Closing Recap 4:10PM EST

Monday, November 24, 14

Index

Up/Down

Last

DJ Industrials

7.84

0.04%

17,817

S&P 500

5.91

0.29%

2,069

Nasdaq

41.92

0.89%

4,754

Russell 2000

13.69

1.17%

1,186

Equity Market Recap

It was another slow, low volume, lackluster trading session for major averages, where the tech
heavy Nasdaq Composite and Small Caps (Russell 2000) outperformed (Dow Transports new alltime high today); though the Dow Industrials lagged given weakness in UTX, XOM, T and VZ (the
S&P was up slightly). This might be the pattern for the rest of the week heading into Thanksgiving
Holiday Thursday (markets close 1:00 PM Friday), though there are several data points tomorrow
in the U.S., and OPEC meeting Thursday. U.S. equity markets opened at fresh highs after another
round of M&A reports, better confidence data out of Germany, and general upbeat sentiment on
U.S. markets, now rallying more than 12% from its October 15 lows.
Stat of the day: MKM Partners noted that the S&P 500 Index has now closed above its 5 Day
Moving Average for 26 consecutive trading days, one shy of the longest streak in history. The SPX
has not had a down day of more than 0.30% in 22 trading days, tying it for the longest such streak
since 1965, and lastly, the S&P is now at the widest spread to its 50 DMA in over a year

Commodities
Oil prices were flat to up slightly most of the day, but faded into the close, with WTI crude ending
lower by 1% to $75.78 per barrel, while Brent for January slid 68c to $79.68 per barrel. Saudi
Arabian Oil Minister Ali Al-Naimi said earlier ahead of meeting that he doesnt know if oil market
is oversupplied, and if it is, its not the 1st time (this ahead of OPEC meeting on Thursday in
Vienna) if they agree on production cut, likely see some short-squeeze after decline in prices
over the last few months (down more than +20% since June highs) was first drop in 3-days
Gold prices ended modestly lower, dipping $2.00 to $1,195.90 an ounce, ahead of a slew of
economic data awaited later this week (gold high $1,203.80 and a low of $1,192.20 an ounce).
Gold has caught a bid in recent days after Fridays surprise China rate cut, ECB President
comments regarding further stimulus, and purchases by Russia as well as upcoming Switzerland
vote (whether SNB needs to hold 20% of gold reserves)

Currencies
The dollar index (DXY) little changed, but down slightly most of the session (-0.17 to 8814), but
still holding at 4-year highs (down from its previous close of 88.38); the euro trended higher
against the dollar at 1.2439, while the yen remains weak against most counterparts (trading
118.27 against the dollar) USD touched 118.98 late last week vs. yen (7-yr high). Amid several
data points the next 2-days, could see added volatility

Bond Market
Treasury markets remain uneventful, though rallied mid-afternoon after solid 2-year auction; the
yield on 10-yr and 30-yr have been stuck in the narrow trading range for almost a month now;
10-yr been between 2.30%-2.38% and 30-yr between 3%-3.08% - very little volatility in bonds of
late in U.S. (Euro bonds have been strong, sending some benchmark yields to record lows)
however, bonds exhibited strength midday, pushing 10-yr yield to bottom end of that range
Treasury auction; the U.S. Treasury auctioned $28B in new 2-year notes was strong, with bid to
cover at 3.71 (highest since December), with notes yielding 0.542%, with indirect bidders
awarded 35.8% - treasuries pared early drop after stronger auction

Macro

Up/Down

Last

WTI Crude

-0.73

75.78

Brent

-0.68

79.68

Gold

-2.00

1,195.70

EUR/USD

0.0043

1.2435

JPY/USD

0.49

118.28

-0.001

2.303%

10-Year Note

Sector News Breakdown

Consumer
Retailers; the S&P Consumer Discretionary Index (XLY) rises to record intraday high; KATE
upgraded at Bank America; ULTA downgraded at Goldman Sachs; OUTR said it was increasing its
daily DVD rental prices and video game rentals in the U.S.; Cotton futures fell to lowest levels
since Sept 2009 (GIL, HBI leveraged to cotton prices); apparel/department store stocks were
higher into shopping period this week KSS, JCP, M, SHLD, DDS, URBN, GPS
Housing stocks higher early; LEN CEO on CNBC said sees sustained upward housing cycle for
many years; RLGY added to Goldman Sachs conviction buy list; building products/retail also
higher; LL upgraded to Overweight at Morgan Stanley
Auto news; VC rises on reports eyes $3.6B sale of South Korean business unit; TSLA in talks with
BMW related to battery technology, charging stations, carbon fiber production, Spiegel reported
Staples mixed; food/grocers names (organic) lag markets, as TFM, WFM, FWM, HAIN shares
under pressure early (WFM/TFM initiated coverage with Underperform at Longbow)
Restaurants mixed; CMG underperformed, but group mostly positive, with gainers in TXRH,
RRGB, CBRL

Energy
Oil stock changes at Raymond James; upgraded HES to outperform from market perform ($100
tgt) and OXY to strong buy ($105 tgt), while cut CVX to outperform and XOM to market perform;
Oil driller weakness continues (RIG, NE, DO fall); E&P stocks also remain weak (DVN, APC, EOG)
Solar stocks; TSL shares fell after Q3 eps beat, but cut its full-year solar module shipment
forecast, largely due to the cancellation of a 130 MW solar project in Mongolia; YGE agreement
to supply 120 MW of solar panels to project in France
Story stocks; SLB positive mention in Barrons
MLPs; UBS said MLP winners are the usptreams best able to capture the opportunity to acquire
PDPs from E&P C-corps (upgrades VNR, downgraded MCEP and LREand lowers tgts on MEMP,
LGCY, BBEP, EROC, LINE, LNCO, as well); CEQP said to sell Tres Palacios to CMLP for about
$130M; BPL had filed a $1B mixed securities shelf
Financials
Financials were leading markets early, as banks outperformed (C, JPM)
Reinsurance/P&C stocks; RNR to acquire PTP for $76 per share, or $1.9B in cash/stock; which
represents a 24% premium to Fridays closing price, with PTP holders to get about 7.5M shares in
RNR stock and $1.16B in cash http://goo.gl/WsK6Uk ; ACE authorizes $1.5B share buyback; AV
shares fell saying its in talks to buy Friends Life Group Ltd. for about $8.5B http://goo.gl/Lfvy7S
Story movers; RCAP said 51 selling agreements recently reinstated; certain broker-dealers have
resumed sales of products distributed by them; CorePoint Group agrees to sell CorePoint
Insurance Co. to AFSI
Healthcare
Healthcare movers on M&A; RNA acquired by BMRN for $17.75 per share/$680M (and
milestones) http://goo.gl/WsK6Uk (shares of SRPT rise in sympathy has rival Duchenne
muscular dystrophy drug); SYK is examining a bid for SNN as a standstill period that prevents it
from making an offer nears its end http://goo.gl/UPAgnP ; TTPH is reportedly considering selling
itself after being approached by interested suitors (acquirer could be Acetelion or Roche)
http://goo.gl/YxDSA4; HLS to buy privately held EHHI Holdings for about $750M
Hospital stocks rally, led by shares of THC, CYH, HCA (note group had been laggard of late on
President Obama immigration legislation push (fears would raise bad debt expense for hospitals)
Biotech stocks outperform, with IBB ETF leading early; shares of large cap biotechs CELG, GILD,
AMGN, ALXN, VRTX, BIIB all rising early
Large cap pharma were laggards, with JNJ, PFE, MRK lower
Other movers; NPSP said its Teduglutide gets orphan drug designation in Japan; RCPT price target
raised to $186 from $130 at Leerink; MCK expanded its distribution pact with OCR; RGLS rises
after Deutsche Bank initiates with buy and $30 tgt
Industrials & Materials
E&C sector downgraded to cautious at Goldman Sachs, cutting ratings on JEC and CBI to sell,
saying group is in early stages of multi-year downturn, as sees challenging outlook for global
upstream commodity infrastructure investment on excess supply
Aerospace & Defense stocks climbed (LMT, NOC, GD); earlier today, Defense Secretary Chuck
Hagel announced his resignation
Metals & Mining; BHP said it plans to cut cap-ex to $14.2B from $14.8B, dropping again to $13B
in 2016; gold miners mixed with gold prices little changed; metals strength continues after last
Fridays China rate cut still
Agriculture/chemicals stocks; shares of potash producers POT, MOS, IPI declined after Uralkali
says in talks w/ Russia regulator to open western portion of flooded mine (IFX reported Uralkali
may resume work at part of troubled mine soon); DE reports earnings Wednesday

 Industrial movers; TYC downgraded at FBR Capital based on valuation as risks in Tyco's longerterm leave little room for contingencies; UTX CEO to retire effective immediately/CFO Hayes
elected as CEO
Transports; index overall higher, with airlines (+ Barrons mention on JBLU), rails, truckers all
stronger early; curious to see if airlines affected amid bad weather forecasts over the next few
days in Northeast (possibly disrupting travel plans during holiday?) little news in space today;
UPS and FDX rise early into prime shopping start this week
Technology, Media & Telecom
Tech space outperformed, with Nasdaq Composite rising most of the day (note the QQQ rise to
104.60, this after touching low of 90.24 on Oct 15 low) led again by AAPL, Internet names and
chip makers (INTC) and software (Security); earnings tonight from BRCD, NUAN, PANW, WDAY
Telecom among biggest laggards; VZ cut to neutral from buy at Citigroup; JPM said expects that
major bidders such as VZ and T to be accessing the debt markets fairly soon to finance their
auction bids (stocks remain under pressure given strong spectrum auction); DISH tgt raised to
$96 at Goldman Sachs/also mentioned favorably in Barrons (said shares may likely rise to $94); a
decade after it sold U.K. mobile carrier O2 to TEF, BT is thinking of either buying back O2 or
acquiring rival EE from Orange and Deutsche Telekom http://goo.gl/hfeHK3
Media; LGFs The Hunger Games: Mockingjay Part 1 debuted this weekend with $123M in
ticket sales domestically (best opening of any film this year), but trailed openings of >$150M for
The Hunger Games and Catching Fire; STRZA climbed after the NY Post reported CBS, LGF,
FOXA has shown some interest http://goo.gl/IStn3J
Software movers; CIMT to be acquired by DDD for $8.97 per share, in deal valued at $97M
http://goo.gl/xP2Vct ; security software stocks rallied with gains in PANW, SYMC, CYBR, FEYE
(ahead of PANW report tonight)
Semiconductors; NXPI to offer $1B of cash convertible notes; AMSL said it expects EPS to triple
and sales of about 10 billion euros ($12 billion) in annual revenue by 2020 (disappointed
investors); INTC & QCOM shares mentioned positively in Barrons; MU positive mention by CLSA
as keeps positive view on the sector, expecting supply/demand to remain well balanced in DRAM
through 2015 and in NAND through 2016; RMBS higher on deal with CSCO

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