Morning Preview: October 25, 2017

Scott GreenDaily Market Report

Early Look
Wednesday, October 25, 17
 
U.S. stock futures are flat, taking a small breather after yesterday’s better-than-expected earnings induced rally, while defensive and safe-haven assets decline. Bond prices are lower, with the yield on the 10-year topping 2.44%, its best levels since May, as markets anticipate the announcement of the next Fed Chairperson over the next week and a resolution on the tax reform bill in Washington that could further push stocks to new record highs. Today marks another very busy day of corporate earnings results along with a few data points (housing), though no Fed speakers in this “black-out” period ahead of a policy meeting. In Asian markets, The Nikkei Index fell-97 points to settle at 21,707 (snapping its more than 2-week winning streak of gains), the Shanghai Index gained 8 points to send at 3,396, and the Hang Seng Index rose 147 points to end at 28,302. In Europe, the German DAX is flat, holding above the 13,000 level, while the FTSE 100 is down about -15 points at 7,510.
 
Stocks opened sharply higher on Tuesday, only to remain there for the duration of the session following a better-than-expected round of earnings from blue-chip companies CAT and MMM. With yesterday’s move, the Dow Industrials hit another new all-time high, while the Nasdaq closed little changed ahead of some key earnings reports later this week (AMZN, GOOGL, INTC, MSFT). Both the S&P and the Nasdaq remain within 1% of their own records. Financials led the gains, with materials and industrials not far behind, and healthcare lagging. The benchmark 10-year Treasury yield climbed 3 bps to 2.405%, breaking past the 2.40% level and its highest since May.
 
Market Closing Prices Yesterday
·      The S&P 500 Index gained 4.15 points, or 0.16%, to 2,569.13
·      The Dow Jones Industrial Average rose 167.80 points, or 0.72%, to 23,441.76
·      The Nasdaq Composite climbed 11.60 points, or 0.18%, to 6,589.43
·      The Russell 2000 Index advanced 2.93 points, or 0.20% to 1,500.42
 
Events Calendar for Today
·      7:00 AM EST       MBA Mortgage Applications Data
·      8:30 AM EST       Durable Goods Orders, Sept-P…est. 1.0%
·      8:30 AM EST       Durable Goods Ex: transportation, Sept-P…est. 0.5%
·      9:00 AM EST       FHFA House Price Index MoM for August…est. 0.4%
·      10:00 AM EST     New Home Sales MoM for September…est. 554K
·      10:30 AM EST     Weekly DOE Inventory Data
 
Earnings Calendar:
·      Earnings Before the Open: AB, ALK, ALLY, ANTM, AOS, APH, BA, BAX, BTU, DPS, EXP, FCX, FLIR, GRUB, HBAN, HES, IP, IR, KO, LEA, LH, LYG, NDAQ, NLSN, NSC, NYCB, OC, SIRI, SLAB, TMO, TRVG, TUP, V, WBA, WEC, WSO, WYN
·      Earnings After the Close: ABX, ACGL, AFL, AMGN, BLKB, BWLD, CA, CLGX, CSGP, CTXS, DLB, DLR, FFIV, FNF, FTI, KIM, KN, LM, LSTR, LVS, MC, MLNX, NOW, NTGR, NXPI, ORLY, PKG, PLXS, PTC, RJF, SSNC, TER, TSCO, TYL, UCTT, UNM, VAR, WCN, XLNX
   
World News
·      The U.K. economy accelerated in the third quarter, boosting expectations that the Bank of England may raise interest rates as soon as next month, as the Office for National Statistics said U.K. GDP expanded 0.4% in Q3 vs. the previous three months, an annualized rate of 1.6%.
·      German business sentiment surged to a record high in October, as the Ifo Institute’s monthly survey showed that its business climate index increased to 116.7 points from 115.3 points in September…above the 115.1 points estimate
·      Investor Intelligence Poll showed that newsletter writers classified as bulls rises to 62.3%, highest since March 1, from 60.0% last week while those bearish slip to 15.1% from 15.2% last week; prior week’s 15.1% was lowest since May 2015 and those expecting a correction tumbles to 22.6%, lowest since March 1, vs 24.8% last week
 
Sector News Breakdown
Consumer
·      Chipotle (CMG) shares fell -10%; Q3 EPS 69c/$1.13B vs. est. $1.63/$1.14B; Q3 comp sales up 1% vs. est. 1.2%; sees FY comparable sales +6.5% vs. estimate +7.2%; 3Q labor costs as percentage of revenue 27.2%; 3Q restaurant level operating margin 16.1%; sees FY17 new restaurant openings slightly below the low end of 195-210
·      Inter Parfums (IPAR) raises FY17 sales view to $575M-$580M from $560M-$570M (est. $572.6M); sees Q3 sales $169.5M vs. est. $160.5M
·      iRobot (IRBT) Q3 EPS 76c/$205.4M vs. est. 46c/$205M; raises FY17 EPS view to $1.65-$2.00 from $1.35-$1.70 and raises FY17 revenue view to $870M-$880M from $840M-$860M
·      Robert Half (RHI) Q3 EPS 68c/$1.32B vs. est. 70c/$1.34B; 3Q gross margin 41.2%; sees Q4 EPS 60c-66c on revs $1.287B-$1.347B vs. est. 66c/$1.29B
·      USANA (USNA) Q3 EPS 97c/$261.8M vs. est. 91c/$259.47M
 
Energy
·      The American Petroleum Institute (API) said U.S. crude supplies rose by 519,000 barrels for the week ended Oct. 20, but also showed a drop of 5.8 million barrels in gasoline stockpiles, while inventories of distillates fell by nearly 5 million barrels
·      Nabors Industries (NBR) Q3 EPS loss (42c)/$662M vs. est. loss (34c)/$674.32M
·      Range Resources (RRC) Q3 EPS 5c/$587M vs. est. 3c/$515.1M; Q3 production totaled 1.99 Bcfe per day, an increase of 32% compared to the prior-year quarter
·      Viper Energy (VNOM) Q3 EPS 24c vs. est. 23c; Q3 operating income $42.5M; 3Q production 12,611 boe/d; sees FY production 11.0 to 11.5 mboe/d
 
Financials
·      Visa (V) Q4 EPS 90c/$4.86B vs. est. 85c/$4.63B; payments volume growth, on a constant dollar basis and excluding Europe co-badge volume, was 10% over the prior year; sees FY18 EPS growth in the mid-40s on GAAP nominal dollar basis
·      Capital One (COF) Q3 EPS $2.42/$7.0B vs. est. $2.15/$6.81B; 3Q net interest margin 7.08%; Q3 net interest income $5.70B, Q3 non-interest income $1.29B; Q3 provision for credit losses $1.83B and Q3 loans held for investment $252.42B
·      Discover (DFS) Q3 EPS $1.51/$2.53B vs. est. $1.54/$2.5B; 3Q provision for loan losses $674M and 3Q net interest income $2.05 billion
·      Ameriprise Financial (AMP) Q3 EPS $3.53/$3.00B vs. est. $2.79/$2.99B
·      Chemical Financial (CHFC) Q3 EPS 79c vs. est. 77c; Q3 net interest margin was 3.40% in the third quarter of 2017, compared to 3.41% in the second quarter of 2017
·      Healthcare Trust (HTA) Q3 FFO 42c/$176M vs. est. 41c/$158M
·      Legacy Texas Financial (LTXB) Q3 non-GAAP EPS 61c (in-line) and Q3 Net charge-offs $12.35M and a provision for credit losses of $7.2M an increase of $902,000 from Q2
·      PennantPark Floating Rate (PFLT) files to sell 6M shares of common stock
·      Torchmark (TMK) Q3 EPS $1.23/$1.05B vs. est. $1.20/$1.02B; sees FY17 EPS $4.77-$4.83, vs. consensus $4.75
·      Trustmark (TRMK) Q3 EPS 51c vs. est. 48c; Q3 net interest margin 3.47%,
·      WR Berkley (WRB) Q3 revs $2.03B vs. est. $1.92B; 3Q net premiums written $1.57 billion; 3Q net premiums earned $1.58 billion and 3Q combined ratio 101%
·      XL Group (XL) Q3 EPS loss ($4.00) vs. est. loss ($3.91); 3Q net premiums written $2.33B, 3Q net investment income $202.8M, 3Q Reinsurance gross premiums written +10.9%
 
Healthcare
·      Acadia Health (ACHC) fell -11%; cut year EPS to $2.23-$2.25 from $2.42-$2.47 (est. $2.44) after Q3 EPS 58c/$716.7M vs. est. 65c/$726.5M; 3Q consolidated same facility revenue +5.5%
·      Express Scripts (ESRX) Q3 EPS $1.90/$24.68B vs. est. $1.87/$25.64B; reports adjusted claims of 343.6M, down 1% vs. last year; raises 2017 adjusted EPS outlook to $6.97-$7.05 from $6.95-$7.05 (est. $6.99); says CFO Slusser leaving to pursue other opportunities
·      Illumina (ILMN) Q3 EPS $1.11/$714M vs. est. 99c/$692.8M; Q3 gross margin was 67.5% compared to 70.2% in the prior year period; sees FY EPS $3.73-$3.78 vs. estimate $3.65
·      NuVasive (NUVA) Q3 EPS 52c/$247.4M vs. est. 48c/$255.36M; announces $100M share repurchase program; lowers 2017 EPS outlook to $1.91 from $2.00 (est. $1.99) and lowers 2017 revenue outlook to $1.03B from $1.065B (est. $1.06B)
·      Idera Pharmaceuticals (IDRA) files to sell $60M in common stock
·      Sanofi SA (SNY) brought a patent-infringement suit against Mylan NV (MYL) in a U.S. court over the French company’s disposable insulin pen and vial-drug products for diabetes.
·      Stryker Corporation (SYK) announced that it has acquired control of VEXIM, a French medical device company listed on the Euronext Growth stock exchange in France
 
Industrials & Materials
·      Canadian National (CNI) Q3 EPS C$1.31/$3.22B vs. est. C$1.32/C$3.27B; reaffirms 2017 adjusted EPS outlook C$4.95-C$5.10; boosted its capital expenditure forecast for the full year to C$2.7B
·      Carlisle (CSL) Q3 EPS $1.37/$1.09B vs. est. $1.35/$1.05B; boosted FY capital expenditure view to $150M from prior $125M-$150M
·      Ingersoll-Rand (IR) Q3 EPS $1.44/$3.67B vs. est. $1.43/$3.7B
·      Kraton (KRA) Q3 EPS $1.51/$510.9M vs. est.94c/$481.77M; sees FY adjusted Ebitda $375M
·      Leidos (LDOS) awarded prime contract by U.S. Army worth up to $728M
·      Scorpio Bulkers (SALT) files to sell 10M shares of common stock
 
Technology, Media & Telecom
·      AT&T (T) Q3 EPS 74c/$39.7B vs. est. 74c/$40.08B; Q3 wireless Ebitda margin 42%; Q3 adjusted Ebitda $12.99B vs. est. $13.40B; 3Q Wireless net adds 3.0M, wireless total postpaid churn +0.84%; Q3 DIRECTV NOW subscribers net additions +300,000 and wireless Ebitda margin 42%
·      Advanced Micro (AMD) shares down -8%; Q3 EPS 10c/$1.64B vs. est. 8c/$1.51B; Q3 adjusted gross margin 35%, vs. est. 34%; sees 4Q revenue down 15% vs. Q3, plus/minus 3% and now sees 2017 revenue up by greater than 20% (had seen 2017 revenue growth mid to high teens percentage)
·      Akamai (AKAM) shares up 8%; Q3 EPS 62c/$621M vs. est. 59c/$610.69M; sees Q4 EPS 60c-65c on revs $638M-$656M vs. est. 59c/$641.19M
·      Juniper (JNPR) Q3 EPS 55c/$1.26B (in-line with est.); sees Q4 EPS 52c, plus/minus 3c vs. est. 60c and sees Q4 revenue $1.23B, plus/minus $30M, well below consensus $1.33B
·      Texas Instruments (TXN) Q3 EPS $1.26/$4.12B vs. est. $1.12/$3.91B; sees Q4 EPS $1.01-$1.15, on revenue of $3.57B-$3.87B vs. est. $1.01/$3.66B
·      Manhattan Associates (MANH) Q3 EPS 51c/$152.9M vs. est. 49c/$150.31M; sees FY17 EPS $1.85-$1.89 on revs $590M-$600M vs. est. $1.87/$594.78M
·      Mercury Systems (MRCY) Q1 EPS 37c/$106.1M vs. est. 26c/$105.2M; sees 2Q adjusted EPS 28c-30c on revs $112.5M-$116.5M vs. est. 29c/$112.0M; raises FY18 EPS to $1.29-$1.35 from $1.15-$1.23 and raises year rev view
·      Shutterfly (SFLY) Q3 EPS loss (78c)/$195.4M vs. est. loss (79c)/$191.64M; sees Q4 EPS $2.60-$3.00 on revs $538M-$568M vs. est. $2.82/$565.41M
·      ZixCorp (ZIXI) Q3 EPS 7c/$16.6M vs. est. 7c/$16.8M; annual contract value increased 10% to $66.1M and new first year orders increased 11% to $2.1M

  

________________________________________________________________________________________
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.

Live Trading

Open an Account

Paper Trading

Register