Monday, December 11, 17
U.S. futures are pointing to a higher open as markets await monetary policy updates from several central banks this week. Federal Reserve policy makers are projected to raise the target range for their benchmark interest rate this week against a backdrop of continuing robust U.S. economic conditions, an improving labor market and forecasts inflation will begin to pick up, while the ECB may reveal details of plans to taper asset purchases. In addition to the FOMC meeting results Wednesday, markets will get interest rate policy news out of the ECB, BOE and SNB as well this week. Oil prices are trading slightly lower while front-month bitcoin futures contract on the Chicago-based CBOE Futures Exchange surged on Monday, in the first day of trading.
Stocks ended mixed last week, with the S&P 500 index gaining 0.35%, the Dow Industrials rising 0.4% while the tech heavy Nasdaq Comp slipped -0.1%. Bond yield rose across the board last week ahead of the FOMC’s rate-setting meeting Dec. 12-13, where an increase in the fed-funds rate is seen as a virtual certainty. The yield for the 10-year benchmark Treasury note ticked higher 2 bps for the week to 2.383%, while the 2-year note yield edged higher by 2 bps to 1.798%.
In Asian markets, The Nikkei Index rose 127 points to settle at 22,938, the Shanghai Index jumped 32 points to end at 3,322 and the Hang Seng Index gained 325 points to settle at 28,965. In Europe, the German DAX is up around 10 points at 13,170, while the FTSE 100 is up about 50 points at 7,440.
Market Closing Prices Yesterday
· The S&P 500 Index gained 14.52 points, or 0.55%, to 2,651.50
· The Dow Jones Industrial Average rose 117.68 points, or 0.49%, to 24,329.16
· The Nasdaq Composite climbed 27.24 points, or 0.40%, to 6,840.08
· The Russell 2000 Index inched higher 1.26 points, or 0.08% to 1,521.72
Events Calendar for Today
· 10:00 AM JOLTs Job Openings for October…est. 6100
· China’s consumer-price index increased 1.7% in November from a year earlier, compared with a 1.9% gain in October. Food prices fell 1.1% from a year earlier
· Chinese banks issued 1.12 trillion yuan ($169.3 billion) of new yuan loans in November, up from 663.2 billion yuan in October and above economists’ expectations, data from the People’s Bank of China showed. Newly extended loans in November beat the 850 billion yuan forecast
Sector News Breakdown
· Mattel (MAT) says in filing Q4 gross sales hurt by retail partners moving toward tighter inventory management and by challenges in Toy Box and certain underperforming brands; sees 2017 sales declining by at least mid-to-high single digits
· Even the hardest-hit retail stocks such as Foot Locker (FL), Macy’s (M) and Kohl’s (KSS) have been bouncing, but it may not last, Barron’s said. While consumers are still willing to spend, buying habits have changed too much, saying that event companies that look immune to the impact of the internet like off-price retailers TJX (TJX) and Ross Stores (ROST) could be at risk
· Barron’s 10 favorite stocks for 2018 include Google parent including Pioneer Natural Resources (PXD) which Pioneer has a strong production-growth outlook thanks to its acreage in Texas’ Permian Basin and Enterprise Products Partners (EPD), a leader in the out-of-favor master limited partnership space with a 6.8% yield
· Alphabet (GOOGL), Delta Air Lines (DAL), Berkshire Hathaway (BRK.A), Volkswagen (VLKAY), Pioneer Natural Resources (PXD), Applied Materials (AMAT), Enterprise Products Partners (EPD), Ally Financial (ALLY), Anthem (ANTM), and US Foods Holding (USFD). The 10 names were chosen on the basis of discussions with institutional investors and Barron’s own analysis
· Oil and industrial metals may see a breakout in 2018 thanks to global growth tailwinds, after a turgid 2017 for the commodity sector. Crude at $50 a barrel isn’t reflected in stocks such as Devon Energy (DVN) – Barron’s
· American Water Works (AWK) maintaining five-year adjusted EPS compound annual growth rate of 7%-10% anchored off 2016 adjusted EPS
· GGP (GGP) has rejected a $14.8B offer from the company’s biggest shareholder, Brookfield Property (BPY), according to Reuters, citing people familiar with the matter. Brookfield Property made a $23 per share cash and stock offer last month for the 66% of GGP it does not already own https://goo.gl/cciJNu
· HSBC Holdings PLC (HSBC) said that its deferred prosecution agreement with the U.S. Department of Justice has expired, and that the Justice Department will file a motion with the U.S. District Court seeking dismissal of the charges deferred by the agreement.
· Puerto Rico was already a problem for municipal bond insurers like MBIA (MBI), when Hurricane Maria made recovery an even bigger challenge, Barron’s reported; says MBIA has less margin for error than its rival Assured Guaranty (AGO)
· Barron’s 10 favorite stocks for 2018 include: Berkshire Hathaway (BRK.A) saying the strong U.S. economy, as well as an expected lower corporate tax rate from the overhaul working through Congress, could bolster the industrial holdings in Berkshire; also mentioned Ally Financial (ALLY)
· Ascension and Providence St. Joseph Health, both nonprofits, are talking about combining, which would create an entity of unprecedent reach, according to The Wall Street Journal, citing people familiar with the matter. A deal would dethrone the nation’s largest pure hospital operator, HCA Healthcare (HCA) https://goo.gl/ariUZJ
· Roche Holding AG (RHHBY) said that a phase-3 trial of its Tecentriq and Avastin treatments showed positive results in patients with a type of advanced kidney cancer; said the IMmotion 151 trial met its co-primary endpoint, slowing the progression of kidney cancer and helping patients live longer
· Agios Pharmaceuticals (AGIO) files automatic mixed securities shelf
· Akari Therapeutics (AKTX) reports on Phase II COBALT Trial of Coversin in paroxysmal nocturnal hemoglobinuria (PHN) met its primary endpoint; sees using 45mg per day dosing regimen for Phase III trials; sees starting Phase III trial in 1Q2018
· Barron’s says that CVS‘ offer to buy Aetna (AET) is the drug chain’s dramatic attempt to defend itself against the PBM-insurer giant UnitedHealth Group (UNH) and looming pharmacy competition from Amazon (AMZN).
· Fate Therapeutics (FATE) announced that the first subject has been treated in the APOLLO study of Fate-NK100 in women with ovarian cancer resistant to, or recurrent on, platinum-based treatment
· Gilead (GILD) and Novartis (NVS) CAR-T therapies for B-cell lymphomas offer persistent benefits for some patients, though fewer than half will have long-term responses, according to studies published in the New England Journal of Medicine and slated for presentation at the American Society of Hematology meeting in Atlanta.
· Global Blood Therapeutics (GBT) said six out of 11 adolescents with sickle cell disease in its mid-stage “Hope-Kids 1” study of voxelotor (previously GBT440) achieved a hemoglobin response greater than 1 g/dL, with a median hemoglobin change of 1.1 g/dL.
· Seattle Genetics (SGEN) CEO said Adcetris revenue has been growing and the biotech company’s first acquisition could be on the horizon. Adcetris, the company’s only drug on the market at the moment is expected to reach around $600M in sales this year and could soon be a $1B “blockbuster” product – Bloomberg
Industrials & Materials
· Barron’s 10 favorite stocks for 2018 include: Delta Air Lines (DAL) and Volkswagen (VLKAY), citing relatively low valuations among peers in their sector
· Volkswagen (VLKAY) CEO said that the German government should consider phasing out the subsidies that encourage customers to buy diesel vehicles, according to The New York Times
Technology, Media & Telecom
· Barron’s 10 favorite stocks for 2018 include: Alphabet (GOOGL), Applied Materials (AMAT)
· China is becoming a global power in the digital world, on the back of internet giants Alibaba (BABA), Tencent (TCEHY) and Baidu (BIDU), which together fund 30% of China’s top start-ups, including online retailer JD.com (JD).
· While there are encouraging signs, Augmented Reality has been experiencing a slow rise, which is symptomatic of an industry that thrives on ever-changing ideas and concepts, often before its customers are ready, Barron’s reported
· DIRECTV, AT&T (T) is trying to woo cord cutters and is not alone in the game, with Dish (DISH), Sony (SNE), Google (GOOGL) and Hulu all launching their own internet TV bundles or MVPDs
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.