Closing Recap

Friday, February 20, 15

Index

Up/Down

Last

DJ Industrials

154.70

0.86%

18,140

S&P 500

12.81

0.61%

2,110

Nasdaq

31.27

0.63%

4,955

Russell 2000

3.90

0.31%

1,231

Equity Market Recap

Equities end the day (and week) higher, posting its biggest move of the week, as Greece was
granted an extension related to bailout funds flowing into Greece. The Dow Industrials traded
above its prior closing high (was 18,053.71), the Nasdaq Composite reached a 15-year intraday
high (less than 50 points from 5,000 level) and up for the 8th consecutive session, and the S&P
500 rises to its 3rd intraday record this week (note Feb low for SPX 1,980.90...first trading day of
the month, and closed above 2,100 more than 120 points in 14 trading days). Greece was the
sole catalyst today after a week of sideways/listless trading action. S&P up 5% in February after
January declines
It was a border line comedy show today with all the headlines out of Brussels pertaining to the
Greece situation, but it ended up where the Eurogroup agreed on a 4-month extension for
Greece, but said Greece must meet conditions, which will be provided on Monday (yes they
continue to drag this out). In Asia, still week long New Year for China had many markets closed,
but Japans Nikkei Index touched a fresh 15-year high overnight.

Commodities
Oil futures ended lower, dropping 82c, or 1.6% to settle at $50.34 for WTI (contract expiry
today), but also ended the week lower by -4.6%, the first weekly decline in over a month.
Weakness came on bearish inventory data, as the API reported a 14M barrel build yesterday
(DOE over 7M), and the Baker Hughes rig count declined another 48 rigs this week, but was less
than 98 decline last week. March natural gas jumped 4.5% to $2.95 per million British thermal
units, with the contract trading around 5.2% higher on the week on colder weather forecasts
Gold prices ended modestly lower, falling -2.70, or 0.2% to 2nd at $1,204.90 an ounce (intraday
high at $1,213.10 an ounce), but ended the week much worse than that, logging a 1.8% decline.
Gold lost some luster today after news that EuroZone finance ministers made progress toward a
bailout extension for Greece. Gold had a brief bounce mid-week after the Fed Minutes showed
policy members were more inclined to hold off on raising rates...but headlines today from Feds
Plosser and Bullard suggested otherwise.

Currencies
Currency markets were quite volatile following the tape bombs coming out Brussels regarding
the Greece debt resolution deal. The dollar index (DXY) reversed earlier gains, falling -.12 to 94.27
(was as high as 94.79), after headlines showed an apparent accord between Eurogroup and
Greece. Here were big swings in the euro, bouncing off lows of 1.1279 to spike as high as 1.1430
after news of the accord broke. The dollar reversed losses against the yen, rising back to the 119
level midday

Bond Market
Treasury markets stronger initially, but pared gains as headlines leaked out throughout the day
about Greece, easing investor concerns that the Greek government and its creditors would again
reach a deal on a new financing arrangement. Greeces current bailout program expires on Feb.
28.; the yield on the 10-yr dropped as much as 7 bps to around 2.04%, but ended up around the
2.10% level (around yesterdays close) after trading as high as 2.15%

Macro

Up/Down

Last

WTI Crude

-0.82

50.34

Brent

0.09

60.30

Gold

-2.70

1,204.90

EUR/USD

0.0027

1.1395

JPY/USD

0.12

119.07

10-Year Note

0.009

2.122%

Sector News Breakdown

Consumer
Retailers; JWN Q4 eps missed by 3c on better revs, on comps 4.5% (est. 3.4%), and guided year
eps well below range ($3.65-$3.80 vs. $4.12); ANN is exploring a sale and has reached out to
potential buyers Bloomberg reported. http://goo.gl/8Vtm4p (ANN also downgraded at
Macquarie); WMT downgraded at Barclays; re FX exposure, Goldman Sachs said sees positive
near-term set up for NKE/TIF and negative for CROX/ANF
Restaurants; NDLS downgraded by two analysts after Q4 EPS miss and 2015 growth below views;
FRGI Q4 eps/revs top consensus on better comps (downgraded at Raymond James on valuation);
GRUB initiated Overweight and $45 target at Barclays
Housing & Building Products; home improvement company MHK Q4 eps/sales top views on
higher Q1 guidance on stronger organic growth
Lodging & Leisure; CHH Q4 eps beat by 6c on better revs and 11% RevPAR, though guides year
eps $2.14-$2.21 vs. est. $2.26; HST downgraded to hold at Stifel given lackluster 2015 outlook;
CNBC noted activist Marcado Capital pressures BID for mgmt. change; IRM worst S&P performer
Energy
Energy stocks declined following a drop in oil prices (first weekly WTI crude decline in a month);
the weekly Baker Hughes (BHI) rig count showed a decline of 48 rigs to 1,310, while weekly oil
rigs dropped 37 to 1,019 which followed a -98 rig count decline the week prior (note, 3Q12
peak was at 1,959, so down more than 30% from those highs)

 On earnings; COG cuts 2015 cap-ex budget to $900M, down from $1.53B-$1.6B view (also
trimmed production forecast to 10%-18% from 20%-30% growth); BAS eps misses by 7c on better
revs (higher SG&A drove the EPS miss); SPN in-line quarterly results; ERF cuts dividend and 2015
cap-ex budget to C$480M (down 40% YoY); CRC posted Q4 eps loss/reduced rigs to 6 from
27/cap-ex cut of 80% to $400M
Analyst changes; EOG downgraded at UBS and Macquarie after earnings; OIS downgraded to
neutral at Credit Suisse; NOG downgraded at Canaccord;
MLP sector; the Alerian MLP Index rose over 1% despite a drop in oil prices (correlation
breaking?), though there were a fair amount of decliners (TGP, BBEP, NGLS); ETE mentioned
positively at Credit Suisse
Financials
Large Cap banks advanced late day following the news out of Greece, which cause a sell-off in
bonds and a jump in yields, which led shares of GS, JPM, C higher; SF said to be in talks to buy
Sterne Agee, Bloomberg reported http://goo.gl/0zhBld ; Citigroup is in advanced talks to sell its
consumer finance unit OneMain Financial Holdings Inc. to subprime lender LEAF for more than $4
billion, Reuters reported http://goo.gl/xpKEFo ; INTU shares jumped after earnings/guidance
Canadian banks; citing the challenging environment for Canadian lenders, KBW cuts Royal Bank
of Canada (RY) and CIBC (CM) to Underperform from Market Perform
In other news; in addition to maybe a retry into the home lending and credit card businesses,
new ALLY CEO Jeff Brown says the company plans to boost its lending to subprime borrowers;
HLSS downgraded by two analysts; NBG shares gained midday on reports that EuroZone
ministers/Greece reached a draft accord
Healthcare
Large Cap Pharma; ABBV named a top pick at Jefferies; ACT received final approval for generic
version of Reckitts Subutex; CLSN said FDA accepted planned Phase 1 dose-escalation study of
GEN-1; CNBCs David Faber said VRX nears deal to acquire SLXP http://goo.gl/9nfvgS
Biotech; Biotech sector moves higher again; sector making new highs (XBI/IBB up again at record
levels); CELG leads after Revlimid Approved for Multiple Myeloma in Europe; also strength in
other small/midcap names; GILD total U.S. retail prescriptions for its Hep C treatments Harvoni
and Sovaldi in latest week were 10,401, down 3.5% from prior week
Hospitals; CYH reported Q4 results in-line with recently lowered guidance (little reaction in the
sector as many companies have already issued quarterly results/guidance)
Services; AHS surges on Q4 results as eps/revs top estimates, and guidance for q1 of $310M$314M well above consensus $275M; IPCM falls on earnings (analyst downgrade); LH Q4
eps/revs slightly topped consensus, while guidance was mostly at mid-point of views (says
suspended buyback until leverage ratio goal met
Industrials & Materials
AG & Machinery; DE Q1 eps $1.12 vs. 83c est.; but cuts year eps forecast to $5.21/$1.8B vs.
$5.49/$1.9B estimate (stock down initially but pared gains recall 13F filing other day showed
Berkshire Hathaway more than doubled its position in DE to more than 17M shares); shares of
other machinery names edged higher CAT, TEX, MTW
Transports; group was mixed most of the session, as truckers/logistics and airlines led (helped by
drop in oil which posted first losing week in the last month), while rails lagged the group (CSX,
NSC, KSU (recent derailment weighing on sentiment)

 Metals & Mining; gold miners higher after NEM quarterly results, with both top and bottom line
topping consensus )also helped as gold reversed earlier losses on Greece fears) shares of GG,
ABX, AUY, AU all higher; steel producer RS upgraded to buy at KeyBanc (follows earnings
yesterday); PAAS downgraded at CIBC; SXC rises as shareholder Jet Capital sales should consider
selling the company
Chemicals; shares of AXLL and OLN pare some of yesterdays gains (jumped after AXLL said it filed
PLR request to IRS for potential MLP in 4Q); petro chemical stocks lag with oil pullback (LYB and
HUN drop); other chemical names mixed on day
Aerospace & Defense; sector stronger today as Sterne Agee raised tgt on BA by $32 to $196 view
that the Free Cash Flow (FCF) dynamic remains underappreciated and UTX $20 to $140 as new
CEO begins taking the company down a new path (rest of group modest gains)
Technology, Media & Telecom
Top movers; Nasdaq Composite index surges again, rising an 8th straight day, led by
semiconductors, Internet, and well, pretty much the whole group
Internet; high beta stocks continue to push higher, led by AMZN, FB, Z, TWTR, NFLX on no
specific news, just momentum remains to upside after earnings season; PCLN extends
yesterdays gains after earnings (several analysts raised price targets today)
Semiconductors; semi index (SOX) another 15 year intraday high as group continues to benefit
from earnings; MRVL upgraded at FBR Capital despite co Q4 rev miss and light guidance
Software & Hardware; AAPL tgt was raised to $145 at Goldman Sachs; BRCD declined on earnings
Media & Telco; FUEL downgraded by two analysts as Q1 organic rev growth implies high-teens
(deceleration from 34% in 4Q) and guided Q1 Ebitda loss to $18M-$19M; EQIX bounced sharply
off lows after mixed quarterly results
Networking; ANET Q4 revs $174M (up 51% YoY) and guides Q1 revs above views $164M-$172M
(above est. $161.75M)
Internet security stocks still surging; several strong movers on earnings this quarter, but now
momentum taking stocks higher (helped by all the high-profile data breaches of major
corporations); shares of CYBR (doubled in 2-weeks), FEYE, PANW, IMPV have rallied

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