Morning Preview: November 1, 2017

Scott GreenDaily Market Report

Early Look
Wednesday, November 1, 17
  
Stock futures are surging, with major benchmarks on track to open about 0.5% higher than yesterday, setting new record intraday levels for major averages ahead of a busy three days of news. Stocks rallied Tuesday ahead of today’s expected unveiling of tax reform from the House, while markets also await confirmation of the next Fed Chair (supposedly tomorrow and the choice to be current governor Powell) and the important monthly jobs report on Friday. There is also an FOMC monetary policy meeting concluding today, though no change to rates are expected. We also get monthly auto sales data today, with expected strength seen given the impact of the recent hurricanes. Earnings continue to come in better-than-expected for large cap drivers, ahead of results from AAPL and FB this week. Markets were also buoyed this morning by an upbeat set of manufacturing data from China (which sent Asian markets skyrocketing) and a continued rally in oil prices, which continued to push above a two-year high. U.S. stocks closed at another record high Tuesday for the Nasdaq Composite, led by large cap and semiconductors (another 17-year high for the SOX index), with major averages posting their best monthly gains since February. Tuesday marked the 62nd record close of 2017 for the NASDAQ. Technology, consumer staples and energy shares helped lead the gains.
 
China’s central bank said Wednesday it pumped 498 billion yuan ($75.05 billion) of liquidity into the country’s banking system in October through a medium-term lending facility. In Asian markets, The Nikkei Index surged 408 points (1.86%) to settle at 22,420. the Shanghai Index gained 2 points to settle at 3,395and the Hang Seng Index jumped 348 points (1.23%) to end at 28,594. In Europe, the German DAX is up over 200 points (1.5%) trading at 13,430, while the FTSE 100 is higher by around 10 points, back above the 7,500 level. In currency markets, the dollar with modest gains, while Bitcoin at it again, rising to new record highs above the $6,500 level.
 
For the month, the Dow rose 4.3% while the S&P 500 is up 2.2% and the Nasdaq ended up 3.6%. All three posted their biggest monthly percentage rise since February. Both the Dow and the S&P wrapped up their seventh straight monthly gain, making for the longest such streak for the blue-chip gauge since one ended April 2012, and the best for the S&P 500 since May 2013. The Nasdaq rose for its fourth straight month.
 
Market Closing Prices Yesterday
·      The S&P 500 Index gained 2.43 points, or 0.09%, to 2,575.26
·      The Dow Jones Industrial Average rose 28.50 points, or 0.12%, to 23,377.24
·      The Nasdaq Composite spiked 28.71 points, or 0.43%, to 6,727.64
·      The Russell 2000 Index advanced 11.64 points, or 0.78% to 1,502.53
 
Events Calendar for Today
·      7:00 AM EST       MBA Mortgage Applications Data
·      8:15 AM EST       ADP Employment Change for October…est. 196K
·      9:45 AM EST       Markit US Manufacturing PMI, Oct-F…est. 54.5
·      10:00 AM EST     ISM Manufacturing Index for October…est. 59.4
·      10:00 AM EST     Construction Spending MoM for September…est. (-0.2%)
·      10:30 AM EST     Weekly DOE Inventory Data
·      2:00 PM EST        FOMC Policy Meeting – no changes expected
 
Earnings Calendar
·      Earnings Before the Open: AGN, APO, BDC, BG, CDW, CEVA, CLX, COMM, CRTO, CSTE, CTSH, EAT, EL, FLOW, GRMN, GRPN, HFC, INXN, LITE, LFUS, NVO, NYT, ORBK, PBI, SBGI, SODA, SPR, TAP, TEL, TEX, TRI, VRSK, WEX, WFT, ZBH
·      Earnings After the Close: ACXM, ALL, ANSS, ARRS, BHF, BXP, CAKE, CACI, CAVM, CSGS, CTRP, DXCM, EGOV, EQIX, FB, FEYE, FIT, FLT, GLUU, GPRO, HIVE, HUBS, ITRI, KHC, LNC, LPSN, MANT, MET, MRO, MUSA, MWA, MX, OCLR, OXY, PI, PRU, PXD, QCOM, QRVO, QTWO, RIG, RYN, SHAK, SYMC, TRNC, TSLA, TTMI, ULTI, VIAV, XPO, YELP, ZAGG, ZEN
   
World News
·      A private gauge of China’s factory activity held steady in October, as the Caixin China manufacturing purchasing managers’ index remained steady at 51.0 in October. While the rate of growth in production was the weakest in four months, some sub-categories–including new orders–improved, Caixin said.
·      China’s central bank said Wednesday it pumped 498 billion yuan ($75.05 billion) of liquidity into the country’s banking system in October through a medium-term lending facility. The central bank also extended 38.4 billion yuan in loans via pledged supplemental lending to China’s three policy banks last month
·      Property damage claims from the devastating wildfires in Northern California earlier this month have surpassed $3.3 billion, California’s insurance commissioner said Tuesday, making the blazes the costliest in U.S. history
·      House Republicans plan to keep a top individual tax rate of 39.6% for the highest-income earners, according to two people familiar with the emerging tax overhaul set to be released later this week.  GOP may raise the income threshold that would trigger that top rate – Bloomberg
·      U.K. manufacturing PMI at 56.3 in October vs. 55.9 FactSet estimate
 
Sector News Breakdown
Consumer
·      Clorox (CLX) Q1 EPS $1.46/$1.5B vs. est. $1.42/$1.48B; sees FY EPS from continuing operations $5.47-$5.67 vs. estimate $5.64 and sees FY sales +1% to +3%
·      B&G Foods (BGS) Q3 EPS 55c/$408.4M vs. est. 47c/$390.85M; sees FY adjusted EPS $2.03-$2.17, estimate $2.05 on sales $1.66B-$1.69B vs. est. $1.66B
·      Big 5 Sporting (BGFV) shares up 10%; Q3 EPS 31c/$270.5M vs. est. 29c/$272.3M; Q3 comp sales fell (-2.9%); sees Q4 EPS 16c-28c vs. est. 31c; sees Q4 SSS to be in the negative low single-digit range
·      Cooper-Standard (CPS) Q3 EPS $2.11/$869M vs. est. $2.37/$844.14M; raises FY17 revenue view to $3.58B-$3.61B from $3.48B-$3.53B (est. $3.55B); narrows FY17 adjusted EBITDA margin to 12.4%-12.6% from 12.3%-12.8%
·      Modine Manufacturing (MOD) Q2 EPS 36/$508.3M vs. est. 22c/$466.33M; raises FY18 EPS view to $1.30-$1.45 from $1.20-$1.35 (est. $1.43) and sees FY18 sales up 32%-36% from last year
·      Papa John’s (PZZA) Q3 EPS 60c/$431.7M vs. est. 60c/$427.7M; cuts FY17 EPS growth to 3%-7% from 8%-12% and cuts FY17 North America comparable sales to up to 1.5% from 2%-4%; Q3 system-wide comparable sales increases of 1.0% for North America and 5.3% for international
·      Sturm Ruger & Co. (RGR) Q3 EPS 53c/$104.8M vs. est. 60c/$126.2M; seesQ4 EPS 74c/$139.2M
 
Energy
·      The American Petroleum Institute (API) reported U.S. crude supplies dropped by -5.1M barrels for the week ended Oct. 27, while also showed a decline of -7.7M barrels in gasoline stockpiles, while inventories of distillates lost -3.1M barrels
·      Anadarko (APC) Q3 EPS loss ($1.27); cut its sales volume forecast for the full year to 224-228 MMBoe, down from prior 231-235; sees 4Q sales volume 56-58 MMBoe and sees 4Q capital expenditure $1.07 billion to $1.27 billion
·      Concho Resources (CXO) Q3 EPS 45c/$627M vs. est. 27c/$610.51M; said delivered quarterly production of 193.2 Mboepd and full-year 2017 production expected to exceed the high end of annual growth guidance range of 24% to 26%; it is targeting crude oil production growth of more than 27% over 2016
·      Devon Energy (DVN) Q3 EPS 46c/$3.16B vs. est. 39c/$3.18B; net production in Q3 averaged 527,000 oil-equivalent barrels per day; remain on track to achieve our 2017 exit rate production targets, and we are positioned to deliver attractive, high rate-of-return growth in 2018
·      HollyFrontier (HFC) Q3 EPS $1.14/$3.72B vs. est. 90c/$3.24B; Q3 production 469,600 barrels per day
·      Hi-Crush Partners (HCLP) Q3 EPS 32c/$167.6M vs. est. 37c/$172.23M; expects Q4 sales volumes to increase to 2.7M-2.9M tons; said that pricing is expected to improve modestly through the end of the year, driven by ongoing tightness in frac sand supply and demand, particularly for fine mesh sand
·      Newfield Exploration (NFX) Q3 EPS 52c/$439M vs. est. 41c/$417.18M; Q3 total net production was approximately 161,700 BOEPD, comprised of 42% oil, 22% natural gas liquids and 36% natural gas; 2017 domestic guidance was raised to approximately 152,000 BOEPD from 149K
·      Oneok (OKE) Q3 EPS 43c/$517.2M Ebitda vs. est. 45c/$503.7M; Q3 natural gas volumes processed increased 16%, NGLs transported on gathering lines increased 5% and natural gas transportation capacity contracted increased 5% YoY; reaffirms year Ebitda outlook
·      Aqua America (WTR) Q3 EPS 43c/$215M vs. est. 43c/$234.41M; backs FY17 EPS view $1.34-$1.39 vs. est. $1.36; cuts FY17 same-system operations and maintenance expenses increase of less than 2% from increase of 1%-2%
·      Bill Barrett (BBG) Q3 EPS loss (8c)/$67.86M vs. est. loss (20c)/$62.88M; reaffirms FY17 Capex view $250M-$270M and sees Q4 capital expenditures $80M-$90M
·      Western Gas Partners (WES) Q3 EPS 38c/$574.69M vs. est. 48c/$557.42M
·      Westport Fuel Systems (WPRT) announced that BRC Gas Equipment was awarded a competitive tender bid by Algeria’s National Company for Petroleum Products Marketing and Distribution, NAFTAL, to supply 40,000 liquid petroleum gas sequential injection systems to be delivered into the growing Algerian market in 2018
 
Financials
·      Artisan (APAM) Q3 EPS 65c/$204.6M vs. est. 63c/$203.8M; Q3 average assets under management $111.4B
·      Fiserv (FISV) Q3 EPS $1.27/$1.40B vs. est. $1.31/$1.45B; sees 2017 adjusted EPS $5.05-$5.12, vs. consensus $5.10 and expects internal revenue growth of 4%
·      Paychex (PAYX) Q3 EPS 29c/$101.3M vs. est. 19c/$100.42M
·      RenaissanceRe (RNR) Q3 operating EPS loss ($13.81) vs. est. loss ($12.05); 3Q net premiums written $483.2M, 3Q net investment income $40.3M and 3Q net premiums earned $547.8M
·      Voya (VOYA) 3Q net income of 81c reflects a 71c after-tax loss from the annual review of actuarial assumptions and models; authorizes an added $800M of share repurchases
 
Healthcare
·      Envision Healthcare (EVHC) shares fell -33%; Q3 EPS 73c/$1.99B vs. est. 88c/$1.99B; sees Q4 EPS 44c-54c on revs $1.88B-$2.02B vss. Est. $2.07B; said it would review strategic alternatives that could include a sale
·      Masimo (MASI) Q3 EPS 70c/$193.7M vs. est. 53c/$188.61M; sees FY EPS $2.95 on revs $774M vs. est. $2.80/$769.3M
·      Avinger, Inc. (AVGR) said the company has received 510(k) clearance from the U.S. FDA for modifications to the company’s Pantheris® Lumivascular atherectomy system
 
Industrials & Materials
·      U.S Steel (X) shares gained 8%; Q3 adjusted EPS 92c/$3.25B vs. est. 70c/$3.07B; sees year EPS $1/70, above estimates of $1.63 (earnings better than comp AKS on Tuesday morning)
·      Loma Negra (LOMA) 50.2M share IPO priced at $19.00
·      Constellium (CSTM) 25M share Spot Secondary priced at $11.00
·      C.H. Robinson (CHRW) Q3 EPS 85c/$3.78B vs. est. 82c/$3.66B
·      Terex (TEX) Q3 EPS 50c/$1.1B vs. est. 37c/$1.03B; raises FY17 EPS view to $1.20-$1.30 from $1.05-$1.15 vs. est. $1.15
·      Ternium (TX) Q3 EPS 99c/$2.48B vs. est. 97c/$2.49B; announced that its board has appointed Maximo Vedoya, Ternium Mexico’s executive VP, to succeed Daniel Novegil as Ternium’s CEO, effective March 1
·      Wabash National (WNC) share fall -11%; 3Q results and full-year guidance miss estimates citing shipment pick-up delays due to the recent hurricanes, ongoing investment in WNC’s molded structural composites start-up, a tighter labor market and costs associated with the Supreme Industries acquisition hurt 3Q results
 
Technology, Media & Telecom
·      Electronic Arts (EA) Q2 EPS 62c/$1.18B vs. est. 54c/$1.18B; 2Q digital net revs $689M vs. $566M YoY; 2Q packaged goods and other revs $270M vs. $332M y/y; sees FY18 revenue $5.15B and EPS $4.20 up from prior $5.1B/$4.10 but below est. $5.20B and $4.25b
·      3D Systems (DDD) shares fell -20%; Q3 EPS 20c/$152.91M vs. est. 12c/$162.91M; says is prudent to withdraw guidance in current environment (shares of SSYS, XONE, VJET move on report); Q3 gross margins 38.3% vs. Bloomberg estimate 51.2%
·      Check Point (CHKP) shares fell -9%; Q3 EPS $1.30/$455M vs. est. $1.24/$449.19Ml guided Q4 EPS $1.45-$1.55 on revs $485M-$525M vs. est. $1.48/$529.2M
·      Cotiviti Holdings (COTV) Q3 EPS 39c/$174.2M vs. est. 38c/$174.06M; cuts FY17 revenue view to $678M-$683M from $688M-$700M (est. $694.83M) and lowers net income guidance to $91M-$95M from $97M-$103M; cuts adjusted EBITDA view to $265M-$268M from $266M-$272M
·      FormFactor (FORM) Q3 EPS 34c/$143.7M vs. est. 32c/$140.4M; sees Q4 EPS 24c-30c on revenue $126M-$134M vs. est. 26c/$132M
·      Frontier Communications (FTR) Q3 EPS loss (94c)/$2.25B vs. est. loss ($1.06)/$2.25B; sees Q4 adjusted EBITDA $910M-$930M; cuts FY17 adjusted free cash flow to $730M-$750M from prior $800M-$900M and sees FY17 capex $1.15B-$1.2B from prior $1.1B-$1.2B
·      Inphi (IPHI) Q3 EPS 36c/$84.5M vs. est. 36c/$84.9M; sees Q4 EPS 33c-39c on revs $84.3M-$88.3M vs. est. 37c/$87.5M
·      Pixelworks (PXLW) files $50M common stock shelf
·      Plantronics (PLT) Q2 EPS 80c/$210.3M vs. est. 66c/$205.1M; Sees 3Q adjusted EPS 75c to 85c on revenue $215M-$225M vs. est. 74c/$222.8M
·      Qualys (QLYS) Q3 EPS 31c/$59.5M vs. est. 22c/$58.61M; raises FY17 non-GAAP EPS view to $1.04-$1.06 from 87c-91c (est. 90c) and raises FY17 revenue $229.6M-$230.1M, up from the previous guidance of $226.8M-$228.3M
·      R.R. Donnelley (RRD) Q3 EPS 30c/$1.73B vs. est. 29c/$1.73B; sees FY net sales $6.8B-$6.9B and EPS $1.10-$1.23 vs. est. $6.94B/$1.04
·      Verisk Analytics (VRSK) Q3 EPS 84c/$549M vs. est. 78c/$527.64M; 3Q Decision Analytics revenue $355.9M and 3Q Risk Assessment revenue $193.2M
 
 
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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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