Financials
· Asset managers – one of the best performing groups in all of financials; BLK leads the group w/a 5% ramp (it was upgraded at Credit Suisse this morning); AB, BEN, JNS, TROW, LM all very strong (up 2%+ each).
· brokers – the electronic brokers are some of the weakest in financials today after the AMTD profit warning last night (on back of SCHW last week); the space has reported their DART #s already and all came in pretty soft. Despite the neg. headlines though, the group has acted OK (ETFC dips 0.8% and underperforms while SCHW and AMDT are more flat). GHL rallies 5% after its deal last night while LAZ dips on its stock sale.
· Banks – this group remains strong – the BKX is now up ~22% on a YTD basis, one of the strongest performing groups in the whole market. C ends flattish after CNBC came out today and said the Treasury prob. won’t pursue a stake sale until after earnings later in Apr (some bulls where hoping this could come sooner). Regionals outperforming – BBT, CYN, KEY, MI, STI, RF, ZION all among the strongest regional banks.
· Insurance – strength in both P&C and the life names today (for the last few days, life has been a notable outperformer). GNW underperforms after being downgraded this morning.
· Cards – the group underperforms; people continue to gravitate away from this space, where the credit story is seen as having played out already and the focus is moving towards loan growth (which remains negative). People thinking the banks have more of the credit story to play out.
· Best Performing SP500 financials: LNC, MI, ZION, HBAN, CBG, FHN, IVZ, PFG, PGR
· Weakest performing: GNW, ETFC, DFS, COF, MCO, MS, SCHW
Industrials/Materials/Energy
· Industrials: Industrials lagged the tape slightly in the afternoon as the market came off its highs in late afternoon trading. Multi-industry stocks came off their highs and we even saw GE move into negative territory after its recent breakout. Machinery names held up fairly well as the market sold off this afternoon, with the higher beta names showing the most outperformance. Aero/def names were mostly in line with the tape despite the fact that we saw a few names underperform (UTX, GR, COL, and SPR to name a few). Building materials stocks all outperformed, up 2-5%, helped by ATU’s earnings this morning. Education and business services were mostly higher again, led by BPI.
· Transports: Transports were mixed, but slightly mixed today as the tape moves higher. Rails were weaker, coming off their highs to finish in negative territory. Freight outperformed ahead of FDX’s earnings tomorrow morning. Truckers lagged a bit today, selling off further as the market moved off its highs. Airlines were lower today after UAUA issued a mostly positive report, but one that might have been offset by higher cost guidance.
· Homebuilders: Homebuilders mixed as many names sold off into the close. As we said yesterday, the next big catalyst for the space will be KBH’s earnings on Tuesday.
· Materials: Materials outperformed a bit but came off their highs as the dollar moved back into positive territory. Metals were mostly higher, led by AA and other aluminum stocks. Steel stocks were notable underperformers as most names were off 1-3%. Chemicals were stronger today with the exception of fertilizers. It’s worth noting that steels and ferts were the leaders over the past few weeks, so it’s interesting that both lagged today. Paper/packaging stocks were all much stronger, up 5-7% after positive box shipment data this morning.
· Energy: Energy stocks were the best space in the market as oil moved higher. We were better to buy oil services and integrateds as both groups outperformed. Refiners also outperformed after lagging yesterday and as crack spreads widened. We were better for sale in E&Ps as natural gas continues to weaken. Coal names were up sharply thanks to MEE’s acquisition of Cumberland Resources, although they came a bit off their highs as the market weakened. Shipping and tanker stocks underperformed as the Baltic Dry Index broke a four day winning streak yesterday. Solar and wind stocks underperformed as investors moved into conventional energy instead. We did see outperformance in names such as ENER (+5%) and STP (+3.5%).
Outliers
· JOYG lagged machinery names amid some profit taking following its recent rally.
· Airlines underperformed following UAUA’s positive operating results number, which might have been offset by higher cost guidance.
· ATU is up over 4% on earnings. Other building materials companies were up 2-4% in accord.
· BPI was up over 2% today. The stock is now up over 50% since its lows in early February.
· AA led aluminum stocks higher, up over 4.5% after being dead money the past few weeks.
· Fertilizers lagged today following their outperformance yesterday.
· TIN (+9.25%), RKT (+9.5%) and IP (+6.25%) led paper/packaging stocks higher after positive box shipment data this morning.
· UFS was up over 3.25% after JP Morgan increased its PT.
· MEE was up around 5.75% (off highs) after announcing it will acquire Cumberland Resources.
· FTO was up 3% as refiners move higher following yesterday’s relative underperformance.
· CHK, DVN, and XCO were off 1.0-1.5% as natural gas continues its slide.
· TNP was off 4.5% on earnings this morning.
· ENER was up over 3.5% after lagging the past 3 days.
Consumer & Retail
· Consumer stocks trading up relatively inline with the tape. Retail names trading +/- 1% for the most part with the exception of Dollar Stores (outperforming; FDO +2%, DG +3%, BIG +1.5%), RUE (+3.8% after earnings and guidance beat), CROX (+10%, pos sell-side comments), ZLC +5% and TSCO (dn 2% on sell-side downgrade). G
· rocers outperforming (SWY +1%, RDK +1.3%) after Processed Food component of PPI showed continued sequential improvement (follows strong Grocery Store component of Feb. Retail sales earlier in the month; next datapoint will be CPI Food at Home tomorrow morning).
· Restaurant space continues to outperform with a slew of positive sell-side comments. JACK upgraded today (+5%) and follows pos comments yesterday on SBUX and SONC. BKC trading up 3% after breaking through $20 level for first time since Apr-09.
· In Autos, LEA outperforming Suppliers after filing in an 8k that it was seeking commitments from lender for a $100-125M revolving line and proposed an amendment to its first lien pact that would allow it to issue $350M of debt. HOG gives back some of yesterday’s strength (dn 1%).
· In Staples, PEP continues to move higher ahead of Monday’s analyst meeting and PM continues to outperform tobacco space (+1% vs. peers dn ~0.3%).
Media/Leisure
· With the tape coming off its highs – buying remained light with investors trimming positions and taking profits. The large cap media stocks underperformed in the second half, in the absence of shorts. Additionally, there were some flows out of the media into cable/wireless.
· Within telecom, S (Sprint) was the leader throughout the day – with the other wireless trading in line and prepaids lagging. Rural telcos (notably Q) ticked higher while the interest level for towers remained low.
· Advertisers traded higher today led by LAMR up >6%, while CCO traded in line; IPG/OMC outperformed, both were up ~1.3%.
· In Video games, ATVI/ERTS both moved higher, continuing their momentum as they have posted gains every day this week
· In leisure, there was some movement out of the Macau centric casinos and into the regional gamers, who trailed the LV/Macau names yesterday. The gaming suppliers also caught some bids with the casinos pulling back.
· The flows from lodging into the cruise lines (RCL up ~1.6% and CCL up ~1.2%) continued - MAR/HOT/H (Hyatt) all traded lower, while WYN was flat, in relief from yesterday.
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