Morning Preview: December 5, 2017

Scott GreenDaily Market Report

Early Look
Tuesday, December 5, 17
  
Stock futures are mixed, with the Dow Industrials on track for another record high, while the tech heavy Nasdaq Composite, which underperformed yesterday, is pointing to a lower open. The selloff for tech stocks weighs on European and Asian markets after the NASDAQ dropped over 1% yesterday. The Dow has been rallying to fresh records over the past week, thanks in part to progress on a U.S. tax overhaul in Washington, but a selloff for tech stocks has weighed on the S&P 500 and Nasdaq Composite. The Republican-controlled U.S. House of Representatives voted on Monday to go to conference on tax legislation with the Senate, moving Congress another step closer to a final bill. The House voted 222-192 to go to conference with the Senate, setting up formal negotiations on the legislation that could take weeks to complete. Bonds are little changed after 2-year Treasury yields rose most in five weeks to hit fresh decade-long high above 1.8%. The Dow Jones Industrial Average gave up a triple-digit gain late yesterday (was up as much as 300 points) but held on to post a record close Monday, while a slump for tech shares dragged the Nasdaq Composite and the S&P 500 lower. Stocks initially rallied, boosted after tax-cut legislation cleared the Senate.
 
In Asian markets, The Nikkei Index dropped -84 points to settle at 22,622, the Shanghai Index dipped -5 points to settle at 3,303 and the Hang Seng Index declined -295 points to end at 28,842. In Europe, the German DAX is down over 70 points, back below the 13,000 level while the FTSE 100 is flat at 7,340. A fresh bout of uncertainty over the first phase of Brexit talks has sent the pound sliding in morning trade in Europe, leaving it on track for its worst fall in a month.
 
Market Closing Prices Yesterday
·      The S&P 500 Index slipped -2.78 points, or 0.11%, to 2,639.44
·      The Dow Jones Industrial Average rose 58.46 points, or 0.24%, to 24,290.05
·      The Nasdaq Composite tanked -72.22 points, or 1.05%, to 6,775.37
·      The Russell 2000 Index declined -11.73 points, or 0.76% to 1,532.41
 
Events Calendar for Today
·      7:45 AM EST       ICSC Weekly Retail Sales
·      8:30 AM EST       Trade Balance for October…est. (-$47.5B)
·      8:55 AM EST       Johnson/Redbook Weekly Sales
·      9:45 AM EST       Markit US Services PMI, Nov-F…est. 55.2
·      9:45 AM EST       Markit US Composite PMI, Nov-F…est.
·      10:00 AM EST     ISM Non-Manufacturing Index for November…est. 59.0
·      4:30 PM EST        API Weekly Inventory Data
 
Earnings Calendar
·      Earnings Before the Open: AZO, BMO, BNED, EMKR, FRAN, GIII, HDS, JILL, LE, TOL
·      Earnings After the Close: AVAV, HQY, IDT, LAYN, OXM, PLAY, POWL, RH, VEEV
 
Other Key Events
·      Cowen Energy and Natural Resources Conference, 12/4-12/5, in New York
·      UBS Media and Communications Conference, 12/4-12/6, in New York
·      Wells Fargo Technology Summit, 12/4-12/6, in Deer Valley
·      Goldman Sachs Financial Services Conference, 12/5-12/6
   
World News
·      Growth in China’s services sector activity picked up to a three-month high in November as China’s the Caixin/Markit services purchasing managers’ index (PMI) rose to 51.9 in November, up from 51.2 in October and the highest reading since August.
·      Activity in the U.K.’s service sector eased in November, as IHS Markit Ltd. said its purchasing managers index for the services industry fell to 53.8 in November, down from 55.6 in October and below expectations for a 0.6-point drop.
·      The Reserve Bank of Australia (RBA) left interest rates unchanged, with next year promising to deliver more of the same. The central bank’s board kept its cash rate target at a record low of 1.5% Tuesday as universally expected by economists
·      A fast-moving fire in Southern California’s Ventura County that began late Monday has led to at least one death and the evacuation of about 1,000 homes so far, according to authorities.
 
Sector News Breakdown
Consumer
·      Toll Brothers (TOL) Q4 EPS $1.17/$2.03B vs. est. $1.19/$2.08\9B; Q4 net signed contract value up 20% to $1.75B, Q4 contract units were up 15% to 1,979 units; reports backlog value at FYE 2017 up 27% to $5.06B
·      HD Supply (HDS) Q3 EPS 80c/$1.4B vs. est. 76c/$1.34B; raises FY17 adjusted EPS view to $2.23-$2.29 from $2.13-$2.29 (est. $2.21) and raises FY17 revenue view to $5.08B-$5.12B from $5B-$5.1B (est. $5.05B)
·      McDonald’s (MCD) plans to introduce new menus with $1, $2, and $3 items early next month, Reuters reported as it faces a price war with rivals ranging from Yum Brands’ (YUM) Taco Bell to Dunkin’ Donuts (DNKN)
·      Ascena Retail (ASNA) Q1 EPS 11c/$1.59B vs. est. 11c/$1.58B; Q1 comparable sales (-5%) vs. estimate (-4.1%); 1Q Justice comparable sales -2%, 1Q Lane Bryant comparable sales -5%, Maurice’s comparable sales -5%, Q1 Dress barn comparable sales -10% and Catherine’s comparable sales -3%; sees Q2 EPS loss (12c)-(7c) on revs $1.62B-$1.66B vs. est. loss (7c)/$1.67B and sees comparable sales down (4%-6%)
·      Reed’s (REED) reports multi-year contracts with Owen-Illinois as its exclusive glass supplier and R.C. Moore as its primary logistics partner for North America
·      Performance Food (PFGC) announces offering of 6.27M shares of common stock for holders
·      Cal-Maine (CALM) shares dropped over 4% yesterday after more than 12 states requested the U.S. Supreme Court block mandates by California requiring hens that produce eggs sold in its boundaries receive more space to move
·      Havertys (HVT) total Q4 sales through November 30 are flat with the same period last year and comparable sales are down (-1.3%); written sales for Q4 are up approximately 0.2% over the same period last year and written comparable store sales are down approximately (-1.2%)
·      At Home Group (HOME) announces 6M share common stock offering for holders
·      Chinese electric vehicle (EV) startup WM Motor Technology Co Ltd will receive a sizable injection from a group of investors led by Baidu Capital, a unit of Chinese internet search firm Baidu Inc , WM Motor’s founder and chief executive told Reuters https://goo.gl/tKJx2X
 
Energy
·      Statoil ASA (STO) submitted its plan for the development and operation of the Johan Castberg project in the Barents Sea, a 49 billion Norwegian kroner ($5.9 billion) project that is thought to hold recoverable resources of between 450 million and 650 million barrels of oil equivalent. https://goo.gl/fKX45Q
 
Financials
·      MasterCard (MA) announces new $4B share repurchase program; raises quarterly dividend 14% to 25c from 22c
·      Deutsche Bank AG (DB) has reportedly been told to hand over information about its dealings with President Donald Trump, as part of the U.S. investigation into suspected Russian meddling in the 2016 election. Deutsche Bank received a subpoena from Special Counsel Robert Mueller several weeks ago
·      Deutsche Bank AG (DB) said that its asset management unit, Deutsche Asset Management, will introduce DWS as a global umbrella brand. It will also change its legal structure to ensure the unit operates independently of the parent.
·      Vantiv Inc. (VNTV) plans to change its name to Worldpay Inc. after closing its acquisition of U.K. payments-processor Worldpay Group PLC, the company said Monday
·      The UK’s financial regulator chose not to publish a controversial report into the Royal Bank of Scotland (RBS) after it received legal advice that it could be sued as a result
 
Healthcare
·      Depomed, Inc (DEPO) signed a definitive Commercialization Agreement with Collegium Pharmaceutical, Inc. (COLL) where COLL will commercialize both NUCYNTA® Extended Release and NUCYNTA® Immediate Release. DEPO will receive a royalty rate on all NUCYNTA revenues based on certain net sales thresholds
·      Neurocrine (NBIX) says Ingrezza capsules taken once-daily improved Tardive Dyskinesia symptoms in patients and was generally well tolerated in 52-week trial; additional data presented from Ingrezza clinical studies show efficacy across adult patient groups
·      Jazz Pharmaceuticals (JAZZ) names Daniel Swisher as President & COO, saying Russell Cox, who has served as executive vice president and chief operating officer since 2014, has resigned, effective January 3, 2018
·      Apollo Endosurgery (APEN) files to sell $50M of common stock
 
Industrials & Materials
·      Bemis Co. (BMS) has recruited Goldman Sachs (GS) to explore options of a sale, the New York Post reports, citing sources. British-based corrugated-packaging company DS Smith PLC is working with Citigroup with regard to a deal for Bemis, which has a market capitalization of $4.2 billion, an unnamed source says, according to the New York Post. https://goo.gl/UPbF4G
·      Cleveland-Cliffs (CLF) announces offering of $275M convertible senior notes
 
Technology, Media & Telecom
·      Cineworld Group PLC has agreed to buy American counterpart Regal Entertainment Group (RGC) for $3.6 billion, creating the world’s second-largest cinema operator. The deal will create a company with more than 9,000 screens. https://goo.gl/nYi2kk
·      Coupa Software (COUP) Q3 EPS loss (5c)/$47.3M vs. est. loss (11c)/$45.0M; sees Q4 EPS loss (16c)-(14c) on revenue $48.3M-$48.8M vs. est. loss (17c)/$47.7M; raises FY18 EPS to (39c)-(37c) from (50c)-(48c) and raises FY18 revenue view to $181.5M-$182.0M from $177.0M-$179.0M
·      Vodafone Group PLC (VOD) said that it has entered into a strategic alliance with SoftBank Group Corp. regarding mobile services for enterprise customers
·      Snap (SNAP) upgraded to Overweight from Equal Weight at Barclays

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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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