Professional Documents
Culture Documents
Currencies
• Another day, another dollar decline, on track for a 6th straight weekly drop, falling sharply
against nearly all major currencies (dollar index back near 3-year lows – Dec 2014). The British
Pound rises to highs of $1.4027 vs. the greenback (highest since June of 2016 – Brexit) before
paring gains to end flat; the euro traded above $.123 briefly while the dollar slumps against the
yen by -0.5% to 110.30 (off overnight highs 111.18) despite dovish comments from Kuroda
overnight (the Japanese central bank said it was still too early to discuss scaling back its easy-
money policy stance). As the first day of the latest round of renegotiations of the NAFTA got
under way, the greenback strengthened against both the Canadian dollar and the Mexican peso
but later pared those gains. Bitcoin rebounded, rising as much as 8%
Bond Market
• Bonds bounce as yields slip (but the 10-year holding above the 2.6% level) helped by a better 2-
year auction late day. Bonds gained early after the lone piece of economic data (Richmond Fed)
missed estimates. Meanwhile, the Bank of Japan left its monetary policy unchanged (expected),
as Gov. Haruhiko Kuroda attempted to reduce speculation that the central bank may follow the
ECB and FOMC by adopting a more hawkish monetary policy. That did not stop the yen from
strengthening however, rallying throughout the day. The yield for the 10-year note dipped to
2.635%, down about 3 bps from yesterday, while the 30-yr held above 2.91%. The U.S. Treasury
sold $26B in 2-yr notes at a yield of 2.066% (vs. 2.067% prior to auction) with a bid-to-cover
(demand) at 3.22 (highest since Sept 2015), and well above the 2.52 prior auction, with indirect
bidders awarded 58.3% of the auction. Shorter term bonds advanced further following the results
Energy
• Energy stocks mixed after the group posted strong gains yesterday, led by oil services after HAL
earnings beat; oil drillers weak on analyst downgrade; E&P stocks lagging; refiners were slightly
lower, while solar stocks jump on overseas tariffs; MLPS rally off lows after strong boost the last
few weeks (Alerian MLP Index up over 17% since November lows)
• Solar stocks active after the Trump administration imposed 30% tariffs Monday on imported
solar-energy cells and modules. The decision imposes a 30% tariff on imported solar cells and
modules in the action's first year, with levies slowly falling to 15% four years from now. The U.S.
government will exempt the first 2.5 gigawatts of solar cells imported into America in each of the
next four years (shares of FSLR, SPWR, VSLR, SEDG, CSIQ were all initially gained – but slipped)
• Oil drillers; Barclays’ downgraded DO and RDC to underweight from equal weight and lowers
near-term dayrate forecasts, saying there’s a few green shoots on the horizon (potentially) in the
offshore sector, though the group is overvalued (sees an avg of 35% downside to group)
• Utilities; sector led early as defensive assets bounce after weeks of declines on rising bond yields
(making dividend paying names less appealing); Mizuho downgraded SO to neutral based on a
need for incremental equity, while the firm upgraded PNM (following a final NMPRC rate order in
the company's general rate case on January 17) and EXC (driven by an increase in estimates);
Credit Suisse upgraded DUK to outperform with $83 tgt as believes credit risks are priced in,
while downgraded ES to underperform from neutral on recent outperformance
Financials
• Banks; another busy morning of earnings in banks, especially regionals, with ZION, SNV, FNB,
HBAN, FITB, WBS, FULT among those reporting results; HRB rises after updating on the impact of
new tax laws; in online brokers, AMTD rises on significant beat driven by much higher revenues
as well as lower expenses; trust bank STT rises on earnings beat; BPOP Q4 earnings beat;
Earnings due post-mkt: CHFC, COF, FCB, FCF, GSBC, HAFC, LTXB, NAVI, STL, TRMK, UBNK, UCBI,
UCFC, UMBF, UMPQ, WSBC
• Insurance; Dow component TRV Q4 core EPS handily topped estimates ($2.28 vs. $1.50 est.) on
better revs of $7.45B on growth in premium across businesses; other P&C stocks such as ALL and
PGR were weak most of the day (KBW said this morning they expected pressure on P&C insurers
exposed to California after the state’s insurance commissioner said he’s directed his staff to
review P&C insurer rates to see whether -- under the new 21% federal corporate tax rate --
expected profits exceed the limits embedded in California’s prior approval process)
• Bond insurer shares active (AMBC, AGO, MBI) after Puerto Rico Governor Ricardo announced his
intention to privatize the Puerto Rico Electric Power Authority (PREPA) – the Commonwealth’s
troubled electric utility – in the aftermath of the damage caused by Hurricane Maria, stating that
the process of selling the assets would take about 18 months.
Healthcare
• Pharma movers; Dow component JNJ Q4 profit topped views though posted a quarterly loss of
$10.7B after taking a one-time charge of $13.6B related to accounting changes caused by tax
legislation (year EPS guidance above views and revs in-line) – also said sees “significant” R&D
spending after tax reform; GBT initiated buy and $80 tgt at William Blair saying on positive HOPE
data, they would see Global Blood Therapeutics as a prime takeout candidate; AMRN said a study
of cardiovascular outcomes nears completion that will show whether Amarin’s Vascepa helps
extend lives; VYGR said FDA cleared their Investigational New Drug Application for VY-AADC for
Advanced Parkinson’s Disease; VRTX added to Bank America US1 List/maintain buy and $180 tgt
• Biotech movers; AMGN upgraded to buy at Argus with $220 as assumes that Amgen will make
shareholder-friendly moves this year as it deploys repatriated overseas cash/also see several
catalysts for growth in 2018; upcoming stock secondary offerings for ADMS, RARE;
• Services, equipment and suppliers; RMD shares jump on earnings results, though analyst mixed
on report (upgraded at Northland but Macquarie downgraded citing valuation and ongoing ASP
declines, while Jefferies noted margins continue to deteriorate)
• Gene-editing stocks rise; SunTrust said “gene editing will be the next major therapeutic modality”
and should be the focus of small- to mid-cap investors as firm upgraded CRSP to buy from hold
(PT to Street-high $45 from $16), and EDIT to buy from hold (PT $45 from $17) as firm highlights
approaching clinical data with CRSP expected in mid-2018, EDIT by year-end
Want a free trial to The Hammerstone Report 4x Daily ? Sign-up for a trial today at
www.thehammerstonereport.com
Please be sure to check out The Hammerstone Institutional Feed for News and Analysis for the
Informed Trader at www.hammerstoneinstitutional.com
***DISCLAIMER/LIMITATION OF LIABILITY: Hammerstone Inc. (the “Report”) provides information and data and does NOT provide any individual investment advice or money management
assistance and does NOT attempt to influence the sale or purchase of securities. The Report is intended for informational purposes only and does not claim to be actionable for investment
decisions. The information contained in the Report has been obtained from sources deemed to be reliable but is not represented to be complete, and it should not be relied upon as such. The
Report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer t o buy or sell any securities. The Report is prepared for
general information purposes only and does not consider the specific investment objectives, financial situation, and particular needs of any individual subscriber, person, or entity. This e-mail
and any attachment(s) are believed to be free from virus. However, it is the responsibility of the recipient to ensure that they are virus free. We do not accept any liability for any loss or damage
arising in any way from the receipt, opening or use of this e-mail and any attachment(s).