Closing Recap

Monday, May 4, 15

Index

Up/Down

Last

DJ Industrials

46.34

0.26%

18,070

S&P 500

6.19

0.29%

2,114

Nasdaq

11.54

0.23%

5,016

Russell 2000

5.87

0.43%

1,233

Equity Market Recap

U.S. stocks rose moderately, with the S&P 500 trading above its previous closing record (and up
40 points earlier from its Thursday low print), posting its best two-day gain since the beginning of
February. The news today has been relatively quiet, with only a few data points in the U.S.,
though manufacturing data overseas was mixed (China weak/Euro better). Data in the U.S. was
in-line with expectations (Factory Orders). Bonds fell, yields rise, and commodities were mixed.
Europe ended strong, as the benchmark German DAX index gained 1.44% and closed at
11,619.85 points, as strong economic data in the euro zone among other positive elements put
investors at the exchange into a buying mood
It was a relatively quiet and slow day, outside of the speaker list at the Ira Sohn Investment
Conference today. Now in its 20th year, the Sohn conference speaking list included Bill Ackman,
David Einhorn, David Tepper, Jeffrey Gundlach and several other high profile money managers
(more details and comments below)
Chicago Fed President Charles Evans said he doesnt see inflation reaching Feds 2% goal until
2018, even then there are downside risks to my projection. It will likely not be appropriate to
raise rates until early 2016, Evans said in text of speech in Columbus, Ind. Weak 1Q data give me
pause, inflation should remain low for some time. I see significant risks, but few benefits, to
increasing interest rates prematurely. FOMC should refrain from raising fed funds rate until
theres much greater confidence that inflation 1Y-2Y ahead will be at 2%

Economic Data
March Factory Goods Orders rise 2.1% (in-line), while Factory goods new orders for Feb. revised
down to a 0.1% fall; New orders ex-trans. for March rise 0% (prior month revised lower) and New
orders ex-defense for March rise 1.3% after rising 0.1% in Feb.
April New York City Business Conditions Rose to 58.1 after Marchs 50, according to a report
from ISM-NY; Business conditions outlook rose to 73.4 vs 69.4 last month

Commodities
Energy prices ended lower, but only down a fraction, as WTI fell 22c to $58.93 close (flirted with
$60 earlier in session, while Brent was little changed. Not much in regards to macro news for the
space (coming off seventh straight weekly gain last week for WTI), quiet on headlines in Middle
East, and earnings pick up again this week for individual companies; Natural gas prices quietly
edge higher (follows move last week on bullish inventory data)
Gold prices with a solid start to the week, rising $12.30, or 1.1% to settle at $1,186.60 an ounce
(follows a volatile, but in the end uneventful week, falling 0.3%, but was the 3rd straight weekly
decline); move higher today as the dollar with only small bounce after falling to 6-week low last
week (only a small climb in dollar today)

Currencies
The U.S. dollar little bounce today (DXY up 0.25% to around 95.50); coming off 6-week low last
week; after staging the biggest rally in almost five years, the euro took a little breather today (0.5% to 1.1134 to near lows of day), falling as most of the regions PMI data dropped in April
(though overall better). While euro-area consumer prices ended a four-month streak of declines
last month, inflation is still stuck at zero. The move lower today follows a 4.6 % jump in April,
biggest monthly gain since September 2010.

Bond Market
Bond markets lost ground late day as yields pushed higher (been moving higher since FOMC last
week); note the note TLT ETF nears $123 - now down from $138.50 high on 1/31. The yield on
the 10-yr approaching 2.14%, while the 30-yr trades up at 2.88%

From Ira Sohn Conference: (from Bloomberg)

Greenlights David Einhorn discusses negatively fracking companies; highlights PXD

3Gs Dreyfus likes shares of PSX and APC
Janas Rosenstein discussed WBA long, also discussed QCOM long; says MCD ripe for turnaround
Leon Cooperman (Omega Advisors) likes ACT, AER, C, GOOGL, PCLN
Ackman tells CNBC will not be talking about CSX at Conference; says ZTS a great company
Glenviews Robbins sees ABBV hitting $90 per share by end of 2016; likes BKD as well
Sarissas Denner reiterates ARIA recommendation
Corvexs Meister discussed YUM long (revealed last week); said China spin could unlock $16
Lone Pines Gaonkar likes MSFT
Lion Points Cederholm likes ALLY

Macro

Up/Down

Last

WTI Crude

-0.22

58.93

Brent

-0.07

66.39

Gold

12.30

1,186.80

EUR/USD

-0.0062

1.1136

JPY/USD

-0.07

120.09

10-Year Note

0.018

2.135%

Sector News Breakdown

Consumer
Consumer Staples; TSN shares advanced as Q2 eps beat by 3c, but did cut its year sales outlook
(said bird flu primary effect is lost export sales); food company SYY Q3 eps missed by 1c; GMCR
shares falling ahead of earnings this week (estimates cut at ML); BUD downgraded at CLSA
Restaurants; MCD to restructure into 4 segments under operational growth led turnaround;
SHAK rises to a new record high; YUM was discussed by Corvex at Ira Sohn conference (recall
they announced increased position last week)
Casinos/Gaming rise; MGM Q1 EPS beat by 13c on better revs, while China Ebitda down 38% to
$148M; PNK confirms it is engaged in productive discussions with GLPI regarding a potential
acquisition of PNKs real estate assets; GLPI cut its year FFO outlook after Q1 missed by 2c;
Macaus casino revenue in April fell (-38.8%) as gross gaming revenue dropped to 19.2 billion
patacas ($2.4 billion) last month, the 11th straight month of decline (WYNN, MPEL, LVS)
Lodging & Leisure; shares of hotels drop (HLT/MAR) after strength last week post earnings/HOT
news explores potential sale; cruise lines are mixed
Autos; GPC upgraded to Buy at Sterne/CRT as believe the long-term upside makes the
risk/reward favorable; auto retail AN said April comp vehicle sales up 6% w/new vehicle sales
27,155
Retailers; sector mixed ahead of earnings next week in apparel/department store space; ANF
declines after analyst initiated with underperform
Energy
Energy stocks mixed, as oil prices pare some gains (up 7 straight weeks); fracking stocks came
under pressure after David Einhorn of Greenlight Capital spoke cautiously of the sector
(specifically mentioned PXD saying shares are worth $78 per share), as well as CXO, PXD, EOG,
CLR, WLL; shares of other E&P stocks were hit as well
Movers on news; oil driller DO Q1 results beat but noted scrapping rigs on weak demand; in E&P,
WLL upgraded to Overweight at Morgan Stanley as negative sentiment after WLL's equity raise
created a valuation discount which he views as an opportunity; WPX agreed to sell a package of
Marcellus Shale marketing contracts for more than $200M
Solar/Alternative energy; SCTY downgraded to neutral at RW Baird citing difficult regulatory
environment and cut price target to $65; SEDG follow through from TSLA battery deal; CLNE
gives up some recent gains (was up 27% last week)
MLPs trim recent gains after oil small move lower (Alerian MLP index 452 level); MEP
downgraded at JP Morgan; NMM declines on Q1 6c eps miss; CLMP opened North Dakota
refinery
Sand fracking stocks; sand fracking names all under pressure today as EMES lower on results
early (Q1 revs $204m vs. $260m est.); shares of SLCA, HCLP, FMSA also lower today
Utility stocks were higher, despite a rise in yields today; the utility index (UTY) up over 1%, led by
gains in CVA (positive mention in Barrons); shares of D rise on Q1 operating EPS beat; shares of
AES, PEG, FE, some of the names higher
Financials
Financials/Large Cap banks; overall quiet news flow in sector (but good gains in JPM, GS, BAC on
higher rates) GS said to develop online lending service to provide loans to consumers/small
businesses; MTB and BX both mentioned positively in Barrons over the weekend; CME said
Interest rate volume avg. 5.1m contracts/day in April, down 14% YoY; regional banks outperform
(led by MTB, RF, KEY, BBT, STI, PNC, HBAN)
Insurance; PRE rejects $6.4B takeover offer from Exor/affirms prior plan with AXS
http://goo.gl/BSk9Wo ; big week of earnings for life insurance stocks (MET, PRU); BRK/B rises
after earnings late Friday night

Healthcare
Large Cap Pharma; more strength in Pharma space today (MRK, BMY); ISIS licensed drug to
prevent Thrombosis to Bayer and will get $100m upfront and is eligible for up to $55m
milestones; CYTR said interim analysis from two Phase 1b studies shows combinations appear
well tolerated with impressive tumor responses
Biotech; biotech ETF (IBB) rises 18 points off last week low of 330.60, which was the 100 day
moving average (hadnt been tested to downside since last Oct); IBB traded against its 50 day of
349 before failing (group last week down on BIIB/CELG results.lifted late week by GILD results);
ARRY Q3 revs better/raises guidance
Gene Therapy; ONCE shares fall after an article said a rival gene therapy (not Spark's) used to
treat patients with a rare form of childhood blindness, appears to wane over time. An
examination of three patients who received an injection of a corrected copy of the defective
gene in one eye showed that the vision in the treated eye improved for as long as three years but
then began to deteriorate (shares of other gene therapy names fell: QURE, BLUE, AGTC)
Other movers; PDCO buys privately held veterinary products firm Animal Health for $1.1B
http://goo.gl/bHGBKb ; EXAS shares advanced after earnings; managed care company HNT
shares climbed after mixed Q1 (eps beat/revs miss) and boosted its year outlook; service stocks
PKI and LH receive analyst downgraded; hospital stocks jumped late day on no apparent news
(THC, CYH, UHS) other than ahead of earnings for several
Industrials & Materials
Airlines; DAL April PRASM down (-3.5%) as stable domestic unit revenues were offset by foreign
exchange pressure and lower surcharges in international markets; RJET Q1 eps misses by 9c,
saying hurt by fleet transition expenses/other items; ALK April traffic rose 9.8%, while capacity up
8.8%, while load factor declines to 83.6%
Rails; railcars GBX, TRN, ARII, WAB gain on the back of last weeks regulatory decision
Metals & Mining; gold miners standout to upside in metals sector as gold prices jump over 1% on
the day (NEM lone loser); steels/iron ore (X/CLF) bounce, but aluminum and copper names take
a breather after recent run in shares; silver miners also rally (SSRI, SLW, PAAS)
Chemicals; DOW says cutting about 3% of jobs and sees up to $380M in charges (will save
~$300m in annual operating costs); WLK Q1 eps missed by 10c on light sales as Q1 hurt by FIFO
accounting, lost sales, lower prod. rates and plant maintenance; OLN upgraded to Buy at Sidoti
Industrials; CECE to buy PMFG for $6.85 per share in deal valued $145.9M http://goo.gl/Mo1cRG;
MOG.A downgraded at Cowen after earnings; KMT upgraded to Buy at Jefferies; DC Capital
proposes buying HIL for at least $5.50 per share http://goo.gl/wGZXeZ ; FRM received nonbinding indication of interest /hires advisor http://goo.gl/Itjwjw
Technology, Media & Telecom
Internet; rough week last week led by social stock weakness (little bounce today in shares of P,
GRPN, etc.); TWTR upgraded at Stifel to Buy after sell-off; LNKD upgraded to Buy at Argus after
sell-off; Barrons said TWTR, LNKD, YELP shares may fall further, while FB and GOOGL remain
must-buys for their superior positions in online advertising; AMZN tgt raised to $525 at OpCo
as sees very strong momentum at AWS; PCLN up ahead of earnings (after EXPE beat last week)
Semiconductors; ON Q1 eps/revs top consensus (said not seeing impact from FX volatility); CEVA
falls as guides Q2 revs below consensus; the semi index (SOX) was down slightly
Software & Hardware; BSFT shares jump as posts Q1 eps/rev beat and boosted guidance; CRM
shares fell (note SAP said Friday it is not considering acquiring its rival CRM after a news report
suggested the leaders of the two companies had held talks about strategic alliances last year
http://goo.gl/bdqxIT)

 Cable; CMCSA Q1 eps and revs top consensus and said will buyback another $2.5B in stock (qtr
helped by strong theme park revs/high speed Internet); top executives close to CHTR have
reached out to management at TWC to discuss a possible merger, WSJ reported
http://goo.gl/rBa34h ; CVC Q1 eps/revs mostly in-line, though data sub adds miss views
Telco/Media; DIS Marvels Avengers: Age of Ultron sequel grossed $187.7m for its opening
weekend (DIS earnings tomorrow morning); AMCX shares rise as Q1 eps/revs top consensus;
TMUS advanced on positive analyst comments
Networking & Equipment; CSCO names Chuck Robbins as next CEO (John Chambers will assume
role as exec. chairman on July 26); CYNI acquired by CIEN for $400M/$4.75 per share
http://goo.gl/6pKSNT; AKAM could rise another 10% this year said Barrons
Services/Communications; CTSH Q1 eps beats and raises year view

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