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    HammerstoneReport Closing ReCap - 12/12/14

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    Major stock indexes fell sharply on Friday, posting their worst week since 2012. The Dow fell 1.76%, S&P 500 fell 1.61% and Nasdaq fell 1.16%. Oil prices plunged to new 5-year lows, down over 3.5% on Friday and 12% for the week. Treasury yields fell sharply again as bonds strengthened, with the 10-year yield at its lowest in over 18 months. Volatility spiked as the VIX jumped over 75% for the week. Most sectors declined, with energy down over 7% as the rout in oil prices continued.

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    HammerstoneReport Closing ReCap - 12/12/14

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    TheHammerstoneReport
    35K views5 pages
    Major stock indexes fell sharply on Friday, posting their worst week since 2012. The Dow fell 1.76%, S&P 500 fell 1.61% and Nasdaq fell 1.16%. Oil prices plunged to new 5-year lows, down over 3.5% on Friday and 12% for the week. Treasury yields fell sharply again as bonds strengthened, with the 10-year yield at its lowest in over 18 months. Volatility spiked as the VIX jumped over 75% for the week. Most sectors declined, with energy down over 7% as the rout in oil prices continued.

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    HammerstoneReport Closing ReCap -12/12/14

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    Major stock indexes fell sharply on Friday, posting their worst week since 2012. The Dow fell 1.76%, S&P 500 fell 1.61% and Nasdaq fell 1.16%. Oil prices plunged to new 5-year lows, down over 3.5% on Friday and 12% for the week. Treasury yields fell sharply again as bonds strengthened, with the 10-year yield at its lowest in over 18 months. Volatility spiked as the VIX jumped over 75% for the week. Most sectors declined, with energy down over 7% as the rout in oil prices continued.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    35K views5 pages

    HammerstoneReport Closing ReCap - 12/12/14

    Uploaded by

    TheHammerstoneReport
    Major stock indexes fell sharply on Friday, posting their worst week since 2012. The Dow fell 1.76%, S&P 500 fell 1.61% and Nasdaq fell 1.16%. Oil prices plunged to new 5-year lows, down over 3.5% on Friday and 12% for the week. Treasury yields fell sharply again as bonds strengthened, with the 10-year yield at its lowest in over 18 months. Volatility spiked as the VIX jumped over 75% for the week. Most sectors declined, with energy down over 7% as the rout in oil prices continued.

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    of 5

    Closing Recap 4:05PM EST

    Friday, December 12, 14

    Index

    Up/Down

    Last

    DJ Industrials

    -309.15

    1.76%

    17,287

    S&P 500

    -32.70

    1.61%

    2,002

    Nasdaq

    -54.57

    1.16%

    4,653

    Russell 2000

    -14.49

    1.23%

    1,152

    Equity Market Recap


    The rout was on, as major averages post worst weekly loss since 2012global stocks mostly
    lower this week, as weak global growth remains underlying story (outside of the U.S.), as
    economic data has not been supportive of recent market upward action in Europe (Germany
    record high last week), and Asia (China up over 30% last few months), as Central Bank
    intervention remains the key (and lone) driver for these markets (equity markets today ended on
    the lows, with selling pressure about the whole day)
    There were four main stories this week: 1) Oil prices plunge: WTI down over 3.5% today to new
    5-yr low of $57.81, while recording a 12% loss for the week; 2) Treasury strength: as bond yields
    have been crushed since last Fridays quick blip higher following the stronger jobs data (10-yr
    touched 2.35% last Friday, down about 25 bps since), closing at its lowest level in over 18-months
    (strong Treasury auctions also helped bonds), 3) the volatility index, as the VIX jumped about
    75% from last Friday (closed 11.82 last week over 20.50 today), 4) Russia: markets keeps
    plunging (-44% YTD), as ruble falling all week (touches record low of 58.3065 against dollar) all
    related to weakness in oil prices (emerging markets soft, with Argentinas Merval index fell 4%,
    worst week since 2008)
    Today marked the end of the second worst week of the year for major averages (as per CNBC
    with S&P -2%); was also the first losing week in the last 8 for the S&P and DJ Industrials. Energy
    sector among top losers (down over 7% this week alone) with Materials down over 2%. Watch
    Japanese election Sunday night (possibly some volatility in markets Monday if any surprises)

    Economic Data
    Nov U.S. producer prices fell a seasonally adjusted (-0.2%), the second decline in the past three
    months (vs. est. -0.1%), as the recent plunge in energy prices pushed the index lower (energy
    prices fell more than -3% for the second month in a row). Excluding food & energy, core prices
    were flat in November (vs. est. 0.1%). The wholesale cost of goods fell by (-0.7%) to mark the
    biggest drop since April 2013. Over the past year, overall producer prices have risen an
    unadjusted 1.4%, the smallest advance since February and down from 1.5% in October

    China's industrial production grew at a slower pace in November; said Friday that industrial
    production growth was 7.2% year-over-year in November, below market expectations and down
    from growth of 7.7% in October
    U.S. Consumer Sentiment surged to a preliminary 93.8 in December, much better than expected
    estimate of about 89.5, and from a final 88.8 in November, as reported by the University of
    Michigan (the reading was the highest since January 2007 on lower energy prices)

    Commodities
    Another week to forget for energy prices, as WTI crude and Brent with another week of sliding
    prices. After todays decline, prices have fallen about 20% from $73.50 level prior to the
    November OPEC meeting where they kept production levels intact (instead of mkt hopes for a cut
    to support prices). Over the past few weeks, we have seen several E&P producers scaling back
    cap-ex spending plans for 2015 given the steep drop in oil (COP did this week). Note global crude
    prices have fallen by about 40% since June highs on oversupply and OPEC's refusal to cut its
    output ceiling. Brent crude fell to a new five-year low of below $62 on Friday (IEA cut its 2015
    forecast for global oil demand growth by 230K barrels per day, to 900K today)
    Gold prices edge lower again, falling another $3.10 to settle at $1,222.50 an ounce (3rd straight
    down lower), while silver slipped 6c to $17.06 an ounce. However, for the week, gold ended
    higher on safe-haven demand as investors reacted to weaker-than-expected economic reports
    from Japan and China, worries about elections in Greece and a slump in global equities

    Bond Market/Currency
    Treasuries higher; what a week for bonds for bonds as the 10-year Treasury yield tumbled to
    2.08% (16-month low if one forgets October's flash crash in yields to 1.8%), while the 30-year
    yield is down to 2.76% (CNBC said lowest in almost 2-years). Europe same picture, as the German
    10-year yields fall to 0.63%, while yields for Spain 1.88%, Italy 2.04% (all less than the U.S.). The
    dollar index dropped -0.30 to 88.363 (but still remains in upward trend), as falls against the euro,
    but flat vs. yen today

    There were 6 new issue IPOs open for trade today

    Avolon Holdings (AVOL) opened at $19.25; 13.636M share IPO priced at $20.00
    Connecture (CNXR) opened at $9.25; 6.64M share IPO priced at $8.00
    Hortonworks (HDP) opened at $24.00; 6.25M share IPO priced at $16.00
    James River Group (JRVR) opened at $21.32; 11M share IPO priced at $21.00
    Metaldyne Performance (MPG) opened at $15.25; 10M share IPO priced at $15.00
    New Relic (NEWR) opened at $30.16; priced 5M shares at $23.00
    Workiva (WK) opened at $14.00; 7.2M share IPO priced at $14.00

    Macro

    Up/Down

    Last

    WTI Crude

    -2.14

    57.81

    Brent

    -1.83

    61.85

    Gold

    -3.10

    1,222.50

    EUR/USD

    0.0042

    1.2453

    JPY/USD

    -0.02

    118.64

    10-Year Note

    -0.072

    2.106%

    Sector News Breakdown


    Consumer
    Retail space one of top beneficiaries of lower oil prices (group holding up well); LULU upgraded
    by one analyst/results yesterday/lower oil prices (helping retail); SPLS upgraded to Outperform at
    Bank America (follows Starboard increased stakes in SPLS/ODP the prior day); COH advances a
    second day
    Staples; as a whole, staples sector mostly lower, with food/beverages/products lower; NUS
    guides 2015 EPS to $3.80-$4.00, below views of $4.15; Danone said it will keep its medicalnutrition division, cooling months of speculation about a possible sale; COST downgraded by one
    analyst weighed on shares
    Building products/builders; NX falls after Q4 EPS/revs miss; homebuilders ending a rough week
    on a down note (group down after TOL earnings mid-week)
    Energy
    Energy space cant get a break, falling again as oil prices plunge further, this time as the IEA cut
    its 2015 forecast for global oil demand growth by 230,000 barrels per day, to 900,000 barrels a
    day; weighing heavily on drillers, E&P, majors, equipment (has been a rough week for energy
    stocks after companies like COP said it would cut its cap-ex budget plans for 2015)
    MLP sector remains under pressure as well MLP Alerian MLP Index (AMZ) makes new 52-week
    lows on the oil drop, led by BBEP (analyst downgrade), LINE, EXLP, VNR, others
    Story stocks; LNG announced that it has engaged 18 financial institutions to act as Joint Lead
    Arrangers to assist in the structuring and arranging of up to $11.5B of debt facilities; EOX lowered
    its 2015 drilling and completion budget forecasts; TLM jumps after the Financial Times reported
    Spain's Repsol (REP) is in talks to acquire them and is currently negotiating a purchase price in a
    range between $6-$8 per share http://goo.gl/A5s7iG
    Utilities; group has held up relatively well in a week to be forgotten for overall equities; CMS was
    initiated a buy at UBS and upgraded DTE to buy; N.Y. Supreme Court Appellate Division yesterday
    ruled that ETR isnt required to seek new coastal consistency certification to renew NRC licenses
    for two Indian Point units, Mid-Hudson (sent shares higher
    Financials
    Large cap banks (WFC, JPM, C) fell as bond yields renewed downside momentum; MS was
    downgraded to neutral at Buckingham on valuation (group down early in week on softer Q4
    trading comments by JPM/BAC at GS conference)
    Canadian banks upgraded at Credit Suisse due to the 10% share price retreat from 52-week highs
    which we believe is mainly on macro issues and perhaps short interest; upgrades BMO and
    NA.CN, but cuts rating on CIBC (CM.CN) to Underperform
    The U.S. Treasury has joined the NY Department of Financial Services in a probe of OCN, reported
    Inside Mortgage Finance. At issue for Treasury is what impact Ocwen's misdating of letters to
    borrowers may have had on its participation in the Making Home Affordable Program the U.S.
    Regional banks in Texas weaken on energy prices; has fallen: 1) in credit market, CNBCs David
    Faber noted its tougher to get high-yield credit deals done in energy, 2) energy debt repayment
    fears Bloomberg noted yesterday since early 2010, energy producers have raised $550 billion of
    new bonds and loans as the Federal Reserve held borrowing costs near zero (will they be able to
    make those debt obligations?) shares of CMA, GNBC, BOKF, CFR, HBHC have been weak

    Healthcare
    Healthcare sector very quiet today, with not a lot in regards to fundamental news; managed care
    another good data point (few this week AET yesterday), as CNC 2015 forecasts top views; small
    cap biotech stocks were higher, overall biotech mostly higher
    Top movers; CCXI met its main target in diabetic nephropathy trial/said CCR2 inhibitor CCX140
    demonstrated statistically significant cut in urinary protein over 52 weeks; PBYI reports positive
    interim PB272 Phase II data; JAZZ falls (kicked off fast track review process for VOD medicine
    Industrials & Materials
    Aerospace/Defense; UTX guided 2015 EPS mid-point to $7.10, below est. $7.29/and year revs
    also below views during investor meeting (Q4 was also below); ESL Q4 eps/revs below views and
    while providing 11-month outlooks; BA downside momentum continues (down for 5th day in a
    row and 11 of last 12), hit on recent reports its delivery of first 787 to AAL delayed again (Airbus
    outlook also weighing on sector as well as suppliers (ATI, PCP, SPR, TGI, TDG)
    Multi/Equipment; EMR downgraded to hold at Deutsche Bank; GE raises dividend; in machinery,
    shares of JOY fall to 4-year lows (ahead of earnings next week)
    Metals & Mining remains a devastated sector; shares of FCX at fresh 5-year lows; steel stocks
    also falling again (X); while iron ore/miners (VALE, CLF) charts remain depressed on continued
    weaker economic data points in Asia (China overnight), slowing global growth demand (as
    evident by recent cuts to oil outlooks)
    Transports; Airlines (an obvious beneficiary to lower oil prices), dipped after headlines that all
    London airspace was closed after computer failure, Eurocontrol reported (European airlines);
    transports overall down, but not as bad as broad market
    Engineering/Construction companies (MTZ, KBR, FLR, PWR) all lower on fears of slowing
    spending by oil companies
    Shippers/tankers; DSX upgraded to buy at Clarkson, while cuts SBLK to hold; the Baltic Dry Index
    fell for a 16th consecutive day, off another (-2.7%) drop today to 863 points
    Chemicals; SHW issues 2015 eps view of $10.65-$10.85, below est. $10.84 (stock up 3% on LOW
    deal); petro chemical stocks falling with oil prices still (LYB, EMN)
    Technology, Media & Telecom
    Hardware/Software; ADBE one of the few highlights in a weak tape, after better quarterly results
    and much better Cloud subs (4Q creative cloud sub adds 644k QoQ vs. est. 534K), while also
    acquiring photo marketplace Fotolia for $800M (which weighed on SSTK); IBM led Dow
    Industrials to the downside as stock breaks to fresh 52-week lows
    Semis; MRVL boosted share buyback by additional $250M; FSL upgraded to Outperform at
    Bernstein; the Semi index (SOX) ended week near lows (much like overall mkt), falling from 14
    year highs of 704.43 high on Monday, to lows of 675 today)
    Video game makers were weaker; total U.S. video game sales in November fell (-11%) YoY,
    according to NPD; said total U.S. video game sales in November were $2.41B, while hardware fell
    23%, video game software fell 2% and video game accessories rose 2% (ATVI, EA, GME active)
    Other movers; GPRO was upgraded to Overweight at JP Morgan after recent pullback (AMBA, a
    GPRO supplier, also positive mention at Pac Crest, as reit OP and $70 tgt); DGLY/TASR move after
    reports Dem bill requires police body cameras http://goo.gl/TjDXYf ; in Telco, WIN falls after CEO
    departure

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    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 to buy or sell any securities. The Report is prepared for
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