Morning Preview: December 15, 2017

Scott GreenDaily Market Report

Early Look
Friday, December 15, 17
  
Stock futures are pointing to a rebound on this final day of trading for the week, as the Dow Industrials and S&P 500 look for a 4th straight week of gains as markets attempt to shake off tax worries that weighed on sentiment late yesterday. Republican Senators Marco Rubio noted late yesterday his displeasure with the bill leaving out an expansion to a child care tax credit, and opposes the current deal while Senator’s Lee and Corker have also expressed concerns of the bill in its current form. Expectations for tax cuts and an overhaul in U.S. tax policies have helped boost stock markets this year and a failure to push through the bill could end the current rally. The Dow Jones Industrial Average snapped a five-day winning streak Thursday with the market taking a breather after several record-breaking sessions as materials and health care sectors topped the losses while consumer discretionary shares were the sole gainers. Major averages got a strong dose of economic data yesterday with jobless claims and retail sales topping expectations, with eyes on manufacturing and industrial production later today. In Asian markets, The Nikkei Index dropped -141 points to settle at 22,553, the Shanghai Index fell -26 points to end at 3,266 and the Hang Seng Index declined -318 points to finish at 28,848. In Europe, the German DAX is down over -30 points at 13,030, while the FTSE 100 is up a few points around 7,450. There are a few movers overnight as ORCL shares slip after earnings, while CSX falls on news its CEO takes medical leave, while COST shares bounce on earnings. Bitcoin futures rallied 7% to $18,050, after falling for three days straight, while gold and oil prices bounce as well.
 
Market Closing Prices Yesterday
·      The S&P 500 Index dropped -10.84 points, or 0.41%, to 2,652.01
·      The Dow Jones Industrial Average fell -76.77 points, or 0.31%, to 24,508.66
·      The Nasdaq Composite slipped -19.27 points, or 0.28%, to 6,856.53
·      The Russell 2000 Index declined -17.50 points, or 1.15% to 1,506.95
 
Events Calendar for Today
·      8:30 AM EST       Empire Manufacturing for December…est. 18.8
·      9:15 AM EST       Industrial Production MoM for November…est. 0.3%
·      9:15 AM EST       Capacity Utilization MoM for November…est. 77.2%
·      1:00 PM EST        Baker Hughes Weekly Rig Count
·      4:00 PM EST        Total Net TIC Flows for October
   
World News
·      China will remove the export tax on steel products, the Ministry of Finance said on Friday, in a move likely to increase trade tensions
·      Russia’s central bank surprised markets with a 50-bps cut to interest rates down to 7.75%
·      EU’s Donald Tusk tweeted this morning “EU leaders agree to move on to the second phase of #Brexittalks.”
 
Sector News Breakdown
Consumer
·      Costco (COST) Q1 EPS $1.45/$31.81B vs. est. $1.34/$31.51B; Q1 total company comparable sales excluding fuel, in constant currency +7.9% and Q1 total company comparable sales including gas, currency +10.5%; said Q1 membership fees $692 million; notes had one less sales day in the U.S, pre-Thanksgiving/Black Friday/Holiday quarter shift added about 1.5% in the U.S for comps sales
·      Hyatt (H) increases share repurchase authorization by $750M
·      Chefs’ Warehouse (CHEF) files to sell 1.9M shares of common stock
·      H&M reported the biggest drop in quarterly sales in at least a decade Friday as fewer customers visited H&M stores, leading the company to pare expansion plans and consider closures; shares fell sharply overnight in Europe
 
Energy
·      Elliott Management Corp., which owns a 6.7% stake in Hess (HES), is readying for a potential new fight with hopes to either remove John B. Hess, its second-generation CEO, or push him to consider selling all or part of the energy company. Elliott is also seeking changes in how the company approaches shareholder returns, pushing for a dividend cut in favor of stock buybacks
·      BP PLC (BP) will buy a 43% stake in solar energy company Lightsource for $200 million, the British oil producer said on Friday, marking its return to the solar sector
 
Financials
·      Capital One Financial (COF) reports November net charge-offs 5.16% vs. 4.70% last month and delinquencies 4.11% vs. 4.13% last month. 
·      JPMorgan (JPM) reports November net credit losses 2.36% vs. 2.35% last month and delinquencies 1.22% vs. 1.24% last month
·      Synchrony (SYF) reports November net charge-off rate 5.03% vs. 5.23% last month and delinquencies 3.09% vs. 3.16% last month
·      DDR Corp. (DDR) said its Board of Directors has unanimously approved a plan to spin off a portfolio of 50 assets, comprised of 38 Continental U.S. assets and the entirety of the Puerto Rico portfolio into a separate publicly-traded REIT to be named Retail Value Trust
·      CubeSmart (CUBE) increases quarterly dividend 11.1%
 
Healthcare
·      Merck (MRK) said that the pivotal phase 3 KEYNOTE-061 trial investigating KEYTRUDA, the company’s anti-PD-1 therapy, as a second-line treatment for patients with advanced gastric or gastroesophageal junction adenocarcinoma, did not meet its primary endpoint of overall survival in patients whose tumors expressed PD-L1
·      Puma Biotechnology (PBYI) has been selected for addition to the NASDAQ Biotechnology Index (NBI) as part of the NBI’s annual re-ranking of biotechnology and pharmaceutical companies listed on The NASDAQ Stock Market
·      Global Blood Therapeutics (GBT) files to sell $100M in common stock
·      Centene (CNC) backs 2017 adjusted EPS view of $4.86-$5.04 (est. $4.98) and backs 2017 revenue view $47.4B-$48.2B (est. $47.72B); sees 2018 adjusted EPS $5.47-$5.87 (est. $5.54) and sees 2018 revenue $60.0B-$60.8B; says expects health benefits ratio of approximately 86.3% to 86.8%
·      Galapagos NV (GLPG.NA) announces decision to opt-in on co-promotion of filgotinib with collaboration partner Gilead Sciences (GILD) in eight European countries, should filgotinib be approved for commercial sale.
 
Industrials & Materials
·      CSX Corp (CSX) shares are lower after its new CEO Hunter Harrison went on medical leave citing unexpected complications from a recent illness; current COO Foot has been named interim CEO
·      Waste Management (WM) raised its quarterly dividend to 46.5c from 42.5c; said it plans to buy back up to $1.25 billion in shares with the plan to go into effect immediately
·      Univar (UNVR) files to sell 10M shares of common stock for holders
·      Safe Bulkers (SB) announced that it has acquired a 92,000 dwt, South Korean 2010 built, dry-bulk, Post-Panamax class
 
Technology, Media & Telecom
·      Oracle (ORCL) shares slide -6%; Q2 adjusted EPS 70c/$9.63B vs. est. 68c/$9.57B; Q2 cloud revs $1.52 billion, service revs $856M, hardware revs $940.0M and adjusted operating margin +44%; raises authorization for share repurchases by $12B
·      Adobe (ADBE) Q4 EPS $1.26/$2.01B vs. est. $1.16/$1.95B; reports Q4 digital media revenue $1.39B, creative revenue $1.16B, document cloud revenue $235M and Q4 experienced cloud revenue $550M; backs FY18 EPS view of $5.50 (est. $5.52) and backs FY18 revenue view of 8.7B
·      Jabil (JBL) shares rise +5%; Q1 core EPS 80c/$5.6B vs. est. 79c/$5.5B; sees Q2 core EPS 50c-74c on revs $4.75B-$5.05B vs. est. 61c/$4.74B
·      RPX Corp. (RPXC) says Chief Revenue Officer and Chief Strategy Officer to leave company; backs Q4 revenue view $77-$82M vs. est. $80.36M
·      T-Mobile (TMUS) upgraded to Outperform at Macquarie
·      Casa Systems (CASA) 6M share IPO priced at $13.00

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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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