Morning Preview: November 30, 2017

Scott GreenDaily Market Report

Early Look
Thursday, November 30, 17
  
Well that was quick! U.S. futures point to a higher open with technology shares bouncing back following the downdraft in the Nasdaq Comp yesterday in a bout of profit taking/sector rotation into retailers, transports and telecom. The Nasdaq Comp fell 88 points, or 1.27%, in its worst day since Aug. 17. The Dow futures are looking at a higher open after hitting a fresh record close on Wednesday. OPEC and its oil-producing allies are widely expected to extend their production-cut agreement when they meet today in Vienna, but deciding on when to end the pact will be a challenge. So far, commentary has suggested an agreement to extend its output agreement by another nine months (oil futures are moving higher). Out of Washington, the Senate voted Wednesday to open formal debate on the GOP tax bill, speeding toward a final vote as early as Thursday night, as Republicans considered whether to cut the corporate tax rate less than President Donald Trump has demanded. One of the most significant unresolved issues is whether the corporate tax rate should be set above the 20% threshold Trump has sought. A busy morning of economic data after an upside surprise by the GDP reading yesterday with personal income/spending as well as inflation data and manufacturing expected out.
 
In Asian markets, The Nikkei Index rose 127 points to settle at 22,724, the Shanghai Index fell -20 points to end at 3,317 and the Hang Seng Index dropped -446 points (1.51%) to settle at 29,177. In Europe, stocks head higher for a 3rd session, lifted by broad-based gains in the banking sector after Credit Suisse provides an upbeat outlook; the German DAX is up around 100 points at 13,160, while the FTSE 100 is up around 20 points at 7,410. Sterling is pushing higher at its strongest levels against the dollar in two months on hopes that the UK has reached an agreement on a divorce payment to the EU.
 
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.
 
Market Closing Prices Yesterday
·      The S&P 500 Index slipped -0.97 points, or 0.04%, to 2,626.07
·      The Dow Jones Industrial Average rose 103.97 points, or 0.44%, to 23,940.68
·      The Nasdaq Composite dropped -87.97 points, or 1.27%, to 6,824.39
·      The Russell 2000 Index advanced 5.86 points, or 0.38% to 1,542.30
 
Events Calendar for Today
·      8:30 AM EST       Weekly Jobless Claims…est. 240K
·      8:30 AM EST       Continuing Claims…est. 1.89M
·      8:30 AM EST       Personal Income for October…est. 0.3%
·      8:30 AM EST       Personal Spending for October…est. 0.3%
·      8:30 AM EST       PCE Deflator MoM for Oct…est. 0.1%
·      8:30 AM EST       PCE Core MoM for Oct…est. 0.2%
·      8:30 AM EST       PCE Core YoY for Oct…est. 1.4%
·      9:45 AM EST       Chicago PMI for November…est. 63.0
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 51.7
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
·      12:30 PM EST     Fed’s Quarles speaks on payments systems in Cleveland
·      1:00 PM EST        Fed’s Kaplan speaks in Dallas
 
Earnings Calendar
·      Earnings Before the Open: APLS, BKS, DCI, KR, MIK, PERY, TD
·      Earnings After the Close: AMBA, AMSWA, NTNX, ULTA, VMW, YEXT, ZUMZ
 
Other Key Events
·      OPEC will hold its 173rd meeting in Vienna to discuss an extension of the current production deal
·      Credit Suisse Tech, Media and Telecom Conference, 11/28-11/30, in Scottsdale, AZ
·      Credit Suisse Industrials Conference, 11/29-11/30, in Palm Beach, FL
   
World News
·      The United States warned the North Korean regime that it would “utterly destroyed” if war were to break out, after Pyongyang test fired its most advanced missile, putting the U.S. mainland within range.
·      China’s official nonmanufacturing purchasing managers’ index rose to 54.8 in November from 54.3 in October, the National Bureau of Statistics said. The sub-index for services increased slightly to 53.6 from 53.5 in October while the sub-index for construction climbed to 61.4 from 58.5, the bureau said. The new orders sub-index for the entire sector rose to 51.8 from 51.1.
·      The official China manufacturing PMI, also released on Thursday, rose to 51.8 in November from 51.6 in October.
·      Japanese industrial production rose in October, as the increase was smaller than a 2.0% rise expected by economists surveyed by the Nikkei and followed a 1.0% fall in September.
 
Sector News Breakdown
Consumer
·      Jack in the Box (JACK) Q4 EPS 73c/$338.75M vs. est. 89c/$340.78M; reports Q4 company comp sales down (-2%) vs. est. down (-2.3%); 4Q Jack system comparable sales -1% vs. est. -1.4%; and Q4 Jack franchise comparable sales -0.7%, vs. est. -1.2%; Q4 Qdoba system comparable sales (-2.1%), company comparable sales (-4%) and Qdoba franchise comparable sales 0%
·      La-Z-Boy (LZB) Q2 EPS 47c/$393.2M vs. est. 45c/$390.0M; Q2 same-store written sales for the La-Z-Boy Furniture Galleries network increased 1.9%
·      PVH Corp. (PVH) Q3 EPS $3.02/$2.36B vs. est. $2.91/$2.33B; sees Q4 adjusted EPS $1.42-$1.44 on revenue growth roughly 11% vs. est.$1.46/$2.26B; Calvin Klein business in the fourth quarter is projected to increase approximately 16% and revs for the Tommy Hilfiger business in the fourth quarter is projected to increase approximately 12%; raises FY17 adjusted EPS view to $7.78-$7.80 from $7.60-$7.70
·      Costco (COST) Nov comp sales up 10.8%; net sales up $13.2B to $11.26B vs. $9.95B last year; November e-commerce sales up 39%
·      Sears (SHLD) Q3 EPS loss ($2.64)/$3.7B; Q3 comp sales fell (-15.3%) and Q3 K-Mart comps down (-13%)
·      Tilly’s (TLYS) Q3 EPS 30c/$152.8M vs. est. 21c/$151.44M; Q3 comparable store sales, which includes e-commerce sales, increased 1.5%; sees Q4 EPS 22c-26c vs. est. 23c
·      At Home Group (HOME) Q3 EPS 7c/$213.0M vs. est. 4c/$201.29M; raises FY18 adjusted EPS view to 77c-79c from 74c-75c and raises FY18 revenue view to $939M-$944M from $916M-$923M (est. $922.59M); still expects net capital expenditures to be $110M-$130M primarily driven by FY18 new store growth and the accelerated timing of expected new store openings in FY19
·      US Foods announces (USFD) offering of 39.95M shares of common stock for holders associated with Clayton, Dubilier & Rice, LLC and Kohlberg Kravis Roberts & Co. 
 
Energy
·      Saudi Arabia oil minister Khalid A. Al-Falih early on Thursday hinted that the Organization of the Petroleum Exporting Countries will agree to extend its output agreement by another nine months
·      Prince Miteb bin Abdullah, one of the most senior Saudi royals detained in the kingdom’s corruption crackdown, has been released after reaching a settlement deal believed to exceed the equivalent of $1 billion, an official involved in the anti-graft campaign said.
 
Financials
·      Credit Suisse Group AG (CS) said it plans to complete its group restructuring in 2018 and gave new targets for coming years; said it will meet its 2018 target of 700 million Swiss francs ($710.9 million) in adjusted pretax profit at its wealth-management and connected business in Asia-Pacific by the end of 2017, prompting it to raise its 2018 target to CHF850 million; set targets of its return on tangible equity, expecting between 10% and 11% in 2019, and 11% and 12% in 2020.
·      Toronto-Dominion (TD) reports Q4 adjusted EPS C$1.36 vs. est. C$1.38; Q4 revenue C$9.27B vs. C$8.75B a year ago; 4Q common equity Tier 1 ratio 10.7%; 4Q return on equity 15.4% and 4Q adjusted ROE 14.7%
·      Genworth Financial (GNW) and China Oceanwide Holdings agreed to a second waiver and agreement of each party’s right to terminate the previously announced merger agreement
·      ProAssurance (PRA) declares special dividend of $4.69 per share
 
Healthcare
·      Teladoc (TDOC) 4.284M share Secondary priced at $35.00
·      Boston Scientific (BSX) upgraded to Buy from Neutral at BTIG
·      HCA Healthcare (HCA) upgraded to Overweight at JP Morgan and raised price target for the shares to $96 from $75
·      Adamis Pharmaceuticals (ADMP) announced the submission of a prior approval supplement to the FDA for a pediatric version of Symjepi
 
Industrials & Materials
·      Gold miners: Citigroup upgraded Goldcorp (GG) to buy, Agnico (AEM) to neutral and downgraded Barrick Gold (ABX) to sell from buy and cut tgt to $13 from $20
·      Venator Materials (VNTR) 21.76M share Secondary priced at $22.50
·      Teekay Corp. (TK) files $150M mixed shelf
 
Technology, Media & Telecom
·      Nokia Corp. (NOK) denied reports that it was considering acquiring Juniper Networks (JNPR) for $16 billion, saying in a prepared statement that “Nokia is not currently in talks with, nor is it preparing an offer for, Juniper Networks related to an acquisition of that company.” CNBC had initially reported after hours that Nokia was in talks to acquire Juniper https://goo.gl/nfaPfH
·      Workday (WDAY) shares down -4%; Q3 EPS 24c/$555.4M vs. est. 15c/$540.59M; 3Q subscription rev. $463.6M; sees FY18 subscription revenue $1.78B-$1.782B
·      Box (BOX) shares down -6%; Q3 adjusted EPS loss (13c)/$129.3M vs. est. loss (13c)/$128.64M; sees FY adjusted loss per share (44c-45c) vs. est. loss (45c); sees FY revs $505M-$506M vs. est. $505.6M; 3Q billings growth was up +26% to $141.5M
·      Guidewire (GWRE) Q1 EPS loss (6c)/$108.2M vs. est. loss (14c)/$100.61M; sees Q2 adjusted EPS 17c-21c on revs $152M-$156M vs. est. 24c/$144.77M; cuts FY18 adjusted EPS view to 82c-90c from 97c-$1.08 (est. 95c) but raises FY18 revenue view to $631M-$641M from $611.5M-$623.5M (est. $626.13M)
·      Synopsys (SNPS) Q4 EPS 69c/$696.6M vs. est. 57c/$650.72M; sees FY18 revenue $2.88B-$2.91B, vs. consensus $2.82B; sees Q1 revs $740M-$765M vs. est. $670M
·      Semtech (SMTC) Q3 EPS 54c/$156.6M vs. est. 50c/$155.6M; sees Q4 adjusted EPS 40c-42c on revs $138M-$142M vs. est. 47c/$153M
·      Descartes Systems (DSGX) Q3 EPS 8c/$62.0M vs. est. 10c/ $60.2M; Q3 adjusted EBITDA of $20.6M
·      Verizon Communications (VZ) announced it will launch wireless residential broadband services in three to five U.S. markets in 2018. Verizon’s first commercial launch is planned to be in Sacramento, Calif., in the second half of 2018
·      Gray Television (GTN) 15M share Secondary priced at $14.50
·      Smart Global (SGH) 3.26M share Secondary priced at $33.50

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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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