Америка сегодня. Объем промышленных заказов.

 

 

 

 AtriCure downgraded to Neutral from Buy at BTIG Research  (18.96)

 

 

 

 

 

 

 

 Crane upgraded to Buy from Neutral at BofA/Merrill  (72.40)

 

Minerva Neurosciences resumed with a Buy at Jefferies; tgt $17  (8.30)

 

 

 Overnight Summary — World markets mixed, but rebounding off of early session lows

• The global equity markets are mixed this morning, with the S&P Futures down ~ 0.3%, but considerably off of overnight lows which were set shortly after the European open. The weakness across the EU was widely impacted by decline in Financials, led by Deutsche Bank following a flurry of announcements that included a EUR8 bln capital raise. The German lender opened up ~10% lower, pulling DB's peers lower in tandem. However, as the early moments waned, traders may have saw the drop in price a bargain, considering rumors of DB's capital raise were in the neighborhood of EUR10 bln on Friday.
• In Asia, the Nikkei closed 0.5% lower, but the rest of regional indices closed on the positive side. Japanese shares were hindered by relative strength in the yen after geo-political tensions increased over the weekend, following missile launches from North Korea falling in Japanese waters. With the currency acting as a safe-haven today, stocks fell in response.
• China had the most significant economic news out over the weekend with financial projections for 2017 being released from the National People's Congress. These targets include GDP rate of ~+6.5% or higher and CPI goal of +3.0% (unchanged from last year). These targets did not come as a surprise, but perhaps more of a relief, lending to an advance of equities within the region.

Market updates: 

• S&P Futures vs Fair Value: -7.00 
• 10 yr Note: 2.4727% 
• USD/JPY: 113.84 -0.19
• EUR/USD: 1.0585 -0.0036
• Europe: FTSE -0.3% DAX -0.4% CAC -0.4% 
• Asia: Hang Seng +0.2% Shanghai +0.5% Nikkei -0.5% 
• Commodities: Gold (1231.30 +4.80) Silver (17.84 +0.10) crude (52.93 -0.41) 

US Econ Data

• January Factory Orders (10am)
• Fed's Kashkari speaks (3pm)

 

 

 

 

 

 

 

 

 On The Wires

• JAKKS Pacific (JAKK) announced a multi-year licensing agreement renewal with Disney Consumer Products (DIS) and Interactive Media in China for merchandise rights for several entertainment properties.  The agreement includes more than 50 Disney entertainment properties such as Disney Princess and Disney Frozen for large doll category, plus new entertainment properties such as Disney's Moana, Disney's Beauty and the Beast in the large doll category; several properties for dress-up, role-play, costumes, masks and accessories; along with a deep library of classic and new entertainment properties for Disney Tsum Tsum collectibles, action figures and ride-ons and wagons.
• As previously announced, SM Energy (SM) entered into a Membership Interest Purchase Agreement with Venado EF L.P., a Delaware limited partnership, pursuant to which Venado will purchase from the Company all of the outstanding membership interests in SM Energy ST LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company. On March 4, 2017, the Company and Venado entered into an amendment to the Purchase Agreement that extended the closing date specified in the Purchase Agreement to March 15, 2017.
• AXIS Capital Holdings Limited (AXS) announced the estimated impact of the recent UK Ministry of Justice's reduction of the discount rate used to calculate lump sum awards in UK bodily injury cases, known as the Ogden Rate.  AXIS Capital estimates that the pre-tax impact of the Ogden rate change on the Company's carried reserves for relevant lines of business is approximately $50 million, to be recognized in the first quarter of 2017. This relates primarily to AXIS Capital's UK motor non-proportional business in its Reinsurance segment. The main classes of business in the UK expected to be impacted by this rate change are motor bodily injury, employers' liability and public liability. Our carried motor reinsurance reserves as at December 31, 2016 reflected a range of risks that may or may not materialize, including a potential reduction in the Ogden rate. However, the recently announced Ogden rate change was higher than scenarios considered most likely, none of which included negative rate scenarios. This increase to carried motor reserves adjusts for this higher reduction in the Ogden rate which has materialized.
• CHC Group (HELIQ) announced that the United States Bankruptcy Court for the Northern District of Texas has confirmed the Company's Plan of Reorganization and signed a confirmation order to that effect. The Company expects to complete its financial restructuring process and emerge from Chapter 11 in the next few weeks, after the conditions of the Plan are satisfied.

 

 

 

 

 

 

 

 British American Tobacco upgraded to Buy at Argus  (63.29)

 

 DineEquity upgraded to Buy from Neutral at CL King  (53.49)

 

 

 

 Asian Markets Close: Nikkei -0.5%, Hang Seng +0.2%, Shanghai +0.5%

Equity indices in the Asia-Pacific region ended mostly higher on Monday. The Nikkei closed 0.5% lower, but the rest of regional indices closed on the positive side. Japanese shares were hindered by relative strength in the yen after geo-political tensions increased over the weekend, following missile launches from North Korea falling in Japanese waters. With the currency acting as a safe-haven today, stocks fell in response. China had the most significant economic news out over the weekend with financial projections for 2017 being released from the National People's Congress. These targets include GDP rate of ~+6.5% or higher and CPI goal of +3.0% (unchanged from last year). These targets did not come as a surprise, but perhaps more of a relief, lending to an advance of equities within the region.

• In economic data:
  • Aus
    • Feb TD Securities Inflation: +2.1% vs +2.1% in Feb 2015
    • Jan Retail Sales s.a: +0.4% vs +0.4%e
    • Feb ANZ Job Advertisements: -0.7% vs +3.9% in Jan
  • China
    • China discloses Financial Targets for 2017 at the National People's Congress
      • GDP ~+6.5%
      • M2 money supply growth target was cut to about 12% from 13% last year
      • CPI goal of 3.0% (unchanged)

---Equity Markets---

• In Japan, the Nikkei closed out the day down 0.5%. The yen saw modest strength against the dollar during the session, but has since reverted back to down less than 0.2% at current rates. Major exporters were among the weakest groups with the likes of Panasonic  (-1.1%) and Honda (-0.6%) were among leaders on the downside on Monday. 
• In China, the Shanghai rose 0.5% to begin the week. As mentioned above, the first reports of news out of the People's Political Conference dished out a few of the state's key financial metrics. Among the most actives on the positive side were Midea Group (+3.7%) and GoerTek (+3.2%), while Bank of China (-0.6%) was among the most widely traded names on the downside. and China
• In Hong Kong, the Hang Seng finished the day up 0.2%. Stocks in general struggled to find direction, with even industry peers trading on different sides of the flat line. This is represented well by the heavily weighted group of energy names, which saw the likes of PetroChina rising 0.5%, while CNOOC sputtered and fell 0.3% by the day's conclusion. 
• In India, the Sensex was among the best performing indices across the region, gaining 0.8% today. All sectors except for IT (-0.2%) closed in the green. The Oil & Gas sector saw the best advance with a +1.3% close. Among the best stocks in the BSE, Reliance Industries cruised to a gain of 3.7%, while hitting 9 year highs along the way. The strength was attributed to a favorable note out of Credit Suisse which also increased the stocks target price. while Realty sector also witnessed strength with a gain of 0.9%.

---FX---

• USDJPY -0.2% to 113.84
• USDCNY -0.1% to 6.8967
• USDINR -0.1% to 66.7150

 

 

 

 

 

 

 

 

 

 

 

 

 On The Wires

• CGI (GIB) has been awarded a contract by the Netherlands' National Police to develop and maintain Burgernet 2.0—the next generation of a digital community policing solution developed by CGI in 2009 and used across the Netherlands since then. Using mobile technology, the Burgernet solution provides citizens, municipalities and the police with a digital collaboration platform to work together to combat crime and enhance the safety of local communities. Under the new contract, which has a term of 7-10 years, CGI will use new digital technologies to enhance Burgernet, as well as provide ongoing maintenance support.
• Pieris Pharmaceuticals (PIRS) announced that a set of ex vivo and in vivo data informing the trial design of a first-in-patient clinical trial for PRS-343, a first-in-class 4-1BB/HER2 bispecific, will be presented in a poster session at the 2017 Annual Meeting of the American Association for Cancer Research (AACR) to be held in Washington D.C., April 1 — 5, 2017. PRS-343 binds to 4-1BB (CD137) on T cells and HER2 on tumor cells, producing tumor-targeted immune activation.
• Accenture (ACN) announced that it has signed a global original equipment manufacturer («OEM») agreement with SAP SE (SAP) to offer its human capital management applications on SAP Cloud Platform. The OEM agreement allows organizations to easily access leading Accenture HCM applications that are purpose-built for the SAP SuccessFactors Employee Central solution and powered by SAP Cloud Platform.

 S&P futures vs fair value: -7.30. Nasdaq futures vs fair value: -14.40.

Equity futures point to a lower open this morning as investors position themselves for some profit-taking to start the new week. The S&P 500 futures currently trade seven points below fair value.

U.S. Treasuries trade slightly higher on Monday morning with the benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, down one basis point at 2.47%.

Crude oil has given back a portion of Friday's solid gain in early action amid fears that lower growth targets in China could decrease oil demand. The energy component trades 0.5% lower at $53.08/bbl.

Today's lone economic report, January Factory Orders (Briefing.com consensus 1.0%), will cross the wires at 10:00 ET.

In U.S. corporate news:

• Netflix (NFLX 141.34, +2.20): +1.6% after the company's stock was upgraded to 'Buy' from 'Neutral' at UBS.
• Tyson Foods (TSN 61.87, -1.73): -2.7% after reports that bird flu was found at a chicken farm linked to the company.
• GoPro (GPRO 8.53, -0.31): -3.5% after the company's stock was downgraded to 'Sell' from 'Neutral' at Goldman. GPRO shares currently hover near their all-time low.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended mostly higher on Monday. Japan's Nikkei -0.5%, China's Shanghai Composite +0.5%, Hong Kong's Hang Seng +0.2%, India's Sensex +0.8%.
  • In economic data:
    • Aus
      • Feb TD Securities Inflation: +2.1% vs +2.1% in Feb 2015
      • Jan Retail Sales s.a: +0.4% vs +0.4%e
      • Feb ANZ Job Advertisements: -0.7% vs +3.9% in Jan
    • China
      • China discloses Financial Targets for 2017 at the National People's Congress
        • GDP ~+6.5%
        • M2 money supply growth target was cut to about 12% from 13% last year
        • CPI goal of 3.0% (unchanged)
  • In news:
    • China had the most significant economic news out over the weekend with financial projections for 2017 being released from the National People's Congress (see economic data above). These targets did not come as a surprise, but perhaps more of a relief, lending to an advance of equities within the region.
    • Japanese shares were hindered by relative strength in the yen after geo-political tensions increased over the weekend, following missile launches from North Korea falling in Japanese waters.

• Major European indices are registering modest losses, pressured mostly by weakness in financial and basic materials stocks. UK's FTSE -0.3%, Germany's DAX -0.4%, France's CAC -0.4%.
  • In economic data:
    • Eurozone March Sentix Investor Confidence 20.7 (expected 18.5; last 17.4)
    • Eurozone Retail PMI 49.9 (last 50.1)
  • In news:
    • Deutsche Bank announced that it will be raising $8.5 billion in new capital. 

 

 

 

 

 

 

 On The Wires

• Micronet Enertec Technologies (MICT) announced that its wholly-owned subsidiary, Enertec Systems 2001 Ltd. (Enertec), was recently awarded a purchase order from a global Aerospace & Defense contractor, totaling more than $460,000. The contract is a continuous order for the development of a diagnosis and simulation system for a specific missile system.
• Mast Therapeutics (MSTX) reported that its wholly-owned subsidiary, Aires Pharmaceuticals, Inc., has entered into an agreement with the University of Pittsburgh related to a Phase 1/2 open-label safety and proof of concept clinical trial of the Company's lead product candidate, AIR001, for the treatment of Pseudomonas aeruginosa (P. aeruginosa) infection in cystic fibrosis (CF) patients. The study is being conducted by the University of Pittsburgh and the University of Pittsburgh Medical Center. Mast's subsidiary will provide study drug and nebulizers for the study, but no direct financial support.
• Agnico Eagle Mines Limited (AEM) announced that it has agreed to purchase 38,100,000 common shares of GoldQuest Mining Corp in a non-brokered private placement at a price of $0.60 per share for total consideration of CAD$22,860,000. 
• First Data (FDC) and FLEETCOR Technologies (FLT) announced the formation of a joint venture that will consolidate their various gift solutions to drive new value for their clients. The new joint venture combines the gift card businesses of both companies. This includes First Data's core gift card business, Transactions Wireless, and Gyft, along with FLEETCOR's Stored Value Solutions prepaid card services and gift card program management assets. The new entity will provide clients with broader international reach and a more robust end-to-end offering. The combined revenue of the businesses that are to be contributed to the joint venture by both companies was $362 million in 2016. First Data will own 57.5 percent of the joint venture and FLEETCOR will own 42.5 percent.
• Iridium Communications Inc. (IRDM) announced that its Safety Voice service, which is used for air traffic communications, has been adopted by more than 500 aircraft as of February 2017. The Iridium Safety Voice service provides aircraft operators with an alternative to existing HF radio systems, replacing them with a secure satellite-based option for long-range communications.
• Gordmans (GMAN) enters into a three-year contract for Revionics Markdown Optimization Suite to drive enhanced margins, remain competitive in a fast-changing retail landscape, and ensure adherence with disciplined business processes.
• KKR (KKR) announced the final closing of KKR Americas XII Fund, a $13.9 billion fund focused on opportunistic investments in private equity-related transactions primarily in the United States, Canada and Mexico. KKR will be investing nearly $1.4 billion in capital alongside investors through the Firm's balance sheet and employee commitments.

 

 S&P futures vs fair value: -8.30. Nasdaq futures vs fair value: -17.60.

Investors have their eyes on the Asia-Pacific region this morning as uncertainty within the region has contributed to a risk-off sentiment in the United States. The S&P 500 futures currently trade eight points below fair value.

Earlier this morning, North Korea fired four banned ballistic missiles into the sea of Japan with some of the missiles landing as close as 190 miles from Japan's northwest coast. The act marks the third time since August that North Korean missiles have fallen in Japan's exclusive economic zone, the offshore area in which Japan has exclusive resource rights. 

Rex Tillerson is scheduled to make his first visit to Japan as Secretary of State later this month to discuss North Korea's threat to the Asia-Pacific region. Mr. Tillerson is also expected to visit China and South Korea.

 

 

 Ligand Pharma discloses that on March 1, it entered into a worldwide platform license agreement with bluebird bio (BLUE)  (103.65)Under the license, bluebird will be able to use the OmniRat, OmniMouse and OmniFlic platforms to discover fully human mono- and bispecific antibodies and antibody fragments. The co is eligible to receive annual platform access payments, development milestone payments and royalties for each product incorporating an OmniAb antibody. Bluebird will be responsible for all costs related to the programs. The co previously disclosed rights to a single-antibody partnership had been licensed to bluebird but this agreement gives bluebird full access to the OmniAb platform.

 

 

 

 

 Gapping up/down: POLA +26% and MVIS +18% after earnings/updates; AA +2%, NFLX +1% and HPQ +1% after upgrades; EU banks trading lower, GPRO -3% after dg at GS

Gapping up
In reaction to strong earnings/guidance:

• POLA +25.9%, MVIS +17.9%

M&A news:

• CNCE +33.7% (to sell CTP-656 to Vertex Pharmaceuticals (VRTX) for an upfront payment of $160 mln in cash with the potential for $90 mln in future regulatory approval milestone payments, also reported earnings)

Other news:

• TGTX +66.4% (announces 'positive' topline results from its Phase 3 GENUINE clinical trial of TG-1101 plus ibrutinib)
• PTCT +14.7% (FDA has acknowledged the filing over protest of PTC's New Drug Application for Translarna)
• ADXS +9% (announces FDA acceptance of IND for personalized neoepitope immunotherapy, ADXS-NEO)
• NOVN +8.8% (provides update on SB204 development program, intends to proceed with the SB204 development program)
• SDRL +8% (modestly rebounding following last week's 37% decline)
• CXRX +6.8% (US district court awarded the co treble damages of $2.2 mln, an increase from the original damages award of $733k)
• IMGN +4.7% (files for $200 mln mixed securities shelf offering)
• RRC +3.6% (Barron's profiles positive view on Range Resources)
• XRX +3% (Barron's profiles positive view on Xerox)
• DBVT +2.7% (reports results of 'Viaskin Peanut' study suggesting lasting response and favorable safety profile)
• RRTS +2.2% (Elliott Associates Friday increased its passive stake to 7.5%)
• VRX +1.8% (completes about $1.1 bln pay down of senior secured term loans from divestitures; to seek refinancing & amendment of credit agreement)
• AMD +1% (Mubadala Development Company PJSC proposes the sale of 45 mln shares under form 144)
• UBNT +0.8% (approved $50 mln stock repurchase program)

Analyst comments:

• AA +2.1% (upgraded to Buy from Neutral at Goldman)
• NFLX +1.4% (upgraded to Buy from Neutral at UBS)
• HPQ +0.9% (upgraded to Outperform from Market Perform at Wells Fargo)

Gapping down
In reaction to disappointing earnings/guidance:

• AFI -12.3%

Select EU financial related names showing weakness in sympathy with DB (EUR8 bln capital raise) :

• CS -3.4%, RBS -2%, LYG -1.5%

Select metals/mining stocks trading lower following China's lowered GDP outlook to ~+6.5%:

• HMY -2.5%, FCX -2.5%, BBL -2.5%, X -2.5%, RIO -2.1%, BHP -1.9%, AKS -1.7%, MT -1.2%, AU -1%

Other news:

• DRYS -8% (discloses stock purchase agreement update)
• TSN -2.4% (WSJ discusses that bird flu was found in chicken farm linked to Tyson Foods)
• CMG -1.3% (files for 2,882,463 share common stock offering by selling shareholder)
• TEVA -1.1% (continued weakness)
• DB -0.9% (announces capital increase of EUR8 bln, refines strategy; announces new financial targets)

Analyst comments:

• GPRO -2.7% (downgraded to Sell from Neutral at Goldman)
• MET -1.1% (downgraded to Neutral from Buy at BofA/Merrill)
• PG -0.8% (downgraded to Neutral from Buy at B. Riley)

 

 

 

 

 

 On The Wires

• Rockwell Medical (RMTI) announced today that poster and oral presentations for Triferic have been selected by the Annual Dialysis Conference for presentation at their Annual Meeting, March 11-14, 2017 in Long Beach, CA. Triferic is the Company's late-stage investigational iron-replacement drug for the treatment of iron deficiency in chronic kidney disease patients receiving hemodialysis. Triferic is the only FDA approved therapy indicated to replace iron and maintain hemoglobin in hemodialysis patients.
• Ross Stores (ROST) opened 23 Ross Dress for Less and five dd's DISCOUNTS stores across 15 different states in February and March. These new locations are part of the Company's plans to add approximately 70 Ross and 20 dd's DISCOUNTS locations during 2017.
• Bristol-Myers Squibb (BMY) and Pfizer (PFE) announced that eight abstracts have been accepted for presentation at the American College of Cardiology 66th Annual Scientific Session, taking place March 17-19 in Washington, D.C. In addition to post-hoc analyses from the pivotal Phase 3 ARISTOTLE (Apixaban for Reduction In STroke and Other ThromboemboLic Events in Atrial Fibrillation) trial, the Bristol-Myers Squibb and Pfizer Alliance will present real-world data analyses that illustrate the Alliance's ongoing commitment to understanding the use of direct oral anticoagulants, including Eliquis (apixaban), in routine clinical practice.
• Applied Optoelectronics (AAOI) announced the development of Electro-absorption Modulated Lasers operating at a data rate of 10 Gigabits per second.
• Global Medical REIT (GMRE) announced today that the Company has increased the commitment amount on the previously-announced senior revolving credit facility with BMO Harris Bank N.A. to $200 million plus an accordion feature that allows for up to an additional $50 million of principal amount subject to certain conditions. This Credit Facility is being increased in response to strong interest from the eight Credit Facility syndicate members. BMO Capital Markets, SunTrust Robinson Humphrey, and Citizens Bank acted as Joint Lead Arrangers and Joint Book runners on the transaction. The lenders under the Credit Facility include BMO Harris Bank N.A., Citizens Bank N.A., SunTrust Bank, The Huntington National Bank, Comerica Bank, KeyBank National Association, Franklin Synergy Bank and Branch Banking and Trust Company.
• Amyris (AMRS) announced that Sumitomo Rubber Industries has adopted liquid farnesene rubber (LFR) as a performance enhancing additive for use in the production of its latest Dunlop-branded Winter Maxx 02 tires. LFR is a liquid rubber developed by Kuraray Co., using Amyris's biologically derived Biofene® branded farnesene. The Winter Maxx 02 represents the brand's best tire to date for on-ice and snow-braking performance and for durability. LFR's breakthrough performance enhancement will be available across Dunlop's entire Winter Maxx 02 portfolio of 91 sizes.
• Evoke Pharma (EVOK) announced that the underwriter of its previously announced public offering of approximately 2.4 million shares of its common stock has exercised in full its option to purchase an additional 362,068 shares of common stock, at a price to the public of $2.90/share. The issuance of the additional shares closed on Friday, March 3, 2017, and all of the shares were sold by Evoke. The exercise brings the total gross proceeds from the offering to approx. $8.0 mln, before underwriting discounts and commissions and estimated offering costs. Evoke intends to use the net proceeds from the offering to fund clinical development, pre-approval and pre-commercialization activities for Gimoti, including the planned comparative exposure trial and planned NDA submission, and for working capital and general corporate purposes.
• IAMGOLD (IAG) announced the signature of a power purchase agreement among IAMGOLD Essakane SA, EREN Renewable Energy SA, AREN ENERGY (PTY) Ltd. and Essakane Solar SAS to begin the development of a 15 MWp solar power plant in 2017 for the Company's Essakane mine in Burkina Faso. The agreement is for an initial period of up to 15 years. The mine is located about 330 kilometers northeast of the Burkinabe capital city, Ouagadougou. In the project's first phase, 15 MWp of solar capacity would be built and the hybridization of IAMGOLD Essakane SA's HFO power plant will allow savings of approximately six million liters of fuel and a reduction of 18,500 tonnes of CO2 per year.
• Hughes Network Systems, a subsidiary of EchoStar (SATS) announced that its Defense and Intelligence and Systems Division (DISD) has been awarded a contract by General Atomics Aeronautical Systems, Inc. (GA-ASI) to work with the company to provide satellite communications on the «Type-Certifiable» Predator B (TCPB) Remotely Piloted Aircraft (RPA) system, which provides the basis for the United Kingdom's Protector programme.
• FirstEnergy Nuclear Operating Company, a subsidiary of FirstEnergy (FE), announced its Perry Nuclear Power Plant in Perry, Ohio, shut down early on Sunday, March 5, for scheduled refueling, maintenance and a transformer replacement that is expected to enhance reliability.
• ARCA biopharma (ABIO) announced that the 175th patient has been randomized into GENETIC-AF, a seamless design Phase 2B/3 clinical trial evaluating Gencaro (bucindolol hydrochloride) as a potential treatment for atrial fibrillation (AF).
• PositiveID Corporation (PSID) announced that its Thermomedics Inc. subsidiary, which markets the Caregiver non-contact thermometer, has entered into a new distribution agreement with National Distribution & Contracting, Inc. («NDC»). Through this new warehouse vendor agreement, NDC will purchase units of Caregiver and distribute it to its member distributors serving the acute care, alternate site, long-term care and home health segments.
• Esperion Therapeutics (ESPR) announced Brian A. Ference, M.D., M.Phil., M.Sc., F.A.C.C., Associate Professor of Medicine, Wayne State University School of Medicine, will present results from Mendelian randomization studies conducted to evaluate the effect of lower LDL-C mediated by genetic variants in the ATP Citrate Lyase (ACL) gene on the risk of cardiovascular events. The abstract, «Genetic Target Validation for ATP-Citrate Lyase Inhibition» will be presented in an oral presentation during the American College of Cardiology 66th Annual Scientific Session on Sunday, March 19, 2017 at 8:51am ET at the Walter E. Washington Convention Center, Washington, DC in Room 147A.

 

 

 S&P futures vs fair value: -9.30. Nasdaq futures vs fair value: -18.90.

The stock market is poised to start the week modestly lower as investors engage in some profit taking in light of the major averages' record high levels. The S&P 500 futures trade nine points (0.4%) below fair value.

Today's risk-off sentiment is most likely due to the belief that the stock market has gone too far, too fast, and is due to get hit with some selling interest. However, some news headlines have helped to support the market's current negative disposition.

Most notably, news of North Korea firing four ballistic missiles into the sea within Japan's economic zone, President Trump alleging that former President Obama ordered a wiretap of his Trump Tower offices, and Deutsche Bank (DB) announcing an $8.5 billion capital raise through the issuance of new stock have contributed to the downtick in equity futures.

On the corporate front, General Motors (GM 37.60, -0.63) is ticking lower in pre-market trade after the company divested its Opel/Vauxhall unit and GM Financial's European operations to PSA Group for $2.3 billion. Also of note, Delta (DAL 49.40, -0.73) is down 1.5% after cutting its first quarter PRASM guidance since unit revenues in February were more moderate than expected.

U.S. Treasuries trade flat this morning after squandering a modest overnight gain. The benchmark 10-yr yield is unchanged at 2.48%.

Crude oil has climbed up to its flat line in recent action after holding a sizable overnight loss earlier this morning. The energy component currently trades 0.2% lower at $52.23/bbl.

Today's lone economic report, January Factory Orders (Briefing.com consensus 1.0%), will cross the wires at 10:00 ET.

 

 

 On The Wires

• New Age Beverages Corporation (NBEV) announced the national launch of its newest product, Aspen Pure Probiotic, the world's first shelf-stable (non-refrigerated) probiotic water with more than 10 billion cfu's (colony forming units/probiotics) and more than 9 months of extended shelf-life.
• OSI Systems (OSIS) announced that its Healthcare division, Spacelabs Healthcare, received an approximately $8 million order to provide patient monitoring solutions and related accessories to a prominent U.S. hospital group. We expect to install, among others, our XTR Telemetry, Xhibit Central Stations, Xprezzon and qube patient monitoring products.
• Fitbit (FIT) introduced Fitbit Alta HR and new advances in sleep tracking, giving you actionable insights and guidance in the Fitbit app to make more informed decisions about your health and stay motivated to reach your wellness goals in style. 
• Black Knight Financial (BKFS) signs 5-year contract renewal for LoanSphere MSP. 
• EastGroup (EGP) reported updated estimates for G&A expenses are $5.5 million for the three months ending March 31, and $14.4 million for the twelve months ending December 31, 2017. The increased G&A expenses reduce the Company's estimated diluted earnings per share and funds from operations by $.02 per share for the first quarter and $.06 per share for the year.

 Opening Market Summary: Stock Market Opens Monday Lower

The S&P 500 opens the week with a loss of 0.5%.

All 11 sectors currently trade in the red with the financial (-0.7%) and materials (-0.7%) sectors demonstrating relative weakness. Meanwhile, the lightly-weighted utilities group (-0.1%) exhibits relative strength. 

U.S. Treasuries trade flat in early action. The benchmark 10-yr yield is currently unchanged at 2.48%.

 Sector Summary: Technology (XLK -0.36%) trading lower today, modestly ahead of the broader market

The tech sector — XLK — trades modestly ahead of the broader market. Semiconductors, meanwhile, display relative strength as the SOX index trades -0.50%. Within the SOX index, QCOM (+0.05%) outperforms, while SIMO (-1.81%) lags. Among other major indices, the SPY is trading 0.47% lower, while the QQQ -0.45% and the NASDAQ +0.06% trade opposite on the session. Among tech bellwethers, TEF (+0.95%) is showing relative strength, while NVDA (-1.68%) lags.

Gainers on news:

• CCIH (+6.4%) co to sell 79.0% equity interest of ChinaCache Xin Run Technology for a total consideration of RMB 221.2 mln in cash before fees and expenses.
• AMD (+2.2%): Mubadala Development Company PJSC proposes the sale of 45 mln shares under form 144.
• UBNT (+0.9%) co approved a $50 mln stock repurchase program.

Laggards on news:

• AAOI (-3.9%) co completed of its previously-announced $50.0 million at the market common stock offering.
• ADI (-0.4%) co received regulatory approval from the Ministry of Commerce of China to complete its acquisition of Linear Technology (LLTC), sees Q2 revenue and EPS between the mid-point and high end of guidance.
• BT (-0.1%) co won exclusive rights to UEFA Champions League and UEFA Europa League.

Among notable analyst upgrades:

• NFLX (+2.1%) upgraded to Buy from Neutral at UBS
• HPQ (+0.2%) to Outperform from Market Perform at Wells Fargo
• EXPE (+0.2%) to Outperform from Neutral at Macquarie
• TWLO (+1.6%) to Outperform from Market Perform at Northland Capital

Among notable analyst downgrades:

• GPRO (-2.9%) downgraded to Sell from Neutral at Goldman
• CSRA (-3.9%) to Market Perform from Outperform at Cowen

Scheduled to report earnings after the bell:

• MEET, RNET

Scheduled to report earnings tomorrow morning:

• PERI

 

 

 

 

 Notable movers of interest: NFLX +2.1% on upgrade from UBS

The following are some of today's most notable movers of interest, categorized by market capitalization (large cap over $10 billion and mid cap between $2-10 billion) and ranked by % change (all stocks over 100K average daily volume).

Large Cap Gainers

• NFLX (142.12 +2.14%): Upgraded to Buy from Neutral at UBS.
• QVCA (19.07 +1.11%): Barrons profile's positive view on the co over the weekend.

Large Cap Losers

• TSN (61.23 -3.73%): WSJ discusses that bird flu was found in chicken farm linked to Tyson Foods.
• ALB (101.45 -3.17%): Downgraded to Neutral from Buy at Citigroup.
• DAL (48.72 -2.81%): Cuts Q1 PRASM guidance to flat from +0-2%; operating margin to 10-11% from 11-13% (AAL, UAL, LUV...).

Mid Cap Gainers

• KITE (74.28 +2.41%): BC Capital Mkts raises their tgt to $95 from $85.
• XRX (7.5 +1.9%): Barron's profiles positive view on Xerox.
• AA (36.9 +1.43%): Upgraded to Buy from Neutral at Goldman.

Mid Cap Losers

• IONS (50.53 -7.63%): Shares fall despite co and Akcea Therapeutics announcing the pivotal Phase 3 Approach study of Volanesorsen met its primary endpoint of reducing triglyceride levels in patients with familial chylomicronemia syndrome.
• CSRA (28.58 -4.54%): Downgraded to Market Perform from Outperform at Cowen.
• WSM (49.13 -2.4%): Wedbush lowers their tgt to $48 from $53.

 Sector Summary: S&P Consumer Discretionary Index -0.6%, in-line with the broader marketThe consumer discretionary group is in-line with the broader market in early trade. The retail group is in the red with the Retail HOLDRS Trust (RTH) -0.5% and the SPDR S&P Retail ETF (XRT) -0.7%.

In the news:

• Leaders:
  • FRGI +4% (Director — Leucadia Nat'l bought 660,000 shares at $19.83-20.68 worth ~ $14 mln)
  • RUTH +4% (provided investor update in presentation)
  • CETV 3.4% (Central European Media completes a transaction with Time Warner to reduce, with effect as of March 1 the fees payable to Time Warner as credit guarantor of the Co's currently outstanding senior term credit facilities)
  • SPU +22% (signs one-year business agreement with China Aigo O2O Technology)
  • EXPE 1.1% (upgraded to Outperform from Neutral at Macquarie)
• Laggards: 
  • TAP -1% (announces proposed offering of US dollar-denominated senior notes; amount not disclosed)
  • WSM -2.1% (Wedbush lowers their WSM tgt to $48 from $53 as they remain cautious on WSM as competitive pressures mount)
  • GM -1.2% (General Motors divests its Opel/Vauxhall unit and GM Financial's European ops to PSA Group for $2.3 bln)
  • CTAS -0.3% (files mixed securities shelf offering for an undisclosed amount)
• Nearly unchanged: 
  • MCD (McDonald's Japan February same store sales increased +17.9% vs +12.3% in January)
  • CMG (files for 2,882,463 share common stock offering by selling shareholder; Pershing Square files amended 13D confirming prospectus was filed to sell shares of common stock)

Other notable trends:

• A few casino/gaming names are seeing early strength: LVS +0.8%, BYD +0.3%, PNK +0.3%, CZR +0.3%

Looking ahead:

• On the earnings front: ASNA, CASY, DAVE, MEET report after the close; MIK, DKS report tomorrow before the open.

 Morning Commodities: Crude declines to levels just above Thursday's 3-week low on headlines China lowered their FY17 growth target to 6.5%, vs 6.7% last year; gold snaps 4-session downtrend

• Crude oil declined to levels just above Thursday's 3-week low on headlines China lowered their FY17 growth target to 6.5%, vs 6.7% last year.
  
  • April crude oil futures were down about $0.16 (-0.3%) around the $53.49/barrel level
  • Factors affecting the price of oil:
    • Crude oil futures for April delivery are oscillating around levels just above last Thursday's 3-week low on headlines earlier this morning that China lowered their FY17 growth target to 6.5%, compared to 6.7% last year.
    • This latest news comes on the heels of last week's data out of Russia, which showed that oil output remained unchanged from Jan levels at around 11.1 mln barrels/day.
    • Recall that Russia still has about ~100k barrels/day left to cut to be in full compliance with the OPEC/non-OPEC output reduction agreement.
    • Lastly, further contributing to the bearish undertone is data from Baker Hughes released Friday afternoon which showed that the number of active rigs drilling for oil rose for the 7th consecutive week by 7, following last week's increase of 6 oil rigs.
    • Reminder: Crude oil has been rang-bound throughout 2017. Crude's peak this year was $55.24/barrel on the first trading day of 2017; its low was $50.71 later in Jan.
  • Upcoming data reminders:
    • API data will be released tomorrow at 4:30 pm ET.
    • EIA petroleum data will be released Wed at 10:30 am ET.
    • Baker Hughes rig count data will be released Friday at 1 pm ET.
• Natural gas surged to a fresh 2-week high on updated cooler weather forecasts
  • April natural gas futures were up about $0.09 (+3.3%) around the $2.92/MMBtu level
  • EIA natural gas inventory data will be released Thursday at 10:30 am ET.
  • Weather forecast:
    • Weather forecasts for the next 8 to 15 days show that rain, snow, and cooler temps will track across the northern & eastern US, potentially boosting demand for heating.
• In precious metals, gold snapped out of its 4-session downtrend as the dollar index traded nearly flat in morning pit trading
  • April gold futures were up about $3.70 (+0.3%) around the $1230.20/oz
  • May silver futures were up about $0.09 (+0.5%) around the $17.83/oz
• The dollar index was nearly flat around the 101.50 level
  
  • Commodities, as measured by the Bloomberg Commodity Index, were +0.4% around the 87.54 level

 Economic Summary: January Factory Orders slightly ahead of estimates

Economic Data Summary:

• January Factory Orders +1.2% vs Briefing.com consensus of 1.0%; December was 1.3%
• The key takeaway from the report is that it should contribute to some slight upward revisions to economists' first quarter GDP estimates since shipments of nondefense capital goods excluding aircraft were not down as much as the advanced report for durable goods indicated.

Upcoming Economic Data:

• January Trade Balance due out Tuesday at 8:30 (Briefing.com consensus of -$48.5 bln; December was -$44.3 bln)
• January Consumer Credit due out Tuesday at 15:00 (Briefing.com consensus of $17.0 bln; December was $14.2 bln)

Upcoming Fed/Treasury Events:

• The Treasury is expected to auction off new debt this week.
  • $24 bln in 3 Year Treasury Notes
  • $20 bln in 10 Year Treasury Notes
  • $12 bln in 30 Year Treasury Bonds

Other International Events of Interest

• China discloses Financial Targets for 2017 at the National People's Congress: GDP ~+6.5%

 

 

 

 Early Options Activity

Taking an early look at the options market, we found the following names that may be worth watching throughout the day for further indication of investor expectations given their options volume and implied volatility movement.

Stocks seeing volatility buying (bullish call buying/bearish put buying):

Calls:

• ASNA Mar 4 calls are seeing interest ahead of earnings tonight after the close with 2280 contracts trading vs. open int of 30, pushing implied vol up around 18 points to ~111%

Puts:

• MDR Apr 6 puts are seeing interest with 5550 contracts trading vs. open int of 0, pushing implied vol up around 12 points to ~56% — we noted activity in the Mar 7 puts last month (see 2/22 13:23 OPTNX). Co reported earnings last month and is expected to report its next quarterly earnings report mid-to-late May.

Stocks seeing volatility selling:

• DXYN, MVIS implied vol is lower following earnings/guidance

Sentiment: The CBOE Put/Call ratio is currently: 0.96… VIX: (11.34, +0.38, +3.5%).
March 17 is options expiration — the last day to trade March equity options.
*Please use the Talk to Us link at the top of the page to provide feedback on this comment as well as the OPTNX comments.

 

 

 Rumor Round Up

Rumor Activity was near average levels to start out the week.

• Lumber Liquidators (LL 18.14 -0.05) renewed M&A chatter circulated.
• AFR discussed that Blackstone (BX 29.57 -0.09) has hired bankers to sell $4 bln in shopping center assets.
• FT detailed that Kepco (KEP 18.07 -0.61) might purchase Toshiba (TOSBF 1.87 +0.01) nuclear unit.
• NY Post reported that Macy's (M 30.41 -1.36) does not want discounted deal from Hudson Bay (HBAYF 8.78 -0.03).

While many rumors circulate during the day, and the validity of the source of these rumors can be questionable, the speculation may increase volatility in the near term

 

 

 

 

 

 

 European Markets Closing PricesEuropean markets are now closed; stock markets across Europe performed as follows:

• UK's FTSE: -0.3%
• Germany's DAX: -0.6%
• France's CAC: -0.5%
• Spain's IBEX: + 0.1%
• Portugal's PSI: -0.6%
• Italy's MIB Index: -1.1%
• Irish Ovrl Index: -0.3%
• Greece ASE General Index: -1.0%

 Currency Commentary: 50-sma in Focus

• The Dollar Index was able to hold its 50-sma (101.18) in early trade and is pressing back higher. Markets will be closely watching economic data all week to see if there are any curveballs for the Fed. The Friday jobs number will garner the most interest but it will likely take a big miss to cause the Fed to change direction. The Fed is in a quiet period as we approach the March 16 meeting.
• The euro is testing its own 50-sma (1.0618) for resistance. Market focus will be on the ECB interest rate decision and ECB Mario Draghi press conference on Thursday. Mr. Draghi was boosted in early going with a better than expected Investor Confidence number. He will have to provide the case on why the ECB should continue its current asset purchase program. Overall expectations are low for anything incremental to happen.
• The pound made a run back to test 1.23 in overnight trade but was unable to hold and is giving up its early gains. Sterling is now slipping back for another key test of the 1.2220 area. Headwinds will likely persist as we approach the government invoking Article 50. On Wednesday the U.K. will release its latest annual budget with expectations for a boost to taxes.
• The yen is yet another currency testing its 50-sma, this one on the support side. Markets are digesting news that North Korea launched four ballistic missiles in the direction of Japan. One fell approx 220 miles short of the country. For now, most are viewing it as the typical response from North Korea as the U.S. and South Korea run their annual military drills. But the move by the unstable country has raised some concern.
• The yuan is holding near the 6.90 area. The country's latest National Congress has kicked off and the country was forced to lower its growth outlook to 'about 6.50%' as compared to 6.50-7.00% in 2016. Not a surprise but still leading to some market selling this morning (BONDX, FOREX). 

 

 

 Today's biggest % gainers/losersThe following are today's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

Today's top 20 % gainers

• Healthcare: NOVN (6.8 +6.41%), PTCT (10.37 +6.07%), NERV (8.75 +5.42%), CLDX (3.81 +4.67%), ADXS (9.63 +4.34%), CARA (18.74 +3.88%), NVAX (1.52 +3.06%), LXRX (16.55 +2.73%)
• Industrials: CR (75.27 +3.96%)
• Consumer Discretionary: RUTH (17.7 +4.73%), FRGI (20.58 +3.91%), EDU (51.39 +3.03%), GTN (14.85 +2.77%)
• Information Technology: BITA (22.64 +4.09%), UCTT (13.79 +3.45%), VRTU (32.87 +3.24%), TIVO (18.6 +3.05%)
• Energy: WRD (12.46 +4.25%), RRC (28.47 +4.06%), TOO (5.35 +3.08%)

Today's top 20 % losers

• Healthcare: NH (6.07 -14.64%), MNKD (1.85 -12.94%), AKRX (22.4 -7.22%), KND (9.1 -7.14%), ADAP (4.29 -6.94%), IONS (51.15 -6.49%)
• Materials: EXK (3.01 -9.21%), GORO (4.26 -8.97%), HMY (2.18 -8.4%), MUX (3.01 -8.21%), AKG (2.34 -7.71%), IAG (3.51 -7.35%), PVG (9.11 -7.33%), HBM (7.65 -6.71%), BTG (2.8 -6.67%), AGI (6.64 -6.35%)
• Industrials: AFI (19.28 -12.16%), RRD (16.04 -8.44%)
• Consumer Discretionary: GPRO (8.26 -6.62%)
• Energy: PES (5.1 -6.48%)

 Today's most active stocksThe following are today's most active stocks ranked by volume and relative volume, categorized by sectors (over $300 mln market cap and 100K average daily volume).

Today's top 20 volume

• Healthcare: VRX (18.13 mln -3.52%)
• Materials: FCX (14.15 mln -3.26%), VALE (10.75 mln -2.5%), MT (9.27 mln -1.97%), AUY (7.57 mln -5.34%)
• Industrials: GE (7.53 mln -0.56%)
• Consumer Discretionary: F (12.2 mln -0.87%), GM (10.32 mln -1.97%), JCP (7.56 mln -3.04%)
• Information Technology: AMD (53.88 mln -3.8%), MU (12.3 mln -1%), NVDA (10.37 mln -2.9%), AAPL (8.81 mln -0.75%), XRX (7.49 mln +1.97%)
• Financials: BAC (35.52 mln -1.2%), DB (13.16 mln -3.85%)
• Energy: CHK (12.7 mln +0.09%), SDRL (11.28 mln +0.4%)
• Consumer Staples: RAD (13.41 mln -3.58%)
• Telecommunication Services: FTR (19.98 mln -4.27%)

Today's top relative volume (current volume to 1-month average daily volume)

• Healthcare: NH (2.24x -14.64%), NERV (2.01x +5.42%), ADXS (1.92x +4.34%), PTCT (1.74x +6.07%), MNKD (1.67x -12.94%), NOVN (1.39x +6.41%)
• Industrials: AFI (1.52x -12.16%)
• Consumer Discretionary: BATRK (2.42x -1.05%), JMEI (1.6x +2.39%), TOUR (1.53x -4.22%)
• Information Technology: NTNX (3x -6.14%), CAJ (2.33x +0.79%), BITA (2.29x +4.09%), LLTC (1.38x +0.68%)
• Financials: DB (2.13x -3.85%), VCV (1.46x +0.21%), TPRE (1.38x +0.41%)
• Energy: VTTI (3.83x +0.26%)
• Consumer Staples: CHEF (2.24x -2.75%)
• Telecommunication Services: TEF (1.37x +0.71%)

 

 Today's biggest point gainers/losersBiggest point gainers: CNCE 16.67(7.02), NFLX 141.14(2), KITE 74.34(1.81), AVB 182.93(1.76), TAL 92.02(1.61), EDU 51.43(1.55), EXPE 121.63(1.51), RRC 28.5(1.16), EOG 99.67(1.1), VRTU 32.79(1.04), FWONK 33.79(0.96), EQT 60.22(0.93), BITA 22.62(0.87), RUTH 17.75(0.85), SUPN 29.54(0.79), FWONA 32.54(0.78), YRD 27.54(0.76), FRGI 20.53(0.73), CXO 133.11(0.7), SQQQ 39.11(0.63), IVAC 11.1(0.6), COG 22.9(0.54), TTWO 58.65(0.53), RICE 20.5(0.52), LILAK 24.03(0.51)

Biggest point losers: AYI 204.58(-4.99), NTES 288.99(-4.49), ULTA 273.96(-4.19), AGN 242.07(-3.56), ALB 101.35(-3.42), IONS 51.3(-3.4), COST 166.89(-3.37), IBB 299.16(-3.33), TTD 41.28(-3.32), UAL 72.33(-3.26), EW 89.29(-3.15), INCY 133.99(-2.92), SAFM 91.49(-2.9), NVDA 95.59(-2.85), TSLA 248.83(-2.74), BIIB 295.14(-2.71), DXCM 77.82(-2.62), PODD 43.77(-2.54), BURL 93.59(-2.48), ALK 96.48(-2.46), MCK 150.17(-2.36), GOLD 88.61(-2.25), CMG 413.85(-2.24), ADSK 83.09(-2.23), TMO 157.95(-2.21)

 

 Market Internals

The broader market starts the week off with modest losses, as the Nasdaq Composite performs the worst thus far, down about 38 points (-0.65%) to 5832, the S&P 500 is lower by 13 (-0.54%) to 2370, and the Dow Jones Industrial Average sheds about 78 (-0.37%) to 20927. Action has come on lower than average volume (NYSE 287 vs. avg. of 307; NASDAQ 765 mln vs. avg. of 781), with decliners outpacing advancers (NYSE 647/2334, NASDAQ 606/2158) and mixed new highs and new lows (NYSE 21/48, NASDAQ 55/42).

Relative Strength:

US Nat Gas-UNG +3.5%, Cotton-BAL +1.6%, Malaysia-EWM +1.1%, US Diesel/Heating Oil-UHN +1.1%, Turkey-TUR +1.0%, India-INP +0.8%, Philippines-EPHE +0.6%, US Gasoline-UGA +0.6%, Indonesia-IDX +0.5%, Mexico-EWW +0.3%, Dollar Index-UUP +0.3%, Grains-JJG +0.3%, Colombia-GXG +0.1%, Uranium/Nuclear Energy-NLR +0.1%.

Relative Weakness:

Jr. Gold Miners-GDXJ -6.7%, Silver Miners-SIL -4.6%, Gold Miners-GDX -3.4%, Copper Miners-COPX -3.2%, Metals&Mining-XME -2.4%, Copper-JJC -2.2%, Steel-SLX -2.0%, Poland-EPOL -1.7%, Peru-EPU -1.5%, Greece-GREK -1.5%, Italy-EWI -1.3%, Russia-RSX -1.2%, Thailand-THD -1.1%, Israel-EIS -1.0%.

 Sector Summary: Industrials trade in-line with the broader market; Delta (DAL) -3.4% on Q1 PRASM guidance cut

The Industrials sector (XLI) is trading -0.5% lower today, in-line with the broader market (SPY -0.5%). In the Industrial Sector airlines (JETS -2.2%) are trading lower after Delta (DAL -3.4%) announced they were cutting Q1 PRASM guidance. 

Notable airlines moving today: JBLU -4.9% AAL -4.6% UAL -4.4% VLRS -3.5% DAL -3.4% ALK -3% SKYW -2.7% CEA -2.4% LUV -2.5% HA -1.9% ALGT -1.7% LFL -1.6% CPA -1%

Earnings/Guidance

• Armstrong Flooring (AFI -12%) reports Q4 loss of $0.09 per share, excluding non-recurring items, $0.04 better than the consensus of ($0.13); revenues fell 3.0% year/year to $271.7 mln vs the $279.18 mln consensus.
  • «In 2017, we expect Adjusted EBITDA to be in the range of $75 million to $85 million, which includes the impact of higher raw material costs, especially lumber. As we continue to generate free cash flow, we are focused on investing in high return projects and other attractive opportunities, and we expect our recently announced repurchase program to generate shareholder value as we work towards a more optimal capital structure.»
• Microvision (MVIS +2.2%) reports Q4 loss of $0.09 per share, in-line with the single analyst estimate of ($0.09); revenues rose 57.3% year/year to $2.91 mln vs the $2.78 mln two analyst estimate.
  • The co anticipates another year of significant growth in 2017. MicroVision anticipates revenue from its planned LBS engines line of business to be in the range of $30 million to $60 million in the 12 to 18 months following the shipment of the first mass production engines which is expected in Q2 2017. Revenue in 2017 from these products is expected to be weighted to the second half of the year.
• Polar Power (POLA +13.3%) reports FY16 EPS of $0.58 vs $0.35 two est average; revs +233% YoY to $22.8 mln vs the $23.0 mln two est average. 
  • «Already in 2017, the global outlook for the telecommunications industry that we serve remains optimistic led by strong expansion in cellular tower infrastructure in Asia and Africa. The domestic market continues its growth through increased investments in telecom infrastructure by top tier telecom providers. We expect the market for DC generators, along with solar hybrid power generation equipment, will remain strong during 2017, supported by the growth of telecommunications infrastructure in rural and remote areas in developing nations. The work to expand our sales infrastructure has already begun, with us adding new sales personnel in both domestic and international markets, while we continue our investment in plant and equipment to further increase production capacity and reduce manufacturing costs.»

News

• Delta Air Lines (DAL -3.4%) cuts Q1 PRASM guidance to flat from +0-2%; operating margin to 10-11% from 11-13%.
  • Market fuel prices tracking ~55%; will be biggest y/y increase in 2017.
  • Continues to expect 2H17 revenue trends to improve.
• Spirit Aitlines (SAVE -0.8%) sees capacity growing between 15-20% annually.

Broker Research

Upgrades

• FedEx (FDX -0.3%) upgraded to Outperform from Market Perform at BMO Capital.
• Crane (CR +4.1%) upgraded to Buy from Neutral at BofA/Merrill.
• Ardmore Shipping (ASC +2.2%) upgraded to Buy from Hold at ABN Amro.

Downgrades

• China Southern Airlines (ZNH -0.1%) downgraded to Sell from Neutral at Goldman.
• RBC Capital Mkts raises their GME (GMS +0.3%) tgt to $38 from $32.

 

 

 

 

 

 Midday Market Summary: Averages Trade Lower at Midday

Investors have taken some money off the table in the first half of Monday's session, cashing in on the stock market's record highs. The Dow (-0.3%) has a slight edge on the S&P 500 (-0.5%) while the Nasdaq (-0.6%) lags.

Some news headlines over the weekend may have had a small part in today's mild pullback, but, more than likely, they've just been used as a convenient excuse for investors to rein in a stock market that may have gone too far, too fast.

Nonetheless, it's worth pointing out that North Korea fired four ballistic missiles into the sea within Japan's economic zone early this morning. Also, Deutsche Bank (DB) led Germany's DAX 0.6% lower after announcing an $8.5 billion capital raise through the issuance of new stock.

The financial sector (-0.8%) has once again filled the leadership role in today's session, only this time it is leading to the downside. The sector has frequently found itself in a leadership role since the presidential election on November 8, pacing the stock market's big gains.

Conversely, the utilities (-0.1%) and energy (unch) groups have shown relative strength today.

The energy sector's outperformance has come despite the 0.4% slip in crude oil, which is suffering at the hand of a 0.4% increase in the U.S. Dollar Index (101.72, +0.36). WTI crude currently trades at $53.10/bbl.

On the corporate front, airlines have suffered heavy losses in today's session after news that Delta Air Lines (DAL 48.37, -1.75) cut its first quarter unit revenue guidance in light of more moderate than expected unit revenues in February. Still, despite the negative influence, the industrial sector (-0.6%) performs in line with the broader market.

The remaining sectors--consumer discretionary, materials, technology, health care, consumer staples, telecom services, and real estate-- are showing losses between 0.3% (health care) and 0.7% (materials).

U.S. Treasuries also hold losses, squandering modest overnight gains. The benchmark 10-yr yield trades two basis points higher at 2.50%.

Today's lone economic report, January Factory Orders, crossed the wires this morning:

• The Factory Orders Report for January showed an increase of 1.2% while the Briefing.com consensus expected a increase of 1.0%. The December reading was left unrevised at 1.3%.
  • The key takeaway from the report is that it should contribute to some slight upward revisions to economists' first quarter GDP estimates since shipments of nondefense capital goods excluding aircraft were not down as much as the advanced report for durable goods indicated.

 Chicago Rivet & Machine: Seoul Metal Holdings discloses 5.21% active stake  (39.99 -0.73)

 

 

 

 Metals Closing Prices: Gold inches lower for the 5th consecutive session on continued strength exhibited by the dollar index

• April gold ended today's session down $0.70 (-0.1%) to $1225.60/oz
• May silver closed today's session $0.04 higher (+0.2%) at $17.77/oz
• May copper closed $0.05 lower (-1.9%) at $2.65/lb

— The dollar index was +0.2% around the 101.72 level.

 Sector Summary: Energy inches modestly higher while the broader market declines, crude sees losses on China's lowered FY17 growth forecast, & natural gas futures surge to a 2-week high on colder weather forecasts

The Energy Sector (XLE, +0.1%) inched modestly higher while the broader market (SPY, -0.3%) declined in afternoon trading. Crude oil (USO, -0.2%) fell as low as nearly -1% on headlines that China lowered their FY17 growth target to 6.5%, vs growth of 6.7% last year. Crude oil futures turned positive briefly in the morning before selling off again, on track to close the session lower ahead of tomorrow's API. Lastly, natural gas (UNG, +3.7%) futures surge to fresh session highs on updated cooler weather forecasts across much of the US.

Factors affecting the price of oil:

• Crude oil futures for April delivery are oscillating around levels just above last Thursday's 3-week low on headlines earlier this morning that China lowered their FY17 growth target to 6.5%, compared to 6.7% last year.
• This latest news comes on the heels of last week's data out of Russia, which showed that oil output remained unchanged from Jan levels at around 11.1 mln barrels/day.
• Recall that Russia still has about ~100k barrels/day left to cut to be in full compliance with the OPEC/non-OPEC output reduction agreement.
• Lastly, further contributing to the bearish undertone is data from Baker Hughes released Friday afternoon which showed that the number of active rigs drilling for oil rose for the 7th consecutive week by 7, following last week's increase of 6 oil rigs.
• Reminder: Crude oil has been range-bound throughout 2017. Crude's peak this year was $55.24/barrel on the first trading day of 2017; its low was $50.71 later in Jan.

Factors affecting the price of natural gas:

• Weather forecasts for the next 8 to 15 days show that rain, snow, and cooler temps will track across the northern & eastern US, potentially boosting demand for heating.
• EIA natural gas data this Thursday is expected to show a draw between about 53-64 bln cubic ft for the week ended Mar 3, compared to last week's build of +7 bcf.

Upcoming data reminders:

• API data will be released tomorrow at 4:30 pm ET.
• EIA petroleum data will be released Wed at 10:30 am ET.
• Baker Hughes rig count data will be released Friday at 1 pm ET.
• EIA natural gas inventory data will be released Thursday at 10:30 am ET.

Notable Gainers:

• Oil & Gas Drilling & Exploration: TransAtlantic Petroleum (TAT, +5%)
• Equipment and services: Synergy Resources (SYRG, +1%)
• Independent oil & gas: Energy XXI Gulf Coast (EXXI, +6%)
• Major-integrated: YPF (YPF, +2%)
• Refining & Marketing: BP Prudhoe Bay Royalty Trust (BPT, +2%)
• Pipelines: Western Gas Partners (WES, +2%)

Notable Laggards:

• Oil & Gas Drilling & Exploration: Breitburn Energy Partners (BBEPQ, -13%)
• Equipment and services: GulfMark Offshore (GLF, -5%)
• Independent oil & gas: New Concept Energy (GBR, -19%)
• Major-integrated: Ecopetrol (EC, -1%)
• Refining & Marketing: Ferrellgas Partners (FGP, -3%)
• Pipelines: Franks International (FI, -6%)

In current trade:

• April WTI crude oil futures: down about $0.12 around $53.22/barrel (-0.2%)
• April natural gas futures: up about $0.10 around $2.93/MMBtu (+3.5%)
• April RBOB gasoline futures: up about $0.02 around $1.67/gallon (+1.2%)
• April heating oil futures: up about $0.01 around $1.61/gallon (+0.6%)

Earnings/News

• Ecopetrol (EC, -1.1%) reported Q4 results; revs rose 4% y/y
  • Co reported Q4 net income of COP186 mln (compared to COP6.3 bln in 4Q15); revs increased 4.2% YoY to COP13.3 bln At 718 thousand barrels of oil-equivalent per day, the company exceeded its 2016 production target by 3 thousand barrels. This was despite a drop in production by 25 thousand barrels of oil-equivalent per day for 45 days, due to the closure of the Caño Limón Coveñas oil pipeline; and a 16% drop in Brent prices.
• Erin Energy (ERN, -1.5%) executed a drilling services contract with Pacific Drilling for use of the Pacific Bora drilling rig
  • The co has the option to drill up to two additional wells. The option to extend the contract, if exercised, would be used to drill two of its offshore Nigeria exploration prospects in the prolific Miocene geological zone. Erin Energy anticipates spudding the Oyo-9 in mid-June and first production from the well to be in Sept 2017. The Oyo-9 is expected to add an additional 6k to 7k barrels per day.
• Patterson-UTI (PTEN, -1.6%) reported drilling activity for Feb 2017; avg of 80 drilling rigs operating in the US & 2 rigs in Canada.

Broker Calls

• EOG Resources (EOG, +1.3%) upgraded to Buy at Tudor Pickering
• Magellan Midstream (MMP, -0.1%) downgraded to Neutral at Citigroup
• TETRA Tech (TTI, -0.6%) downgraded to Equal-Weight at Morgan Stanley
• Enbridge (ENB, +0.7%) resumed with an Outperform at BMO Capital

 

 

 Currency Market Summary

Dollar Edges Higher as Commodity Currencies Remain Weak

• The U.S. Dollar Index is adding 0.13% to 101.67 today as the kiwi dollar traded to a fresh seven-week low. The British pound, Canadian dollar, and Swiss franc also traded near one-month lows against the greenback. As the loonie weakens sharply, speculators have amassed their largest net long position in over four years. The international economic data releases were limited but investor confidence in the eurozone did rise to a nine-year high in March. The European Central Bank's Governing Council will release its next monetary policy decision on Thursday. In the U.K., the triggering of Article 50 to begin the formal Brexit process is now expected to be delayed by about a week (from March 8-9 originally) due to an adverse development in the House of Lords
• EUR/USD: -0.37% to 1.0584
  
  • In the eurozone, the Sentix Investor Confidence Index rose more than expected to 20.7 for March (17.4 in February)
  • The eurozone's retail purchasing managers' index slipped to 49.9 in February from 50.1 in January
  • Potential French presidential candidate Alain Juppe ruled out his candidacy today, leaving Francois Fillon to stand for the center-right in the first round of France's presidential election in April
• GBP/USD: -0.48% to 1.2236
  
  • In the U.K., new car sales fell by 0.3% y/y in February. Taxes on auto sales will rise on April 1 and that is expected to bring some sales forward into March
• USD/CHF: +0.45% to 1.0122
  
• USD/JPY: -0.05% to 113.97
  
• USD/CNY: +0.01% to 6.894
  
• USD/RUB: unch at 58.235
  
• USD/TRY: +0.41% to 3.719
  
• USD/BRL: +0.24% to 3.1235
  
  • Brazil's Markit Services PMI rose more than expected in February to a 23-month high of 46.4 from 45.1
  • The Markit Composite PMI — which combines both services and manufacturing activity — climbed to 46.6 from 44.7
• USD/MXN: +0.15% to 19.54
  
• USD/CAD: +0.27% to 1.3413
  
• AUD/USD: -0.16% to 0.7583
  
  • Australian retail sales grew by 0.4% m/m in January, meeting expectations after a 0.1% dip in December
• NZD/USD: -0.57% to 0.6998
  
  • In New Zealand, building consents climbed by 0.8% m/m in January after a 7.9% slide in December

 

 

 

 Energy Closing Prices: Natural gas futures rally & close near a 2-week high on updated cooler weather forecasts ahead of Thursday's EIA

• April natural gas closed $0.07 higher (+2.5%) at $2.90/MMBtu
  • Factors affecting the price of natural gas:
    • Weather forecasts for the next 8 to 15 days show that rain, snow, and cooler temps will track across the northern & eastern US, potentially boosting demand for heating.
    • EIA natural gas data this Thursday at 10:30 am ET is expected to show a draw between about 53-64 bln cubic ft for the week ended Mar 3, compared to last week's build of +7 bcf.
• April crude oil futures fell $0.11 (-0.2%) to $53.22/barrel
  
  • For factors affecting the price of crude & upcoming petroleum data reminders, see today's Energy Sector Summary comment posted at 14:09 pm ET.
• April RBOB gasoline closed $0.02 higher (+1.2%) at $1.67/gallon
• April heating oil futures closed $0.01 higher (+0.6%) at $1.60/gallon

 

 Treasury Market Summary

Yield Curve Steepens as Stocks Stabilize

• U.S. Treasuries moved lower today in a curve-steepening trade as January's factory order growth slightly exceeded economists' expectations. Fixed-income markets are still digesting last week's aggressive campaign by Fed officials to prepare markets for a March 15 rate hike and equities continued to stumble although the S&P 500 has recovered from its session low of 2,368 to lose 2,375.5 at the moment. A March hike is now almost fully priced into Fed funds futures and now the debate turns to when a second hike will happen. The U.S. Dollar Index rallied from overnight losses to add 0.09% to 101.63. The slow drip of U.S. economic data continues on Tuesday with January's trade balance and Consumer Credit report, but the Treasury will begin its auctions for the week with $24 bln of 3-year notes
• Yield Check:
  
  • 2-yr: unch at 1.31%
  • 5-yr: unch at 2.01%
  • 10-yr: +1 bp to 2.49%
  • 30-yr: +3 bps to 3.10%

• News:
  
  • U.S. factory orders grew by 1.2% m/m in January. The Briefing.com consensus was 1.0% and December's growth was 1.3%
    
    • New orders for manufactured goods have increased in six of the last seven months
    • New orders for manufactured goods have increased in six of the last seven months
    • Shipments of nondefense capital goods excluding aircraft were down 0.4% in January compared to a 0.6% decline reported in the advanced report for durable goods orders
  • The St. Louis Fed's Financial Stress Index is down to -1.293, a 20-month low

• Commodities:
  
  • WTI crude: -0.19% to $53.23/bbl.
  • Gold: +0.09% to $1,227.6/troy oz.
  • Copper: -1.63% to $2.652/lb.

• Currencies:
  
  • EUR/USD: -0.34% to 1.0587
  • USD/JPY: -0.08% to 113.93

• Data out Tuesday:
  
  • January Trade Balance (08:30 ET)
  • January Consumer Credit (15:00 ET)
• Treasury Auction:
  
  • $24 bln 3-year Treasury auction (results at 13:00 ET)