Morning Preview: December 13, 2017

Scott GreenDaily Market Report

Early Look
Wednesday, December 13, 17
  
Stocks futures are little changed ahead of the FOMC central bank policy meeting at 2:00 PM EST later today, where an interest rate hike is highly anticipated. Both the S&P 500 Index and the Dow Jones Industrial Average closed at fresh record highs again yesterday, for the 60th and 67th times respectively this year alone, and each come into Fed day riding 4-day winning streaks. The tech-heavy NASDAQ is less than 1% away from its all-time bests. U.S. stock futures dipped early overnight after Democrat Doug Jones won Alabama’s Senate election Tuesday night, defeating Republican Roy Moore. Stock futures have since rebounded to trade close to the flat line. The Democrat’s victory will shrink the Republican Senate majority, leaving the balance at 51-49. That has raised concerns that it will be harder for the Republicans to push through major overhauls, such as tax reform. The central bank’s Federal Open Market Committee is widely expected to announce its third and final interest-rate hike of 2017 on Wednesday, with central bank policy results expected from the BOE, ECB and SNB tomorrow. U.S. stocks rose on Tuesday as economic data pointed to solid growth ahead of the Fed announcement, leading to gains in the financials where higher rates tend to help, along with hopes of tax reform. In Asian markets, The Nikkei Index declined -108 points to end at 22,758, the Shanghai Index gained 22 points to finish at 3,303 and the Hang Seng Index jumped 428 points to end at 29,222. In Europe, the German DAX is down around -20 points at 13,160, while the FTSE 100 is flat around the 7,500 level.
 
Market Closing Prices Yesterday
·      The S&P 500 Index gained 4.12 points, or 0.15%, to 2,664.11
·      The Dow Jones Industrial Average rose 118.77 points, or 0.49%, to 24,504.80
·      The Nasdaq Composite dropped -12.76 points, or 0.19%, to 6,862.32
·      The Russell 2000 Index declined -3.72 points, or 0.24% to 1,516.12
 
Events Calendar for Today
·      7:00 AM EST       MBA Mortgage Applications Data
·      8:30 AM EST       Consumer Price Index (CPI MoM for Nov…est. 0.4%
·      8:30 AM EST       CPI Ex: Food & Energy MoM for Nov…est. 0.2%
·      10:30 AM EST     Weekly DOE Inventory Data
·      2:00 PM EST        FOMC Rate Decision Announcement and Yellen Press Conference
   
World News
·      House and Senate negotiators are settling on a corporate rate of 21% in a final tax bill, up from the 20% passed by each chamber, the Washington Post reports. The Post’s story also said congressional Republicans are in advanced talks to lower the top tax rate for individuals from 39.6% to 37% as they finalize a tax package.
·      Democrat Doug Jones won Alabama’s Senate election Tuesday night, defeating controversial Republican Roy Moore
 
Sector News Breakdown
Consumer
·      Sears Holdings Corp. (SHLD) agreed to extend the maturity of an existing term loan originally maturing June 2018 to January 2019, with an option to further extend the maturity to July of that year. Sears paid down the term loan by $325M in Q4r, reducing the outstanding balance to about $400M and bringing the total term loan repayment in 2017 to about $570M
·      Limoneira (LMNR) cuts FY17 EPS view to 40c-44c from 51c-55c and below consensus 53c; sees FY17 revenue roughly $120M vs. est. $121.5M; firm said excessive heat in the Arizona desert slowed fruit sizing during Q4 which delayed timing of the lemon harvest for its desert crop near Yuma, Arizona until Q1
·       Knoll, Inc. (KNL) to acquire Muuto, a designer and provider of affordable luxury furniture, lighting and accessories for the workplace and home, for about $300M; see Muuto deal adding to 2018 EPS, with EPS accretion from deal accelerating towards 30c by 2021
 
Energy
·      The American Petroleum Institute (API) reported U.S. crude supplies dropped by -7.4M barrels for the week ended Dec. 8, a rise of 2.3M barrels in gasoline stockpiles, while inventories of distillates rose 1.5M barrels
·      Edison Int’l (EIX) shares rebounded overnight after the Los Angeles Fire Department investigators determined the Skirball Fire that broke out on Dec. 6 was caused by an illegal cooking fire at an encampment in a brush area
·      Noble Midstream Partners (NBLX) and Greenfield Midstream agree to form a joint venture to acquire the Saddle Butte pipeline system in the DJ Basin for $625M. Saddle Butte assets include ~160 miles of pipeline in operation, 300K bbl/day of delivery capacity and 210K barrels of crude oil storage capacity, with 115K dedicated acres from six customers under fixed fee arrangements, including 72K dedicated acres from PDC Energy (PDCE)
·      Oil prices higher on signs U.S. inventories are falling. OPEC will release its monthly report later on Wednesday, which could also impact crude prices.
 
Financials
·      Manning & Napier (MN) preliminary assets under management, or AUM, as of November 30 of $25.6B compared with $26.4B at October 31 and $26.5B at September 30
·      Waddell & Reed (WDR) said assets under management of $81.4B for the month ended November 30, 2017, compared to $81.5B on October 31, 2017
·      Margin requirements for CME Group Inc. (CME) bitcoin futures will be 47% next week when the contracts start trading, an increase from the previous plan of 35%
·      Iron Mountain (IRM) 14.5M share Secondary priced at $37.00
 
Healthcare
·      Civitas (CIVI) Q4 EPS loss (29c)/$380.4M vs. est. $386.8M; Q4 adjusted Ebitda $42.4M vs. Bloomberg est. $44.5M; sees year revs $1.57B-$1.62B
·      Proteostasis (PTI) announces offering of 7M shares of common stock
·      NuVasive, Inc. (NUVA) entered into a definitive agreement to acquire SafePassage. Terms of the deal were not disclosed
·      Fate Therapeutics (FATE) announces common stock offering
 
Industrials & Materials
·      Honeywell (HON) said it sees Q4 EPS about $1.84, compared to prior guidance of $1.79-$1.84 and sees its year EPS $7.55-$7.80 vs. est. $7.79
·      Genesee & Wyoming (GWR) traffic in November was 271,912 carloads; same-railroad traffic in November 2017 was 243,609 carloads, down 2.8% vs a year ago
·      WESCO International (WCC) reaffirms its 2017 outlook, announces a new share repurchase authorization to replace the existing authorization expiring at the end of 2017
 
Media & Telecom
·      Former Trump campaign adviser Carter Page argued in court papers on Tuesday that AT&T Inc. (T) should not be permitted to buy CNN parent Time Warner Inc. (TWX) because there was a risk it would lead to “recklessness” in journalism.
·      Net neutrality advocates said they are gearing up for a legal fight after abandoning attempts to convince the U.S. Federal Communications Commission to keep 2015 rules aimed at maintaining an open internet – Reuters
 
Technology, Media & Telecom
·      Finisar (FNSR) shares up 13% as Apple (AAPL) awards the company $390M from Advanced Manufacturing Fund; Finisar to reopen Sherman, Tex. Plant to create 500 high-skilled jobs
·      Toshiba Corporation, Toshiba Memory Corporation, and Western Digital Corporation (WDC) have entered into a global settlement agreement to resolve their ongoing disputes in litigation and arbitration, strengthen and extend their relationship, and enhance the mutual commitment to their ongoing flash memory collaboration
·      Verifone (PAY) Q4 EPS 44c/$477M vs. est. 43c/$472.46M; sees Q1 adjusted EPS 22c on revs $431M-$433M below est. 34c/$465.61M; sees FY18 adjusted EPS $1.47-$1.50 on revs $1.788B-$1.813B vs. est. $1.57/$1.92B; authorized new $100M share buyback plan
·      MongoDB (MDB) reports over 4,900 customers at Q3-end, up ~88% YoY and reports over 2,600 MongoDB Atlas customers at Q3-end, up ~37% sequentially; sees Q4 adjusted EPS (43c)-(42c) on revs $42M-$42.5M vs. est. loss (44c)/$41.21M
·      Helios and Matheson (HMNY) files to sell common stock, warrants no amount given

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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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