing a "non-binding" merger agreement with Colony
Capital LLC and post earnings http://goo.gl/CFCFLV ; RLGY up on earnings; AFSI rises after
earnings analyst upgrade
Healthcare
Biotechs; JAZZ Q3 eps beat/boost guidance (several analysts raise tgt); PCYC Q3 eps/revs top
views (upcoming event at ASH meeting 11/6); biotechs (IBB) were slightly lower, with no major
news outside of earnings
Generics; ACT shares rise on Q3 beat and ups 2H eps forecast; ENDP falls after mgmt. said
earnings will be negatively impacted by rebating in the generics business
Hospital stocks fall after Republicans last night won control of the U.S. Senate (note Republicans
have promised to seek to repeal most parts of the Affordable Care Act, which benefits hospitals
by reducing the number of uninsured patients that use their services) shares of CYH, UHS, HCA,
LPNT among some of laggards today group dropped yesterday in earnings THC/CYH
Ebola leveraged names get a lift midday after the White House asked Congress for #6.2B for
Ebola funding; did not move the needle on treatment makers (CMRX, SRPT, BCRX, NLNK), but did
for protective clothing makers (LAKE, APT) higher
Managed care stocks jump in reaction to WCG better quarterly beat and guidance (shares of
CNC, HUM, UNH were modestly higher)
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