Morning Preview: November 20, 2017

Scott GreenDaily Market Report

Early Look
Monday, November 20, 17
  
U.S. stock futures are mixed to start the holiday abbreviated week, as political uncertainty in Germany slightly weighed on investor sentiment. On Friday, the Dow and the S&P 500 dropped -0.4% and -0.3%, respectively, and the Nasdaq Composite slipped 0.2%. The S&P and Dow logged a second straight week of losses as investors kept a close eye on the progress of the Republican tax cut plan. The market’s focus remains on Washington and the Senate after the House of Representatives passed a sweeping bill to overhaul the tax code on Thursday. Trading volumes are likely to gradually thin out this week, given the Thanksgiving Day holiday on Thursday and the likelihood that no action will be taken in Washington on the U.S. tax plan until after the holidays at this point. The latest developments in the Russia probe were also seen as a factor in the market action after Special Counsel Robert Mueller’s team issued a subpoena to more than a dozen officials from Donald Trump’s campaign in mid-October, asking them to hand over Russia-related documents. Regardless, stock averages, despite moving in a downward trend over the last two weeks, remain not far from recent record setting highs. In Asian markets, The Nikkei Index fell-135 points to settle at 22,261, the Shanghai Index gained 9 points to end at 3,392 and the Hang Seng Index rose 61 points to settle at 29,260. In Europe, the German DAX is back above 13,000 with a gain of about 0.2%, while the FTSE 100 is flat around 7,385. In Germany, failure to form new government casts doubt over Chancellor Angela Merkel’s future, could lead to snap elections or minority rule, or 0.40% to 1,492.82
 
Market Closing Prices Yesterday
·      The S&P 500 Index dropped -6.79 points, or 0.26%, to 2,578.85
·      The Dow Jones Industrial Average fell -100.12 points, or 0.43%, to 23,358.24
·      The Nasdaq Composite slumped -10.50 points, or 0.15%, to 6,782.79
·      The Russell 2000 Index advanced 5.94 points, or 0.40% to 1,492.82
 
Events Calendar for Today
·      10:00 AM EST                    Leading Index for October…est. 0.7%
   
World News
·      Negotiations to form the first German government made up of center-right parties and left-leaning environmentalists collapsed, leaving the country in political limbo and raising doubts about Chancellor Angela Merkel’s political future
·      Special counsel Robert Mueller’s investigation into Russian election-meddling has requested a wide range of documents from the Justice Department, ABC News reported late Sunday, including emails related to the firing of then-FBI Director James Comey and Attorney General Jeff Sessions’ decision to recuse himself from the Russia probe
·      Japanese exports rose 14.0% in October from a year ago, helped by strong overseas demand for cars and tools to make semiconductors. The gain was largely in line with a 15.5% increase expected by economists and marked the 11th straight monthly improvement in exports on the back of a recovery in the global economy and a weaker yen.
·      Sen. Susan Collins on Sunday recited a list of concerns she had with the Republican tax bill barreling through the Senate, raising pressure on the party’s leadership to slow its progress and make changes to secure passage.
 
Sector News Breakdown
Consumer
·      Alibaba Group Holding Ltd. (BABA) is making another big bet on brick-and-mortar, saying it will pay $2.88 billion for a 36% stake in China’s second-largest big-box retailer, Sun Art Retail Group Ltd. https://goo.gl/RHTGQJ 
·      Online shopping should show double-digit growth in November and December, with the digital arms of brick-and-mortar retailers shining, Barron’s said. Dana Telsey, CEO of Telsey Advisory Group, rates Nordstrom (JWN) a buy for online initiatives and multi-channel approach. Jeremy McLean, retail analyst at Hedgeye Risk Management, favors Wal-Mart (WMT) and Restoration Hardware (RH)
·      Monster Beverage (MNST) downgraded to negative at Susquehanna with tgt of $51
·      General Motors (GM) upgraded to Buy at Guggenheim
 
Energy
·      Baker Hughes (BHGE) mentioned positively in Barron’s saying while it is not easy to be a General Electric (GE) company and seems like GE may be giving up on Baker Hughes (BHGE), it does not mean investors should, saying the recent selloff may be a chance to pick up shares at a bargain
·      WGL Holdings (WGL) Q4 adjusted EPS loss (17c)/$429.1M vs. est. loss (19c)/$479.6M
 
Financials
·      Eight of the world’s biggest banks are preparing to discuss financial settlements with the European Commission after an investigation into whether the firms formed a cartel to rig the global foreign-exchange market, the Financial Times reported
·      Invesco Mortgage Capital (IVR) will replace MKSI Instruments (MKSI) in the S&P SmallCap 600
·      Barclay’s (BCS) upgraded to buy at Bank America
 
Healthcare
·      Roche Holding AG (RHHBY) announced positive results from two major phase 3 trials, one for its hemophilia treatment Hemlibra and the other for Tecentriq, a cancer therapy
·      The CMS announced 2018 Medicare Parts A, B premiums and deductibles. Medicare Part A annual inpatient hospital deductible that beneficiaries pay when admitted to the hospital will be $1,340 per benefit period in 2018, an increase of $24 from $1,316 in 2017, U.S. Centers for Medicare and Medicaid Services said while monthly premium for Medicare Part B enrollees will be unchanged at $134 for 2018
·      Tactile Systems Technology (TCMD) will replace Lumos Networks (LMOS) in the S&P SmallCap 600
·      Galapagos NV (GLPG) reports positive topline results from its ALBATROSS Phase 2 study in cystic fibrosis patients with C1 corrector GLPG2222. The ALBATROSS study included 37 cystic fibrosis patients with a gating mutation on one allele and F508del mutation on the other allele
·      Ziopharm Oncology (ZIOP) reports updated results from its Phase 1 trial in recurrent or progressive glioblastoma (GBM); the median overall survival of 12.5 months for the 15 patients treated with Ad-RTS-hIL-12 plus 20mg of veledimex has been sustained at a mean follow-up time of 11.1 months as of Oct. 18, vs a mean follow-up time of 9.2 months
·      Cardinal Health (CAH) downgraded to Underweight from Equal Weight at Morgan Stanley
 
Industrials & Materials
·      Volkswagen AG (VLKAY) raised its profit and revenue targets for 2020 as expects revs to rise more than 25% through 2020 and operating profit would increase 25% or more
 
Technology, Media & Telecom
·      Marvell Technology Group Ltd. (MRVL) is nearing a deal to buy chip maker Cavium Inc. (CAVM) for about $6 billion; the companies plan to announce the deal as soon as Monday, according to people familiar with the matter; the deal comprises 50% cash and 50% stock and values Cavium at $80 or more a share – WSJ https://goo.gl/sK93zZ
·      Toshiba Corp. said it would raise ¥600 billion ($5.3 billion) through the sale of new shares to foreign funds, a step to avoid a delisting from the Tokyo Stock Exchange if the planned sale of its chip unit is delayed.
·      International Business Machines Corp. (IBM) could make 30% or more over the next year according to Barron’s saying a rise in gross profit this quarter (the first in five years) will drive shares according to Morgan Stanley which has a $192 price target
·      S&P SmallCap 600 constituent MKS Instruments (MKSI) will replace Brocade Communications Systems (BRCD) in the S&P MidCap 400
·      Etsy (ETSY) announces $100M stock repurchase program
·      MicroVision (MVSN) files $60M mixed securities shelf
·      Warner Brothers (TWX) “Justice League,” a mega-budget production in which Batman, Wonder Woman, Superman and other superheroes team up opened to an estimated $96 million in the U.S. and Canada this weekend, disappointing box office hopes for well over $100M
·      Verizon (VZ) upgraded to Outperform from Market Perform at Wells Fargo
·      Verizon (VZ) is nearing a deal with the National Football League for digital streaming rights that would enable the carrier to broadcast games to internet-connected TVs, tablets and phones, Bloomberg reports
·      Viacom (VIAB) upgraded to Hold from Sell at Deutsche Bank

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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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