Morning Preview: November 15, 2017

Scott GreenDaily Market Report

Early Look
Wednesday, November 15, 17
  
Stock futures are markedly lower for a change, as investors attitude turns defensive. Bonds are advancing, and stocks are sliding amid a sharp decline in risky assets such as oil and as the prospect of having a tax reform plan officially ironed out by Thanksgiving Day becomes bleaker. Dow futures tumbled more than 100 points on Wednesday, following another steep pullback in the U.S. dollar vs. rival currencies, and ahead of some important economic data later this morning. Inflation related report consumer prices (CPI) and retail sales numbers expected before the open, which follows a “hotter” than expected PPI report yesterday. The question is, will the market react the same way it has over the last few months? Buying on the slightest sign of weakness as major averages are trading about 1% from its best all-time levels.
 
U.S. stocks slipped on Tuesday, with both the S&P 500 falling for the 3rd time in 4 days, though managed to bounce off earlier lows of (-0.7%), extending its streak of no decline over (-0.5%) for 50 straight days, a stretch not seen since 1965. Yesterday’s decline was led by retailers after earnings from DKS and TJX, though HD and AAP advanced on results, while energy stocks slipped as oil prices declined nearly 2% on weaker China data and a bearish IEA demand report.
 
Oil prices tumble after yesterday’s decline following weekly data showing a surprising buildup in U.S. inventories of both crude oil and gasoline after the close last night. The API reported Tuesday that U.S. crude supplies climbed by 6.5 million barrels for the week ended Nov. 10 (data comes ahead of the EIA report at 10:30 AM today).
 
In Asian markets, The Nikkei Index dropped -351 points to settle at 22,028, the Shanghai Index dropped -27 points to end at 3,402 and the Hang Seng Index declined -300 points to settle at 28,851. In Europe, markets are on track for a 7th straight daily decline, as the German DAX is sliding around -175 points at 12,850, while the FTSE 100 is down over -0.5% at 7,370.
 
Market Closing Prices Yesterday
·      The S&P 500 Index dropped -5.97 points, or 0.23%, to 2,578.87
·      The Dow Jones Industrial Average fell -30.23 points, or 0.13%, to 23,409.47
·      The Nasdaq Composite dropped -19.72 points, or 0.29%, to 6,737.87
·      The Russell 2000 Index declined -3.81 points, or 0.26% to 1,471.26
 
Events Calendar for Today
·      3:00 AM EST       Fed’s Evans speaks at European Conference in London
·      7:00 AM EST       MBA Mortgage Applications Data
·      8:30 AM EST       Consumer Price Index (CPI) MoM for October…est. 0.1%
·      8:30 AM EST       CPI Ex: Food & Energy MoM for Oct…est. 0.2%
·      8:30 AM EST       Empire Manufacturing Index for November…est. 25.1
·      8:30 AM EST       Retail Sales MoM for October…est. 0.0%
·      8:30 AM EST       Retail Sales Ex: Autos MoM for October…est. 0.2%
·      10:00 AM EST     Business Inventories for September…est. 0.0%
·      10:30 AM EST     Weekly DOE Inventory Data
·      4:00 PM EST        Net Long-term TIC Flows for September
   
World News
·      Japan’s economy grew at an annualized pace of 1.4% in the July-September quarter, marking its longest growth streak in 16 years and was in-line with estimates, but private consumption fell an annualized 1.8% in the quarter
·      A congressional committee heard testimony Tuesday that at least two current members of Congress are known sexual harassers. Rep. Jackie Speier (D-Calif.) didn’t name the members in testimony before the House Administration Committee — except that one is a Republican and the other a Democrat.
 
Some notable 13F filing results (as per Bloomberg)
·      Appaloosa: top new buys: AMAT, XPO…top exits: LB, DAL, WFC, CX, ATVI, EXPE, SWN, RIO, NUE… boosted stakes in MU, FB, NRG, ALLY, AAPL, BSX, TMO, UNH, ETE, CNC…and cut stakes in AGN, PNC, ETP, WPZ, GM, BAC, QQQ, MHK, DG, BTU
·      Berkshire: Top new buys: BAC …Top exits: WBC …Boosted stakes in AAPL, SYF, MON ….and cut stakes in IBM, WFC, CHTR
·      Bridgewater: Top new buys: DGX, RIG, KMB, VIAB, X, REGN, FB, KSU, ECL, MA… top exits: CHK, PG, NE, VRSN, ADBE, LUV, PAYX, INTU, CHRW, BMY… boosted stakes in GLD, TLT, HYG …cut stakes in SWN, INTC, FE, RL, GPS, NFX, LYB, SPG, DVN
·      Elliott: Top new buys: TCO, ISBC, GTYH, VEAC, MPAC, EQT, GRA, GNTX… top exits: PHM, LOGM, BBL, CJ, FMSA, ARCC, SLCA, XEC… boosted stakes in NXPI, HES, NOMD, ECA, EGN, MPC, RYAAY…. cut stakes in ADNT, ABCO, IMPV, MITL, AA, ACAD, NRG
·      Glenview: top new buys: PNR, CVS, CMCSA, TWTR, CNDT, MGM, FDX, PX, VNTV… top exits: HUM, DD, PHH, HAIN, MRVL… boosted stakes in SHPG, ZBH, DWDP, MCK, DNB, AET, EBAY, FDC, DLPH, NKE …and cut stakes in LOW, WBA, RLGY, CI, ANTM, V, CCE, GOOGL
·      Greenlight: Top new buys: XELA, VNTR, TECD, PLCE, GPS, DLTR, KR … top exits: CPN, PVH, AA, NYRT … boosted stakes in TPX, MU, ADNT, HPE, PRGO, DSW, MYL … cut stakes in GM, AAPL, UHAL, CC, DDS, RAD, FRED, QHC, CNX, AER
·      Lone Pine: Top new buys: PCLN, EA, PYPL, MELI, WYNN, VNTV, BUD… top exits: ORLY, SYMC, CSX, ULTA, ANET, ATUS, LNG, SNAP, ALB…boosted stakes in UNH, CMCSA, CRM, NOW, TRU, ICE, MSFT, STZ, TV, EXPE …and cut stakes in FLT, TMUS, CHTR, BABA, FB, AVGO, ATVI, MA
 
Sector News Breakdown
Consumer
·      Target Corp. (TGT) Q3 EPS 91c/$16.67B vs. est. 86c/$16.6B; Q3 comp sales rose 0.9% vs. est. 0.4%; sees Q4 comp sales unchanged to up 2%; sees Q4 EPS $1.05-$1.25 vs. est. $1.24; said Q3 digital channel sales increased 24%
·      Beazer Homes (BZH) Q4 EPS $1.03/$672.98M vs. est. 54c/$639.44M; 4Q new home deliveries 1,904 and Q4 backlog $665.8M; 4Q cash and cash equivalents $292.1M; 4Q cancellation rate 20.6%
·      YogaWorks (YOGA) Q3 EPS loss (37c)/$13.5M vs. est. loss (20c)/$12.88M; sees FY17 revenue $54.3M-$54.8M vs. est. $53.57M; sees Q4 revenue $14.3M-$14.8M vs. est. $14.29M
·      Nestle SA (NSRGY) said it will reorganize its infant-nutrition division as it moves to spur more rapid growth in a unit it has been identified as one of its priorities.
·      Forever 21 Inc. said that unauthorized users may have gained access to its payment systems, potentially exposing the credit-card information of customers who shopped in some of the fashion retailer’s stores
 
Energy
·      The American Petroleum Institute (API) reported U.S. crude supplies climbed by 6.5M barrels for the week ended Nov. 10; data also showed a rise of 2.4M barrels in gasoline stockpiles, while inventories of distillates fell by -2.5M barrels
·      Rex Energy (REXX) Q3 EPS loss ($1.00)/$48.0M vs. est. loss ($1.10)/$46.48M; Sees 4Q production 195.0 to 205.0 mmcfe/d and sees FY production 180.0 to 190.0 mmcfe/d
·      Westport (WPRT) Q3 EPS loss (12c)/$60.8M vs. est. loss (14c)/$52.3M
 
Financials
·      Capital One Financial (COF) October net charge-offs 4.70% and October 30-plus day performing delinquencies 4.13%
·      JPMorgan (JPM) reports October net card losses 2.35% vs. 2.32% last month and said October 30-plus day delinquency rate 1.24% vs. 1.22% last month
·      Synchrony (SYF) reports October net charge-off rate 5.23% vs. 4.16% last month and said October 30-plus day delinquencies 3.16% vs. 3.19% last month
·      AGNC Investment (AGNC) estimated tangible net book value of $19.64 per common share as of October 31
·      Everbridge (EVBG) files $100M convertible notes offering due 2022
 
Healthcare
·      Cardinal Health Inc. (CAH) has agreed to sell its Chinese pharmaceutical and medical-products distribution business to local rival Shanghai Pharmaceuticals Holding Co. for $557M
·      Sage Therapeutics (SAGE) 3.529M share Secondary priced at $85.00
·      Achillion (ACHN) files to sell 18.4M shares of common stock for holder
·      NovaBay (NBY) Q3 EPS loss (16c)/$4.1M vs. est. loss (9c)/$4.77M; cuts FY17 revenue view to $17.5M-$18.5M from $19M (est. $18.63M)
·      Presidio (PSDO) files to sell 8M shares of common stock
·      OncoCyte (OCX) Q3 EPS loss (22c) and had cash and cash equivalents of $11.0 million
 
Industrials & Materials
·      Airbus SE (EADSY) and Boeing Co. (BA) secured more than $75 billion in single-aisle plane commitments Wednesday. Airbus secured what it called one of the biggest aircraft deals in its history with a 430-jet agreement with airlines linked to Indigo Partners LLC, which carried a sticker price of almost $49.5B. Boeing followed shortly after with a deal to sell Dubai-based Flydubai up to 225 more of its 737 Max 8 planes at a list price value of $27 billion
·      Esco Tech (ESE) Q4 EPS 74c/$204.6M vs. est. 74c; sees 1Q EPS 28c-33c vs. est. 51c; sees FY EPS $2.30-$2.40 vs. est. $2.49
·      Limbach Holding (LMB) Q3 EPS loss (12c) on revs $121.3M; narrows FY17 revenue view to $460M-$470M from $460M-$480M and backs FY17 adjusted EBITDA view of $18M-$20M
·      Valvoline Inc. (VVV) raised its quarterly dividend by more than 50% to 7.45c from 4.9c
 
Technology, Media & Telecom
·      Lam Research Corp. (LRCX) said it will buy back up to $2 billion in shares over the next 12 to 18 months and approved raising the quarterly dividend by 11% to 50c
·      Macom (MTSI) shares fell -14%; Q4 EPS 46c/$166.4M vs. est. 46c/$170.1M; shares slide on guidance as sees Q1 adjusted EPS 10c-16c on revs $130M-$136M below est.45c/$171.2M; said expect Networks demand to remain soft, and the A&D and Multi-market businesses to return to more normalized levels
·      SendGrid (SEND) 8.2M share IPO priced at $16.00
·      CarGurus (CARG) Q3 EPS 2c/$83.0M vs. est. 0c/$79.2M; said Q3 total paying dealers were 26,553 at the end of the period, up 37% compared to 19,403 YoY; sees Q4 EPS 1c-2c on revs $85M-$86M vs. est. 1c/$81.8M
·      Synacor (SYNC) Q3 EPS 1c/$36.3M vs. est. loss (5c)/$37.0M; narrows FY17 revenue view to $140M-$145M vs. consensus $143.4M
·      The U.S. International Trade Commission has launched an investigation into Apple Inc. (AAPL) for patent infringement, the USITC said. Aqua Connect Inc. and Strategic Technology Partners LLC lodged a complaint Oct. 10 and requested the USITC issue a temporary exclusion order

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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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