Closing Recap

Monday, April 6, 15

Index

Up/Down

Last

DJ Industrials

118.21

0.67%

17,881

S&P 500

13.72

0.66%

2,080

Nasdaq

30.38

0.62%

4,917

Russell 2000

4.79

0.39%

1,260

Equity Market Recap

Equity markets end higher, erasing what was a negative picture overnight as futures were
broadly lower (Dow futures fell more than 100 points overnight), led by energy shares. The old
bad news is good news was back for major averages again today, as the weaker jobs data on
Friday was seen more as a reason to keep loose monetary policy in place longer for the U.S.
(helping market sentiment) then a negative for the economy. In addition, investors received
more dovish commentary from NY Fed President Dudley, while an in-line ISM services report
was perceived as positive (guess good news is also good news). Crude oil prices weighed on
transports, but lifted energy stocks (which pushed major averages higher), while lower bond
yields kept financial gains in check. Note S&P futures touched a low of 2,044 at about 8:00 AM
this morning, but up more than 30 handles from that level.

Economic Data
Jobs data missed; On Friday (when U.S. markets were closed), job creation was positive in March,
but dropped below the 12-month moving average of 252K jobs as only 126K payroll jobs were
added in the month (well below estimates for 243K added and broke streak of 12 straight 200Kplus gains). The Job creation has not been this low since November 2013, when only 83K jobs
were added. Also, gains for February and January were reduced by a combined 69K. On a positive
note, average hourly wages rose a solid 0.3% in March, while unemployment held at 5.5%
March ISM Non-Manufacturing fell to 56.5 from 56.9 in prior month, while was in-line with
consensus estimates; Business activity fell to 57.5 from 59.4 prior month, while New orders rose
to 57.8 from 56.7 and Employment rose to 56.6 vs 56.4 prior
Feds Dudley said the FOMC could pause rate hikes if markets react too strongly to tightening,
though 10-year Treasury yield seems low given Fed aims to achieve a 2% inflation rate, driven in
part by QE in Europe and Japan. He expects bond yields to rise eventually, while low inflation is
due partly to the global economy

Commodities
Oil prices jumped $3, or over 6% to settle at $52.14 per barrel after Saudi Arabia raised its prices
for crude to Asia for the second straight month (possible sign demand improving), adding to
upward pressure amid fighting in Yemen as well as doubts that any Iran nuclear deal will have an
immediate effect on the market. A weaker dollar after the jobs data disappointed late last week
also helping lift commodity prices. Brent prices also jumped over 5%, but spread between the
two contracts remain around $6.
Gold prices touched 7-week highs, rising more than 1.5% to settle at $1,218.60 an ounce
boosted by last Fridays much-weaker-than-expected U.S. employment report. Gains in the gold
and silver markets were tempered when the U.S. stock indexes rallied sharply on Monday, after
being under pressure in early trading

Currencies & Bonds

The U.S. dollar index (DXY) advanced to start the trading week after dropping sharply Friday in
the wake of the employment report. The greenback has fallen the past few weeks on better Euro
area data and mixed U.S. data. The recent weakness in the U.S. dollar index has also been a
bullish underlying element for the precious metals markets. The euro traded above the 1.10 level
against the dollar, though pared gains, while the yen lost ground. Bonds opened up in strong
fashion, with yields down around the 1.82% level for the 10-yr, but pared gains throughout,
lifting yields off lows (back above 1.9%); 30-yr yield back above 2.5% and 5-yr was at 1.307%

Macro

Up/Down

Last

WTI Crude

3.00

52.14

Brent

3.17

58.12

Gold

17.70

1,218.60

EUR/USD

-0.004

1.0929

JPY/USD

0.59

119.57

10-Year Note

0.068

1.903%

Sector News Breakdown

Consumer
Retailers; retailers stronger as group continues to push to highs - comes today despite jump in
energy prices, and as cotton futures jump to 5-month highs; no fear on earnings related to port
closings last month either; shares of luxury KATE, RL, PVH higher; COH upgraded at Telsey to Buy
saying turnaround strategy is gaining traction; LB was upgraded to Buy at Mizuho Securities and
ups tgt to $108
Consumer Staples; CNBC reported that Federal law enforcement gets in touch with top HLF
members; protein stocks active after KeyBanc downgraded SAFM to Underweight as believe the
chicken cycle has reached an inflection point with supply poised to accelerate, resulting in a likely
oversupply situation in 2016 maintains OW on TSN; tobacco stocks higher
Housing & Building Products; LL upgraded to Outperform at Raymond James with $40 tgt; TREX
CEO Ron Kaplan said in Barrons that economic tailwind is finally beginning to blow for decking,
fencing material maker as housing remodeling demand catches up with GDP growth; Z cut to
Equal-weight at Barclays and cut tgt to $105 as believe n-t has become challenging
Casino, Lodging & Leisure; in Leisure news, IMAX upgraded to buy at Canaccord saying earnings
risk is easing; toy maker MAT upgraded to buy at B Riley on attractive risk/reward
Auto news; TSLA said it delivered 10,030 vehicles in Q1, up 55% YoY (had said it planned to
deliver 9,500 cars in 1Q)

Energy
Energy stocks among top gainers today; it was a broad based rally in energy stocks as WTI crude
prices jumped over 5% most of the day, helped by weakness in the dollar, and as investors look
to buy beaten up energy companies into earnings (most of bad news baked in?); shares of HAL,
APC, RIG, DNR among top gainers
Movers on news; MTDR rose after reporting record quarterly production; PEGI advanced despite
cutting its Q1 view as it bought 3 wind plants; MHR fell on analyst downgraded
MLPs; WPZ to acquire additional interest in Utica East Ohio Midstream Partnership from a
subsidiary of EVEP for ~$575M; little gains in Alerian MLP Index (AMZ) despite jump in oil
Utilities rising; sector a beneficiary of the continued falling rates, with UTY up over 1.5%...among
top gainers today AES, PEG, ETR, DUK, EIX; DUK also up 2% after announced $1.5B share
buyback; all components of UTY in positive territory today
Financials
Large Cap banks were little changed despite broader market rallying as banks still feeling effects
of lower yields (weigh on NIM); regional banks RF and CMA downgraded to Neutral from Buy at
Guggenheim; MTB shares fell after regulators said they wont be able to complete a review of its
proposed acquisition of HCBK by April 30, and that the deal will miss its latest deadline
Exchanges/Brokers; high frequency trading firm Virtu Financial Inc. is seeking a valuation of about
$2.59 billion in a public offering of its stock, according to a new filing
REITS; VTR agreed to buy Ardent Medical Services Inc. and its affiliate Ardent Health Services for
$1.75 billion in cashVTR board unanimously approves a plan to spin off most of its postacute/skilled nursing facility (SNF) portfolio into an independent publicly traded REIT ("SpinCo")
http://goo.gl/VaWZ8T ; O announces 5M share secondary; mortgage REITs PMT, STWD, TWO
named top picks at Credit Suisse
Payment services; WU downgraded at Susquehanna on price appreciation
Healthcare
Biotech sector rises as IBB/XBI rise, though large cap names mixed; QURE jumped after
agreement w/ BMY with exclusive access to uniQure's gene therapy technology platform for
multiple targets in cardiovascular diseases
Specialty Pharma; OMER target raised to Street high $61 at Wedbush after the company
announced the US commercial launch of OMIDRIA; SMCP initiated buy and 423 tgt at
Guggenheim; ALKS said treatment with ALKS 3831 showed durable efficacy and beneficial weight
effect over six months in Phase 2 study of schizophrenia patients; TRGT said PFE plans to end its
2009 research and license agreement
Other news worthy items; CAPN awarded a Small Business Innovation Research (SBIR) Phase I
grant totaling approximately $220K by the NHLBI; CRIS said its CUDC-907 to treat diffuse large Bcell lymphoma received orphan drug designation; CYTXs its Lorem vascular received regulatory
clearance in China
Industrials & Materials
AG & Machinery; AGCO downgraded to Sell at Deutsche Bank saying 2015 consensus earnings
expectations are far too optimistic; Barrons said MON shares may be worth $150, about 30%
higher, as long-term growth prospect remain solid with good pipeline of new products
Industrials; EMR said Feb 3-mont; h orders were down (-10%) vs. Jan (-5%-10%); sees Q2 GAAP
sales -7%; UTX named top pick for 2015 in US Aerospace & Defense at Bernstein
Transports; one of sector laggards on the jump in oil; group weakness led by airlines (UAL, DAL,
DAL, LUV) amid the rise in energy prices; UBS lowers estimates in rails driven by the expectation
of weaker coal, crude by rail, and frac sand volumes compared to our prior assumptions; rail cars
outperform rails ahead of GBX earnings tomorrow (TRN, RAIL, ARII rise)

 Metals & Mining; gold miners get a lift after gold prices jumped following a weaker jobs report,
weighing on the dollar last Friday; shares of NEM, ABX, GG rise early; metals in general getting a
bounce (FCX, VALE) amid the weaker dollar; AA set to report earnings this Wednesday (unofficial
start to earnings season); Deutsche Bank downgraded CDE and CNX, while lowering targets in
many names in the space
Chemicals; DD urged holders to reject Trians four board nominees; EMN was mentioned
favorably in Barrons saying shares look cheap at below 10x PE, and may rise 35% to $92 in one
year; higher oil prices helped lift petro names LYB and WLK
Materials, Paper & Packaging; Barrons said OI shares may rise 25% or more to $27-$30 as glass
container maker cuts costs, improved cash flow and buys back shares; KeyBanc reduced
estimates across paper coverage to account for increasing FX headwinds and severe winter
weather (cuts tgts MWV and RKT)
Technology, Media & Telecom
Internet movers; In response to new Chinese government mandates, WBAI said it plans to
voluntarily and temporarily suspend all of its online lottery sales services starting from April 4,
2015; TRIP cut to Hold at Needham citing the unexpected resignation of CFO Julie Bradley; GAME
agreed to be taken private by Capitalhold in a deal worth $1.9B http://goo.gl/lYYEhj; social media
(GOOGL, TWTR) blocked in Turkey on prosecutor order; PCLN initiated with Buy at Argus
Handsets; Samsung Galaxy S6 teardown shows chips from Samsung, BRCM, INVN, SWKS, AVGO,
MXIM, TXN and STM, according to Chipworks teardown; Samsung Electronics Co. will
manufacture the main chip in Apple Inc.s next iPhone model http://goo.gl/61EyCl
Semiconductors; SWKS downgraded at Stephens on valuation; QCOM downgraded at FBR Capital
saying noting AT&T listed the specs for their GS6it did not have a Qualcomm baseband, but a
Samsung one; AMBA tgt raised to $78 at Pacific Crest and raise estimates on solid checks; SNDK
mentioned as possible takeover target at both Bernstein and Susquehanna today after shares
have fallen 40% from highs; ALTR falls (no M&A news materialize after WSJ speculation two
weeks ago related to INTC sent shares surging); NVDA reports favorable ITC ruling in patent fight
with Qualcomm, Samsung
Comm equipment/Hardware; HRS upgraded to Overweight at Barclays as thinks the synergy
with XLS capture opportunities are very achievable; GPRO estimates raised at Pacific Crest;
GRMN downgraded to sell at Citigroup saying competitive pressures are likely to stall the growth
of the company's GPS fitness watch business
Software movers; INFA jumped after Reuters reported it received offers from two private equity
consortia and is negotiating a sale that could value it at between $5B-$6B http://goo.gl/e3vmL6 ;
SPLK upgraded at Stephens to Overweight; VMW upgraded to Buy at Nomura as survey results
suggest that business was likely a bit ahead of plan in Q1; MSFT upgraded at Wells Fargo saying
stock adequately reflects the XP hangover and negative FX headwinds (firm downgraded SAP
rating but stock rose); NOW tgt raised to $94 at Morgan Stanley
Media/Telco; GCI was downgraded at FBR Capital; VLTC continued to rise on news that billionaire
investor Carl Icahn increased his stake in the mobile marketing and advertising technology
company

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