Morning Preview: April 12th,2017

eOptionDaily Market Report

Stock futures are little lower, trading in a narrow trading range overnight (S&P futures high 2,356.50 and low 2,345.50), but are currently down only a few points below 2,350. Crude oil prices rise for a seventh straight session, boosted by expectations that major oil producers will extend their output cuts. Britons’ wages after inflation rose at their slowest pace in nearly three years in the three months’ through February, sending the pound lower. Markets set for another quiet day, with no major economic data points expected today and no major earnings. Tomorrow wraps up the holiday shortened week (markets in U.S. closed Friday) with several earnings reports in the banking sector (JPM, C, WFC).

U.S. stocks finished lower on Tuesday as rising geopolitical tensions scared investors out of risky assets like stocks and into the perceived safety of Treasuries, gold and the Japanese yen. The dollar sunk to its weakest level against the yen in five months, (down at 109.74 from 1100.94 yen late Monday), while stock-market volatility (VIX) climbed to its highest levels of the year as investors focused on geopolitical tensions surrounding Syria, Russia and North Korea, as well as concerns about the first round of France’s presidential election later this month.

In Asian markets, The Nikkei Index fell -195 points (1%) to settle at 18,552, the Shanghai Index dropped -15 points to settle at 3,273 and the Hang Seng Index jumped 225 points to close at 24,313. In Europe, the German DAX is up over 10 points at 12,150, while the FTSE 100 is also slightly higher around the 7,375 level. There were several economic data points out last night overseas (see below)

Market Closing Prices Yesterday

  • The S&P 500 Index dropped -3.38 points, or 0.14%, to 2,353.78
  • The Dow Jones Industrial Average slid -6.72 points, or 0.03%, to 20,651.30
  • The Nasdaq Composite slipped -14.15 points, or 0.24%, to 5,866.77
  • The Russell 2000 Index advanced 9.86 points, or 0.72% to 1,376.95

Events Calendar for Today

  • 7:00 AM ET MBA Mortgage Applications Data
  • 8:30 AM ET Import Prices MoM for March…est. (-0.2%)
  • 10:30 AM ET Weekly DOE Inventory Data
  • 2:00 PM ET Monthly Budget Statement for March…est. (-$169.0B)

World News

  • China’s consumer inflation rebounded slightly in March after slipping to a more than two-year low in the previous month. China’s consumer price index increased 0.9% in March from a year earlier, compared with a 0.8% gain in February, the National Bureau of Statistics said
  • Japanese core machinery orders rose in February, increasing 1.5% from the previous month, following a drop of 3.2% in January (estimate was for a rise of 3.7%)
  • German think tanks raised their growth projections for Europe’s largest economy due to strong exports and investment spending. They forecast growth of 1.5% in 2017, compared with September’s prediction of 1.4% and after 1.9% posted
  • Britons’ wages after inflation rose at their slowest pace in nearly three years in the three months’ through February, growing only 0.1% (UK Pound dropped following the report)
Sector News Breakdown

Consumer

  • Tractor Supply (TSCO) guides Q1 EPS 45c-46c on sales $1.56B, below estimates of 53c/$1.57B; 1Q comp sales included decrease in comp transaction count of 1.4% and decrease in average ticket of 0.9% (shares fell after the close)
  • AutoNation’s (AN) CEO Mike Jackson called Tesla Inc.’s (TSLA) market value “inexplicable,” a day after its market cap topped that of auto maker General Motors Co. (GM). Tesla “is either one of the great Ponzi schemes of all time” or will eventually work out for investors Jackson said
  • Procter & Gamble (PG) raises quarterly dividend 3% to roughly 69c per share
  • Wal-Mart (WMT) plans next week to offer discounts on some online orders when customers opt for in-store pickup instead of home delivery, a pricing structure it says passes on the shipping costs it saves. The discounts will be available on items that are only sold online, initially about 10,000 products

Energy

  • NuStar Energy LP (NS) agreed to buy midstream operator Navigator Energy Services LLC for $1.48 billion. Navigator owns and operates crude-oil transportation, pipeline gathering, and storage assets located in West Texas’ Permian Basin https://goo.gl/pjuuN1
  • The American Petroleum Institute (API) reported a decline of 1.3 million barrels in U.S. crude supplies for the week ended April 7, and also showed a drop of 3.7 million barrels in gasoline supplies and a fall of 1.6 million barrels in distillates
  • Midday yesterday, the WSJ first reported that Saudi Arabia said likely to back OPEC extending output cuts, according to a person familiar with the kingdom’s internal discussions. The kingdom hasn’t taken a final decision yet and will decide on an extension depending on the stance of other OPEC nations incl. Iraq and Iran, the person said

Financials

  • Artisan Partners (APAM) said assets under management, or AUM, as of March 31, totaled $103.8B
  • Invesco (IVZ) prelim month-end assets under management, or AUM, of $834.8B a decrease of 0.2% month over month. The decrease was driven by lower Money Market AUM and net long-term outflows, partially offset by favorable market returns, inflows into PowerShares QQQs and foreign exchange
  • CME Group (CME) announced on Tuesday that it is in the final stages of testing a platform for spot gold using a trading platform inspired by the digital currency bitcoin
  • JPMorgan Chase & Co. (JPM) is delaying a plan to move some wealth management clients to a self-directed platform as the bank awaits word on whether the Trump administration will rewrite or scrap higher standards for brokers – Bloomberg

Healthcare

  • Neurocrine Biosciences Inc. (NBIX) said it received FDA approval for Ingrezza to treat tardive dyskinesia, a neurological disorder. Ingrezza “is the first and only FDA-approved product indicated for the treatment of adults with TD; shares jumped after the close
  • Vermillion (VRML) files to sell 6.56M shares of common stock for holders
  • Healthcare Services (HCSG) Q1 EPS 30c/$404.5M vs. est. 29c/$415.3M; slightly raises dividend to 18.75c
  • Globus Medical (GMED) upgraded to Outperform from Market Perform at Leerink

Industrials & Materials

  • Elliott Management Corp. has informed Akzo Nobel NV (AKZOY) that it plans to call a shareholder meeting to try to oust the chairman of the company’s supervisory board, increasing pressure on the paint giant to engage in sale talks (Elliott owns more than 10% of shares)
  • Sherwin-Williams (SHW) & Valspar (VAL) agreed to sell assets related to Valspar’s North American Industrial Wood Coatings business toAxalta (AXTA) for $420m in cash in order to help secure regulatory approval for VAL/SHW deal

Technology, Media & Telecom

  • Meredith Corp.’s (MDP) weeks-long pursuit of an acquisition of Time Inc. (TIME) has advanced into late-stage discussions, according to people familiar with the matter. Other potential buyers, including a consortium led by Pamplona Capital Management, also remain in discussions for Time – Bloomberg https://goo.gl/b6alV3
  • Siris Capital has held talks with investment banks about strategic options for Digital River, including finding a buyer for the company, Bloomberg reported (Digital River was taken private by Siris back in Feb 2015, buying them for $575M)
  • The English-language version of a voice-activated “virtual assistant” that is a major feature of Samsung Electronics Co.’s newest flagship device won’t be ready to go when the Galaxy S8 smartphone arrives in U.S. stores next week
  • Toshiba Corp. expressed doubt for the first time over whether it can continue as a going concern after huge losses at its U.S. nuclear subsidiary, which filed for bankruptcy last month. The company issued the warning alongside its latest earnings report https://goo.gl/41FcOU
  • HP Inc. (HPQ) upgraded to Buy from Neutral at Citi
  • GrubHub (GRUB) upgraded to Outperform from Perform at Oppenheimer
  • Worldwide Q1 PC shipments fell 2.4% YoY to 62.2M units according to preliminary results by Gartner; first time since 2007 that PC market had less than 63M units in quarter. Lenovo 1Q shipments 12.4m vs 12.2m y/y, market share 19.9% vs 19.2% y/y, HPQ 1Q shipments 12.1m vs 11.4m y/y, market share 19.5% vs 17.9% y/y while AAPL 1Q shipments 4.22m vs 4.03m y/y, market share 6.8% vs 6.3% y/y

 

Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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