Mid Day Outlook: November 30, 2017

Scott GreenDaily Market Report

Mid-Morning Look
Thursday, November 30, 17
Stocks surge to new record highs (again) as the Dow Jones Industrial Average opened above 24,000 for the first time and technology shares rebounded following yesterday’s broad based sell-off (-1.25% for NASDAQ) with the Senate nearing a vote on tax legislation. Republican Leader McConnell says he sees Senate passage of tax bill late Thursday or Friday. Transports also making new highs, adding on to its more than 3% spike yesterday led by gains in airlines, rails and delivery. Rising oil prices helped lift energy shares as it seems that OPEC will extend its production cuts through 2018 (mentioned by several delegates, but yet to be officially confirmed). The Russell 2000 index (small caps) hit another record high, extending its recent outperformance as optimism continued to swell over the prospects of tax-reform legislation passing in Washington. There was also strong data out of China overnight as China’s official nonmanufacturing purchasing managers’ index rose to 54.8 in November from 54.3 in October. The official China manufacturing PMI, also released on Thursday, rose to 51.8 in November from 51.6 in October. The dollar is now broadly lower, while gold slips and bonds, but stocks still moving up!
For trading in November, which closes Thursday, the Dow industrials are looking at a gain of around 2.4%. That would be the eighth-straight monthly win, the longest such streak since July 1995. The S&P 500 is eyeing a monthly rise of roughly 1%. It also looks set to nail an eight-month winning streak, the longest such run since January 2007. As for the tech-heavy NASDAQ, it is poised for 1.4% advance. That would be its fifth month of rises in a row and the longest such winning streak since May 2017
Treasuries, Currencies and Commodities
·      In currency markets, the Dollar Index (DXY) reversed earlier gains despite mostly better economic data, as the ICE index is on track to drop (-1.5%) for the month of November, which would be its worst performance since a (-2.9%) slide in July; dollar falls again vs. Pound as Sterling up 0.7% at $1.3513, rises above $1.35 for the first time since September on Brexit; the USD/Canadian dollar slips to 4-week lows early; dollar little changed vs. yen; Bitcoin down as much as 10% earlier; euro rises vs. dollar back above 1.19 as Eurostat’s flash inflation estimate for November coming in below expectations at 1.5%, with core inflation remaining unchanged at 0.9%
·      Commodity prices; oil prices with modest gains initially (have since slumped – down 3-straight days coming into today) early following OPEC’s decision to extend output cuts; gold prices slumping further on the better economic data readings
·      Treasury yields rose following the PCE inflation number, the Fed’s preferred price gauge, as it rose 0.1% in October, while stripping out food and energy prices, the core index rose 0.2%, matching forecasts; the 2-year Treasury note yield is flat at 1.762%, while the 10-year yield up about 1 bps to 2.385% (yesterday highs above 2.39%)
Economic Data
·      Weekly Jobless Claims fell 2K to 238K vs. est. 240K while prior week claims revised up to 240K from 239K; the 4-week moving avg. rose 2,250 to 242.25k in the week ending Nov. 25; continuing claims rose 42k to 1.957m in the week ending Nov. 18
·      Personal Income for October rose 0.4%, topping the 0.3% estimate while Personal consumption rose 0.3%, matching estimates; real personal spending rose 0.1% (est. up 0.2%); PCE core inflation rose 0.2%, matching estimate (and up 1.4% YoY), while PCE prices rose 0.1% (also in-line); compensation rose 0.3% in Oct. vs 0.4% gain the prior month and savings rate at 3.2% in Oct.
·      Chicago PMI index falls to 63.9 from 66.2 in prior month (still not far off 20-year highs), though topped estimates of 63; prices paid rose at a faster pace, signaling expansion while new orders rose at a slower pace, signaling expansion; employment rose and the direction reversed
Sector Movers Today
·      Retailers; COST extends its streak of 7%+ monthly comp. sales to 4 straight periods, reporting Nov. total comps. +10.8% vs est. +7% and U.S. comps. ex-gas +8.4% vs est. +5.7%; SHLD shares surge after the retailer posted a narrower quarterly loss and continued to sell off assets and pay debt; LB Nov comp sales fell (-1%) vs. est. up 0.2% and sees December comps unchanged to low-single digits; GPS downgraded to sell at Citigroup after 43% rise since mid-August; BKS shares fall on widening quarterly losses; PVH Q3 results beat though Q4 EPS was slightly below views; other movers on monthly comp sales: BKE, CATO, while shares of TLYS, EXPR, PERYmove on earnings
·      Cruise lines downgraded at Macquarie, as the firm cut NCLH to underperform from neutral, and RCL cut to neutral from outperform saying the Street is too optimistic on yield growth in 2018/19 and expects Street estimates will be hard to match given tough pricing comparisons, new supply from CCL (cut tgt on NCLH to $47 from $58)
·      Software movers after earnings; BOX posted Q3 beat and raise, although markets key in on commentary that large deals slipped into Q4/KeyBanc said results were largely in line and featured healthy upside to FCF estimates; SNPS shares rise as guidance for Q1 and full year beat the highest estimates after a solid Q4 beat on both the top and bottom line; WDAY posted a mixed quarter with a top line beat ($555M vs. $541M cons.) but a billings miss ($562M vs. $573M) due to shorter contract duration leading to fewer collections upfront/ upside driven by subscription growth of 37% YoY; DSGX downgraded at Raymond James after earnings
·      Gold miners active after Citigroup makes changes: firm upgraded GG to buy, and AEM to neutral but downgraded ABX to sell from buy and cut tgt to $13 from $20; says investors should remain selective heading into 2018 within the gold sector as prices are expected to trade roughly flat next year; sees gold averaging around $1,207/oz in 2018
·      ADMP +10%; as files U.S. marketing application for expanded use of Symjepi
·      BEAT +7%; announced a partnership with AAPL to provide cardiac monitoring services in conjunction with the Apple Heart Study
·      COST +3%; extended its streak of 7%+ monthly comp. sales to 4 straight periods (NOV up 10.8%)
·      CS +2%; plans to complete its group restructuring in 2018 and gave new targets for coming years
·      HCA +4%; upgraded to overweight at JP Morgan and tgt raised to $96
·      HOME +14%; posted another very strong quarter as comps rose 8.3% ex: hurricanes
·      KLAC +3%; as semis and equipment names recover from yesterday’s sharp decline
·      KR +10%; as quarterly results top Street as discounts lure shoppers/comp sales topped views
·      MDCO +2%; upgraded to outperform at Oppenheimer based on its successful transformation into a pure-play R&D biotech company
·      SHLD +5%; posted a narrower quarterly loss and continued to sell off assets and pay debt
·      SNPS +6%; as guidance for Q1 and full year beat the highest estimates after Q4 beat
·      TITN +16%; as Q3 EPS beat views and narrowed year EPS loss view
·      ALGT -2%; forecast 2018 EPS below consensus estimates
·      BKS -10%; posted another sales slump as online retailers chipped away at its core business
·      BOX -3%; Q3 results mostly in line with slightly better guidance but said large deals slipped in qtr
·      GOL -7%; falls after Brazil’s Senate rejected a bill that would lower the maximum ICMS tax rate for domestic jet fuel sales
·      JACK -5%; missed Q4 estimates across the board led by weakness in Qdoba
·      JNPR –4%; as NOK denied reports that it was considering acquiring Juniper for $16B. CNBC had initially reported after hours that Nokia was in talks to acquire Juniper https://goo.gl/nfaPfH
·      NCLH -4%; downgraded to underperform at Macquarie saying street too optimistic
·      WDAY -1%; posted a mixed quarter with a top line beat, but a billings miss due to shorter contract duration leading to fewer collections upfront
·      Gray Television (GTN) 15M share Secondary priced at $14.50
·      Myomo (MYO) 4.175M share Spot Secondary priced at $2.40
·      Smart Global (SGH) 3.26M share Secondary priced at $33.50
·      Teladoc (TDOC) 4.284M share Secondary priced at $35.00
·      Tribune Media (TRCO) 7M share Spot Secondary priced at $40.76
·      US Foods (USFD) 39.96M share Spot Secondary priced at $28.30
·      Univest (UVSP) 2.3M share Spot Secondary priced at $28.25
·      Venator Materials (VNTR) 21.76M share Secondary priced at $22.50


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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