Morning Preview: November 28, 2017

Scott GreenDaily Market Report

Early Look
Tuesday, November 28, 17
  
Stocks futures point to a slightly higher open, looking to post new all-time record highs, as President Donald Trump’s drive to overhaul the U.S. tax code headed toward a new drama on Tuesday in the Senate, where a pair of Republican lawmakers (Republicans Ron Johnson and Bob Corker) said they may vote against the measure and demanded changes to the party’s tax bill in exchange for their help in moving the measure forward. Also today, the Senate Banking Committee holds a hearing on Fed Chair Nominee Jerome Powell, along with a few key economic data points. The U.S. economy is expected to grow at 2.5% in 2018, up from this year’s rate of 2.2%, but then drop back to 2.1% growth in 2019, the Organization for Economic Cooperation and Development said overnight. In Asian markets, The Nikkei Index slipped -9 points to settle at 22,486, the Shanghai Index rose 11 points to settle at 3,333 and the Hang Seng Index fell -5 points to end at 29,680. In Europe, the German DAX is higher by 40 points at 13,040, while the FTSE 100 is up around 40 points at 7,425. Stocks struggled on Monday, with major averages ending mixed, as strength in retailers was offset by a slump in energy shares following a more than 1% decline in oil prices ahead of the OPEC meeting later this week. The Dow Jones Industrial Average outperformed, closing just shy of the record close of 23,590.83, though the S&P 500 Index and Nasdaq Composite ended lower. Defensive stocks such as utilities and telecom companies also outperformed, while semiconductors and commodities tumbled.
 
Events Calendar for Today
·      7:45 AM EST       ICSC Weekly Retail Sales
·      8:30 AM EST       Advance Goods Trade Balance for Oct…est. (-$65.0B)
·      8:30 AM EST       Wholesale Inventories MoM, Oct-P…est. 0.4%
·      8:55 AM EST       Johnson/Redbook Weekly Sales
·      9:00 AM EST       FHFA Housing Price Index MoM for September…est. 0.5%
·      9:00 AM EST       S&P CoreLogic’s 20-city survey for September…est. 0.3%
·      9:45 AM EST       Senate Banking Committee holds hearing on Fed Chair Nominee Powell
·      10:00 AM EST     Consumer Confidence for November…est. 124.0
·      10:00 AM EST     Richmond Fed Manufacturing Index for November…est. 14
·      10:15 AM EST     Fed’s Harker speaks on Financial Safety for Aging Population
·      4:30 PM EST        API Weekly Inventory Data
 
Earnings Calendar
·      Earnings Before the Open: BNS, CBK, NOMD
·      Earnings After the Close: ADSK, CENT, NUAN, PSTG, WAIR
 
Other Key Events
·      Senate Banking Committee holds hearing on Fed Chair Nominee Powell (9:45 AM EST)
·      Citigroup Basic Materials Conference, 11/28-11/29 in New York
·      Credit Suisse Tech, Media and Telecom Conference, 11/28-11/30, in Scottsdale, AZ
·      Jefferies Global Energy Conference, 11/28-11/29, in Houston, TX
·      Piper Jaffray Healthcare Conference, 11/28-11/29, in New York             
 
Market Closing Prices Yesterday
·      The S&P 500 Index slipped -1.00 points, or 0.65%, to 2,601.42
·      The Dow Jones Industrial Average rose 22.79 points, or 0.59%, to 23,580.78
·      The Nasdaq Composite dropped -10.64 points, or 0.15%, to 6,878.52
·      The Russell 2000 Index declined -5.85 points, or 0.39% to 1,513.31
   
World News
·      The U.S. economy is expected to grow at 2.5% in 2018, up from this year’s rate of 2.2%, but then drop back to 2.1% growth in 2019, the Organization for Economic Cooperation and Development (OECD) said Tuesday in its latest outlook. The OECD said the global economy will grow by 3.6% this year, 3.7% in 2018 and 3.6% in 2019.
·      EuroZone private-sector lending to non-financial firms was up 2.9% on an annual basis, the ECB said in its monthly report, compared to a 2.4% reading in September. Lending to eurozone households rose by 2.7% in the year to October, unchanged from the previous month.
·      The Japanese government stuck to its moderately upbeat view on the economy in November, its monthly economic report showed on Tuesday, saying it remained on a recovery path helped by consumer spending and business investment
 
Sector News Breakdown
Consumer
·      Thor Industries (THO) Q1 EP $2.43/$2.23B vs. est. $1.86/$2.02B; Q1 Consolidated RV backlog $3.58B; Q1 gross margin 14.9%
·      Roark Capital Group has agreed to buy Buffalo Wild Wings (BWLD) in a deal worth $2.4 billion, Bloomberg News reported Monday night. Roark reportedly sweetened the deal by upping its offer to $157 a share, from its original bid of $150 https://goo.gl/6d61Uv
·      Grupo Modelo, the Mexican unit of Anheuser-Busch InBev (BUD) and brewer of Corona Extra and other export brands, plans to invest 14 billion Mexican pesos ($753 million) in the construction of a major brewery in central Mexico
·      Christopher Bank (CBK) Q3 EPS loss (5c) on revs $98.5M and Q3 comps down (5%)
 
Energy
·      Royal Dutch Shell PLC (RDSA) said it would be canceling its scrip-dividend program–dividends paid in shares in lieu of cash payments–from Q4’17, as well as announcing a planned share-buyback program of $25 billion between 2017 and 2020.
 
Financials
·      Wells Fargo & Co. (WFC) cheated a number of their foreign-currency exchange business customers by overcharging them, according to a Wall Street Journal report late Monday. According to the Journal, an internal review found that out of about 300 fee agreements, only 35 companies ended up paying what they were originally told the price was – WSJ
·      Barclays (BCS) and Royal Bank of Scotland (RBS) have emerged as the weakest British lenders in a severe economic stress scenario
·      The Bank of Nova Scotia (BNS) offered $2.2 billion for a majority stake in the Chilean operations of Banco Bilbao Vizcaya Argentaria SA (BBVA)https://goo.gl/A49c22
·      Scotiabank (BNS) Q4 EPS C$1.65 vs. est. C$1.66; Q4 common equity Tier 1 ratio 11.5%; 4Q return on equity 14.5%
 
Healthcare
·      UnitedHealth (UNH) sees 2018 EPS $10.55-$10.85 vs. est. $10.82 and also expects 2018 revenues of $223B-$225B vs. est. $217.9B; sees 2018 cash flows from ops $13.3B-$13.8B; reaffirms 2017 outlook
·      Apollo Endosurgery, Inc. (APEN) said the FDA announced 510k clearance of the OverStitch Sx, a new, full-thickness flexible endoscopic suturing system that will work on a broad range of single-channel flexible endoscopes
·      Dova Pharmaceuticals (DOVA) said the FDA accepted for review its marketing application seeking approval for avatrombopag for the treatment of thrombocytopenia in patients with chronic liver disease about to undergo a procedure
·      Aratana Therapeutics (PETX) files to sell $35M in common stock
·      Catalyst Pharmaceuticals (CPRX) files to sell 11M shares of common stock
·      Medpace (MEDP) files to sell 4M shares for holder Cinven Capital Management
·      Bristol-Myers Squibb (BMY) said the European Medicines Agency, or EMA, validated its type II variation application, which seeks to expand the current indications for Opdivo plus Yervoy to include the treatment of intermediate- and poor-risk patients with advanced renal cell carcinoma
·      Egalet (EGLT) says Egalet-002 showed statistically significant difference in average pain intensity from baseline to week 16
 
Industrials & Materials
·      MTS Systems (MTSC) Q4 EPS 44c/$201.5M vs. est. 36c/$193.5M; sees FY18 GAAP EPS $2.05-$2.30 on revs $780M-$820M vs. est. $2.40/$810.55M; said guidance reflects additional restructuring expenses of $1M-$3M for actions initiated in fiscal year 2017; forecasting adjusted EBITDA for the full year to range between $120M-$140M
·      BHP Billiton Ltd. (BHP) said it aims to cut costs further across its Australian mining operations, targeting another 10% drop in unit costs over the medium term and US$1.6 billion in additional productivity gains over the next two years
·      Ardmore Shipping (ASC) files to sell 5.6M shares for holder GA Holdings LLC
·      Venator Materials (VNTR) files to sell 18M shares for shareholder Huntsman
·      Airbus SE, Rolls-Royce Holdings PLC and Siemens AG plan to fly a hybrid-electric airliner in three years in what is turning into a race with Boeing (BA). The three European companies plan to modify a BAe 146 regional airliner with a hybrid-electric propulsion system to take flight in 2020.
 
Technology, Media & Telecom
·      Japan’s SoftBank Group Corp is offering to purchase shares of Uber Technologies Inc at a valuation of $48 billion, a 30 percent discount to its most recent valuation of $68.5 billion – Reuters https://goo.gl/jkkzTQ
·      Tech Data (TECD) Q3 EPS $2.00/$9.1B vs. est. $1.92/$9.11B; sees Q4 EPS $3.35-$3.65 on revs $10.25B-$10.8B vs. est. $3.32/$10.57B
·      Ericsson AB (ERIC) said it expects that there will be one billion fifth-generation subscriptions for enhanced mobile broadband by 2023, it said Tuesday.
·      Airbnb, Reddit, Shutterstock, Inc, Tumblr, Etsy, Twitter and a long list of small internet companies urged the Federal Communications Commission on Monday to scrap a plan to roll back net neutrality rules.
·      Cyber Monday in the U.S. is expected to generate $6.6B in online sales, an increase from $5.6B last year, Reuters reports, citing Adobe Analytics
·      Gray Television (GTN) files to sell 15M shares of common stock

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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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