Morning Preview: December 22, 2017

Scott GreenDaily Market Report

Early Look
Friday, December 22, 17
  
Stock futures are edging higher, looking to trade back near record highs after stocks rebounded on Thursday amid optimism over the positive impact from the tax reform package passed Wednesday in Washington. Several Wall Street strategists have boosted their 2018 target for the S&P 500 following the news. Energy and financial shares led yesterday’s advance, while money kept rotating out of technology large caps (Internet names) and interest rate sensitive sectors (such as Utilities). Among the best performers on Wall Street were energy companies, with gains in HES, MRO, APA and CVX. As for Friday, expect light volumes into the Christmas Holiday weekend. The blue-chip Dow closed just 0.04% below its all-time close, so if the index holds its premarket gain it could rack up another record on Friday. Bitcoin dropped below $14,000 on Friday, falling as much as 30% from a record high set on Sunday.  The cryptocurrency fell to a low of $13,300 on Friday. There is a spate of data Friday morning. At 8:30 AM EST, reports on durable goods orders, core capital orders, personal income, consumer spending and core inflation, or the PCE deflator, for November will be released. New-home sales figures for November and a consumer sentiment reading for December are due at 10:00 AM EST.
 
In Asian markets, The Nikkei Index rose 36 points to settle at 22,902, the Shanghai Index slipped -3 points to finish at 3,297 and the Hang Seng Index gained 210 points to settle at 29,578. In Europe, the German DAX is down around -20 points at 13,080, while the FTSE 100 is up 10 points at 7,614 after trading to all-time highs yesterday. Spanish stocks led European markets lower on Friday, after parliamentary elections in Catalonia handed a win to the separatist movement, rekindling fears of the re-emergence of tensions in Spain.
 
Market Closing Prices Yesterday
·      The S&P 500 Index gained 5.32 points, or 0.20%, to 2,684.57
·      The Dow Jones Industrial Average rose 55.64 points, or 0.23%, to 24,782.29
·      The Nasdaq Composite gained 4.40 points, or 0.06%, to 6,965.36
·      The Russell 2000 Index advanced 7.03 points, or 0.46% to 1,547.11
 
Events Calendar for Today
·      8:30 AM EST       Personal Income for November…est. 0.4%
·      8:30 AM EST       Personal Spending for November…est. 0.5%
·      8:30 AM EST       PCE Deflator MoM for Nov…est. 0.3%
·      8:30 AM EST       PCE Core MoM for Nov…est. 0.1%
·      8:30 AM EST       PCE Core YoY for Nov…est. 1.5%
·      8:30 AM EST       Durable Goods Orders, Nov-P…est. 2.0%
·      10:00 AM EST     New Home Sales MoM for November…est. (-4.4%) to 655K
·      10:00 AM EST     University of Michigan Sentiment, Dec-F…est. 97.2
·      11:00 AM EST     Kansas City Fed Manufacturing for December…est. 15
·      1:00 PM EST        Baker Hughes Weekly Rig Count
   
World News
·      The U.K. economy grew at a steady in Q3 as the Office for National Statistics confirmed that the economy grew 0.4% in the three months through September, an annualized rate of 1.6%. Spending by households and businesses, along with investment in homes and other buildings, powered the expansion
 
Sector News Breakdown
Consumer
·      Nike (NKE) Q2 EPS 46c/$8.55B vs. est. 40c/$8.39B; Q2 inventory +6% and effective tax rate 12.7%; Q2 gross margin 43%; rev breakdown: Q2 North America revs $3.49B, (Bloomberg est. $3.54B), EMEA revs $2.13B, Greater China revs $1.22B, Asia Pacific & Latin America revs $1.27B; sees Q3 revenue growth at or slightly below growth in Q2; backs FY18 revenue growth view in mid-single digits, consensus $35.79B and backs FY18 margin contraction view 50-100 bps
·      Cintas (CTAS) Q2 EPS $1.24/$1.61B vs. est. $1.27/$1.59B; sees FY adjusted EPS from continuing operations $5.39-$5.46 (up from prior $5.30-$5.38) on revs $6.37B-$6.43B vs. est. $5.37/$6.39B
·      Papa John’s International (PZZA) founder will step down as CEO next month. John Schnatter, who is featured on Papa John’s pizza boxes and in the chain’s commercials, will be replaced by Chief Operating Officer Steve Ritchie on Jan. 1, the company announced
 
Energy
·      NiSource (NI) reaffirms 2017, 2018 forecast and expectations for 2020; also says it continues to expect to grow its net operating earnings per share and dividend at 5%-7% each year through 2020; also applauded the tax reform bill
 
Financials
·      Chubb (CB) authorizes $1B share repurchase program
·      Portugal’s Banco BPI S/A will sell its card and point-of-sale activities to entities associated with CaixaBank SA for a total of 113 million euros ($134.1 million). CaixaBank SA (CABK.MC) holds a controlling stake in Banco BPI. https://goo.gl/n1YXMQ
 
Healthcare
·      Roche (RHHBY) will buy U.S. cancer drug specialist Ignyta Inc (RXDX) for $1.7 billion in an agreed deal to broaden its oncology portfolio; Roche would pay $27 per share for Ignyta, representing a premium of about 74% to the stock’s closing price on Thursdayhttps://goo.gl/fMUZKH
·      La Jolla Pharmaceutical (LJPC) shares rise 14%; the FDA approved its Giapreza (angiotensin II) drug to increase blood pressure in adults with septic or other distributive shock; the approval came two months ahead of an expected regulatory decision by the Feb. 28 Pdufa date
·      Celgene (CELG) shares fall -4%; Phase 3 Relevance trial evaluating Revlimid plus Rituximab in front line follicular lymphoma failed to show superior efficacy versus standard-of-care. This is the second Revlimid failure in lymphoma following last year’s disappointment in diffuse large B-cell lymphoma
·      Antares Pharma (ATRS) said request in response to the Complete Response Letter received regarding the New Drug Application for XYOSTED; says meeting should be scheduled to occur within 30 days of FDA receipt of a written meeting request
·      Quidel (QDEL) announced it has received 510k clearance and Clinical Laboratory Improvements Amendments waiver from the FDA for its Sofia Strep A+ Fluorescent Immunoassay instrument
·      Ra Pharmaceuticals (RARX) announced that it has initiated dosing in the company’s Phase 2 clinical trial evaluating RA101495 SC for the treatment of generalized myasthenia gravis, or gMG
 
Industrials & Materials
·      AAR Corp. (AIR) Q2 EPS 35c/$449.7M vs. est. 37c/$449.7M; said to provide preliminary guidance for FY 2019 at Investor Day on January 11
·      Australia’s Wesfarmers has agreed to sell a Queensland coal mine to US miner Coronado Coal Group for A$700M ($539M)
·      BHP Billiton (BHP) will fund up to $181M for remediation, repair and compensation related to the Samarco dam disaster ahead of a bigger settlement package likely to be announced next year – Financial Times
 
Technology, Media & Telecom
·      Deutsche Telekom is buying Austrian cable provider UPC from Liberty Global (LBTYA) for 1.9 billion euros ($2.25 billion) including debt as it adds broadband services to countries where it only offers mobile operations. https://goo.gl/L3s5HL
·      CalAmp (CAMP) Q3 EPS 31c/$93.7M vs. est. 29c/$91M; sees 4Q adjusted EPS 27c-33c on revenue $91.0M-$96.0M vs. est. 32c/$93.5M
·      Smart Global (SGH) Q1 non-GAAP EPS $1.05/$265.4M vs. est. 92c/$255M; sees Q2 non-GAAP EPS $1.30-$1.36 on revs $280M-$300M vs. es.t 91c/$253.68M; sees Q2 gross margin 21%-23%
·      World Wrestling Entertainment (WWE) CEO Vince McMahon sells $100M worth of shares
·      Helios & Matheson’s MoviePass (HMNY) customers have voiced complaints that they either never received their subscription cards in the mail or have been unable to activate them and that the company’s customer service does not respond to requests, MarketWatch reports, citing customer tweets
·      Eric Schmidt will step aside as executive chairman of the board of directors at Google parent company Alphabet (GOOGL) next month, the company announced on Thursday evening
·      Facebook Inc (FB) and Universal Music Group on Thursday announced a global agreement that will enable users to upload videos featuring music from Universal’s library across the social media network as well as Instagram and Oculus.

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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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