Closing Recap

Friday, August 7, 15

Index

Up/Down

Last

DJ Industrials

-46.37

0.26%

17,373

S&P 500

-5.97

0.28%

2,077

Nasdaq

-12.90

0.25%

5,043

Russell 2000

-8.95

0.73%

1,206

Equity Market Recap

Equities lower amid another day of key technical levels breached, as the S&P closed out with
another losing week (falling 4 of 5 sessions), and now down for a 5th weekly drop in seven after
taking out its 200 day moving average support level (2,073) but major averages did pare losses
into the close. The Dow Industrials slid for a seventh consecutive losing session (first time in 4years), and has traded down over 1,000 points from record highs.
Stocks edged lower early, as July employment data was strong enough to keep a September Fed
rate hike on the table. Sector laggards include Health Care (for a 2nd day as Biotech slides), with
Nasdaq Biotech down 1% today, down 3.9% this week, as the Nasdaq Composite underperforms
for a second day. Commodity prices mixed as oil falls to 4-month lows (6 straight weekly
declines), but gold bounced off lows. Bonds stronger early on short end of curve, while the dollar
pared recent gains. Transports giving back recent gains, underperforming the overall market. It
was a day of technicals (second day in fact), with key support levels for the S&P, NASDAQ,
Transports, and others failing to hold.

Economic Data
July Nonfarm Payrolls rose 215K, slightly below the 225K estimate, but the prior month was
upwardly revised to 231K from 223K, while the unemployment rate held at 5.3% (in-line); the
participation rate held at 62.6%, while average hourly earnings MoM rose 0.2% from prior 0%
(though in-line with ests.); Nonfarm private payrolls rose 210k vs prior 227k (est. 212k), while
manufacturing payrolls rose 15k after rising 2k in the prior month

Commodities
Crude oil futures slumped for a 6th straight week, down over 79c, or 1.77% to close at $43.87
(near session lows), and fell over 6% for the week (follows a 21% decline in July) and touched its
lowest close since March 17th. Another rise in the number of U.S. oil rigs also kept pressure on
crude, as the Baker Hughes rig count rose 10 rigs (3rd weekly increase), with oil rigs up 6, adding
to fears U.S. production has yet to peak despite a fall in prices. Brent oil prices were equally soft,
also down over 6% for the week (1.8% today)

 Gold prices rose $4, or 0.4% to settle at $1,094.10, erasing earlier losses despite after a
stronger/but mostly in-line jobs report. Gold shrugged off the negative implications of the solid
employment report to finish higher. Gold traded as low as $1,081.40 an ounce but swung to a
high of $1,098.90 an ounce later Friday morning. Gold registered a weekly loss of about (-0.1%)

Currencies
Dollar reverses lower; the dollar index (DXY) climbed early to its highest level in nearly four
months (98.33) after data showed the U.S. created jobs at a solid pace last month, further
bolstering expectations the U.S. Federal Reserve will raise interest rates next month. However,
the gains were short lived (fell to 97.50 level), as investors took profits following a strong week of
returns for the greenback. The dollar posted two-month highs against the yen before falling (high
125.07 to lows 124.10) and nearly five-month highs versus the Swiss franc. Following the jobs
report, the swaps market was pricing in a 52% chance of a September rate hike, up from 47%
before the data's release. The euro ended near best levels of the day.

Bond Market
Bonds were surprisingly strong, as yields dropped for a second day, and the yield curve moved to
its narrowest level since the end of April. The gap between 2-and 10-year yields is now at 1.45
points. The jobs report bolstered the case for the Fed to raise rates next month, pushing
investors to move out of the short end and into the long end. The 10-year yield fell below 2.20%
(to 2.17%) vs. 2.236% yesterday. Given the move in bonds, short dated yields rose. The jobs data,
while strong, was slightly below consensus views.

Macro

Up/Down

Last

WTI Crude

-0.79

43.87

Brent

-0.91

48.61

Gold

4.00

1,094.10

EUR/USD

0.043

1.0968

JPY/USD

-0.56

124.17

10-Year Note

-0.072

2.164%

Sector News Breakdown

Consumer
Retailers; COH upgraded to buy at UBS and upped tgt to $42 on Brand Improvement evidence;
ICON falls after CEO resigns/analyst downgrade; KORS raised to buy at BB&T after earnings, but
Piper cut to Underweight
Consumer Staples; HSY falls as Q2 EPS beat but revs miss and reaffirmed forecasts; SFM
announced CFO to replace CEO and lowered its FY15 EPS guidance; MNST shares rise despite Q2
sales falling well below consensus ($693M vs. $755M), after falling nearly 6% yesterday in
sympathy with GMCR results; NUS jumps on earnings results/despite cutting year revs on FX
Restaurants; NDLS Q2 results miss views and guidance below forecasts/downgraded at Piper
falls; BOJA rose after boosting its forecast for the year (75c-78c vs. 69c); WING Q2 EPS beat ests
by 2c; group tired after a busy week of mixed earnings

Energy
It was a tough week for the energy complex, as oil prices swung lower for a 6th week on a rising
dollar and same concerns on over supply/increased production, while inventory data did show
increased demand; the Baker Hughes (BHI) weekly rig count rose 10 rigs to 884 total, while the
oil rig count climbed 6 to 670 (but oil rig count down 903 from last year)
Movers on news; LNG rose as holder Icahn reports 8.18% stake; Icahn intends to seek talks with
Cheniere Mgmt on operations, capex, executive compensation; may seek board representation;
CJES falls after Goldman removed from CL buy
Earnings movers; BBG with in line as cash flow beat on higher production and lower op costs;
EGN EPS miss, while EBITDA beat (raised capex/production view); PACD slight beat and raise; in
drilling, ORIG beat on revs and cost mgmt; EOG falls on earnings (volatile trading); PBR declined
on earnings miss
Frac Sand movers; HCLP was downgraded to Sector Perform at RBC Capital, while EMES was cut
at RW Baird saying they were too early in turning bullish again and are incrementally bearish on
the run-rate business accordingly (SLCA and FMSA were active)
MLPs; TGP was upgraded to buy at UBS; CAPL declines on Q2 unit loss; MWE shares fell again on
downgrade at Credit Suisse citing MWE's revised guidance for EBITDA and distributable cash flow
to $925M-$975M and $700M-$750M; Alerian MLP Index though snaps 6-day losing streak
Utility index; shares of defensive utilities advanced, helped as investors flee to dividend paying
sectors in flight to safety, and as bond yields slide; UTY index advanced
Financials
Financials outperformed overall markets, but were still lower amid a pullback in short-term
yields, though expectations still remain for a rate hike in September that should benefit banks re
lending (though action in bonds markets tell another story about expectations for Fed); insurance
stocks led lower still in what has been a rough weak for group (softer ALL and GNW results);
Texas / Energy exposed banks still holding up (CFR, TCBI, CMA) despite oil falling further
In news; BAC said to be planning sale of $1.2B in home loans (news right before the close
yesterday), while COF is in exclusive talks with GEs health-care finance unit, said reports
http://goo.gl/yBUos8; LEAF upgraded to Buy at Sterne Agee; PHH cut at FBR after plunging
yesterday post earnings; AXP jumped midday after Bloomberg reported Valueact said to acquire
about $1B stake
Healthcare
Healthcare; DEPO said HZNP offered to raise its $2B takeover bid and include cash
http://goo.gl/za4Cfp; Biotech leading lower again, down nearly 4% for week; the IBB took out 50
day of 375 yesterday only to trade below its 100 day of $364.35 today
On news; ALNY discontinued Phase 2 Ole study as of August 5 due to injection site reactions
(downgraded at JP Morgan); OPHT cut to sell at Goldman Sachs with $45 tgt citing competitor
updates, as well as lack of meaningful catalysts; AQXP surged after positive results on secondary
endpoints from Phase 2 Leadership study in bladder pain syndrome/interstitial cystitis; HMSY
little recover off 52-week lows after buyback news; SRPT cut to neutral at SunTrust on valuation
CAR-T stocks slipped; group led lower by BLUE & CLVS after results; BLUE fell over 12% as
EPS/revs disappoint (JUNO, KITE lower); Global Blood Therapeutics (GBT) said to price 6M shares
at $16-$18 on Aug. 10, according to reports
Devices & Equipment movers; FLDM shares plunged after Q2 results that missed consensus and
deep guide-down; lab companies DGX and LH slipped intra-day
Movers higher on earnings: AIRM, NVRO
Movers lower on earnings: ACAD, GALE, LJPC, PMC, TXMD, XON

Industrials & Materials

Transports; Dow Transports underperformed the overall market, falling after recent strength;
group broadly lower, with most components falling, led by truckers and freight; lower energy
prices have lifted group in latest week (DJ Index traded to 8500 earlier just Wednesday, its 100
day MA, before failing) broke back below its 50 day today 8,297; shares of FDX, JBHT, CAR,
MATX biggest hits to index today
Metals & Mining; FCX trades to new 52-week lows as copper touched new 6-year lows earlier;
overall, material and metals names were weaker; aluminum names tumble, led by CENX on
earnings/rev miss (AA falls), while steel mixed/gold miners little changed
Chemicals; K+S AG said it received an unsolicited letter again from POT for 41 euros ($45) per
share, unchanged from last time it made the proposal/deal would value K+S at about EUR7.9
billion. http://goo.gl/CzZd8A ; ALB upgraded at SunTrust noting shares fell 3% despite improving
business performance in 2Q
Technology, Media & Telecom
Semiconductors; Drexel Hamilton downgraded shares of AVGO, FCS, INTC, MU, TXN, and XLNX
to hold saying China-based mobile and communications infrastructure cos., including Huawei,
Xiaomi, ZTE, are delaying chip orders; NVDA advanced after earnings; HIMX soft guidance and
EPS (but shares bounced); DIOD revenue slightly below consensus, and guided for muted
seasonal 3Q15 revenue; overall index remains depressed (SOX); SUNE extends earnings losses,
now down 50%from its July 20th highs
Media movers; bounce in a few of the names in a group that has been pummeled over the last
two days on earnings/lower growth outlooks; VIAB was upgraded at Barclays after sell-off (notes
has been Underweight over the last year due in part to our belief that the media ecosystem is
undergoing a structural shift); TWX, FOXA, DISCA, CBS, have all been casualties in sector
Cable & Telco; cable stocks new lows amid continued weakness in media space on cable cutting
cord fears/lower outlooks as well as after CVC results (CMCSA, CHTR fall)
Internet; GRPN fell on Q2 miss and light guidance ($700M-$750M vs. $755M est); ZNGA
upgraded by one analyst after Q2 beat estimates citing growth of core franchises; AMZN down
nearly $60 from post earnings all-time high levels; TWTR falls to within a dollar of IPO price back
in 2013 of $26
Software movers; TNGO plunged as Q2 EPS misses by 9c and guides slight revs/analyst
downgrades; IMPV better results lifted shares, but failed to rally the Internet Security space
which in a sell-off slump (as winners being sold in latest mkt pullback); CSOD rises on earnings
and Credit Suisse upgrade as added new clients, fueling booking increase; VRNS up on earnings
Comm equipment/hardware; ANET moves higher after strong quarter/especially in the US and in
cloud (was 5th consecutive beat-and-raise quarter since going public); CSC upgraded to buy at Citi
Other movers higher on earnings: FLTX, HAR, NUAN, STMP
Movers lower on earnings: ALRM, DGLY, HRS, TNGO

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