Closing Recap 4:05PM EST

Friday, November 14, 14

Index

Up/Down

Last

-16.96

0.10%

17,635

S&P 500

0.57

0.03%

2,039

Nasdaq

8.40

0.18%

4,688

Russell 2000

-0.45

-0.04%

1,174

DJ Industrials

Equity Market Recap

Major averages end mixed, but all in all another solid week for U.S. equities. There really wasnt
much going on today (or the week for that matter), but healthcare weakness stood out, led by a
more than 2% drop in biotech (CELG, GILD, BIIB); energy was mixed amid a bounce in oil
prices/M&A activity; gold miners rally with upside reversal in gold prices; retailers end week
generally positive (despite some very mixed earnings results); AAPL makes new all-time highs;
another record high for Dow Transports was a quiet week but another strong one as well
(major averages rise a 4th straight seek)
Note major indices have not faltered a bit since its October 15 low, rallying pretty much for 4
straight weeks. Note the Nasdaq Composite is up over 550 points from its October 15th low of
4,116 (less than 1 month, more than a 12% upside move), while the Dow Industrials are up from
Oct 15 low of 15,855 (almost 1,800 bounce, or about an 11% rally).

Economic Data
U.S. retail sales rose a seasonally adjusted 0.3% in October, above ests for 0.2% increase, and
bouncing back from the first decline in eight months (fell -0.3% in Sept). Retail sales ex-autos
increased 0.3% (also above ests for a 0.2% increase) prior month retail sales unchanged
Oct Import Prices fell (-1.3%), slightly better than the expected (-1.5%) decline forecasted by
economists, as the prior month was revised slightly downward to -0.6%
University of Michigan Confidence jumps to 89.4, above estimates for 87.5 (and Oct final 86.9);
current conditions index prelim for Nov 103 vs. est. 98.8 (last time UoM confidence close to this
level, was July 2007 at 90.4 reading)
Sept. Business Inventories rose 0.3% vs. est. 0.2%; sales little changed after falling 0.5% the prior
month, the Census Bureau said; inventories forecast range down 0.1% to up 0.5
Foreclosure filings climb 15% in October; there were default notices and other foreclosure filings
reported on more than 123,000 U.S. homes, up 15% from September the largest monthly
growth since foreclosure activity peaked in early 2010 - RealtyTrac reported

Commodities
Oil prices rise, with WTI crude and Brent both rising more than 2.3% on more of a relief rally, but
still end the week lower. It was the seventh consecutive weekly decline for WTI (longest such
streak since 1986 as per CNBC), as fears of oversupply remains firmly in the market place/and no
OPEC intervention (OPEC meeting Nov 27th). The bounce today came as the dollar pared recent
gains, and investors buying on weakness. WTI crude ended at $75.82, after falling as low as
$73.25 earlier, while Brent rose, but couldnt get back above the $80 level. Gasoline price ended
higher by a few cents to $2.0425 a gallon after trading below $2 yesterday
Gold prices reversed earlier losses, surging $24.10, or 2.1% to settle at $1,185.60 an ounce (but
still ended with a -0.4% weekly loss), after trading against the $1,150 level earlier. December
silver jumped 69c, or 4.4%, to $16.31 an ounce. Two likely reasons for the rise in gold today: 1)
the dollar paring recent gains (dollar index big drop from earlier highs), but other reason, 2)
movement ahead of Swiss referendum on Nov 30th (lot of talk on this today, including CNBCs
Rick Santelli). Note If the referendum is passed, the Swiss National Bank (SNB) will be forced to
increase reserves by around 1,500 tonnes over five years, i.e. 300 tonnes per year (good read
here http://goo.gl/H9j9UE )

Currencies
It was another very volatile day in the currency market, with the dollar index (DXY) touching a
high of 88.267, before falling back to the 87.50 level by days end. The euro set a fresh high for
the week, rising above 1.2546 (after touching low of 1.2399 earlier this morning); new seven year
high for US dollar against the Japanese Yen (116.82 high today), before paring gains

Bond Market
U.S. bond markets rebounded from early weakness to gain ground Friday, pulling down yields
(10-yr fell to 2.33% after trading at 2.3& earlier). The move came despite stronger economic data
today, with some wires citing the consumer-sentiment survey which some believe inflation
concerns are weakening (inflation expectations had fallen from 2.6% to 2.8%). Bonds rallied even
though Fed Reserve Bank Bullard said sees first Fed Rate hike at end of Q115

Macro

Up/Down

Last

WTI Crude

1.61

75.82

Brent

2.16

79.65

Gold

24.10

1,185.60

EUR/USD

0.0053

1.2531

JPY/USD

0.50

116.27

10-Year Note

-0.04

2.315%

Sector News Breakdown

Consumer
Retail; JWN Q3 eps/sales come in above estimates, while sees FY15 revs at high end of views
(though cut eps view); analyst changes on LULU, which was cut to Underperform at Sterne Agee
saying the brand has been damaged; NKE downgraded to neutral at Sterne Agee on valuation;
shares of both ROST and TJX downgraded to sell at Canaccord; PERY seen holding talks with Bank
America, Peter Solomon, Bloomberg reported, citing The Street http://goo.gl/1i34wp; MOV
plunges as cuts forecast for year (also sees prelim Q3 sales to $188.6M-$189.7M, below views
$216.6M and EPS well below estimates as well); URBN lower ahead of earnings Monday
Autos; car rental; HTZ to restate 2011-2013 financials/sees lower profit view on obsolete
equipment and disposal costs; GPI raises dividend and boosts buyback by $100M; initiations in
auto retailers at Sterne Agee include AAP buy and $165 tgt, ORLY & GPC with neutrals, and AZO
init UP; HOG upgraded at Goldman saying checks indicate U.S. retail sales accelerated in October

 Homebuilders another strong performance (has been a good week after some positive earnings
reports earlier this week); seeing shares of KBH, HOV, DHI
Staples; HLF board member Cardoso a target in long-running Brazilian fraud case;
http://goo.gl/Jh46ia; MCD rises early after Jana Partners takes 0.09% stake (stock up a 9th
straight day); FRSH Q3 eps/comps top views/boosts year EPS outlook
Energy
Oil service stocks remained active after the WSJ reported late yesterday HAL was in talks to buy
BHI, according to people familiar with the matter. Talks between the two oil-field-services
companies are moving quickly, and they could reach an agreement soon http://goo.gl/wynFuL;
BHI confirmed yesterday it was in preliminary talks with HAL; shares of other service names
(WFT, NOV, as well as ETFs like OIH)
Oil stock movers; PBR falls after delaying the release of its quarterly results for a month on
kickback probe delays; energy as a whole mixed, trying to lift amid a bounce in oil prices off 4years lows, and M&A activity in the service sector but still with knowledge of an inventory
supply glut/lack of OPEC action remains a longer-term issue for oil stocks and a view of a
continuing stronger dollar
The Republican-controlled House passed legislation Friday approving the Keystone XL oil
pipeline, setting the stage for a Senate showdown (November 18th) that mixes energy politics
with a fight over Louisiana's Senate seat. The vote was 252-161 in favor of the bill, which was
sponsored by Rep. Bill Cassidy, R-La., in an effort to boost his chances to take Louisiana's Senate
seat away from Democrat Mary Landrieu. TransCanada's Keystone Pipeline is one vote short of
the 60 it will need to be approved by the Senate, according to The Hill
Financials
Again, not much news in the financial space, with regional banks little lower (KEY, USB); Online
brokerage stocks ETFC and SCHW higher after monthly metrics data; despite a further drop in
yields late day in bonds, REIT stocks lagged, ending near the lows (IYR fell)
Healthcare
Biotech index fell more than -2%, led by weakness in GILD (down more than 1% for a 3rd straight
day), as Sovaldi slide continues/Harvoni climb slows said Bloomberg; BIIB falls after Evercore said
total prescriptions for Tecfidera since early July, appears flattish; shares of other large cap
biotech names under pressure (AMGN, CELG, BMRN, REGN); FGEN IPO opened at $23 after
pricing at $18; PBYI fell after Neratinib study failed to show PHS benefit in Phase II
Movers on news; GERN announced a global strategic collaboration with Janssen Biotech (JNJ);
PBYI; ABC announces $4.06B US department of Defense contracts to supply pharmaceuticals;
PBYI shares fell; LAKE said Ebola leading to significant increase in orders
Industrials & Materials
Mining & Metals; gold miners reverse to upside today given the surprise bounce in gold prices
midday (down 1% early, ran up as much as 2.4%); GDX traded higher, led by gains in ABX, NEM,
IAG, GG; industrials, like steel names (X, STLD), copper (FCX), were stronger
Transports; group bounces after modest pullback; CVTI fell after filing to sell 2.2M shares of
common stock; Virgin America Ltd (VA) opened at $27.00 after 13.337M share IPO priced at
$23.00 (2nd biggest airline IPO ever)
Story movers; ABGB shares plunge after company said debt raised by Abengoa Greenfield unit
will be classed as non-recourse (bondholders said they thought the 265 million euros of highyield notes were so-called recourse debt); BEAV rises on stock buyback; KMT down on weaker
Oct orders

Technology, Media & Telecom

Internet movers; P rises after filing showed Chairman McAndrews bought $465K of shares; KING
rises a 2nd day after releasing new installment of its Candy Crush app game; AMZN with a 1%
gain for the 5th time in last 6 days (follows positive analyst comments earlier in week about
company likely finally cutting expenses); BABA steady after falling yesterday after seeking $8B in
debut bond sale (YHOO still on the rise amid strength in BABA shares)
Semiconductor news relatively quiet; AMAT in-line quarter/guidance little light of expectations;
INTC hosts analyst day next week
Video game sales NPD data said that US software sales in October decreased 27% after lapping
a +12% compare last year (shares of GME, ATVI, EA active)
Chinese Internet; SINA shares fall after Q3 results mostly in-line, but Q4 revs guided below views
($204M-$210M vs. $216M); YOKU Q3 revs missed and CFO resigning; WB Q3 loss narrowed; BITA
shares jumped after better Q4 revenue
Digital advertising group gets good results for a 2nd day after TUBE beats on various metrics; Q3
eps/revs beat, and guides Q4 above consensus (group higher yesterday on FUEL results)

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