Closing Recap

Monday, March 30, 15

Index

Up/Down

Last

DJ Industrials

263.18

1.49%

17,975

S&P 500

25.22

1.22%

2,086

Nasdaq

56.22

1.15%

4,947

Russell 2000

17.22

1.39%

1,257

Equity Market Recap

Equities gapped up globally, holding gains throughout the sessions in the U.S., Asia and Europe,
as more Central bank easing expectations/commentary, and M&A news (several deals
announced today, all in Healthcare sector), were enough to propel stocks broadly higher. The
S&P 500 Index, coming into today, had gone 28 sessions without back to back gains (that streak
broke today), while the Dow Industrials traded back above the 18,000 level midday and posted
its first back-to-back daily gains Feb 24/25th.
U.S. stocks traded higher, encouraged by talks of stimulus in Asia, as investors eyed the week's
economic data. Today marked the 15th triple digit move in the Dow this month (out of 21 trading
days). Also note with todays gains, all major averages moved back into positive territory for the
year/quarter. Top sector gainers were Energy (despite lower oil), Industrials, Financials and
utilities, while more defensive sectors Telecom, Staples and Healthcare lagged (but all 10 sectors
in the S&P gained). We also likely saw end of month/quarter stock window dressing today (more
tomorrow).
Asia markets advanced, with Chinese stocks closing at seven-year highs, after China unveiled
more details of its New Silk Road plan to boost trade and economic relations with Eurasia and
Africa. Hints of further monetary easing in comments from Chinas central-bank governor also
helped push up stocks. The Nikkei Index gained 125 points to close 19,411, the Shanghai Index
surged another 2.6% or 95 points to settle at 3,786 (its highest settlement since March 2008),
and the Hang Seng Index jumped 1.5% or 368 points to close at 24,855 (capping its biggest daily
percentage gain since late January). Europe also posted solid gains, rising the most in three
weeks (Germany closed back above the 12,000 level, up 1.8% today).

Economic Data
Feb. Personal Income rose 0.4%, above estimate for a 0.3% increase (prior month also revised
upward), while Personal consumption rose a scant 0.1%, below estimates for a 0.2% rise (prior
month unrevised at -0.2%); Core inflation for Feb rose 0.1% MoM (in-line), while PCE prices rose
0.2% MoM (also in-line); the Savings rate at 5.8% in Feb. vs 5.5% the prior month
U.S. Feb. Pending Home sales rose 3.1% MoM (highest since June 2013), topping consensus of up
0.3% ; said Northeast fell 2.3%, Midwest up 11.6%, South fell 1.4%, and West up 6.6%
March Dallas Fed Manufacturing Index at (-17.4) vs. (-11.2) last month and estimate of (-8.8)

Commodities
Oil futures end slightly lower, but well off lows of the session, on a day that saw little in regards
to news on situation in Yemen, or ahead of Iran nuclear talks deadline; WTI crude finished lower
a mere 19c to $48.68 per barrel (off lows $47.61) inventory data tomorrow (have continued to
see weekly inventory builds for months), but the stronger dollar overnight weighed on
commodity prices; Brent prices rallied into the pit close as well, off only 12c ($56.29)
Gold prices end the session lower by $15, falling 1.3% to settle at $1,184.80 an ounce, falling for
its 2nd session (after 8 straight sessions of gains prior). The weaker dollar helped propel gold the
past two weeks, as well as some geopolitical fears (Yemen), but the dollar has recovered the past
two days, causing a commodity based sell-off (oil also fell)

Currencies
The dollar was stronger; extended gains against other currencies, rising to best level in more
than a week against the yen (120.13 high), while the euro slid all day (to 1.081 low). The dollar
index (DXY) jumped back above the 98 level (98;07 high) before parings, rising a little more than
0.7% after falling the past 2 weeks on expectations the FOMC to remain steady on low rates.

Bond Market
Bonds were little changed; Despite some mixed economic data (better Housing/Incomebut
weaker Spending/Manufacturing), as yields remained depressed and little changed from Fridays
close (10-yr about 1.95% the whole day). Not much in bonds today

Macro

Up/Down

Last

WTI Crude

-0.19

48.68

Brent

-0.12

56.29

Gold

-15.00

1,184.80

EUR/USD

-0.0076

1.0813

JPY/USD

1.04

120.18

10-Year Note

0.008

1.956%

Sector News Breakdown

Consumer
Retailers; footwear rating changes at RW Baird as upgraded NKE and WWW to Outperform,
while downgrading GCO to neutral; FINL was upgraded to Buy at Monness, Crespi; BBY said its
Canada ops to close 66 future shop locations; overall, retail up with broader market, led by
hardline retail, as well as apparel and department stores

 Consumer Staples; GNC reached an agreement with the NY AG affirming that the relevant GNC
products were in full compliance with the federal FDA Current Good Manufacturing Practices;
GMCR announces new partnerships (no terms); CALM dips on earnings; still strength in food
space after KRFT/Heinz deal last week (SJM, MDLZ, DF, GIS)
In tobacco, after months of regulatory examination, RAI and LO are expected to meet this week
with members of the FTC ahead of a final decision by the agency on whether to allow the
companies to merge
Housing & Building Products; NCFT to be acquired by FBHS for $25.50, in $600M cash deal
http://goo.gl/NDzj1A ; RH upgraded to Buy at Goldman Sachs saying represents one of the
strongest square footage growth stories in retail; homebuilders rise with market (LEN, TOL) and
stronger pending home sales data
Casino, Lodging & Leisure; Casino stocks remain weak, have been in a downtrend the last 9
months shares of MPEL downgraded at Bank America
Autos; HTZ upgraded to Equal-weight at Morgan Stanley; MGA in discussions to sell interiors unit
to Antolin, Bloomberg reports; TSLA CEO Elon Musk said in a tweet, "Major new Tesla product
line -- not a car -- will be unveiled at our Hawthorne Design Studio on Thurs 8pm, April 30."
(comments led battery back makers like SCTY higher); auto parts retailers ORLY and ZO trade to
new all-time highs today
Energy
Disconnect in energy space today, with major oil companies XOM, CVX leading the Dow
Industrials higher, but oil prices were under pressure most of the day; overall Energy stocks
outperformed, despite WTI falling on a stronger dollar
Oil Drillers; RIG upgraded to Neutral from Reduce at Global Hunter w/$14 tgt as believes has the
ability to significantly reduce risk exposure and manage cash flows even through a potentially
prolonged downturn; SDRL said BP terminated a contract for its West Sirius semi-submersible
drilling rig, resulting in a $160M decrease to its backlog, while extending a deal with another rig
MLPs; BBEP shares fall on reports to sell $350M of perpetual convertible preferred units and
$650M of senior secured notes to investment funds managed by EIG/BBEP also cut its dividend to
50c (downgraded to sell at Wunderlich); LINE and LNCO both downgraded to Sell at UBS given
multiple headwinds facing the partnership (cuts LINE tgt to $9/LNCO to $8)
Oil service/equipment; HP, KEG, PTEN downgraded, while TTI upgraded at Scotia Howard Weil
08:23 noting strategies for navigating downcycle differ
Utility; DYN won approval from the FERC to buy power plants in Illinois, Ohio and Pennsylvania
from DUK and Energy Capital Partners for $6.25B; Utility Index (UTY) also gained with overall
market gains (weaker last week)
Financials
Financials/Large Cap banks were leaders today, led by shares of JPM, GS (both lifted the Down
industrials), on no specific news other than broad market rally
Chinese Real estate firms rise; led by gains in LEJU, EJ and SFUN, as PBOC governor Zhou
Xiaochuan hinted on further policy easing, saying China has "room to act" to counter deflation.
The PBOC has already carried out a series of monetary easing moves over the last several
months, including multiple rate cuts and reserve requirement cuts
Lending; ONDK initiated Outperform and $28 tgt at Pacific Crest as believes supports an
attractive ROI for SMB lending (initiated LC with sector perform)

Healthcare
Healthcare; several M&A deals today; drug developer ASPX being acquired by TEVA for $101 per
share/$3.2B deal http://goo.gl/11j0Kt; pharmacy benefit manager CTRX is being acquired by unit
on UNH (OptumRX) for $61.50/$12.7B deal http://goo.gl/xZnVba; orphan drugmaker HPTX to be
acquired by Ireland based HZNP for $46 per share/deal about $1.1B http://goo.gl/9234wv; MYL
said it began a public offering of 35M shares of stock held by ABT subsidiaries; CANF psoriasis
drug CF101 failed to achieve primary endpoint in Phase 2/3 study
Biotech sector lagged despite a few positive developments; AMGNs Kyprolis received FDA
priority review in Myeloma; biotech firm ICEL acquired by Fujifilm Holdings Corp for
$16.50/$307M deal http://goo.gl/mDACYN; BDSI fell as its Clonidine Topical Gel fails to meet
primary endpoint in Phase 3 study; XON rises after announcing CAR-T accord deal with Merck
KGaA (XON gets $115M upfront/eligible to receive up to $826M milestones); ZIOP rises as XON
will share the economic benefits of the partnership equally
Medical devices; ZMH gained European Union regulatory approval for its proposed $13.4 billion
purchase of rival Biomet after agreeing to divest three businesses in Europe to allay competition
concerns http://goo.gl/tV3cis ; ISRG several positive analyst comments from Hernia Symposium
Other movers; HWAY board concludes best plan to remain as stand-alone public company; HCP
cuts guidance after amending and extending Master Lease
Industrials & Materials
AG & Machinery; ADM reached an agreement to purchase AOR, an oil bottling company based in
Belgium; Canpotex has finalized potash supply contracts for 2015 with all of its major customers
in Chinapricing was confirmed with its customers at current competitive levels (ferts were
stronger POT/MOS); HDS rises on positive Barrons article
Transports; airlines benefitted from a combination of lower oil prices, a broad market rally, and
positive analyst comments (DAL initiated OP and $55 tgt at Argus); group has been volatile of late
with fluctuation on oil prices); Dow Transports were up 1% on the day after weakness last week
(broad gains but rails still lagging)
Metals & Mining; TCK shares jumped midday after Bloomberg reported the company said to have
held early stage talks with Antofagasta http://goo.gl/pSKbTU (shares of FCX, VALE, BHP initially
jumped on headline); gold miners lagged given the pullback in gold prices today; steels with
recovery bounce (group under pressure last week on profit warnings AKS, NUE, STLD)
Chemicals; DD approved changes to the corporate governance structure of its soon-to-be-spunoff Chemours performance-chemicals business as activist fund Trian Fund Management tries to
make its own changes at the company; SERV said U.S. DoJ started criminal/EPA investigation into
use of Methyl Bromide
Aerospace & Defense; ERJ has received a firm order for 15 E175s and two E190s from KLM's
regional subsidiary (estimated at $764M); AIR falls on lower Q3 results; TTEK awarded a $1B
multiple-award indefinite delivery indefinite quantity (IDIQ) contract for the U.S. Agency of
International Development (USAID)
Technology, Media & Telecom
Internet; high beat names were leaders, with good gains in the sector; AMZN announces
Marketplace for on-demand home services (weighed on shares of ANGI); P shares rise after
positive analyst comments (Canaccord); NFLX shares gained
Semiconductors; group adds to gains late Friday after the WSJ reported INTC is in advanced talks
to buy chip partner ALTR, according to people familiar with the matter, a move that would
represent the semiconductor giants biggest-ever acquisition (both stocks pared
gains). http://goo.gl/rLde3K (many analysts weigh on today amid the deal speculationSOX
higher); BRCM upgraded to Buy with $50 tgt at Nomura; ADI upgraded to Overweight at Barclays
and up target to $70 as believes has secured multiple sockets across AAPL's iPhone/iPad lineup
to enable the 3D/Force Touch feature

 Software & Hardware; ORCL upgraded to Outperform at RBC on cloud growth and as 12c
adoption accelerates; PLT guided Q4 earnings below its prior range forecast; GPRO upgraded to
buy at Dougherty saying rival Xiaomi's $64 action camera may actually be good for GoPro in
terms of stimulating demand; GPRO supplier AMBA tgt raised to $81 at Canaccord and reit buy;
BBRY shares fell after earnings Friday (Goldman reiterated sell)
Telco; S&P 500 constituent WIN will replace IGT in the S&P MidCap 400, S&P (while O replaces
WIN in the S&P 500 index); defensive telecom names lagged overall market gains
Media movers; MSG upgraded by two analysts after confirming restructuring plan, splitting
sports teams/venues from cable (analyst upgrades as Morgan raises to Overweight and $94 tgt);
DWA rises as Home, its only film release for 2015, led the weekend box office and beat its own
expectations with $54M, the company's third-largest non-sequel opening; SSP announces special
dividend; WWE said sees Q1 exceeding guidance but notes Q1 subs reached avg 982K (shares
fell); overall media names (broadcasters/cable) were strong

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