Closing Recap 4:10PM EST

Wednesday, November 19, 14

Index

Up/Down

Last

DJ Industrials

-1.89

0.01%

17,685

S&P 500

-3.08

0.15%

2,048

Nasdaq

-26.73

0.57%

4,675

Russell 2000

-11.33

0.97%

1,158

Equity Market Recap

Equity markets end mixed to little changed, falling early on no specific news, rebounded shortly
into the 2:00 FOMC Minutes (DJIA turned positive briefly), but gave up gains following the
headlines out of the Fed (see below), as the S&P failed to extend its 4-day winning streaks.
Healthcare, Transports, and Energy lagged, while retail earnings were better (TGT, LOW, SPLS),
lifting Consumer Discretionary. The NASDAQ (high beta tech fell) and Russell 200 Index
underperformed, while the Dow Industrials were little changed. Commodity and currency
markets were volatile
FOMC Minutes dominated afternoon commentary: Minutes showed many participants
observed the committee should remain attentive to evidence of a possible downward shift in
longer-term inflation expectations. Some of them noted that if such an outcome occurred, it
would be even more worrisome if growth faltered. The minutes show the members continued
to expect inflation to move back to the committees 2% target over the medium term as resource
slack diminished in an environment of well-anchored inflation expectations. Bloomberg

Economic Data
Oct Housing starts fell to 1,009k from 1,038k in the prior month (and below est. 1,025k)
dropping -2.8% in Oct. after rising 7.8% the prior month (single family starts rose to 696k;
multifamily starts fell to 313k in Oct.). Building Permits rose to 1,080k vs. 1,031k in Sept. (and
above est. 1,040k), rising 4.8% in Oct. after rising 2.8% the prior month

Commodities
Crude oil prices ended little changed at $74.58 per barrel in a relatively busy session. Prices
initially fell on bearish inventory data as the DoE data showed weekly crude build of +2.61m
barrels vs. an expected drawdown of -1.5m barrels. Nat gas prices resume strength on colder
weather temps across the country ($4.37 mln Btu, up 13c). Oil prices pared losses on reports
Russia may cut exports of oil and oil products in December as traders expect lower export duties
to be enforced from the start of the next year, Reuters reported (OPEC meeting next week)

 Very volatile session for gold prices, but only end down $3.20 to settle at $1,193.90 an ounce.
Gold was higher overnight on dollar weakness, only to fall on reports showing support among
Swiss voters for a referendum proposal that would force a huge increase in the central bank's
gold reserves has slipped to 38%, falling short of the majority backing it needs to become law
(following story, gold fell about 2% to $1,175 an ounce). However, prices rebounded midafternoon ahead of the FOMC Minutes (was at 2:00)

Currencies/Treasuries
The dollar index was higher, rising to 87.67 (though dollar mixed) after the release of the FOMC
minutes, though quickly snapped back to pre-minutes levels. The euro spiked up to 1.26, before
pulling back sharply (1.2542), while the dollar jumped above 118 against the yen. Bond markets
were higher early but reversed following the FOMC Minutes; the 10-yr yield jumped above the
2.35% level late day, as bonds rolled into the close

Macro

Up/Down

Last

WTI Crude

-0.03

74.58

Brent

-0.20

78.27

Gold

-3.20

1,193.90

EUR/USD

0.0007

1.2541

JPY/USD

1.01

117.87

+0.036

2.358%

10-Year Note

Sector News Breakdown

Consumer
Retailers up on earnings; TGT Q3 eps/revs both above consensus and narrows year EPS to $3.15$3.25 from $3.10-$3.30/posts Q3 comps 1.2% above views; LOW raises year EPS/sales outlook
after Q3 results top consensus as housing gains lift remodels; SPLS Q3 eps/sales just top ests,
while Q4 guidance below views; LZB Q2 eps tops views/revs miss boosts dividend; PETM rises
after earnings and report buyout firms KKR & Co LP and Clayton, Dubilier & Rice LLC have teamed
up to take the company private for more than $7.5B http://goo.gl/nrN661
Analyst changes; COLM upgraded at Citi amid positive commentary on brand and likely better
traffic trends; DSW upgraded to positive at Susquehanna on improving full-priced sales, better
alignment of inventory and potential margin recapture into FY15
Staples movers; SJM Q2 eps/sales both in-line with expectations and reiterated year outlook;
GMCR to report earnings after the close tonight; TSN sees 2015 eps $3.30-$3.40 (est. $3.40); In
Restaurants, JACK Q4 eps/revs/comp store sales all top analyst estimates, while BWLD rises
after Wunderlich reiterates buy and $185 tgt
Auto; TSLA drops as Morgan Stanley cuts Model X delivery forecast to 5K from 15K/cuts
estimates as well; GM, F little changed as suppliers mostly lower (AXL, BWA)
Energy
Energy stocks were mixed, bouncing off earlier lows amid reversal in energy prices midday, but
group still remains market laggard; coal stocks giving up some recent gains, with shares of ANR,
ACI, WLT, CNW falling
Oil drillers; monthly fleet status reports out of RIG and HERO Cowen said negative for both as
RIG now has three floaters idle, will see wave of additional ready stackings if co. doesnt start
to sign contracts soonfor HERO said update without any material contracting accomplished

 Marine MLP stocks TOO, SDLP, GMLP, GLOG, RIGP, NMM all downgraded to Market Perform at
Wells Fargo saying outperformance will be challenging amid lower energy prices (target prices
lowered across the group); Canadian MLPs TRP, ENB, BIP all upgraded at Credit Suisse; Citi
reduced commodity price assumptions for the E&P MLPs to incorporate the forward curve for oil
and gas (also added high risk ratings to all the E&P MLPs)
Financials
Financials modestly lower, with major banks down slightly; insurance stocks lower across the
board on no news (PRU, MET, LNC); brokers were weaker (Oct market volumes were up, but Nov
been very slow to start) SCHW, ETFC; regional banks also lower
Story movers; WU could be the next activist target: Bloomberg Real M&A reports
http://goo.gl/mWjBdC; CLNY entered into definitive agreements to acquire Cobalt Capital
Partners for about $1.6B http://goo.gl/wNiCHV ; EJ falls after cutting its year revenue outlook
Healthcare
Healthcare little weaker though biotech moves higher; GILD resumes downward momentum
after rising 3% yesterday (had fallen more than 1% each of the 4-days prior on Harvoni scripts);
VRTX rises as Royalty Pharma confirms acquisition of royalties on Vertex Pharmas cystic fibrosis
treatments for $3.3B; AGIO leukemia drug candidate shows clinical activity in Phase 1 trial; CLVS
lung cancer drug loses PFS lead vs. AZN
Managed care stocks (UNH, HUM, WLP), as well as hospital stocks (THC, CYH, UHS) were among
biggest laggards in healthcare; other stock movers; EYES IPO opened at $17 after 3.5M share deal
priced at $17; MNK falls after earnings; DPLO rises on positive analyst initiations; MJN jumped
after Dow Jones reported Fresenius and Permira make joint bid for Danones Medical Unit
Small cap movers; BIND said its phase II anti-cancer treatment study met objective; MACK
received FDA fast-track designation for MM-398; SGYP positive Sp-333 results
Industrials & Materials
Ag chemicals; CF upgraded to Outperform at Credit Suisse (raise tgt to $315); POT upgraded to
Outperform at Raymond James; MOS upgraded to positive at Susquehanna; note group rallied
yesterday (AGU, MOS, POT, IPI) after Uralkali announced pulling workers from the Solikamsk-2
potash mine (2.3 mil tones of production) in Russia due to a brine inflow situation
Transports fall; group has been outperformer of late on lower energy prices/strong pricing, but
group comes for sales today, led by airlines on likely profit taking (1st sign of equity weakness in
more than 3-weeks); shares of UAL, AAL, DAL among those falling
Metals & Mining; CLF falls on reports examining exit options for its Eastern Canadian iron ore
operations which may result in closure of Bloom Lake mine (one firm said move surprising/may
restrict cash flow); with iron ore prices extending historic decline, approaching $70/dry ton in a
retreat to the lowest level in more than five years, as analysts rule out any Chinese restocking
that typically supports prices towards the end of each year hitting steel stocks as well (X, AKS)
Gold miners gave up recent gains off lows, this after a mid-morning plunge in gold prices after
Reuters reported support among Swiss voters for a referendum proposal that would force a huge
increase in the central bank's gold reserves has slipped (NEM, ABX, GG,AUY fall)
Chemicals; Longbow comments on ASH, NEU saying lower base oil costs will be a margin benefit
but will be offset by lower volume growth and price outlook for lubricants in 2015; shares of CYT,
CHMT, LYB, HUN remain flat to weak on falling oil

Technology, Media & Telecom

Internet movers; BABA drops again (4th drop in last 5 days) since debt offering news (YHOO falls
too); Z rises, can reach EV of $50B, Caledonias Michael Messara says at Sohn investment
conference; Internet in general fairly weak early (TWTR, YELP, NFLX, FB)
Tech movers; OPLK to be acquired by Koch Industries for $24.25 http://goo.gl/CWDm5e ; SNCR
downgraded to underperform at RW Baird; EJ falls after cutting its year revenue outlook; LEJU Q3
revs miss/cuts year revenue forecast; VIPS Q3 topped views/but guidance disappoints; GPRO
shares fell ahead of expected secondary pricing tonight
Semis (group strong yesterday = paring gains today; QCOM hosted analyst day; INTC analyst day
tomorrow; ASML upgraded at Evercore
High beta tech stocks/software fall; shares of CRM down ahead of earnings tonight, SPLK
tomorrow; while shares of software stocks (DWRE, NOW, QLIK, ULTI) also lower
BBRY downgraded to Underweight at Morgan Stanley saying market too optimistic
Telecom stocks active again; DISH, as well as towers AMT as bids for AWS-3 spectrum licenses at
FCCs auction climbed to $16.4B as of end of 15th round, doubling the $8.1B in bids received at
that stage of a 2008 sale of comparable spectrum well as towers; TMUS rose midday after DT
Telekom said it could attract suitors again (stock had been down on spectrum auction bids); T &
VZ fall more than 1% early amid stronger spectrum auction

Want a free trial to The Hammerstone Report 4x Daily ? Sign-up for a trial today at www.
thehammerstonereport.com

***DISCLAIMER/LIMITATION OF LIABILITY: Hammerstone Inc. (the Report) provides information and data and does NOT provide any individual investment advice or money management
assistance and does NOT attempt to influence the sale or purchase of securities. The Report is intended for informational purposes only and does not claim to be actionable for investment
decisions. The information contained in the Report has been obtained from sources deemed to be reliable but is not represented to be complete, and it should not be relied upon as such. The
Report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer t o buy or sell any securities. The Report is prepared for
general information purposes only and does not consider the specific investment objectives, financial situation, and particular needs of any individual subscriber, person, or entity