Morning Preview: December 18, 2017

Scott GreenDaily Market Report

Early Look
Monday, December 18, 17
  
U.S. stock futures are surging to start the week, soaring to fresh records on growing confidence the Republicans will succeed in getting a major tax bill passed this week. Top U.S. Republicans said they expected Congress to pass a tax code overhaul this week, with a Senate vote as early as Tuesday and President Donald Trump aiming to sign the bill by week’s end. John Cornyn, the No. 2 U.S. Senate Republican, said in an interview on ABC’s “This Week” on Sunday that he was “confident” the Senate would pass the legislation, “probably on Tuesday.” Republican Representative Kevin Brady said he believed his party had the votes to pass the bill. All three benchmarks scored new closing highs on Friday, driven by optimism over the tax-cut legislation. The Dow average closed up 0.6% to 24,651.74, the S&P gained 0.9% to close at 2,675.81 and the Nasdaq Composite Index rose 1.2% to 6,936.58. The Dow and the S&P 500 have now booked weekly gains for four-straight weeks. Crude oil prices are higher along with gold while the dollar is mixed and bonds slip. In Asian markets, The Nikkei Index jumped 348 points to settle at 22,901, the Shanghai Index…the Hang Seng Index gained 202 points to finish at 29,050. In Europe, the German DAX is surging around 200 points at 13,300, while the FTSE 100 is up 30 points at 7,520
 
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 23.80 points, or 0.90%, to 2,675.81
·      The Dow Jones Industrial Average rose 143.08 points, or 0.58%, to 24,651.74
·      The Nasdaq Composite spiked 80.06 points, or 1.17%, to 6,936.58
·      The Russell 2000 Index advanced 23.47 points, or 1.56% to 1,530.42
 
Events Calendar for Today
·      10:00 AM EST                    NAHB Housing Market Index for December…est. 70
   
World News
·      Republican Sen. John McCain will return home to Arizona and miss his party’s final tax bill vote expected this week, CBS News reported on Sunday. The House is expected to take up the bill on Tuesday. Republicans likely have the votes they need for passage after two holdouts, Sens. Bob Corker of Tennessee and Marco Rubio of Florida, pledged their support last week
·      Japan’s export growth accelerated in November, rising 16.2% and handily beat a 14.6% annual gain expected by economists in a Reuters poll
·      Carolina Panthers owner Jerry Richardson announced on Sunday he will sell the team, hours after the National Football League said it had taken over an investigation into allegations of workplace misconduct by the owner.
 
Sector News Breakdown
Consumer
·      Procter & Gamble (PG) announced that it has appointed Nelson Peltz, CEO and a founding partner of Trian Fund Management, L.P., to its Board of Directors, effective March 1, 2018
·      Kellogg (K) announces share buyback authorization of up to $1.5B
·      Barron’s said while shares of Alaska Air (ALK) are down over 20% this year, they should rise in 2018 noting with a lower valuation and a better dividend yield than many rivals, the company should rise after if fully integrates Virgin Air, which already is adding to earnings
·      Vietnam’s trade ministry said on Sunday that Vietnam Beverage Co Ltd, a unit of Thai Beverage (TBEV.SI), was the only investor seeking to buy all shares of Vietnamese brewer Sabeco on offer worth nearly $5 billion. https://goo.gl/Hk64VX
 
Energy
·      Master limited partnerships are Barron’s top income idea for 2018 as industry cash flows may rise by mid-single digits next year. “Industry leader” Enterprise Products Partners (EPD) and Energy Transfer Partners (ETP) look attractive.
·      Sunrun (RUN) files to sell 30M shares of common stock for holders
·      Ameren (AEE) files automatic mixed securities shelf 
 
Financials
·      Bitcoin futures have pushed CBOE’s (CBOE) stock to a new record high, and some see the stock as a way to benefit from investors fascination with Bitcoin, Barron’s reported, but is recommending that investors no longer treat the shares as a “set and forget” position until it is clearer how the Bitcoin ecosystem will influence CBOE
·      Barron’s said REITs may offer 6%-7% total returns next year based on expected adjusted funds from operations growth, according to Green Street Advisors’ Mike Kirby. His top picks are Taubman Centers (TCO), which offers 30% upside in a potential sale; Simon Property Group (SPG), which is “doing a fine job” navigating a tough shopping mall environment; and Sun Communities (SUI), which offers a “growth story and safety” in the trailer park business.
·      TD Ameritrade (AMTD) will now offer clients Chicago Board Options Exchange’s, bitcoin futures contracts starting Monday. The client must have at least a $25,000 balance and the margin requirement will be one and a half times what the CBOE requires
 
Healthcare
·      Humana Inc. (HUM) is in advanced talks to join with two private-equity firms in a deal to acquire home-care provider Kindred Healthcare Inc. (KND); the deal would value Kindred at $9 a share, the people said, a modest premium to Friday’s close at $8.60 https://goo.gl/mEgMfj
·      Aratana (PETX) said AT-016 didn’t achieve efficacy success criteria; anticipates that after its license partner has further evaluated the study results, the parties will determine if the collaboration to bring the therapeutic to market will continue
·      AstraZeneca PLC (AZN) said the U.S. FDA accepted a supplemental new drug application for Tagrisso.
·      Navidea (NAVB) files $100M mixed securities shelf
·      Merrimack (MACK) files $150M mixed securities shelf
·      Spark Therapeutics (ONCE) shares plunged after the company released disappointing results for its hemophilia A treatment, but the selloff may be overdone given the company’s other promising treatments according to Barron’s
·      McKesson (MCK) has been awarded a maximum $400,000,000 fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract for digital imaging network picture archiving communications system products and maintenance
 
Industrials & Materials
·      CSX Corp. (CSX) Chief Executive Hunter Harrison died on Saturday from “unexpected severe complications from a recent illness”, a day after the surprise announcement that he was placed on medical leave.
·      Steel Dynamics (STLD) sees Q4 EPS 48c-52c below consensus 55c saying “despite a lower sequential fourth quarter earnings result, we remain confident that macroeconomic and market conditions are in place to benefit domestic steel consumption in 2018″
 
Technology, Media & Telecom
·      Australia’s Aconex Ltd (ACX.AX) said on Monday it had received a A$1.56 billion ($1.2 billion), or A$7.80 in cash-per-share, buyout offer from U.S. software major Oracle Corp (ORCL), sending the target’s share price up 45% https://goo.gl/g2RXXe
·      Disney’s (DIS) “Star Wars: The Last Jedi” was a monster force at the U.S. box office, soaring to $220 million, the second-highest opening weekend ever. The only film that’s had a stronger launch was “Star Wars: The Force Awakens” in 2015, the first “Star Wars” to be released in a decade, which shattered records with a $248 million opening.
·      France’s Thales SA has agreed to buy chip maker Gemalto NV for EUR4.8 billion ($5.64 billion) in a deal that aims to create “a world leader in digital security,” the companies. Thales will pay 51 euros for each Gemalto share, representing a 57% premium https://goo.gl/Y2yHSh
·      Akamai Technologies (AKAM) holder Elliott Associates reported it owned about a 6.5% stake, as of Dec. 5; Elliott said it believes the shares are undervalued as Akamai “possesses an unmatched network platform”
·      U.S. telecom companies like Verizon (VZ) and AT&T (T) offer “lush dividend yields” amid M&A noise, and international stocks China Mobile (CHL) and Deutsche Telekom (DTEGY) also offer attractive payouts.
·      Netflix (NFLX) success and its high valuation is forcing the rest of the TV work to scramble, Barron’s reported. In the wake of Disney’s (DIS)/21st Century Fox (FOXA)purchase, investors should expect more consolidation to come, he adds. Given that FOX RSN business looks very similar to MSG Networks (MSGN) and with Disney’s deal spurring a new wave of RSN interest, 208 could be the year that MSG gets sold, Barron’s says. Other potential attractive targets include AMC (AMCX) and Viacom (VIAB)

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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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