Morning Preview: December 14, 2017

Scott GreenDaily Market Report

Early Look
Thursday, December 14, 17
  
Stock futures are pointing to a higher open after the Dow Industrial Average closed at a record for a fourth straight session (now up 5-straight days overall) as the FOMC boosted interest rates and raised its U.S. GDP growth target for 2018 to 2.5% from 2.1%. “Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate,” said the Fed in announcing its decision. However, the S&P 500 index slipped in the final minutes of trading to end lower and snap its 4-day win streak. The 2-year Treasury yield posted its biggest one-day drop in three weeks after the Fed raised rates, dropping 4.3 bps to 1.786%, the biggest one-day drop since Nov. 22 while the yield on the 10-year Treasury note slipped 5 bps to 2.353%. Corporate stock news has taken a backseat the Central Banks (more today), and news out Washington related to the tax reform agenda.
 
Central Banks on the agenda today with the Bank of England policy rate decision out around 7:00 AM and the European Central Bank at 7:45 followed by President Draghi press conference at 8:30 AM. Overnight, the Swiss National Bank kept its deposit rate at minus 0.75% and said it was still willing to intervene in currency markets if the Swiss franc gets too strong. Regarding tax reform, it was reported yesterday that House, Senate Republicans reached a deal on final tax bill with details to be released this week/votes next week; tax agreement sets top individual rate at 37%, down from current 39.6%; corporate tax rate to be 21%, higher than 20% GOP had agreed on.
 
In Asian markets, The Nikkei Index dipped -63 points to settle at 22,694, the Shanghai Index dropped -10 points to settle at 3,292 and the Hang Seng Index fell -55 points to end at 29,166. Also, following the FOMC interest rate hike of 25 bps yesterday, the People’s Bank of China on Thursday raised two key short-term interest rates. In Europe, the German DAX is down around -70 points at 13,050, while the FTSE 100 is down about -20 points ahead of its Bank of England policy meeting later.
 
Market Closing Prices Yesterday
·      The S&P 500 Index slipped -1.26 points, or 0.05%, to 2,662.85
·      The Dow Jones Industrial Average rose 80.63 points, or 0.33%, to 24,585.43
·      The Nasdaq Composite gained 13.48 points, or 0.20%, to 6,875.80
·      The Russell 2000 Index advanced 8.33 points, or 0.55% to 1,524.45
 
Events Calendar for Today
·      8:30 AM EST       Weekly Jobless Claims…est. 236K
·      8:30 AM EST       Continuing Claims…est. 1.9M
·      8:30 AM EST       Import Prices MoM for November…est. 0.7%
·      8:30 AM EST       Advance Retail Sales MoM for November…est. 0.3%
·      8:30 AM EST       Retail Sales Ex: Autos MoM for November…est. 0.6%
·      9:45 AM EST       Markit US Manufacturing PMI, Dec-F…est. 53.9
·      9:45 AM EST       Markit US Services PMI, Dec-P…est. 54.7
·      9:45 AM EST       Markit US Composite PMI, Dec-P
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 52.3
·      10:00 AM EST     Business Inventories for October…est. (-0.1%)
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
·      1:00 PM EST        U.S. Treasury to auction $12B in 30-year notes
 
Other Key Events
·      Swiss National Bank (SNB) rate decision
·      Bank of England (BOE) interest rate decision at 7:00 AM EST
·      The European Central Bank (ECB) rate decision at 7:45 AM EST/press conference at 8:30 AM EST
   
World News
·      The Swiss National Bank (SNB) kept its deposit rate at minus 0.75% and said it was still willing to intervene in currency markets if the Swiss franc gets too strong.
·      Tax related news yesterday: House, Senate Republicans reach deal on final tax bill; tax bill details to be released this week, with votes next week; tax agreement sets top individual rate at 37%, down from current 39.6%; corporate tax rate to be 21%, higher than 20% GOP had agreed on
·      Business activity in the eurozone surged in December, as the preliminary, or flash, composite purchasing managers’ index came in at 58.0, the highest since February 2011, and above FactSet’s consensus estimate of 57.2
·      Germany’s Ifo institute has raised its growth forecast for the county’s economy, citing a buoyant manufacturing sector and strong private consumption and construction. The institute now forecasts 2.6% growth for 2018, compared with the 2% predicted previously. It has also raised its forecast for 2017 growth to 2.3% from 1.8%.
·      U.K. retail sales rise 1.6% in November year-on-year vs. 0.3% estimate
·      A Kentucky lawmaker who was accused of sexually assaulting a former member of his church reportedly killed himself on Wednesday. State Rep. Dan Johnson shot himself on a bridge in Mt. Washington, according to Kentucky’s WDBR.com.
·      Russian President Vladimir Putin will run for re-election not as a candidate of the ruling United Russia party but as an independent, he announced on Thursday
 
Sector News Breakdown
Consumer
·      Pier 1 (PIR) shares fell over -20%; Q3 adjusted EPS 9c/$469.2M vs. est. 11c/$466.7M; Q3 comp sales fell (-0.7%) vs. est. (-1.2%); 3Q gross margin 37.7% vs. Bloomberg estimate 39.5%; said Q3 inventory fell (-12.7%); sees Q4 comp sales down (-1.5%-3.5%) and sees Q4 EPS 16c-24c below consensus 38c; cuts FY18 EPS view to 17c-25c from 38c-48c (est. 41c) and cuts FY18 net sales growth view to “approximately flat” from 0%-2%
·      Pinnacle Foods (PF) reaffirms 2017 adjusted EPS outlook at the low end of its guidance range, or $2.55 per share ahead of investors conference tomorrow
·      Blue Buffalo (BUFF) downgraded to hold from buy at Deutsche Bank
·      Tiffany (TIF) upgraded to Buy from Neutral at Citigroup and raised price target to $115 from $92 saying shares look attractive as currency tailwinds and tax reform should benefit the company’s earnings
·      lululemon (LULU) upgraded to Buy from Hold at Deutsche Bank
·      Finish Line (FINL) upgraded to Hold from Sell at Deutsche Bank
 
Energy
·      The IEA said the amount of crude oil on the global market rose by 170,000 barrels a day in November to 97.8 million barrels a day. The agency cited a surge in U.S. shale production and increased drilling and completion activity.
 
Healthcare
·      AveXis (AVXS) said it plans to begin Phase 1 Trial in SMA Type 2 Utilizing Intrathecal Delivery of AVXS-101; FDA notified AveXis it may begin trial based on a review of data provided by company; trial to commence immediately; trial will evaluate safety, dosing and proof of concept for efficacy
·      Flexion Therapeutics (FLXN) announced it has entered into a definitive agreement with GeneQuine Biotherapeutics GmbH to acquire the global rights to GQ-203; FLXN to make upfront payment of $2M to GeneQuine, may incur milestone payments of as much as $8.7M
·      Danaher (DHR) said it sees FY18 EPS $4.25-$4.35 vs. consensus $4.34 and sees FY18 non-GAAP core revenue up 3.5%-4%
·      Protagonist (PTGX) says results of phase 1 study of PTG-300 demonstrate pharmacodynamic-based clinical proof of concept
 
Industrials & Materials
·      ABM Industries (ABM) Q4 EPS 37c/$1.5B vs. est. 49c/$1.5B; sees FY adjusted EPS $1.70-$1.80 vs. estimate $2.04; raises dividend by 3%
·      Nordson (NDSN) Q4 EPS $1.38/$573.9M vs. est. $1.33/$544.4M
·      Bombardier (BDRBF) said it sees 2018 revenue growing by about $1B over its 2017 forecast, helped by higher C Series deliveries, although the expected range trails analyst estimates; also reaffirms 2017 outlook, says 5-year turnaround plan is on track
 
Technology, Media & Telecom
·      Cognizant (CTSH) launches accelerated $300M share buyback
·      Tintri (TTR) Q3 adjusted EPS loss (79c)/$31.8M; sees Q4 adjusted EPS loss (83c)-(79c) and revs $25M-$27M, well below consensus views

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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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