Morning Preview: October 2, 2017

Regal HelpdeskDaily Market Report

Early Look
Monday, October 2, 17
U.S. stocks futures kick off the new month and quarter the same way they ended Friday, moving higher and setting new all-time highs. On Friday, the S&P 500 ended modestly higher by 0.67%, the Dow Industrials up 0.23% and the Nasdaq a little over 1%. For the month, the S&P 500 rose 1.9%, the Dow gained 2.1% and the Nasdaq Composite gained 1.05%. For the quarter, the S&P 500 rose 4%, the Dow added 4.9% and the Nasdaq Comp gained 5.8%. There are a few data points later this morning as well as a few speakers that could provide direction for major averages, but markets now await the kick off of quarterly earnings which begins next week. Spain’s IBEX stock benchmark fell about 1% after voters in Catalonia backed secession in a Sunday referendum that was marred by violent clashes. There was also a fatal altercation in Las Vegas overnight after a shooter at Mandalay Bay Hotel killed 20 people (some reports have the number as high as 50) and injuring over 100 according to reports. In Asian markets, The Nikkei Index gained 44 points to settle at 20,400, the Shanghai Index and the Hang Seng Index were both closed for holiday. European stocks rise for 8th straight session as the euro slides after a violent Catalonia vote. In Europe, the German DAX is up about 40 points at 12,870, while the FTSE 100 is also up around 40 points at 7,410.
Market Closing Prices Yesterday
·      The S&P 500 Index climbed 9.30 points, or 0.37%, to 2,519.36
·      The Dow Jones Industrial Average rose 23.89 points, or 0.11%, to 22,405.09
·      The Nasdaq Composite jumped 42.51 points, or 0.66%, to 6,495.96
·      The Russell 2000 Index advanced 2.08 points, or 0.14% to 1,490.86
Events Calendar for Today
·      9:45 AM EST       Markit US Manufacturing PMI, Sept-F…est. 53.0
·      10:00 AM EST     ISM Manufacturing for September…est. 58.0
·      10:00 AM EST     Construction Spending MoM for August…est. 0.4%
·      2:00 PM EST        Fed’s Kaplan speaks in El Paso
World News
·      gunman firing from a Las Vegas hotel rained a rapid-fire barrage on a huge outdoor concert festival on Sunday night, sending thousands of people fleeing until SWAT units found and killed him. More than 20 victims died, and more than 100 others were wounded, officials said.
·      Spanish stocks and the euro fell on Monday as the country was left reeling from the previous day’s turbulent events that saw thousands of police use force to obstruct voting in the referendum ruled illegal by the constitutional court in Madrid
·      Spanish riot police burst into polling stations across Catalonia on Sunday, seizing ballot boxes and voting papers to prevent a banned referendum on a split from Spain in a show of force aimed at asserting Madrid’s authority over the rebel region – Reuters
·      Japan business confidence among Japan’s large manufacturers improved to a 10-year high in the July-September quarter as the main index measuring large manufacturers’ sentiment rose to plus 22 in the three-month period from plus 17 previously. The tankan reading for large manufacturers was the highest since September 2007
·      National Economic Council Director Gary Cohn said Sunday that the Trump administration’s proposed tax on offshore profits would be in the “10% range.”
·      IHS Markit Ltd. said UK purchasing managers index for the manufacturing industry, fell to 55.9 in September from the revised reading of 56.7 a month earlier/this was below the expectations
·      Three American scientists have won the Nobel medicine prize for discovering the molecular workings of the body clock that controls the circadian rhythm in humans and many other living creatures
Sector News Breakdown
·      Nordstrom (JWN) has struggled to put together the financing for a buyout deal and may not be able to close the deal, the New York Post reports, citing unidentified source; the deal estimated to be worth upwards of $10B
·      Metro Inc., Canada’s third biggest food retailer, said it would buy pharmacy chain Jean Coutu Group for C$4.5 billion ($3.60 billion). Metro Inc, which had last week said it was in talks to buy Jean Coutu, offered C$24.50 per share for the Varennes
·      Cal-Maine (CALM) Q1 EPS loss (33c)/$262.8M vs. est. loss (22c)/$264.3M
·      Macau Sept. Casino revenue rises 16.1% YoY above the 14% estimated rise said Barron’s (Bloomberg survey range from +11% to +17% – watch WYNN, MLCO, LVS)
·      Nissan Motor Co. (NSANY) shares fell overnight after the company said it temporarily suspended vehicle registration in Japan because the domestic factories didn’t follow inspection processes that were agreed with the regulator
·      While electric vehicles currently sell for about $8,000 more than gas guzzlers, they will be cheaper than traditional cars by the early to mid-2020s, Barron’s reported, citing Cowen analyst Jeffrey Osborne. The increasing affordability of electric vehicles may not be good news for Tesla (TSLA), as rivals may see it as an incentive to take the space seriously
·      Casino stocks (WYNN, MGM, LVS) declined following the shooting overnight in Las Vegas
·      First Solar (FSLR) mentioned positively in Barron’s saying it would be the biggest beneficiary if the White House pushes ahead with a tariff hike on imported solar cells, as its products would become cheaper than those sold by foreign rivals. Shares could rise to $65, from $45.88, according to Deutsche Bank. U.S. businesses that buy imported modules for installation on homeowners’ roofs could take a hit, such as: Vivint Solar (VSLR) and Sunrun (RUN).
·      GasLog (GLOP) files $750M mixed securities shelf
·      Bank stocks cut at Baird; Trim banks into strength after stocks have rallied back to post-election highs, even while loan growth is weaker, the yield curve is flatter, and there’s been little progress with Trump’s fiscal agenda, Baird said after cutting Zion (ZION), Regions (RF), and Fifth Third (FITB) to underperform
Industrials & Materials
·      General Dynamics (GD) shares could jump to $240 from a recent $206 in the next year according to Barron’s as its popular Gulfstream corporate jets may benefit from a comeback in business flying that’s struggled since the Great Recession. Other picks included Cessna owner Textron (TXT), Embraer (ERJ) and Bombardier (BBD/B CN)
·      Astec (ASTE) sees upgrades to pellet plants impacting Q3 EPS by 54c-58c per share
Technology, Media & Telecom
·      Walt Disney (DIS) and cable operator Altice USA (ATUS) reached a programming deal that keeps ESPN and other channels on the air as the two companies finalize details on a new contract, according to Reuters
·      LiLAC Group (LILAK) mentioned positively in Barron’s saying the tracking stock representing cable-TV tycoon John Malone’s Latin American and Caribbean cable assets, could rally after falling by almost 50% in the past 16 months as the region recovers from hurricanes Maria and Irma. Its growth prospects are attractive, according Evercore ISI
·      Applied Materials (AMAT) and Taiwan Semiconductor Manufacturing Co. (TSM) are two good bets in the rise of artificial intelligence, which requires innovations in computer-chip technology as well as new designs and approaches to using materials like silicon – Barron’s
·      Media company the Daily Mail & General Trust PLC said its 2017 outlook is in line with market expectations, following the close of its fiscal year on Sept. 30; said it expects group revenue to grow by 1%, adding that adjusted pretax profit would be at the lower end of market forecasts
·      Bain Capital plans to buy Japanese advertising agency Asatsu-DK Inc (9747.T) in a deal that could be worth $1.2 billion or more
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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