Morning Preview: November 13, 2017

Scott GreenDaily Market Report

Early Look
Monday, November 13, 17
  
Stock futures are pointing to a lower open after the S&P 500 and Dow Industrials posted their first weekly drop in two months last Friday. Last week’s slight pullback was most likely worries about delays in the much-anticipated corporate tax cuts out of Washington, while earnings season begins to wrap up. For the week, the Dow fell 0.5% while both the S&P and the Nasdaq lost 0.2%. Both the Dow and the S&P had risen for eight straight weeks, while the Nasdaq broke a six-week rally. All three indexes are hovering near record levels. The underperforming Russell 2000 meanwhile fell a more pronounced 1.2% over the week. In Asian markets, The Nikkei Index fell -300 points to settle at 22,380, the Shanghai Index gained 15 points to end at 3,447, and the Hang Seng Index rose 61 points to end at 29,182. In Europe, the German DAX is down around -30 points trading just under 13,100, while the FTSE 100 is up a few points around 7,440. Bitcoin slumped late last week as the cancellation of a technology upgrade prompted some users to switch out of the cryptocurrency. The cryptocurrency had dropped over 5% since late Friday, and at one point extended its slide from last week’s record to as much as 29%. In corporate news, Dow component General Electric (GE) cut its quarterly dividend this morning in a much-anticipated move, while there were a few M&A headlines as well (see below).
 
Market Closing Prices Yesterday
·      The S&P 500 Index slipped -2.32 points, or 0.09%, to 2,582.30
·      The Dow Jones Industrial Average fell -39.73 points, or 0.17%, to 23,422.21
·      The Nasdaq Composite inched higher 0.89 points, or 0.01%, to 6,750.94
·      The Russell 2000 Index advanced 0.26 points, or 0.02% to 1,475.27
 
Events Calendar for Today
·      2:00 PM EST        Monthly Budget Statement for October …est. (-$58.0B)
   
World News
·      The head of the House of Representatives’ tax-writing committee Kevin Brady said on Sunday he would not accept elimination of a federal deduction for state and local taxes, opposing a proposal from Senate Republicans that would hike taxes for some middle-class Americans.
·      At least 332 people were killed in Iran and Iraq when a magnitude 7.3 earthquake jolted the region, state media in the two countries said
·      OPEC and non-OPEC oil producers are moving towards deciding at their Nov. 30 meeting whether to extend a global agreement to curb oil supply further into 2018, two ministers said on Monday, a quicker time frame than previously indicated. – Reuters
 
Sector News Breakdown
Consumer
·      Hasbro Inc. (HAS) has made a takeover offer for rival Mattel Inc. (MAT), according to people familiar with the matter. Hasbro’s approach to Mattel was made recently, though the terms of any possible deal couldn’t be learned, and the approach may go nowhere https://goo.gl/6rFgX7
·      The global auto industry could prove resilient despite electric vehicles and autonomous vehicles according to Barron’s saying that it could reward shareholders. AmidTesla’s (TSLA) success in electric vehicles, major auto makers like General Motors (GM), Daimler (DDAIF), Volkswagen (VLKAY) are working on new technologies and initiatives, while reorganizing existing operations in value-enhancing ways, the report noted
·      Consumer-staples companies could suffer further before they get better according to Barron’s, facing the “ever-present threat” of Amazon.com (AMZN) as shoppers favor online buying, avoid credit-card debt, and seek out brands that sell sustainable or organic products. Weak performance is inviting activists into Procter & Gamble (PG), Colgate (CL) and Nestle (NSRGY).
 
Energy
·      Royal Dutch Shell PLC (RDSA) said it is selling 71.6 million shares in Woodside Petroleum Ltd. for 31.10 Australian dollars ($23.78) a share, raising A$2.2 billion as it seeks to lower its debt mountain; said it is selling the shares to two investment banks and expects the deal to be completed on Tuesday. https://goo.gl/rLusWi
·      The arrests of billionaire Prince Alwaleed bin Talal and others in Saudi Arabia’s crackdown on corruption have made investors wary of the pending IPO of part of its oil producer Saudi Aramco says Barron’s
·      Oil prices are “ready for a surge” even above their two-year high of $57 a barrel because of sanctions the U.S. may reimpose on Iran, the Saudi Arabia shakeup, and fighting between Kurdish and Iraqi forces, writes Barron’s
 
Financials
·      Equity Commonwealth (EQC), a U.S. real estate investment trust (REIT) focused on office space and chaired by property mogul Sam Zell, has approached Forest City Realty Trust Inc (FCE/A) to discuss a possible merger, people familiar with the matter said. https://goo.gl/ef2bzb
·      WisdomTree (WETF) buying ETF Securities’ European exchange-traded commodity, currency and short-and-leveraged business in stock and cash deal valued at $611M; will exchange $253 million of cash and 30m WisdomTree shares for the business; trims dividend to 3c from 8c
·      PayPal (PYPL) stock still looks good according to Barron’s saying it has been on the year’s big winner but despite the huge rise, there’s likely further upside ahead; notes the company is broadly rolling out Pay with Venmo, a feature which allows users to send money to their friends for free
·      Green Dot (GDOT) downgraded to neutral from buy at Citigroup
 
Healthcare
·      Teva (TEVA) downgraded to Underweight from Neutral at JPMorgan
·      Novartis AG (NVS) said Friday that the results of two phase 3 trials of brolucizumab, a treatment for neovascular age-related macular degeneration, or nAMD, led to “significantly fewer” patients showing signs of disease activity and retinal fluid as it met the primary endpoint of non-inferiority against Regeneron Pharmaceuticals (REGN) aflibercept drug.
·      Nektar (NKTR) and Bristol-Myers Squibb (BMY) announced the first presentation of data from the PIVOT-02 Phase 1/2 Study, which is designed to evaluate the combination of Bristol-Myers Squibb’s Opdivo with Nektar’s investigational medicine, NKTR-214
 
Industrials & Materials
·      General Electric (GE) to cut its quarterly dividend to 12c from 24c
·      Boeing (BA) and Emirates, one of the world’s largest airlines, announced a commitment to purchase 40 787-10 Dreamliners at the 2017 Dubai Airshow. The deal, including airplanes and related equipment, is valued at $15.1B at current list prices
·      Boeing (BA) and Azerbaijan Airlines announced an order for five more 787-8 Dreamliners and a commitment to purchase two large freighters. The agreement, announced at the 2017 Dubai Air Show, is valued at about $1.9B at current list prices
·      Genesee & Wyoming (GWR) traffic in October 2017 was 275,317 carloads, an increase of 29,973 carloads, or 12.2%, compared with October 2016. G&W’s same-railroad traffic in October 2017 was 242,507 carloads, a decrease of 2,837 carloads, or 1.2%, compared with October 2016
 
Technology, Media & Telecom
·      Qualcomm Inc (QCOM) is making preparations to reject rival Broadcom Ltd’s (AVGO) $103B bid as early as this week, four people familiar with the matter said Sunday https://goo.gl/sm3Bu7
·      The U.S. Justice Department is encouraging AT&T Inc. (T) to address antitrust officials’ concerns about the $85.4 billion acquisition of Time Warner Inc. (TWX) before the Nov. 23 Thanksgiving holiday or face a lawsuit to block the deal – Bloomberg
·      Alibaba Group Holding Ltd.’s (BABA) Singles’ Day shopping day generated record 168.2 billion yuan ($25.3 billion) in sales
·      JD.com (JD) Q3 ADS 23c vs. est. 10c; sees 4Q revenue 107B-110B yuan; after Q2 net revenue 83.75 billion yuan; 3Q gross merchandise vol. 302.5 billion yuan
·      58.com (WUBA) Q3 EPS 36c/$410.2M vs. est. 28c/$388.5M
·      Barron’s said investors looking for 2017’s holiday stock winners should look at Nintendo (NTDOY), as the company is offering a slew of new videogames and lifting the production of its new Switch console. While the stock has risen 75% this year, analysts predict that the impetus from a strong holiday could increase earnings per share by 12% this FY
·      Sony (SNE) shares could jump another 20% according to Barron’s saying sales of camera chips for smartphones and videogames systems and software are marching higher, and the company has reintroduced its robot puppy Aibo
·      Nintendo (NTDOY) is expecting to ramp up production for its Switch game console to between 25M and 30M units for the next fiscal year, which starts in April 2018, WSJ reports
·      Disney (DIS) and Marvel Studios’ “Thor: Ragnarok” won the weekend again with $56.6M for a 10-day domestic tally of $211.6M. Overseas, the movie also topped the chart with $75.9M for a foreign tally of $438.5M
·      Uber Technologies Inc. cleared the way for a multibillion-dollar investment led by SoftBank Group Ltd. that will transform the corporate structure of the world’s most valuable startup and give the ride-hailing company a powerful ally in its battle against global rivals. The deal, confirmed Sunday by Uber, took shape after former Chief Executive Travis Kalanick and a major investor, Benchmark, reached an agreement over control of board seats

_________________________________________________________________

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