Closing Recap 4:05PM EST

Monday, December 29, 14

Index

Up/Down

Last

-15.41

0.09%

18,038

S&P 500

1.82

0.09%

2,090

Nasdaq

0.05

0.00%

4,806

Russell 2000

3.75

0.32%

1,219

DJ Industrials

Equity Market Recap

Equity markets ended little changed, trading in a very narrow range most of the session on light
volumes (expect more of the same this week), but the Dow Industrials (halted 8 day win streak),
S&P 500 Index, Russell 2000 Index and Utility Index all touched new all-time highs at one point
today. However, Russias ETF (RSX) fell around 10% on the day as oil prices hit 5 year lows.
A new record in a year of broken recordsthe S&P 500 has not posted a losing streak of more
than three consecutive days in 2014something that has never happened in a calendar year!
Looking into the remainder of the week, the calendar is completely empty and there really isnt
much else scheduled
The Dow industrials failed to post its 39th record close of the year, the S&P 500 recorded its 53rd
record close, The Nasdaq Composite came in at highest levels since March 2000 (within 5% of alltime record), and the Russell 200 Index posts new all-time highs
Lead story overseas, the Greek elections, as Greek PM Samaras failed to get the country's
parliament to agree on a new president in a third and final vote on Monday, meaning parliament
will have to be dissolved and a snap election held in late January or early February. The vote
could bring the left-wing Syriza party to power, jeopardizing an international bailout. Greece's
main stock market fell as much as 11% on the news

Commodities
Energy futures end lower; prices reversed overnight gains to trade to lowest levels in over 5
years, with both Brent and WTI crude off more than 2%. WTI crude for Feb fell $1.12 to $53.62
per barrel (overnight high $55.74), while Brent dropped under $58 per barrel (overnight high
$60.41). Natural gas prices surged after plunging the week prior on warmer temps, rising 0.18 to
3.1 mln Btu (ending near the highs)
Gold prices opened weak and finished weaker, ending lower by more than 1% to $1,182.10 an
ounce, while silver prices dropped 37c or over 2% to $15.78 an ounce

Currencies
The dollar index (DXY) advanced throughout the day, rising to 90.20 level (best levels since early
2006). Note the DXY traded between 80 and 81 for the first half of 2014, but has picked up with
the improving U.S. economy in the 2nd half (5% GDP last quarter). Add the fact Central Banks
around the world are picking up the pace of monetary easing given their struggling economies,
the dollar has pulled away from the pack (Yen/euro both decline, while the ruble erasing recent
gains against the dollar today). The euro hit a fresh 28-month low against the dollar, at $1.2154

Bond Market
Bond markets remain strong; if not for the plunging price in oil and the aftermath effects of
emerging markets (Russia), the bond market defying all would be the big story this year. Where
most economists predicted yields to climb this year, given the improving economy in the U.S., it
has been anything but. Yields are holding near multi-year lows, and despite Fed members
indicating that rate hikes will be data dependent, given the low inflation, many are speculating
rate hikes get pushed out further. Yield on the 10-yr drops to 2.20% today

Economic Data
December Dallas Fed Manufacturing Outlook reported at 4.1 below the 9.5 expected, and 10.5
reading in November; New Orders 1.3 vs. 5.6 prior

Macro

Up/Down

Last

WTI Crude

-1.12

53.61

Brent

-1.53

57.92

Gold

-13.40

1,181.90

EUR/USD

-0.0029

1.2154

JPY/USD

0.37

120.69

-0.044

2.206%

10-Year Note

Sector News Breakdown

Consumer
Retailers were mixed to mostly higher, as December momentum continued; KORS share gains
continue post-Holiday/remains Top Pick at Bank America; NLS positive outlook at DA Davidson
after conducting checks; FBR Capital favors shares of CRI, HBI, UA, COLM and PLCE for
Q4/holiday; thinks AEO, ANN, URBN could be pressured (52-week highs for JWN, TJX, LB, TGT)
Barrons commented on HOG saying motorcycle shipments may expand by near-double digits
in coming years; said KMX shares no longer looks cheap after more than doubling to $68 since
October 2013, and may fall to $53; BEL shares look oversold after dropping 20% on Russian
economy concerns, may rise more than 50% to $18.50 in 2 years
Staples; ANFI announced a $90M third party supply contract; CMG soared on the day on no
specific news in restaurant sector (gains in YUM, WEN, JACK); Shake Shack files for IPO with
initial $100m registration amount, sees listing on NYSE as (SHAK); consumer staples
underperformed on the session, with product stocks lower
Casinos & Gaming; Wells Fargo lowered its Dec. Macau gaming revenue view to a decline of (31%) from prior view of down (-27%-29%) citing recent checks (WYNN, MPEL, LVS, MGM)

Energy
Energy stocks, the worst performers of 2014, bounced early this morning, before succumbing
once again to a drop in oil prices midday (oil touched lowest level in 5 years). Stocks leveraged
to natural gas, which fell last week on a drop in prices, was mixed today (CHK, SWN, EQT)
Total rig count fell another 35 to 1,840 in latest tally (down from 1,920 on Dec 5th); said oil rig
count dropped 37 to 1,499, while natural gas rigs rose 2 to 340 according to Baker Hughes
Utility index remains among top performers in S&P this year, with the Index (UTY) rising to a new
record high, led this morning by GAS, XEL, PPL, DYN, EIX, among others
Coal stocks (WLT, ANR, BTU) another sector that has been pummeled this year thanks to
slumping coal prices, a general rout in commodities names, and some bankruptcy fears, are
seeing some early short covering and bargain-hunters
E&P buying opportunity to develop in 2H 2015 ahead of supply response and oil price rally,
Topekas analyst said; top picks: EGN, COG, FANG
MLPs were flattish despite the drop in crude prices; the Alerian MLP Index (AMZ) was little
changed most of the session, holding around the 460 level
Financials
Financials outperformed the overall market early, despite a continued drop in interest rates;
strength in banks most of the day (despite light volume totals the past week), with shares of JPM,
MS, BAC, C higher
In stock news; ICE told CNBC that the NY Stock Exchange is not up for sale, denying NY Post story
(earlier, the NY Post reported ICE appears to be laying the groundwork for a potential sale of the
New York Stock Exchange http://goo.gl/Vkggrw); GS and some of its clients stand to lose $835M
from a loan made to Banco Esprito Santo, the WSJ reported http://goo.gl/Cqvxlj
Healthcare
Few headline movers/stories this morning, but overall fairly quiet after volatility last week on
pricing fear concerns after ESRX/ABBV Hep C deal sent shockwaves in biotech/Pharma space
Biotech sector; GILD was upgraded to Overweight at Morgan Stanley saying pricing in ~40% HCV
price and market share declines vs 2014, which they see as unrealistic (was also defended by
Citigroup); FDA designates RXDXs lead product candidate, entrectinib, with Orphan Drug
designation; RPRX wins Androxal patent dispute; rightful owner of two Androxal patents; CYTK
rises as filing showed Astellas Pharma has 5.3% stake
Industrials & Materials
Machinery/equipment; MTW outperformed on reports Carl Icahn with 7.7% stake/looks to split
cranes & food-service equipment businesses (other crane co.s TEX and CR were higher)
Metals & Mining; Gold miners mixed with gold prices struggling again; steel stocks were also
mixed on the day; all in all quiet in material sector
Technology, Media & Telecom
Tech was quiet; semiconductors downgraded at Needham as firm says is turning more cautious
on chip stocks following a blistering 2014; downgrading CAVM, MTSI, MXL, RFMD, SWKS, and
TQNT to hold from buy and cuts AMBA to Underperform on believe of slowing growth, margin
pressure and price pressure from top customer GPRO; IPHI is top pick and upgrades to Strong
Buy; MU had positive mention in Barrons over the weekend

 Internet; Piper said that recent global travel trends continue to appear favorable through first
two months of current quarter (fundamentals positive for PCLN, less so for EXPE); Barrons said
NFLX, AMZN may both be winners in digital ad world
Hardware/Software movers; Barrons was positive on shares of STX, FB, AAPL among tech shares
that may shine in 2015 as they benefit from consolidation, online video advertising growth
Xiaomi Corp.s valuation could more than double to $100B, spurred by its latest financing round,
according to investor Yuri Milner. Chinas largest smartphone vendor has the same potential as
Facebook Inc. (FB) and Alibaba (BABA) to reach that valuation http://goo.gl/SYNNSQ
Media & Telco; LIVE Q3 EPS missed, but revs better; Variety reported that DTV to raise prices in
February by up to 6% for all programing/packages

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