Trading Diary: Irma departs, damage remains, stocks woozy

Wall Street’s post-Irma, Weird Wednesday action finds averages slightly flat with a negative bias. Home Depot, Valero pop, biopharma secondaries drop.

Fox News drone video showing damaged or missing homes in Florida Keys. (Screen capture via YouTube posted video)

WASHINGTON, September 13, 2017 – It’s gloomy and damp outside today in the Washington, D.C. suburb where we tap our columns out more or less every day. We’re likely experiencing the feeble tendrils of what was once the incredibly destructive Hurricane Irma.

The stock market Wednesday seems to have taken on a similar tone, and the malaise seems quite evident in most sectors. Healthcare stocks, which had been recovering somewhat recently, got smacked today, taking our Allergan Preferred (symbol: AGN/PRA) shares down brutally, by 12 points the last time we could bear to look.

To varying degrees, everything else has gotten smacked a little or a lot, too, including in the sometimes but not always wonderful world of tech, where Apple’s predictable post-product announcement swoon seems to be in full force today, influencing its suppliers and even unrelated tech stocks as well.

Read also: New Apple iPhones a hit, stock tanks. Wednesday markets flat

Bright spots today include financials, which continue to recover somewhat in the decidedly not-quite-as-bad-as-we-thought post-Irma environment. True, Florida was battered tremendously, as Irma ultimately engulfed the entire state. Damage is widespread, but genuine catastrophe seems only to have hit the Keys, with an estimated 25 percent of all homes in that area consigned to the “total loss” category. Grim.

Trading Diary

Yet from a business standpoint, the bright spot here as it was for Harvey in Houston, is the highly anticipated recovery phase after the storm, which will surely boost the sales of DIY and contractor support monsters like Home Depot (HD) and Lowe’s (LOW).

As of 3 p.m. ET or thereabouts Wednesday, HD is still up 17 cents, building at least a bit on its recent gains. Lowe’s for some reason is off 44 cents at the moment, perhaps due to a bit of short-term profitability in that stock.

Our pair of oil refineries are looking happy this afternoon, too. Valero (VLO) is perched at the moment at $70.99 per share, looking like it might want to close the day at $71 and change, while recovering Calumet (CLMT), after taking a couple days of battering, has battled back to $8.

CLMT used to be one of our MLP dividend champions, but was destroyed by too great a debt burden two years ago, largely due to a risky yet much needed new refinery built to take advantage of the nearby Bakken shale action.

When the brief OPEC price war erupted, Calumet nearly went underwater when the new refinery was underutilized. It’s sold, now, along with other marginal facilities, and Calumet is currently refocusing itself on its continually lucrative special petroleum products niche. Liquidity and profitability are starting to return. Maybe the dividend will, too. Some day.

In the meantime, we’ll take the slow, steady capital gains, assuming the company keeps outperforming.

Valero, vastly more profitable and offering a fantastic dividend yield of 4 percent at the moment, would like to go higher, but may be getting stuck around the $70 handle. We’ll wait and see if we take the profit we have in this one, or just pull out right now, devil may care. It’s a crap shoot in a market that seems this confused.

Our two biopharma gambles – we picked up secondary stock offerings in Insmed (INSM) and this morning in Portola Pharmaceuticals (PTLA) – popped, then dropped, leaving us flat at the moment. Both are nearing the Promised Land of major drug approvals for rare diseases, and are a good if speculative bet. But right now, given the market’s tone, they’ve fallen back a little bit from their initial jumps, and are slightly in the red for us.

Under house rules, we have to hold these puppies for 31 days, so nothing to do at the moment. But INSM in particular looks like it’s worth holding through what’s likely to be a pair of final product approvals. We shall see.

That’s it for today. It’s boring, moderately negative, and we have other things to do right now. Bet you do, too!

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17