Closing Recap

Friday, May 8, 15

Index

Up/Down

Last

DJ Industrials

266.59

1.49%

18,190

S&P 500

28.03

1.34%

2,116

Nasdaq

58.00

1.17%

5,003

Russell 2000

9.44

0.76%

1,234

Equity Market Recap

Up, up and away.as all day, media reports called the April nonfarm payrolls report Goldilocks,
leading markets to best levels of the week, as numbers were good/solid for economy (223k
added jobs, 7-year low unemployment rate), but not good enough to push expectations for the
Fed to raise rates anytime in near future (revisions for jobs were to the downside/average
earnings missed views). The report created a risk on mentality, as the more than 1% gain was
broad based, helped amid a pullback in global bond yields. Major indices trade back above key
technical/psychological levels early (and held). The move higher takes all three major averages
positive for week and back above psychological levels (Dow 18K, S&P 2,100, Nasdaq 5K)
Bloomberg notes, it has been more than 100 days of talks between Greece and its creditors that
have failed to produce an agreement to unlock aid from the countrys 240 billion-euro bailout
and avert default. The standoff has led to an unprecedented flight of deposits from Greek banks
and renewed concern over the countrys future in the single currency. May 12: IMF loan
repayment totaling ~EU755m due; European Union Finance Ministers meeting

Economic Data
April Nonfarm Payrolls rose 223k, mostly in-line with consensus of 228k gain, while the
unemployment rate was down to 5.4% from 5.5% to mark the lowest level since mid-2008. The
payroll data was downwardly revised in Feb/March by 39k, while the participation rate inched
higher to 62.8% vs prior 62.7%. Earnings were disappointing, rising 0.1% MoM, vs. est. 0.2%.
Private payrolls added 213k vs. est. 225k (also revised down), while Manufacturing payrolls rose
1k after unchanged in the prior month
Wholesale Inventories rose 0.1% in March, below est. for a rise of 0.3%; March wholesale
inventories increased to $574.5b vs $573.7b in prior month. Feb. inventories revised to positive
0.2% from 0.3%. Wholesale sales fell (-0.2%) in March after falling (-0.6%) the prior month

Commodities
Energy prices were all over the place today, with WTI crude closing higher after falling more than
2% early (after a 3% drop Thursday), while Brent closed little changed. The reversal higher
allowed oil prices to close higher by 0.4% for the week. Note both are still a few dollars off best
levels intraday yesterday ($62 WTI/$70 Brent). Nat gas prices jumped over 5% early to $2.88 mln
Btu after Exelon shuts Oyster Creek Nuclear-Power Reactor in New Jersey.
Gold prices closed higher by $6.70, or 0.6% to settle at $1,188.90 an ounce (snaps 2-day loss),
while recording a 1.2% gain for the week, snapping a 3-week losing streak. Note over the past 6
weeks, futures have been trading in a tight range of $1,180-$1,210 (for the most part) as the
outlook regarding FOMC policy has become cloudier than it already was.

Currencies
The dollar index (DXY) was up modestly (not as much as one would think with equities surging on
heels of better jobs data), with the index up about 0.15% to 94.80 level (briefly traded above 95),
scaling a high of 95.07 intraday and a low of 94.32. The euro trended lower against the dollar at
1.1228 vs. prior close of 1.1268. Bottom line was, the data pushed out trader expectations for
when the Federal Reserve will begin raising interest rates, which up until the middle of April had
underpinned a nine-month rally in the greenback.

Bond Market
It was another see-saw day for bond markets that saw initial weakness after the in-line to slightly
better jobs report, causing a drop in bond yields from best levels of 2015 (10-yr touched around
2.3% intraday yesterday, falling to morning lows of around 2.10% after the jobs data). But bonds
pared gains late in the session, as the 10-yr yield crept back up to 2.15% level, only down slightly
from yesterday. Yesterday snapped an 8-day losing streak for bonds, with yields jumping over the
last week and a half. The recent rout has sent bond yields to much more attractive levels, and
with the German bund market stabilizing, investors are focusing attention abroad

Macro

Up/Down

Last

WTI Crude

0.45

59.39

Brent

-0.12

65.42

Gold

6.70

1,188.90

EUR/USD

-0.0055

1.1212

JPY/USD

0.02

119.75

-0.036

2.144%

10-Year Note

Sector News Breakdown

Consumer
Consumer Staples; MNST reported lower than expected Q1 results with 2% revs downside owing
to weak intl results ahead of KO transition; food stocks rise as WWAV Q1 eps beats by 2c on
better sales and boosts top/bottom year by 2c, while POST also better earnings; in grocers, SFM
shares fall on Q1 eps/rev/comps miss (follows weak WFM results the day prior)
Restaurants; MCD April global comp. sales down (-0.6%), slightly better than the down (-1.8%)
estimate (not as bad); while U.S. comp (-2.3%), in-line and Europe was better up 1%; BOJA opens
at $26.55, after 7.75M share IPO priced at $19; SHAK fell a 3rd day (falling from record highs)

 Housing & Building Products; Housing stocks jump on better jobs reading and lower rates; LEN
leads group higher after Barclays upgraded to Overweight (called specific to company); roofer
BECN posts smaller than expected loss for quarter and sees increased profitability Q3/Q4, while
flooring name MHK up on earnings as well; building products/tool names surge to best level in
years (MLM, VMC, SWK); home improvement names all leading (LOW, LEG, WHR)
Casino, Lodging & Leisure; you name it, they bounced as casinos (WYNN, LVS, MPEL),
hotels/lodging names (MAR, H, HOT), and cruise lines (NCLH, CCL) were all up on broad rally
Energy
Energy stocks have been volatile this week, up early in the week as oil prices jumped, but have
given back some of those gains the last two days as prices have eased
Weekly Baker Hughes (BHI) report showed that total rig count dropped another -11 to 894
overall, while oil rigs fell -11 to 668 (last week showed a decline of -27 rigs and oil rig drop of -24);
oil rigs have plunged about 60%, or 941 rigs, since peaking in mid-October and are at the lowest
level since December 2010.) oil rigs now down for a 22nd straight week
In news; MRO was upgraded to Outperform at Wells Fargo as believe MROs attractive shale
acreage and drilling program should deliver from a growth/cash flow/returns standpoint; oil
driller DO was cut to underperform at FBR Capital as next floater upcycle still 12-18 months
away; FANG 4M share Spot Secondary priced at $74.25
MLPs; Alerian MLP Index up on some analyst comments/oil rallying late day; CMLP was
downgraded by one analyst, while ENBL was upgraded to Outperform at Credit Suisse; SMLP
6.5M share Secondary priced at $30.75
Alternative energy/solar/coal; WLT jumped as it said it will make interest payments and continue
discussions with debtholders to explore alternatives to recapitalize its balance sheet amid a
difficult met coal pricing environment; SEDG posts EPS/rev beat in first quarter since IPO, and
also providing upbeat guidance for Q4; solar strong, with CSIQ, SUNE rising; SSNI up on Q1
beat/strong sales guidance
Utilities jumped early as yields came tumbling in; the UTY index was up over 1% early as lower
bond yields make dividend paying stocks more attractive; Natural gas prices jumped after reports
that EXC shuts Oyster Creek Nuclear-Power Reactor in New Jersey saying it experienced an
automatic scram from a turbine trip
Financials
Large Cap banks/financials in general one of the few sectors lagging (not down though) given the
pullback in rates today, as banks (lending), brokerage names lag; HCBK shares fell after DOJ
request on residential mortgage lending practices (in 10q filing); V jumped late day after
Bloomberg said reportedly in talks to buy Visa Europe, valued at approximately $15B-$20B
(shares of MA/DFS jumped as well) http://goo.gl/JD40Td
Brokers & Exchanges; ITG reports April U.S. trading volumes of 3.9B shares, and average daily
volume, or ADV, was 184M shares (down from 4.6B shares and ADV of 208M shares in March)
REITs; after falling sharply over the past week on rising rates, group gets relief bounce as bond
yields come tumbling in nearly 20 bps from high print yesterday, lifting group (IYR was up 2%);
SPG, VNO, PSA, GGP (also analyst upgrade) were movers to the upside

Healthcare
Large Cap Pharma; TEVA said to seek $25B in financing for MYL takeover, Bloomberg reported,
saying no final decision made on raising offer price http://goo.gl/5aAuA0 ; FLML rises after
negative competitor drug news (JAZZ/CNCE) as their Phase 1 PK/PD results for their JZP-386 drug
do not support advancing the candidate into later-stage development at this time; more than 1%
gains in large cap pharma MRK, PFE, LLY, JNJ, BMY
Biotech movers; index at highs of the week (IBB), lifted with broader market; VRTX reversed premarket lower levels to trade higher (initially down after FDA staff report questions whether
Vertexs fixed-dose combination of lumacaftor/Kalydeco proposed name Orkambi works
better than Kalydeco alone); BIIB announces $5B stock buyback plan; other movers to upside
after earnings MDVN (despite eps/revs miss),
CAR-T movers; BLUE extends gains from yesterday after earnings; rises to all-time high (up 3rd
day); space continues to be strong (KITE, CLDX, CLVS, JUNO)
Equipment & services; FLDM falls on disappointing Q1 results (eps miss by 12c/revs miss); CERN
drops on lower guidance
Industrials & Materials
AG & Machinery; SYT rejected $45B MON takeover offer saying it undervalues the company
http://goo.gl/bpjNrW; for potash names (POT, MOS, AGU), Canpotex finalized annual potash
supply contracts, confirmed with its customers at a $10.00 MT price increase, bringing the new
contract price to $332
Industrials; CBI declined after the parent of the company's partner on a nuclear plant
construction project, Toshiba, said it will establish an independent investigation committee to
examine its accounting for some infrastructure-related projects
Transports; Dow Transports jumped more than 1% early (50-day MA 8,825), in broad move
higher, helped by easing oil prices early (though as energy bounced off lows, transports slightly
pared gains, specifically airlines which soared early)
Technology, Media & Telecom
Internet; AOL Q1 eps/revs/Oibda all beat estimates on growth in digital ad revs; BABA extends
yesterday gains on earnings (Goldman Sachs upgraded to Buy; YELP extends yesterday gains after
reports working with Goldman Sachs to find a buyer; overall though, Internet underperformed
market, with shares of TWTR, FB, LNKD, PCLN lagging
Semiconductors higher despite weak outlook from NVDA; NVDA falls after Q1 eps miss and
guided revenue significantly lower primarily due to weakness in its PC OEM business; MCRL to be
acquired by MCHP for $839M/$14 per share http://goo.gl/URQHrY; separately, MCHP Q4 results
topped consensus; group pared gains late
Software & Hardware; MSFT is currently is not weighing an offer CRM, Reuters reported
http://goo.gl/UWPvaJ ; DATA trades record high after Q1 beat/posted 75% growth to $130M a
full 13% above the high end of guidance and easily exceeding expectations (74% license growth
despite the strong 4Q14); PRO significantly lowered guidance for the year due a shift to a cloudfirst strategy (weighed on shares); CA mover on earnings
Internet Security stocks resume upward momentum on earnings; IMPV posts smaller than
expected Q4 eps loss on better revs, while guidance also comes in above consensus; CYBR also
surging on Q2 beat and boosted forecast for year. Bloomberg notes security stocks account for
three out of the top-four performing stocks in the BI infrastructure software peer group in 2015,
led by FEYE (up 27%), PANW (up 22%) and Trend Micro (CHKP, PFPT rise/ KEYW falls on earnings)
Media; CBS 1Q earnings beat behind the strength of licensing at Showtime and CBS despite some
softness in advertising; LBTYK dropped on larger Q1 eps loss/rev miss; FUEL received an
unsolicited buyout bid from Gravity4 for $350M http://goo.gl/BExYiX
Other movers higher on earnings: AAOI, MFLX, NPTN, NUAN, OLED, QTWO, STMP, TRAK
Other movers lower on earnings: AMBR, DIOD, GDOT, RBCN, SWIR

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