Morning Preview: October 6, 2017

Regal HelpdeskDaily Market Report

Early Look
Friday, October 6, 17
 Stocks futures are little changed, holding steady a day after record closing highs for major averages again, as investors await the Nonfarm payroll report later this morning. For the week as of Thursday, the Dow industrials were looking at a gain of 1.65%. The S&P 500 and Nasdaq Composite were each on track for rises of around 1.3%. With the S&P 500 closing at a record Thursday, it marked the longest string of all-time high closes (six consecutively) since 1997 (when it had 8-straight), according to WSJ Market Data Group, and was the 43rd record close of the year for the S&P. The extended winning streaks for major averages (8-straight for S&P and Nasdaq and 7-straight for the Dow Industrials) add to a series of records on the back of hopes around reforms to the tax code and its positive implications for businesses. Yesterday, tech outperformed led by Internet giants Amazon after it was said to be experimenting with a new delivery service and Netflix as it plans to raise the price of its most popular service plan. Markets also got a midday boost after the House of Representatives passed a budget resolution–seen as setting the stage for an overhaul of the tax code. In corporate news overnight, Costco shares slip after earnings results while data-center company Switch sold 31.25 million shares at $17 apiece in its IPO.
 
In Asian markets, The Nikkei Index gained 62 points to settle at 20,690, the Shanghai Index remained closed for its week-long holiday and the Hang Seng Index rose 78 points to settle at 28,458. In Europe, the German DAX is up around 10 points at 12,980, while the FTSE 100 is higher by about 15 points at 7,525. The FTSE 100 advance (7th straight session) comes as the British Pound falls further amid political turmoil. Sterling is now set for a 2.5% weekly tumble, its biggest since the week ending Oct. 7, 2016, when the currency lost 4.1% against the dollar after a flash crash.
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 14.33 points, or 0.56%, to 2,552.07
·      The Dow Jones Industrial Average rose 113.75 points, or 0.50%, to 22,775.39
·      The Nasdaq Composite spiked 50.73 points, or 0.78%, to 6,585.36
·      The Russell 2000 Index advanced 4.32 points, or 0.29% to 1,512.09
 
Events Calendar for Today
·      8:30 AM EST       Change in Nonfarm Payrolls for September…est. 80K
·      8:30 AM EST       Change in Private Payrolls for September…est. 72K
·      8:30 AM EST       Change in Manufacturing Payrolls for September…est. 8K
·      8:30 AM EST       Unemployment Rate for September…est. 4.4%
·      8:30 AM EST       Average Hourly Earnings MoM for September…est. 0.3%
·      8:30 AM EST       Average Weekly Hours for September…est. 34.4 hours
·      10:00 AM EST     Wholesale Inventories MoM, Aug-F…est. 0.0%
·      1:00 PM EST        Baker Hughes Weekly Rig Count
·      3:00 PM EST        Consumer Credit for August…est. $15.54B
 
Fed Speakers
·      9:15 AM EST       Fed’s Bostic speaks at Workforce Conference
·      12:15 PM EST     Fed’s Dudley speaks on Monetary Policy
·      12:45 AM EST     Fed’s Kaplan speaks at Workforce Conference
·      1:00 PM EST        Fed’s Bullard speaks on Economy in St. Louis
 
World News
·      Puerto Rico faces a government shutdown on Oct. 31, including halting its hurricane recovery, if Congress doesn’t provide billions in emergency funds, said Treasury Secretary Raul Maldonado. While attention has focused on the commonwealth’s staggering $74 billion debt, Puerto Rico faces a more immediate crisis in the wake of the storm. It’s running short of money for fuel, salaries of recovery workers and food aid
·      Orders for Germany’s important manufacturing sector surged in August, reflecting a solid upswing in the sector, as the total manufacturing orders increased 3.6% compared with July
 
Sector News Breakdown
Consumer
·      Costco (COST) Q4 EPS $2.08/$42.3B vs. est. $2.02/$41.62B; Q4 membership fees $943M; Q4 Total Comp Sales with gas/FX up 6.1% vs. est. up 5.2%; Q4 Total comp sales Ex-Gas/FX up 5.7% vs. est. up 5.1%; Sept. Total Comp Sales up 8.9% vs. est. up 6.2%
·      Helen of Troy (HELE) Q2 ESP $1.65/$378.5M vs. est. $1.35/$376M; sees year EPS $6.50-$6.90 vs. est. $6.71 and year sales $1.56B-$1.59B vs. est. $1.59B
·      Yum China (YUMC) Q3 EPS 53c/$2.04B vs. est. 56c/$1.98B; Q3 same-store sales grew 6%, including growth of 7% at KFC, flat at Pizza Hut; initiates quarterly cash dividend of 10c; raises share repurchase plan to $550M
·      Macau casino operators dropped in Hong Kong after government statistics showed a decline in tourist numbers over the first few days of the holiday week; Statistics from Macau’s tourism office showed the number of mainland Chinese tourists from Oct. 1-4 dropped 5.1% y/y to 363,435; total tourist numbers fell 2% y/y (watch WYNN, MLCO)
·      Southwest (LUV) traffic fell as flew 9.5B revenue passenger miles (RPMs) in September 2017, a decrease of 4.5% from the 9.9B RPMs flown in September 2016. Available seat miles (ASMs) decreased 1.6% to 11.6B in September 2017, compared with September 2016 ASMs of 11.8B; reaffirms forecast for Q3 RASM flat-down 1%
·      Havertys (HVT) Q3 sales $207.6M vs. est. $216.5M; total written sales for 3Q fell 3.5%; written comp sales fell 4.2%
 
Energy
·      Carrizo Oil & Gas, Inc. (CRZO) sold assets in the Marcellus Shale to a subsidiary of Kalnin Ventures LLC for $84M in cash, and could receive contingent payments of up to $7.5M
·      Refiners Valero (VLO) downgraded to neutral and Marathon (MPC) downgraded to underweight at JP Morgan
 
Financials
·      Annaly Capital (NLY) announces offering of 65M shares of common stock
·      Synchrony (SYF) downgraded to Neutral from Buy at Bank America
·      Banco de Sabadell SA, one of Catalonia’s biggest banks, said on Thursday that it would move its headquarters out of the restive Spanish region, as bankers said another major Catalan lender, CaixaBank SA, also was considering a relocation
 
Healthcare
·      Bayer AG (BAYRY) halted a phase III study for the use of blood-thinning drug Xarelto in a further indication because it didn’t show improved efficacy compared with another treatment using aspirin.
·      Immunogen (IMGN) 14.5M share secondary priced at $6.50 per share
·      Amgen (AMGN) said the Journal of Clinical Oncology has published positive results from the IMLYGIC® (talimogene laherparepvec) Phase 2 ‘264 study/the study met its primary endpoint of objective response rate (ORR)
 
Industrials & Materials
·      Giga-tronics (GIGA) has received an additional $4.9M order extending ongoing production of its high-performance RADAR filters for a major aerospace company; sees Q2 revenue $2.0M-$2.2M vs. $4.4M a year ago
·      Coeur Mining (CDE) announced Q3 production of 9.5M silver equivalent ounces, comprised of 4.0M silver ounces and 93,293 gold ounces. Q3 silver equivalent production increased 7% quarter-over-quarter and 10% year-over-year
·      Honeywell International Inc. (HON) is pursuing an acquisition of water-filtration company Evoqua Water Technologies, which is laying the groundwork for an initial public offering, according to people familiar with the matter. https://goo.gl/qnB317
 
Technology, Media & Telecom
·      Switch Inc. (SWCH) 31.25M share IPO priced at $17 apiece, after previously stating a target range of $14-$16. At that price, Switch stands to collect at least $531.25M at a valuation of about $4.2B
·      Synchronoss Technologies Inc. (SNCR) has resumed talks with Siris Capital Partners to sell itself, because Siris raised its offer and agreed to a period of limited exclusivity to make a buyout, Synchronoss said Thursday. https://goo.gl/mB66SY
·      Hedge fund Elliott Management Corp’s attempt to acquire U.S. networking software maker Gigamon Inc (GIMO) has ground to a halt over price disagreements, people familiar with the matter said. Gigamon rejected Elliott’s latest offer in the past few weeks after it came in below the company’s share price, one of the sources said https://goo.gl/fUyw3c
·      Globalstar (GSAT) 73.4M share secondary priced at $1.65 per share
·      Nintendo (NTDOY) climbed to a more than nine-year high on Friday following a report that the Japanese games maker had raised orders for its Switch console on strong demand
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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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