Morning Preview: December 1, 2017

Scott GreenDaily Market Report

Early Look
Friday, December 1, 17
  
Stock futures are pointing to a lower open after the U.S. Senate late Thursday suspended a vote on a tax bill as lawmakers continued to debate a number issues related to cutting rates for individuals and corporations. The vote in the Senate on tax reform was expected to resume on Friday. The day prior, all U.S. benchmark stock indexes rallied as it appeared the Senate Republicans made headway in their push to pass tax cuts, as it received support from some Republicans that had opposed it prior (McCain). The Dow rose above 24,000 for the first time and notched its longest streak of monthly gains in more than 20 years (8-months). The S&P 500 and Dow ended at record highs, but the tech-heavy Nasdaq fell short of its all-time high, though it rebounded after having fallen on Thursday. Financial stocks are lower in Europe and the U.S. given the tax-reform delay in Washington (one of the biggest sector beneficiaries the last few days), with investors running to the perceived safety of sovereign bonds that sent their yields lower. For the week, the blue-chip benchmark Dow Jones was on track for a 3% rally as of Thursday’s close, which would be the biggest one-week jump since December last year. In Asian markets, The Nikkei Index gained 94 points to settle at 22,819, the Shanghai Index ended flat at 3,317 and the Hang Seng Index fell -103 points to settle at 29,074. In Europe, the German DAX is down over -160 points to 12,850, while the FTSE 100 drops around -35 points under 7,300. The Stoxx 600 was looking at a weekly loss of 0.7%, which would mark its third weekly decline in four.
 
Events Calendar for Today
·      9:05 AM EST       Fed’s Bullard speaks in Arkansas
·      9:30 AM EST       Fed’s Kaplan speaks in Texas
·      9:45 AM EST       Markit US Manufacturing PMI, Nov-F…est. 54.0
·      10:00 AM EST     ISM Manufacturing for November…est. 58.3
·      10:00 AM EST     ISM Prices Paid for November…est. 67.0
·      10:00 AM EST     Construction Spending MoM for October…est. 0.5%
·      10:15 AM EST     Fed’s Harker speaks on Inclusive Economic Growth
·      1:00 PM EST        Baker Hughes Weekly Rig Count            
 
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 21.51 points, or 0.82%, to 2,647.58
·      The Dow Jones Industrial Average surged 331.67 points, or 1.39%, to 24,272.35
·      The Nasdaq Composite spiked 49.58 points, or 0.73%, to 6,873.97
·      The Russell 2000 Index advanced 1.84 points, or 0.12% to 1,544.14
   
World News
·      China’s manufacturing activity grew at the weakest pace in five months in November as input costs remained high. The Caixin/Markit Manufacturing Purchasing Manager’s Index (PMI) dipped to 50.8 from 51.0 in October, but was roughly in line with ests for a slight drop to 50.9
·      Japanese consumer prices rose for the 10th straight month in October and at a faster pace, as the CPI rose 0.8% from a year earlier, compared with a 0.7% increase in September
·      Activity in the U.K.’s manufacturing sector posted the fastest growth in over four years in November, as production, new orders and employment all gained.Markit Ltd. said its purchasing managers index for the manufacturing industry, jumped to 58.2 in November, up from the upward-revised reading of 56.6 a month earlier and was the highest in 51 months
 
Sector News Breakdown
Consumer
·      Ulta Beauty (ULTA) Q3 EPS $1.70/$1.34B vs. est. $1.67/$1.34B; Q3 comparable sales increased 10.3% (vs. est. 104%) in Q3 driven by 6.0% transaction growth and 4.3% growth in average ticket; sees Q4 EPS $2.73-$2.78 on revs $1.926B-$1.959B vs. est. $2.84/1.93B; said Q4 comps expected to increase 8% to 10%
·      Five Below (FIVE) Q3 EPS 18c/$257.2M vs. est. 13c/ $246.1M; opened 41 new stores and ended the quarter with 625 stores in 32 states; sees Q4 EPS $1.09-$1.16 on revs $491M-$503M vs. est. $1.08/$484M; Q3 comp sales up 8.5% vs. est. 4.5% and sees Q4 comp sales up 4% to 6%
·      Zumiez (ZUMZ) Q3 EPS 48c/$245.8M vs. est. 48c/$245M; Q3 comp sales rose 7.9% vs. est. 7.4%; sees Q4 EPS 78c-84c on revs $291M-$297M vs. est. 79c/$288.5M; sees Q4 comp sales up 3%-5%
·      Blue Apron Holdings Inc. (APRN) installed Chief Financial Officer Brad Dickerson as Chief Executive on Thursday, pushing out co-founder Matthew Salzberg.
·      Big Lots (BIG) Q3 EPS 6c/$1.11B vs. est. 4c/$1.12B; Q3 comp sales up 1%; raises FY17 EPS view to $4.23-$4.28 from $4.15-$4.25 (est. $4.24) and sees FY17 comp sales up 1%-2%
·      Camping World Holdings (CWH) announced that its Board of Directors declared a cash dividend of 28.32c per share
·      John B Sanfilippo (JBSS) buys Squirrel Brand Assets for $31.5M, paying $20M in cash and $11.5M financed by the seller through a three-year unsecured promissory note
 
Energy
·      A South Dakota state official said Thursday that a federal agency’s diagnosis of a recent leak in TransCanada Corp.’s (TRP) Keystone pipeline could signal a systemic problem and could lead the state to revoke the permit that allows the company to operate the pipeline.
·      Maersk Oil has been given the go-ahead to fully redevelop the Tyra gas field in the Danish North Sea, investing 21 billion Danish kroner ($3.16 billion) to enable continued operations from the asset for at least 25 years
 
Financials
·      Royal Bank of Scotland Group PLC (RBS) said it will close 259 branches and cut 680 jobs to reduce costs as more customers having been using mobile and online services.
 
Healthcare
·      Amazon.com Inc. (AMZN) has had early talks with generic drug makers like Mylan NV (MYL) and Novartis AG’s (NVS) Sandoz about a potential entry into the pharmacy business, according to a Thursday report. CNBC reported Thursday that health care investment bank Leerink confirmed that a Sandoz executive recently spoke with Amazon about its plans to enter the health-care market in the U.S. https://goo.gl/P2UmEL
·      Regeneron (REGN) downgraded to Neutral from Buy at Citigroup
·      Bristol-Myers Squibb (BMY) announced that the Phase 3 study CheckMate -078, evaluating Opdivo versus docetaxel in previously treated advanced or metastatic non-small cell lung cancer, was stopped early because the independent Data Monitoring Committee concluded that the study met its primary endpoint
·      Shire PLC SHP (SHPG) said it has appointed Dr. Andreas Busch as executive vice president, head of research and development and chief scientific officer; also said it was appointing its current head of R&D, Dr. Howard Mayer, as its chief medical officer, also effective in January
·      Nevro Corp. (NVRO) announced that it has received CE Mark for its next-generation Senza II Spinal Cord Stimulation (SCS) System delivering HF10 therapy.
 
Industrials & Materials
·      Bayer AG (BAYRY) said that the Committee on Foreign Investment in the U.S., or CFIUS, has no national security concerns related to the German company’s planned takeover of Monsanto Co. (MON)
·      Agco (AGCO) upgraded to Conviction Buy from Neutral at Goldman Sachs
·      Cummins (CMI) downgraded to Neutral from Buy at Goldman Sachs
·      Culp (CULP) Q2 EPS 32c/$80.7M vs. est. 35c/$75.74M; sees Q3 overall sales slightly higher than last year, consensus $77.82M
 
Technology, Media & Telecom
·      VMware (VMW) Q3 EPS $1.34/$1.98B vs. est. $1.27/$1.96B; Q3 free cash flow +$911M; Q3 billings growth up 21%;
·      Broadcom (AVGO) does not intend to increase its $105B bid for Qualcomm (QCOM) ahead of a proposal next week to replace directors on its board, Bloomberg reports, citing people familiar with the matter. Broadcom does not expect to boost its $70-per-share offer until closer to Qualcomm’s board meeting in Marchhttps://goo.gl/n2V1KC
·      Nutanix (NTNX) Q1 adjusted EPS loss (16c)/$275.6M vs. est. loss (26c)/$266.9M; Q1 billings $315.3M, up 32%; sees Q2 adjusted EPS loss (22c)-(20c) on revs $280M-$285M vs. est. loss (25c)/$282M
·      Yext (YEXT) Q3 adjusted EPS loss (12c)/$44.3M vs. est. loss (13c)/$43.85M; sees Q4 adjusted EPS loss (12c)-(10c) on revs $47.3M-$48.3M vs. es.t loss (11c)/$48.39M; Q3 gross margin 73.7% vs. 70.8% a year ago
·      Ambarella (AMBA) Q3 EPS 75c/$89.1M vs. est. 67c/$88.97M; sees Q4 revenue $68M-$72M vs. est. $70.27M and sees Q4 gross margin on a non-GAAP basis between 62.0%-63.5%
·      RadiSys (RSYS) said it has received an approximately $5M order for MediaEngine product from its large Asian customer, of which roughly $4M is expected to be shipped in the fourth quarter of 2017
·      Altice NV (ATUS) said it has entered into an agreement to sell its Switzerland-based data-center operations and telecommunications solutions business to InfraVia Capital Partners for around $217M dollars

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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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