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IB Traders' Insight

Global market commentary from IBG traders and market participants.

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2015-03-05 15:04:19

Posted by
Singapore Exchange

Contributor

Futures

India Budget Boosts Outlook

  • India’s Union Budget unveiled on 28 February 2015 ignited trading interest in domestic equities as foreign funds rushed to penetrate the market.
  • The Budget promised sufficient changes to ignite fresh optimism in Indian growth during Modi’s reign.
  • The CNX Nifty Index gained 160.75 points on 28 February 2015 and topped 9,000 points on 3 March 2015. A surprise rate cut by India’s central bank on 4 March is expected to add to India’s export competitiveness on a falling Rupee.
  • SGX CNX Nifty Index Futures led in price discovery during the special India Union Budget trading session on Saturday, 28 February 2015.

Budget Ignites Rally

The much-awaited India budget, while not the game changer as some anticipated, managed to stoke fresh anticipation for India’s potential growth.

Corporate income tax is set to be lowered to 25% from the current 30% over the next four years. An additional 700 billion rupees (US$11.3 billion) will also be injected into the country's roads and railway infrastructure in fiscal year 2015.

A national investment and infrastructure fund, which would raise debt and invest in infrastructure, is also being considered. If set up, the fund will help to enhance funding accessibility for local firms.

The CNX Nifty Index rallied on Saturday trading gaining 160.75 points. The budget triggered a buying frenzy in domestic stocks in the following week. A net total of 134,088,210 units were created in India-related ETFs between 28 February to 3 March 2015, according to Bloomberg data.

Net Creation of ETFs (28 February- 3 March 2015)

Source: Bloomberg

On the other hand, some observers expressed disappointment with Prime Minister Modi avoiding the potential political costly battle of scrapping food subsidies. The cost of the South Asian nation's food subsidies for the fiscal year ending on 31 March 2015 is estimated to surge by 25% to 1.15 trillion rupees (US$18.6 billion) year-on-year. The combined subsidy for rice and wheat accounted for a third of India’s total subsidy bill.

The failure to scrap subsidies coupled with the projected increase in capital spending would mean that the government has to push back its target of reducing fiscal deficit to 3% of GDP by a year to 2018. The fiscal deficit is expected to occupy 3.9% of GDP in 2015 while the economy is projected to expand between 8% and 8.5% year on year.

Luckily for India, the dip in oil prices allowed for the increased spending without a corresponding cut in food subsidies.

India’s Fiscal Surplus/Deficit

Source: Bloomberg

Some analysts have stated that the budget is far from the game-changing budget of 1991 which ushered in India's economic liberalisation.

On the other hand, others pundits such as rating agency Standards & Poor praised the budget, stating it displayed “the government's commitment to keeping the fiscal deficit low despite lower-than-expected revenue growth”.

Morgan Stanley was also positive, stating "The budget lends greater conviction to our out-of-consensus earnings forecasts for the coming two years", and "we continue to be bullish on Indian equities with our key overweight positions being private sector banks, industrials, discretionary consumption and technology”.

CNX Nifty Index Tops 9000; SGX CNX Nifty Index Futures Registers Robust Interest

Despite these mixed feelings, foreign investors voted with their fingers and invested  millions of dollars into the India stock market.

On 28 February 2015, the CNX Nifty Index gained 160.75 points to close at 8901.85.

The surge continued with the CNX Nifty index crossing the 9000 mark for the first time before closing at 8996.25 on 3 March amidst continued optimism over economic reforms and foreign fund buying. The Nifty has surpassed its previous lifetime high of 8,996.60 set on 30 January 2015.

Performance of SGX Nifty Index Futures

Source: Bloomberg

The SGX CNX Nifty Index Futures contract continued its inexorable advance in line with the broad equity market. The contract has set a number of new records since the start of the year. January saw a record high of 1,991,291 contracts traded with highest average daily volume of 99,565 contracts. Open interest touched 534,531 on 24 February 2015.

Strong trading interest was also seen in the roll market. As of 25 February 2015, 87.1% of the February 2015 SGX CNX Nifty Index Futures contract have been rolled into the March 15 contracts. This is markedly higher than the 1-year historical average of 78.7% as market participants took positions ahead of budget day.

Meanwhile, the CNX Nifty Index is set to undergo a rebalancing exercise. With effect from March 27, 2015, Jindal Steel & Power and DLF will be excluded from the CNX Nifty Index while Idea Cellular and Yes Bank will be included. The inclusion of Yes Bank, will increase the financial sector weightage in the 50-stock index. With Yes Bank, Nifty will contain nine banking stocks. However the inclusion of these two stocks is not expected to add much volatility to the index. Examination of the average standard deviations of the Jindal Steel, DLF, Idea Cellular and Yes Bank reveal that DLF exhibits the highest day-to-day volatility.

Sectors of CNX Nifty Index

Source: Bloomberg

Average Standard Deviation (2008- 2014)

Source: Bloomberg

Act 1 Scene 2 – Devalue Your Way to Prosperity

On 4 March 2015, India’s central bank added fuel to the euphoria by lowering interest rates in a surprise move for the second time this year, a booster for Prime Minister Narendra Modi’s first full-year budget.

The benchmark repurchase rate was cut to 7.5% from 7.75%.

“This makes explicit what was implicit before –- that the government and the Reserve Bank have common objectives and that fiscal and monetary policy will work in a complementary way,” Governor Raghuram Rajan said in a statement. INR slumped against the US dollar, falling 0.77%.

The cut in repo rate will further aid India’s exports competitiveness and boost the “Make in India” campaign championed by Prime Minister Modi. The USD/INR rate has been outperforming other Asian currencies since the start of the year, gaining 2.39% even as other currencies lost ground.

Performance of INR and Major ASIAN Currencies against the Greenback (Jan-Feb 2015)

Source: Bloomberg

Francis Tan of UOB Global Economics & Markets Research said “We think that the RBI will keep the current repurchase rate unchanged for now, as once the US starts their interest rate normalisation in the middle of this year, capital outflow worries could once again be on RBI’s dashboard. We recall the period of capital outflow and the quick depreciation of the INR during May 2013 when the US Fed started the ‘taper talk’”.

Volatility could spike in the coming months as the US proceeds to raise rates.

The SGX INR/USD FX Futures contract saw 187,405 contracts (approx US$6 billion in notional value) traded in February with open interest rising 55.3% on the month to reach a high of 16,019 contracts as at 27 Feb 2015. The futures contract has seen steady growth in volume and open interest since July 2014.

Weekly Volume and OI of SGX INR/USD FX Futures Contract

Source: Bloomberg

 

This article is from Singapore Exchange and is being posted with Singapore Exchange’s permission. The views expressed in this article are solely those of the author and/or Singapore Exchange and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-03-05 14:07:44

Posted by
Barron's

Contributor

Options

GE: Traders Get Bullish on Succession Chatter

Looking to next month’s earnings report, traders load up on options that will pay off if stock rises.

 

General Electric’s pre-earnings buzz is getting more intense. Speculation is swirling that Jeff Immelt, GE’s chairman and chief executive, could be replaced by Jeff Bornstein, GE’s (ticker: GE) chief financial officer.

Bornstein’s “focus on costs, cash flow, earnings quality, and transparency is getting traction,” Barclays’ Scott R. Davis recently opined in a research note. “He has a more open mind on portfolio simplification. There is a view inside GE that he may now be the front-runner for the next CEO post.”

In a front-page story today, The Wall Street Journal reports that GE has been hurt by falling oil prices, impeding Immelt’s efforts to overhaul the conglomerate. A GE spokesman declined comment on GE’s CEO selection process or when Immelt might relinquish a job he has held since September 2001.

The hint of a leadership change, however, has made GE’s stock and options even more appealing to investors ahead of April 17 earnings. In the options market, investors are buying upside calls in anticipation earnings push the stock above its 52-week high of $27.53 set in June. The options action implies that traders expect GE shares to rise above $35 by next January.

“March and April call buying suggests an expectation of near-term catalysts, but January 2016 and 2017 call buying suggests long-term bullish views,” Goldman Sachs advised clients in a recent trading note.

To be sure, GE rarely attracts this much positive investor attention. Until recently, the company was largely dismissed as too big to manage.

But since Immelt was named chairman and chief executive officer, GE has largely fallen from favor. GE’s shares have profoundly underperformed the Standard & Poor’s 500 Index.

On Sept. 4, 2001, GE’s stock closed at $40.83.

Based on price percentage change, GE is down 37% versus the S&P 500’s 86% gain through the end of last month.

The total return picture is equally ugly. Including dividends, GE is flat for the same period, while index investors have seen their wealth expand by 143%.

“I’m absolutely stunned,” a senior trader at a top-trading firm said after reviewing GE’s stock history.

This massive divergence between GE’s stock and the S&P 500 has made Immelt an antihero for many investors.

They would have done much better buying a low-cost index fund than owning shares in one of the world’s premier corporations. Immelt gets little credit for shrinking the sprawling company, and guiding GE through the aftermath of the 9/11 terror attacks and the worst financial crisis since 1929.

With the anti-Immelt chorus seemingly nearing a crescendo, many investors hope GE’s April earnings report marks the start of a transformation. The mere hint of a leadership change attracts the attention of investors, including those who might have shunned GE for other industrial conglomerates like 3M (MMM), which has handily beaten the index since 2001. Investors cite two pending deals as compelling near-term reasons to consider GE.

First, GE is buying Alstom’s power and grid businesses and forming several joint ventures. This deal could close by summer.

Also, GE is expected to soon sell its remaining shares in Synchrony Financial (SYF). Those deals could boost GE’s stock.

Against all the bullish speculation and trading, analysts are lowering GE’s first-quarter earnings estimates. Three months ago, analysts estimated that GE would earn 38 cents a share on revenue of $34 billion. They have subsequently lowered the hurdle to 30 cents a share, which could supercharge whatever forward guidance management offers on the post-earnings conference call.

“The stock could be $30 quite easily if we get any additional data points that show that GE’s cost focus has staying power, that it can earn a margin on its backlog, and it executes well on Alstom, Synchrony, and any other portfolio moves it announces,” Barclays’ Davis told clients in the same note that suggested a leadership change.

The options market reinforces Davis’ view of GE’s stock price. With GE’s stock at $25.89, investors are buying upside calls in anticipation of a meaningful stock rally. During the past 10 days, investors have accumulated about 138,000 April $26 calls, 137,000 January $30 calls, 127,000 January $35 calls, and 117,000 February $25 calls. The calls were mostly executed at midmarket prices — between the bid and ask — that indicates institutional investors bought securities.

The call-trading pattern reflects an expectation that analysts and investors will soon bullishly rerate the stock.

Should these forces swirling around GE be validated by the company’s earnings report, investors should not expect GE to suddenly trade like Tesla Motors (TSLA) or some other momentum stock. GE’s shares are still priced in the options market like a stodgy conglomerate.

The implied volatility of GE’s call options that expire April 17, the day of earnings, is 19. The corresponding put implied volatility is 18. GE’s annual historical volatility is about 15%. The difference between GE’s call and put volatility reinforces the market’s bullish earnings expectations.
 

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This article is from Barron’s and is being posted with Barron’s permission. The views expressed in this article are solely those of the author and/or Barron’s and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-03-05 13:40:05

Posted by
Waverly Advisors, LLC
Technical/Quantitative Market Research
Contributor

Technical Analysis

Waverly Advisors Summary Stats

%Chg: percent change from the previous day’s close

SigmaSpike: the day’s change expressed as a standard deviation of the last 20 trading days. Values inside +/- 1.0σ are generally insignificant, +/- 2.5σ are large (for the volatility of the particularly instrument), and +/-4.0σ are very large.

C/DayRng: the current price as the pipe “|” within the day’s range. Can easily see at a glance if trading near high or low of the day. The day’s open is “:”. You can read more about this indicator in my book.

For sectors: analysis is done using the State Street Sector SPDRs (XLE, XLF, etc.) %Chg is the day’s change for the SPDR, and Excess is the Excess Return for the day (the SPDR’s return – the S&P 500 return).

 

For more information about Waverly Advisors please click here.

2015-03-05 13:38:10

Posted by
Waverly Advisors, LLC
Technical/Quantitative Market Research
Contributor

Technical Analysis

Waverly Advisors Update: Largest Advances / Declines

The individual stock tables are simply ticker lists showing the largest values for the following criteria:

SigmaSpike: Largest volatility-adjusted moves. (Note that this measure, though we might call it a “standard deviation spike”, does not assume that anything is normally distributed. You’ll see a handful of +/-4.0σ moves on many days, and +/- 10σ do happen.)

GapOpen: The stock’s opening gap, expressed as a SigmaSpike.

FromOpen: Stocks often reveal stronger trending character by their relationship to their opening print, rather than to the previous day’s close. This screen evaluates the move off the open as a SigmaSpike.
 

For more information about Waverly Advisors please click here.

2015-03-05 13:36:13

Posted by
Waverly Advisors, LLC
Technical/Quantitative Market Research
Contributor

Technical Analysis

Waverly Advisors Afternoon Update

Largest Rel Volume: Stocks with the largest multiple of their 20 day average volume. Note that the “average” value for this number will change as the trading day progresses, but the relative position of a stock within this list should show some persistence. These are likely stocks in the news, or stocks experiencing a sharp flow of new information.

Largest Rel Ranges: First, we express each stock’s daily range as a % of the 20 day average range, and then choose the 10 with the largest values of that measure. These are the stocks with the largest daily ranges, relative to their own typical daily ranges.

Gap Analysis shows stocks with open gaps (today’s high < yesterday’s low or today’s low > yesterday’s high) remaining.

Stocks with Open Gaps (for the Day): ACAD, AER, ALSN, ANF, AZN, BMRN, BUD, CCL, CENX, CL, CMS, CNQ, COG, COMM, COST, CSIQ, ECA, ENDP, FE, FLS, GLNG, HDB, INCY, JKS, JOY, KITE, KR, LINE, MAC, MBLY, MDVN, MEOH, MNK, MYL, NCLH, PEIX, RCL, SGEN, SNE, SWKS, UL, UN, UNH, WETF, WFM, WM, XEL, ZIOP

 

For more information about Waverly Advisors please click here.

2015-03-05 11:55:52

Posted by
Andrew Wilkinson
Chief Market Analyst
Interactive Brokers
Contributor

Options

Stability in oil ahead?

It seems that many onlookers feel comfortable that the accentuated weakness in the price of crude oil may have ended. But one option trader appears to be positioning for prices not to budge much over the next couple of years. One investor sold the January 2017 straddle 2600 times using the United States Oil Fund (Ticker: USO), which closely tracks the price of oil futures. The trade expiring in almost two years’ time is possibly aimed at taking advantage of the decay of time value embedded in options prices, while banking on a strictly limited jaywalk in the value of the fund. With the USO trading at $19.00, the investor took in a premium of $6.70 per contract on the trade, which sets breakeven parameters on the straddle strategy of $25.70 to the upside and $12.30 to the downside. The fund touched its recent low of $16.30 on January 29 when crude oil futures closed at $45.23. Its price last traded above the current breakeven for the strategy on December 3, when crude futures settled at $69.47. The trade commands such a premium in part on account of high implied volatility, which has actually slipped on the day by 7.6% to stand at 42.9%. Volatility peaked on the USO in the days after the price of oil reached its current floor. By comparison, the same straddle combination using the January 2016 expiration is priced at around $5.00 per contract implying breakeven parameters of $14.00 and $23.00 for the oil fund.

Chart – USO and crude oil prices

2015-03-05 11:32:11

Posted by
John Carter
President
Simpler Stocks
Contributor

Stocks

Simpler Stocks: Wednesday Movers

Stocks continued to back off recent highs on Wednesday. Two days of declines does not a trend make, and employment data signaled what may be a blip: the ADP report just missed forecasts. Arguably more important data will come at the end of the week with the release of the February payroll report, which may give hints as to the eventual interest rate hike so many investors are expecting.

Stocks to Watch:

Honeywell International Inc. (Ticker: HON)

Honeywell announced Wednesday that it is seeking to grow dividends faster than earnings, and that acquisitions are at the top of its near-term strategy. The company also guided current quarter and full year expectations in line with the Street. The shares are trading at a decent 15x forward estimates, with a yield of 2% that could get a boost.

Cognizant Technology Solutions Corporation (Ticker: CTSH)

With a focus on information technology, consulting and health care/logistics and financial services, Cognizant stands to benefit from continued strength in the labor market. The shares continue to trade above both the 50- and 200-day moving averages, despite some recent volatility. Operating margins continue to be strong, with 18% logged most recently. In addition, any uptick in the 19% sales growth expected for this year should be a boon to the bottom line.

Chart – Six-month chart of CTSH

Dealertrack Technologies, Inc. (Ticker: TRAK)

Despite some volatility in the name in recent sessions, Dealertrak reported strong results late last month that showed 26% gains in revenues ex acquisitions, and this extends a long string of better than 20% top line growth. Recent acquisitions are proving a drag on near term results, as full year guidance came in under expectations. But that is due in part to financial reporting standards, and management still targets better than 20% growth near term. 

AMC Entertainment Holdings, Inc. (Ticker: AMC)

Lower prices at the pump translate into higher discretionary spending for the consumer, which in turn, some would argue, translates into a richer entertainment budget. The Street certainly looks for upside this year for AMC, as earnings estimates have the company growing the bottom line by as much as 75% on revenue upside of 9%. That in turn should temper in 2016 to 23% and 4% growth, respectively. But continued job growth, relatively low energy prices and strong demand for the movies bodes well for the stock, which also yields 2.3%. 

Maximus Inc. (Ticker: MMS)

Consensus has Maximus growing earnings by 20% in the next fiscal year (ended Sept 2016), while revenue growth should be fairly steady at 14%. That speaks to strong leverage in the government business processing segment (MMS’s bread and butter). The PEG ratio is roughly 1x, while the adjusted PE ratio is just about in line with expected growth. Free cash flow yield of 4% may hint at dividend increases.

TiVo Inc. (Ticker: TIVO)

Shares in TiVo jumped as much as 6% on Wednesday after earnings were reported, yet retreated to roughly 2% gains by session’s end. As the company transitions from core DVR services to embrace subscription services, the company posted profit of $0.07 a share, better than the four pennies the consensus had expected. Current quarter management guidance matched expectations, and cable TV should continue to be strong. TIVO shares trade for forward EPS multiples of 18x, yet the Street has fiscal year growth of 43% by comparison.

 

About the author: John Carter has been a full time trader for 15 years, serving over 100,000 subscribers in over 100 countries.  For more analysis on high growth stocks visit www.SimplerStocks.com.

 

This article is from Simpler Stocks and is being posted with Simpler Stocks’ permission. The views expressed in this article are solely those of the author and/or Simpler Stocks and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-03-05 10:26:54

Posted by
Jamie Lissette
Trading Analyst
Hammerstone Group
Contributor

Stocks

The Hammerstone Report: Sector News Breakdown

Consumer

  • Costco (COST) 2Q EPS $1.35 vs. est. $1.18 (may not include tax benefits/charges); Q2 revs $27.5b vs. est. $27.6b; said Feb. total comp sales up 1% (mostly in-line), while Feb. U.S. ex-fuel comp sales up 7%
  • Roundy’s (RNDY) Q4 EPS 7c/$1.075B vs. est. 3c/$1.06B; sees FY15 EPS (18c)-(7c) on revs $4B-$4.08B vs. est. loss (9c)/$4.03B; sees FY15 SSS growth (2.75%)-(0.75%) and FY15 adjusted EBITDA $115M-$125M
  • Conn's (CONN) February sales up 4.9% YoY to $95.4M and reports February comp sales down 5.8% vs. February 2014
  • Zumiez (ZUMZ) Feb. Comp sales rose 6.9% vs. est. up 4.0%
  • Allegiant Travel (ALGT) February passenger traffic up 8.6% to 657,399 and February RPM up 5.1% to 639M; February load factor down 1.2 points to 87.2%

Energy

  • Canadian Solar (CSIQ) Q4 EPS $1.28/$956.2M vs. est. $1.34/$953.94M; said total solar module shipments were 1,125 MW; sees Q1 revenue $725M-$775M vs. est. $733.9M
  • Exxon Mobil (XOM) downgraded to Hold from Buy at Evercore ISI
  • Golar LNG (GLNG) and Rosneft Oil Company have entered into a Memorandum of Understanding that foresees cooperation between the companies in the area of floating liquefaction and transportation of natural gas
  • EnCana (ECA) announces C$1.25B bought deal offering
  • Vivint Solar (VSLR) sees Q1 revenue $8.0M-$8.5M vs. est. $8.73M; sees Q1 total operating expenses $47M-$50M
  • Pacific Ethanol (PEIX) Q4 EPS 41c/$256.2m vs. est. 16c/$246.7m
  • Jones Energy (JONE) Q4 EPS 20c/$75.6M vs. est. 15c/$91.09M
  • The U.S. Senate failed to override President Barack Obama's veto of legislation approving the Keystone XL oil pipeline, leaving the controversial project to await an administration decision on whether to permit or deny it. The Senate mustered just 62 votes in favor of overriding the veto, short of the two-thirds needed.

Financials

  • Simon Property Group Inc. (SPG) has made takeover approaches for rival Macerich Co. (MAC), seeking to combine two of the largest shopping-mall owners in the U.S. The latest approach came within the past few weeks, and followed an earlier one late last year http://goo.gl/ZJhW61
  • H&R Block (HRB) Q3 eps loss (13c)/$509M vs. est. 17c/$518M; said revs rose $309m primarily as a result of earlier opening of IRS e-file system this tax season; said total U.S. tax returns prepared by and through H&R Block declined 4.2% y/y as of Feb. 28
  • IBERIABANK (IBKC) files automatic mixed securities shelf
  • Apollo Commercial (ARI) files to sell 10M shares of common stock
  • Eagle Bancorp (EGBN) 2.449M share Secondary priced at $35.50

Healthcare

  • AbbVie Inc. (ABBV) is to buy Pharmacyclics Inc. (PCYC) for about $21B, paying $261.25 per share in cash and stock, about a 13% premium to PCYC closing price; (note the Financial Times late yesterday reported PCYC would be acquired by JNJ) http://goo.gl/2pA2cs
  • Achillion (ACHN) Q4 eps loss (21c) vs. est. (18c); sees 2015 loss (95c) vs. est. loss (72c); sees 2015 net cash used in operating activities $100m-$110m
  • Summit Therapeutics (SMMT) 3.45M share IPO priced at $9.90
  • Cross Country (CCRN) Q4 revs 3c/$188.1M vs. est. 4c/$191M; sees Q1 revs $185-$190m vs. est $186m
  • Horizon Pharma (HZNP) plans offering of $300M of exchangeable Senior Notes

Industrials & Materials

  • Joy Global (JOY) Q1 EPS 25c/$704M vs. est. 36c/$753.75M; lowers FY15 EPS view to $2.50-$3.00 from $3.10-$3.50 (est. $3.20) and lowers FY15 revenue view to $3.3B-$3.6B from $3.6B-$3.8B (est. $3.65B)
  • Tyco (TYC) raises quarterly dividend to 20.5c from 18c
  • General Dynamics (GD) boosts quarterly dividend to 69c from 62c
  • Embraer (ERJ) Q4 EPS 50c/$2.04B vs. est. 91c/$2.14B; Expected deliveries of 95-100 jets in the Commercial Aviation segment and 35-40 large jets and 80-90 light jets in the Executive Jets segment

Media & Telecom

  • NeuStar (NSR) said the FCC recommendation “misunderstands” operating system and would disrupt service for 12m consumers. NSR will review its options and continue to question process
  • Late Wednesday, Time Warner’s (TWX) HBO is in talks with Apple Inc. (AAPL) to be its launch partner for the highly anticipated HBO Now video streaming service, according to a report in Wednesday's International Business Times
  • Alaska Communications (ALSK) sees 2015 run rate adj. Ebitda at end of 2015 $54m-$56m; said Q4 revs $53.5m

Technology

  • Apple Inc. (AAPL) will delay the start of production on a larger, 12.9-inch iPad until around September because of problems involving the display panel supply, said a report by Bloomberg News citing people familiar with the company's plans as saying
  • Etsy Inc., an online marketplace for crafts and vintage goods, has filed for an initial public offering, according to a regulatory filing. Etsy, which applied on Nasdaq under symbol “ETSY” filed for an IPO of up to $100 million
  • Semtech (SMTC) Q4 EPS 34c/$130.4M vs. est. 33c/$130.11M; sees Q1 adjusted EPS 27c-30c on revs $130M-$136M vs. est. 37c/$136.40M
  • Callidus Software (CALD) 4.6M share secondary priced at $13.00 per share
  • GSI Group (GSIG) Q4 EPS 24c/$94M vs. est. 19c/$95.02M; sees FY15 revenue $380M vs. est. $392.64M (says includes for-ex headwinds)
  • Interdigital (IDCC) plans to sell $275M worth of senior convertible notes due 2020

 

The content of this post was created by the Hammerstone Group. The Hammerstone Institutional Forum, a chat-based platform for traders, provides subscribers with up-to-the-minute breaking news headlines and instant analysis that drive the market. For more information please visit www.thehammerstone.com. For more information on the stocks mentioned in the Hammerstone Recap, please contact Brian Ducey at brian@thehammerstone.com.

 

This article is from The Hammerstone Group and is being posted with The Hammerstone Group’s permission. The views expressed in this article are solely those of the author and/or The Hammerstone Group and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-03-05 09:55:36

Posted by
Andrew Wilkinson
Chief Market Analyst
Interactive Brokers
Contributor

Forex

Euro weakens on bond buying details

The single European currency unit continues its slide on Thursday following further details on the ECB’s bond-buying plan. Asset purchases of €60bn ($66bn) per month will start next week offering support to the region’s economy and continue until there is a “sustained adjustment in the path of inflation”. The euro fell to buy only $1.1007 against the US unit, suffering the same punishment from investors as did the greenback during the FOMC’s delivery of QE. The dollar has strengthened since May 2014 when one euro bought $1.4000. The four months from May to September 2014 the euro weakened by 10-cents. For the final quarter of that year, further euro selling shaved another dime off its purchasing power, sending it down to $1.2000. It has taken from January through the first week of March of this year to steal back the next 10-cents as details of the plan are unveiled. Make no mistake, a weaker euro is benefitting the Eurozone as evidenced by strengthening economic data. And let’s not delude ourselves that the program is likely to be long-lasting until inflation ticks up towards 2%. So what are the chances of the euro/dollar relationship falling to parity? According to the options market the odds of the euro falling through $1.00 by June are just 5.5%, while a decline of the same magnitude playing out by September has a 10.6% likelihood. The odds seem slight considering Newton’s first law of physics.

Chart –Sliding euro

2015-03-05 09:29:41

Posted by
Jamie Lissette
Trading Analyst
Hammerstone Group
Contributor

Stocks

The Hammerstone Report

U.S. equity futures are slightly higher following the ECB meeting results and ahead of Fed bank stress tests later today. Overnight, one big M&A deal in the Healthcare space, as Abbvie (ABBV) agreed to buy Pharmacyclics (PCYC) in a $21B deal, while retailer Costco (COST) reported stronger quarterly results, and mining company Joy Global (JOY) warned for the year. U.S. stocks ended lower for a second consecutive session on Wednesday, with the S&P 500 Index dropping to its lowest level in two weeks. Profit taking took place ahead of the closely watched official jobs report Friday and the ECB meeting (Thursday morning). Data Wednesday was mixed as private-sector employment data showed continued gains in February but at a slower pace than in the prior month, while service data came in above expectations.

Note the euro weakened further, falling to a fresh 11-year low (1.1048) ahead of today’s ECB meeting and announcement of details of its debt-purchase program (QE) – British pound was also lower ahead of the BoE meeting. European stocks rise for a 2nd day, led by Germany (DAX up 0.5%). Asian stocks fell as China set the lowest economic growth target in more than 15 years (to 7%), though Japanese shares gained. The Nikkei Index gained 48 points to 18,751, the Shanghai Index dropped 31 points (about 1%) to 3,248, and the Hang Seng Index fell 272 points (1.11%) to settle at 24,193.

After the bell today, results of the Fed’s Dodd-Frank stress test of 31 banks will be released, showing minimum capital ratios under baseline, adverse and severely adverse scenarios.

World News

  • China lowered its economic growth forecast to about 7% this year at the opening of the country’s biggest political event of the year. Last year’s goal was “about 7.5%”; when actual growth came in at 7.4%--the slowest in more than two decades
  • German factory orders fell in January, declining (3.9%) after a revised increase of 4.4% in December
  • Bulls in American Association of Individual Investors (AAII) survey slip to 39.8% from 45.4% (was at 7-week high 47.0% in prior week: those bearish rise to 23.4% from 20.3% and those considering themselves neutral rise to 36.8% from 34.3%
  • China plans to invest a total of 1.6 trillion yuan ($255 billion) in railway and water projects this year, Premier Li Keqiang said Thursday

 

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