Morning Preview: May 8th, 2017

eOptionDaily Market Report

U.S. stocks futures are slightly lower, amid a bout of profit taking following a market friendly outcome of the French election yesterday. Europe is trading lower, while U.S. futures slip from all-time highs reached last Friday after another rally on earnings, Trump policy hopes and as macro concerns have eased (Korea, France, etc.). On Sunday, Centrist candidate Emmanuel Macron has won the French presidential election with over 65.5% of the votes, against 34.5% for rival Marine Le Pen, according to early exit-polling estimates. Macron, a supporter of the European Union, may ease market anxiety that has been in place on fears that far-right candidate Le Pen would win and make good on promises to yank France out of the EU. The euro pulled back in early trade on Monday (down at 1.095 from highs 1.1023), as the initial relief rally over centrist reformer Emmanuel Macron winning the French presidential election started to fizzle. After falling over 6% last week, crude futures are slightly higher after Saudi Arabia’s oil minister said a deal to cut production could be extended into 2018 (OPEC meeting is on the 25th of this month).

In Asian markets, The Nikkei Index jumped 450 points (2.31%) to settle at 19,895, the Shanghai Index dropped -24 points to end at 3,078 and the Hang Seng Index rose 101 points to close at 24,577. In Europe, the German DAX is now lower by over 30 points at 12,675, while the FTSE 100 is up a few points above 7,300.

The S&P 500 and the Nasdaq Composite indexes ended at records last week, following Friday’s stronger-than-expected April employment report. The Dow Jones Industrial Average closed higher and above the 21,000 mark—at 21,006.94—for the first time since early March. As of Friday, the S&P moved less than 20 points in either direction for eight consecutive days, the longest streak since 1964, according to reports.

Market Closing Prices Yesterday

·      The S&P 500 Index gained 9.77 points, or 0.41%, to 2,399.29

·      The Dow Jones Industrial Average rose 55.47 points, or 0.26%, to 21,006.94

·      The Nasdaq Composite jumped 25.42 points, or 0.42%, to 6,100.76

·      The Russell 2000 Index advanced 8.15 points, or 0.59% to 1,397.00

Events Calendar for Today

·      8:35 AM ET          Fed’s Bullard speaks on panel on interest rates

·      8:45 AM ET          Fed’s Mester speaks at Chicago Council on Global Affairs

·      10:00 AM ET       Labor Market Conditions for April

Earnings Calendar:

·      Earnings Before the Open: AES, AFI, FDC, JD, LBTYA, MNK, NWL, ON, ONDK, PGEM, SYY, TSN, XEC

·      Earnings After the Close: AMC, CVG, EOG, FN, HTZ, IFF, MAR, MODN, MTW, OTEX, P, TDOC, TSO

Sector News Breakdown

Consumer

  • Coach (COH) to buy Kate Spade (KATE) for $18.50 per share, in deal valued at $2.4B (deal news breaking at 6:46 AM EST)
  • Southwest Airlines (LUV) April Traffic up 8.4%, and capacity up 7.6%; still sees 2Q Rasm Up 1%-2%; April load factor 84.0% vs 83.4% y/y
  • Newell Rubbermaid (NWL) Q1 EPS 34c/$3.3B vs. est. 29c/$3.22B; raises year EPS view to $3.00-$3.20 from prior $2.95-$3.15 and est. $3.05; raises dividend to 23c from 19c; reaffirms year sales outlook of $14.52B-$14.72B
  • Amazon (AMZN) shares could reach $1,000 by the summer and continue to $1,100 in a year, according to Barron’s in a feature article. If history is any indication, the company’s spending ramp should bring another round of reaccelerating revenue, the publication says, adding that the company’s profits will “balloon” by the end of the decade
  • Amazon (AMZN)-induced carnage among traditional retailers “sets up well” for TJX (TJX), Ross Stores (ROST) and Burlington Stores (BURL), Barron’s contends in a feature article

Energy

  • AES Corp. (AES) backs FY17 adjusted EPS view $1.00-$1.10 vs. consensus $1.06; backs FY17 free cash flow view $1.4B-$2B
  • Northern Oil and Gas (NOG) Q1 EPS 0c/$65.8M vs. est. loss (1c)/$48.5M; 1Q production 13,299 boe/d and sees Adding 12 net Wells to production during year

Financials

  • A consortium led by U.S. private equity firm TPG Capital made a A$2.2 billion ($1.63 billion) cash proposal to acquire Fairfax Media Ltd’s metropolitan newspapers and Domain real estate classifieds unit, the Australian media group said https://goo.gl/Zo9ZsH
  • Berkshire Hathaway (BRK/A) reports Q1 operating EPS $2,163 vs. consensus $2,705; said, “At March 31, 2017, our book value had increased by 3.5% since year end 2016 to $178,073 per Class A equivalent share
  • AG Mortgage (MITT) files to sell $100M of common stock ‘at the market’
  • Fidelity Southern (LION) files $100M mixed securities shelf
  • Kearny Financial (KRNY), Clifton Bancorp (CSBK), and Waterstone Financial (WSBF) remain appealing, Barron’s contends in a ‘Sizing Up Small Caps’ column, adding that Waterstone could attract a suitor
  • Despite the post-election run-up in bank stocks, OceanFirst Financial (OCFC) is “worth considering,” Barron’s said, noting the “high-quality” company has a “promising” profit outlook and could offer 13% upside
  • Ares Management (ARES) 1Q economic net/unit 30c vs. est. 40c; said assets under management $99.8B

Healthcare

  • Mallinckrodt (MNK) Q1 EPS $1.68/$810.9M vs. est. $1.64
  • Tenet Healthcare (THC) is seeking an estimated GBP150M, the FT reports, citing people close to the vendor (Tenet paid $215M, or GBP144M) for Aspen two years ago)
  • Novartis (NVS) mentioned positively in Barron’s saying beginning in 2018, it could be set for a “multiyear run” of profit gains driven by new cardiac and psoriasis drugs and a “promising” drug pipeline; also notes the stock trades roughly in line with peers despite that positive outlook

Industrials & Materials

  • Tanker firm DHT Holdings (DHT) rejected on Sunday a fifth takeover proposal from shipping tycoon John Fredriksen’s Frontline (FRO), calling the $500 million all-share bid “woefully inadequate”. The initial bid, offering to issue 0.725 Frontline shares in exchange for each share of DHT, was eventually raised to a ratio of 0.8, but was again turned down. https://goo.gl/0FhEtI
  • Akzo Nobel NV (AKZOY) said it had rejected a third unsolicited takeover bid by U.S. paints giantPPG Industries (PPG)
  • ITT Inc. (ITT) Q1 EPS 64c/$625.8M vs. est. 60c/$607.2M; boosts midpoint of previous GAAP EPS forecast by 5c
  • Hecla Mining (HL) Q1 EPS 4c/$142.5M vs. est. 3c/$169.16M

Technology, Media & Telecom

  • Micron (MU) downgraded to neutral from buy at Goldman Sachs as FY17-18 Street EPS estimates have been revised up by ~70%; said recent industry discussions with channel companies suggest slowing spot price momentum in DRAM and, to a lesser extent, NAND
  • Sinclair Broadcast Group Inc (SBGI) is nearing a deal to acquire Tribune Media Co (TRCO) for close to $4 billion after prevailing in an auction for one of the largest U.S. television station operators, and a deal could come as soon as Monday – Reuters https://goo.gl/FVU2q7
  • Walt Disney Co.’s (DIS) Marvel Studios continued its winning streak at the box office this weekend, as “Guardians of the Galaxy Vol. 2” opened to a strong $145 million in the U.S. and Canada, according to studio estimates.
  • On Semiconductor (ON) Q1 EPS 18c/$1.44B; sees Q1 revs $1.29B-$1.34B and gross margins 34.7%-36.7%
  • Comcast (CMCSA) and Charter (CHTR) are forming a wireless partnership, reports the Wall Street Journal, citing sources. The scope of the partnership is unclear, the report says.https://goo.gl/hxeT1R
  • Liberty Global (LBTYA) Q1 operating income down 18.1% to $431M; Q1 revenue $3.519B vs. est. $3.52B; reports organic RGU net additions up 40% to 244,300
  • Liberty Global LiLAC (LILA) Q1 revs $911M vs. est. $908M; Q1 operating income $138M

 

 


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 conten

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