Morning Preview: December 6, 2017

Scott GreenDaily Market Report

Early Look
Wednesday, December 6, 17
U.S. futures are pointing to a lower open, with the S&P coming off its first 3-day losing streak since August as stocks have failed to hold early gains the last two days, sliding near session lows into the close. Stocks dropped yesterday after a tech-led bounce lost steam in late afternoon, dragging major averages lower, while small-caps (Russell 2000 fell over 1%) dropped the most in a month. Ironically, the CBOE Volatility Index, or “fear” gauge fell -3.3% to 11.29 despite the market slide, snapping a six-day winning streak. Japan’s Nikkei ended the session 2% lower amid a broad decline in Asia, suffering its biggest one-day percentage slide since March 22 amid weakness in commodity and tech stocks. The Nasdaq Composite, which is down -1.3% for the week thus far, has seen the most selling in recent sessions, with analysts blaming profit taking after big gains. Markets also wait for the Senate and House to come to terms and finalize a combined tax-reform bill, as the two chambers have passed bills, but with several differences (AMT, tax rate).
Oil prices also sliding overnight after a weekly inventory report (API) showed large builds in both gasoline and distillates. There are a couple of data points to watch today including the private payroll ADP report (8:15 AM EST) and Nonfarm productivity data (8:30 AM EST). In Asian markets, The Nikkei Index tanked -445 points (1.97%) to settle at 22,177, the Shanghai Index slipped -9 points to end at 3,293 and the Hang Seng Index plunged -618 points (2.14%) to settle at 28,224. In Europe, the German DAX is down over -100 points at 12,940, while the FTSE 100 is flat around the 7,325 level. The Bitcoin mania hasn’t stopped, with the cryptocurrency up another 8%, trading above the $12,700 level for a new record high.
Market Closing Prices Yesterday
·      The S&P 500 Index slumped -9.87 points, or 0.37%, to 2,629.57
·      The Dow Jones Industrial Average fell -109.41 points, or 0.45%, to 24,180.64
·      The Nasdaq Composite dropped -13.15 points, or 0.19%, to 6,762.21
·      The Russell 2000 Index declined -20.26 points, or 1.32% to 1,516.76
Events Calendar for Today
·      7:00 AM EST       MBA Mortgage Applications Data
·      8:15 AM EST       ADP Employment Change for November…est. 190K
·      8:30 AM EST       Nonfarm Productivity for Q3-F…est. 3.3%
·      8:30 AM EST       Unit Labor Costs for Q3-F…est. 0.2%
·      10:30 AM EST     Weekly DOE Inventory Data
Earnings Calendar
·      Earnings Before the Open: AEO, BF/B, DLHC, FRED, HRB, IEC, JW/A, KLXI, LEE, SCWX, VRA
·      Earnings After the Close: ALOG, AVGO, GEF, KEYS, MIND, NCS, OKTA, OLLI, SEAC, TLRD, VRNT
Other Key Events
·      Barclays Global Tech, Media and Technology Conference, 12/6-12/7 in San Francisco
·      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
·      Bank of Canada rate decision
·      Brazilian rate decision
World News
·      Two men are set to appear in London court on charges related to an alleged plan by Islamist terrorist to launch a suicide attack at British Prime Minister Theresa May’s residence.
·      German factory orders climbed 0.5% in October for the third month in a row
·      Investor Intelligence Poll showed bulls rise to 64.2% from last week’s 62.3%; Nov. 8 it reached a 30-year high of 64.4%; bearish sentiment unchanged at 15.1% and those expecting a correction slips to 9-month low of 20.7% versus 22.6% last week
Sector News Breakdown
·      Dave & Buster’s (PLAY) Q3 EPS 27c/$250.0M vs. est. 24c/$255.8M; Q3 comp sales fell (-1.3%) and EBITDA increased 9.8% to $45.6M from $41.5M; lowers FY17 revenue view to $1.148B-$1.155B from $1.16B-$1.17B (est. $1.17B) and lowers FY17 comp sales view to 0.0%-0.75% from 1%-2%; sees FY18 revenue growth at low-double-digit rate
·      RH Corp. (RH) Q3 EPS $1.04/$592.47M vs. est. $1.04/$591M; comparable brand revenues increased 6% compared to a (-6%) decrease last year; narrows FY17 adjusted net income view to $83M-$87M from $82M-$87M; backs FY18 revenue view $2.58B-$2.62B vs. est. $2.45B and sees FY18 CapEx $65M-$75M
·      Oxford Industries (OXM) Q3 EPS 17c/$236.0M vs. est. 9c/$239M; sees FY17 EPS $3.55-$3.70, on revenue $1.08B-$1.095B vs. est. $3.59/$1.09B
·      Liquidity Services (LQDT) Q4 adjusted EPS loss (33c)/$61.4M vs. est. loss (24c)/$64.2M; sees Q1 EPS (34c)-(25c)vs. est. loss (16c)
·      Funko (FNKO) Q3 adjusted Ebitda $27M vs. est. $24.2M; 3Q sales climbed 21% YoY to $142.81M; Q3 net income $8.3M; selling general and administrative expenses increased ~74% on spending
·      In Ventura County, about 60 miles northwest of Los Angeles, the named Thomas Fire exploded to scorch around 55,000 acres in less than a day, destroying at least 150 structures and forcing at least 27,000 residents to evacuate. Yesterday, shares of Edison International (EIX) declined over -10% on concerns they could be liable for the start of the fire (no confirmation at this point)
·      Bill Barrett (BBG) files to sell 21M shares of common stock; announced that it has agreed to a strategic business combination with Fifth Creek Energy Company, a portfolio company of NGP, in a transaction valued at approximately $649M
·      The American Petroleum Institute (API) reported that U.S. crude supplies dropped by -5.5 million barrels for the week ended Dec. 1, posted a jump of 9.2 million barrels in gasoline stockpiles, while inventories of distillates rose about 4.3 million barrels
·      The Bank of Canada is expected to keep rates steady at its monetary-policy meeting Wednesday, while markets expect a positive tone from Gov. Poloz on the outlook for the Canadian economy.
·      Retail property developer Hammerson PLC (HMSO.LN) said Wednesday it has agreed to buy shopping center owner Intu Properties PLC (INTU.LN) for 3.4 billion pounds ($4.57 million).
·      Clovis (CLVS) priority view granted by the FDA and based on positive data from phase III ARIEL3 clinical trial in which rucaparib significantly improved PFS in all ovarian cancer patient populations studied; PDUFA date of April 6, 2018
·      HealthEquity (HQY) Q3 EPS 17c/$56.8M vs. est. 13c/$55.41M; narrows FY17 EPS view to 64c-66c from 64c-68c (est. 71c) and narrows FY17 revenue view to $225M-$228M from $223M-$228M vs. consensus $227.0M
·      RBC Capital reported late yesterday that Amazon (AMZN) has canceled its pharmaceutical wholesaler application in Maine; said is opting instead for selling medical supplies, an activity that does not require a license in Maine (ABC, CAH, CVS, MCK, RAD, WBA)
·      GW Pharmaceuticals (GWPH) files to sell $225M in ADSs
·      Viking Therapeutics (VKTX) files to sell common stock, no amount given
Industrials & Materials
·      AeroVironment (AVAV) shares gain 25%; Q2 EPS 29c/$73.8M vs. est. loss (6c)/$63.5M; sees FY18 EPS 45c-65c on revs $280M-$300M vs. est. 61c/$294.2M; 2Q backlog $127.1 million
·      Powell (POWL) Q4 EPS loss (42c)/$95M vs. est. loss (26c)/$94.11M; said it sees net loss for FY18; said new orders placed during Q4 totaled $112M compared to $91M in prior quarter
·      Layne Christensen (LAYN) Q3 EPS loss (10c)/$127.42M vs. est. loss (4c)/$131.12M; said “We are very pleased with the early results from our Water Midstream business and today we are announcing a six-mile northward extension of our current pipeline in order to meet additional demand from upstream producers with limited access to water”
·      Grupo Aeroportuario del Surest (ASR) said that total passenger traffic for November 2017 declined 4.3% when compared to November 2016. Passenger traffic rose 7.3% in Mexico, and declined 31.9% in San Juan and 13.7% in Colombia
Technology, Media & Telecom
·      Veeva (VEEV) Q3 adjusted EPS 25c/$176.1M vs. est. 22c/$172.1M; sees Q4 adjusted EPS 21c-22c on revs $179M-$180M vs. est. 20c/$177.32M; raises FY18 adjusted EPS view to 91c from 86c-87c (est. 87c) and raises FY18 revenue view to $679.7M-$680.7M from $672M-$674M
·      21Vianet (VNET) shares fell -7%; Q3 EPS loss (-$1.98) on revs 759.3 million yuan; sees 4Q hosting, related services net revenue RMB740M-RMB760M
·      Alphabet Inc. (GOOGL) is pulling YouTube from the Inc. (AMZN) Echo Show and Fire TV streaming devices, the company said


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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