Morning Preview: December 8, 2017

Scott GreenDaily Market Report

Early Look
Friday, December 8, 17
U.S. stock futures are pointing to a higher open for the final day of trading this week as investors cheer news overnight that U.S. lawmakers have advanced legislation to keep the government funded through December 22, as Congress scrambles to avoid a shutdown when the current funding measure expires at the end of the day today. European markets are also higher after Jean-Claude Juncker, the president of the European Commission, said early Friday that “sufficient progress” has been made on three key issues holding up the Brexit negotiations for the talks to advance to the next stage. The two stories are helping propel U.S. futures and foreign markets ahead of the important monthly jobs report which is expected at 8:30 AM EST later this morning (est. for 195K jobs added, wages to rise 0.3% and unemployment to hold at 4.1%). The rebound in tech stocks that started on Wednesday looked set to continue on Friday after rising 0.5% yesterday to trim its weekly loss to -0.5%. As of yesterday, the Dow average was on track for a 0.1% weekly loss and the S&P 500 was set for a 0.2% slide for the week. The dollar is higher, along with oil prices after rising yesterday, while defensive/safe-haven trades such as gold and bonds are lower, and Bitcoin drops about 10% to move back under $15,000. In Asian markets, The Nikkei Index jumped 313 points (1.39%) to end at 22,811, the Shanghai Index gained 17 points to settle at 3,289 and the Hang Seng Index surged 336 points (1.19%) to close at 28,639. Gains in Asia were helped by positive trade data out of China as demand for commodities picked up in November with the world’s largest consumer of raw materials boosting imports of copper, crude oil, soybeans and steel-making ingredient iron ore. In Europe, markets are also trading higher as the German DAX is up over 175 points at 13,220, while the FTSE 100 is higher by about 20 points at 7,340.
Market Closing Prices Yesterday
·      The S&P 500 Index gained 7.71 points, or 0.29%, to 2,636.98
·      The Dow Jones Industrial Average rose 70.57 points, or 0.29%, to 24,211.48
·      The Nasdaq Composite jumped 36.47 points, or 0.54%, to 6,812.84
·      The Russell 2000 Index advanced 11.59 points, or 0.77% to 1,520.47
Events Calendar for Today
·      8:30 AM EST       Change in Nonfarm Payrolls for November…est. 195K
·      8:30 AM EST       Change in Private Payrolls for Nov…est. 195K
·      8:30 AM EST       Change in Manufacturing Payrolls for Nov…est. 15K
·      8:30 AM EST       Unemployment Rate for Nov…est. 4.1%
·      8:30 AM EST       Average Hourly Earnings for Nov…est. 0.3%
·      10:00 AM EST     Wholesale Inventories MoM Oct-F…est. (-0.4%)
·      10:00 AM EST     University of Michigan Confidence, Dec-P…est. 99.0
·      1:00 PM EST        Baker Hughes Weekly Rig Count
World News
·      The U.S. House passes a bill to fund the government through December 22nd
·      Japan’s gross domestic product (GDP) grew at an annualized pace of 2.5% from the previous three months, and extended its growth streak to seven quarters, its longest expansion in 16 years. A preliminary figure had estimated growth at 1.4%. In non-annualized terms, the economy expanded 0.6% from the previous quarter, compared with an initial figure of 0.3% growth.
·      U.K. manufacturing industry posted its sixth monthly expansion in a row for the first time on record in October, as factory output grew by 0.1% compared with September, and by 3.9% compared with October 2016, both slightly above the expectations
·      China’s exports grew 10.3% in November from a year earlier in yuan terms, following a 6.1% gain in October. Imports for November expanded 15.6% in yuan terms from a year ago, compared with a 15.9% rise in October. The country’s trade surplus widened last month to 263.6 billion yuan ($39.8 billion) from CNY254.5 billion the previous month.
Sector News Breakdown
·      Wal-Mart Stores (WMT) files debt securities shelf
·      American Outdoor Brands (AOBC) shares fell -02%; Q2 EPS11c/$148.4M vs. est. 7c/$142.18M; sees Q3 adjusted EPS 7c-10c on revs $170M-$180M below est. 41c/$209.38M; cuts year view to 57c-67c from prior $1.04-$1.24 and cuts revs to $650M-$675M from prior $700M-$740M
·      United Natural Foods (UNFI) Q1 EPS 60c/$2.46B vs. est. 60c/$2.39B; raises FY18 EPS view to $2.72-$2.80 from $2.67-$2.77 (est. $2.72) and raises FY18 revenue view to $9.84B-$10B from $9.63B-$9.81B (est. $9.72B); reaffirms 2018 cap-ex guidance
·      Steelcase (SCS) Q3 EPS 22c/$772M vs. est. 23c/$794.87M; says orders for day-to-day business from large customers improved in Nov. following significant declines earlier in quarter
·      Good Times Restaurants (GTIM) Q4 EPS loss (5c)/$22.58M vs. est. loss (6c)/$21.26M; Q4 same store sales for company-owned Good Times restaurants increased 3.9% in Q4; same store sales for company-owned Bad Daddy’s restaurants increased 1.4% in Q4; backs FY18 revenue view $100M-$102M and assume same store sales growth of approximately 3%-3.5%
·      DAVIDsTEA (DTEA) Q3 EPS loss (C25c) on revs C$43.0M and comp sales fell (-6.8%); said board of directors has decided to explore strategic alternatives in order to enhance shareholder value
·      Party City (PRTY) files to sell 10M shares of common stock for holders
·      Dover (DOV) announced that it plans to spin off its upstream energy businesses within the Dover Energy segment, collectively, the “Wellsite” business, into a standalone, publicly-traded company, to be named at a later date
·      CONSOL (CNX) upgraded to buy from hold at SunTrust
·      Tellurian (TELL) 10M share secondary priced at $10.00 per share
·      Investors Bancorp Inc. (ISBC) said it was laying off about 5% of its workers and closing six of its branch offices; said the cuts will reduce annual operating expenses by about $10M-$12M
·      Farmer Mac (AGM) fired CEO Buzby solely on the basis of violations of company policies unrelated to the company’s financial and business performance; names Lowell Junkins as acting president and CEO
·      Douglas Emmett (DEI) raises quarterly dividend 9% to 25c per share
·      European banks were among the biggest gainers overseas, with analysts reacting optimistically to a compromise by global regulators on post-crisis rules on the financial sector.
·      Anthem (ANTM) boosts stock buyback plan by $5B
·      Cooper Companies (COO) Q4 EPS $2.65/$561.5M vs. est. $2.64/$558.3M; sees FY adjusted EPS $11.35-$11.65 on revs $2.48B-$2.53B vs. est. $11.55/$2.48B
·      Gilead Sciences (GILD) and its cell therapy subsidiary Kite entered into a definitive agreement under which they have agreed to acquire Cell Design Labs, Inc. for $567M, gaining new technology platforms that will enhance research and development efforts in cellular therapy
·      MediciNova Inc. (MNOV) shares jumped 50%; said it received positive top-line results from the company’s clinical trial of MN-166 in amyotrophic lateral sclerosis; said that it conducted data analysis on 51 subjects without non-invasive ventilation in the “intent to treat” population and the trial “achieved the primary endpoint of safety and tolerability, and also demonstrated efficacy trends in favor of MN-166 (ibudilast).”
·      Sangamo’s (AGMO) application for orphan medicinal product designation for SB-318 and SB-913 gets positive opinion from Committee for Orphan Medicinal Products of the European Medicines Agency
·      Enzo Biochem (ENZ) Q1 EPS loss (1c) on revs $27.7M; Q1 adjusted Ebitda loss $48,000; plant facilities in Farmingdale undergoing expansion to accommodate anticipated growth
Industrials & Materials
·      United Airlines (UAL) November 2017 consolidated traffic increased 5.1% and consolidated capacity (available seat miles) increased 5.1% YoY; consolidated load factor was flat YoY; said to buyback $3B more in common stock
·      Aqua Metals (AQMS) files to sell common stock
Technology, Media & Telecom
·      Finisar (FNSR) Q2 EPS 23c/$332.2M vs. est. 30c/$331.6M; Q2 adjusted gross margin 30.3%, below Bloomberg estimate 33.5%; sees Q3 EPS 21c-27c on revs $325M-$345M below est. 33c/$345.3M; sees Q3 gross margins 30%-31%
·      Silicon Labs (SLAB) will acquire Sigma Designs (SIGM) for $7.05 per share in a cash transaction valued at approximately $282M
·      Cloudera (CLDR) Q3 EPS loss (17c)/$94.6M vs. est. loss (24c)/$91.26M; sees Q4 adjusted EPS loss (24c)-(22c) on revs $97M-$99M vs. est. loss (26c)/$97.25M; sees FY18 adjusted EPS (84c)-(82c) on revs $361M-$363M vs. est. loss (94c)/$358.67M; Q3 subscription revenue $78.1M, up 48% y/y
·      Science Applications (SAIC) Q3 EPS 98c/$1.15B vs. est. 87c/$1.11B; 3Q free cash flow +$72M, Q3 net new bookings $2.6 billion and Q3 book to bill ratio 2.3%
·      Ericsson (ERIC) wins $75M in patent trial against China’s TCL; Ericsson claimed TCL’s Android cell phones and tablets it sells under the TCL and Alcatel OneTouch brands infringed patent 7,149,510 for controlling access to terminals that transmit voice communications
·      Fujian High Court requires Veeco Shanghai to stop importing, making, selling and offering to sell Veeco EPIK 700 model MOCVD systems, Veeco (VECO) said; said evaluating ruling, which applies only in China; will continue to service and support its installed base of EPIK 700 MOCVD systems
·      Globalstar (GSAT) files to sell 38M shares of common stock for holders


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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