Morning Preview: January 5, 2018

Scott GreenDaily Market Report

Early Look
Friday, January 5, 18
The historic run for U.S. stock averages continues, as futures point to fresh record highs for the Dow, S&P 500, Nasdaq Comp, Transports and Small Caps, rising for a 4thconsecutive session to start the New Year ahead of the important jobs report at 8:30 AM EST. Yesterday, stocks jumped on the back of supportive ADP payroll data, as well as a rise in commodity prices. The move in stocks has lifted the Dow Industrials easily past the 25K mark for the first time yesterday and the S&P above the 2,700 level just a day prior, with sentiment buoyed by the recently passed tax package in the U.S., rising commodity prices, strong economic data and robust corporate earnings (while fear is non-existent). Oil prices are pulling back from 3-year highs, down over 1%, while the dollar rebounds from a 3-month low. In other economic news on Friday, figures for the foreign trade deficit for November are due for release at 8:30 AM EST. The ISM nonmanufacturing report for December and an update on factory orders for November are scheduled for 10:00 AM EST. In Asian markets, The Nikkei Index rose 208 points to settle at 23,714 (rising nearly 1,000 points the last 2-trading sessions), the Shanghai Index inched higher 6 points to 3,391 and the Hang Seng Index gained 78 points to close at 30,814. After strong gains yesterday, European markets adding to gains as, the German DAX rises around 150 points at 13,315, while the FTSE 100 is up over 20 points around 7,725.
Events Calendar for Today
·      8:30 AM EST       Change in Nonfarm Payrolls for December…est. 190K
·      8:30 AM EST       Change in Private Payrolls for December…est. 190K
·      8:30 AM EST       Change in Manufacturing Payrolls for December…est. 18K
·      8:30 AM EST       Unemployment Rate for December…est. 4.1%
·      8:30 AM EST       Average Hourly Earnings for December…est. 0.3%
·      8:30 AM EST       Trade Balance for November…est. (-$50.0B)
·      10:00 AM EST     ISM Non-Manufacturing Comp…est. 57.5
·      10:00 AMEST      Factory Orders for November…est. 1.1%
·      1:00 PM EST        Baker Hughes Weekly Rig Count            
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 10.93 points, or 0.40%, to 2,723.99
·      The Dow Jones Industrial Average rose 152.45 points, or 0.61%, to 25,075.13
·      The Nasdaq Composite gained 12.38 points, or 0.18%, to 7,077.91
·      The Russell 2000 Index advanced 3.15 points, or 0.20% to 1,555.72
World News
·      Steve Bannon faces fresh doubt about whether he can pull off his populist revolution within the Republican Party after his top financial patron cut ties with him on Thursday in the wake of his feud with President Donald Trump. Rebekah Mercer rebuked Bannon in a statement on Thursday and said she and her father, Robert Mercer, the former co-chief executive officer of the hedge fund Renaissance Technologies, would not finance his projects.
·      Global debt rose to a record $233 trillion in the third quarter of 2017, more than $16 trillion higher from end-2016, according to an analysis by the Institute of International Finance – Bloomberg
·      North Korea and South Korea have agreed to hold high-level talks next week amid signs of warming relations on the peninsula – Financial Times
Sector News Breakdown
·      Sonic (SONC) Q1 EPS 30c/$105.43M vs. est. 25c/$108M; said Q1 comp sales declined (-1.7%) vs. est. loss (-1.4%); said “as expected, our first quarter same-store sales declined modestly versus prior year reflecting continued intense competitive pressure and unfavorable weather”
·      Francesca’s (FRAN) cut its EPS view to 18c-23c from 35c-40c (below est. 36c) and lowers Q4 revenue guidance to $137M-$139M from $145M-$150M (below est. $145.78M); said holiday performance was disappointing as challenging conversion rates and traffic trends that started in the third quarter persisted into the holiday season
·      Cal-Maine (CALM) Q2 EPS 55c/361.2M vs. est. 73c/$364.3M; says will not pay dividend for Q1, Q2 of 2018
·      Grupo Aeroportuario del Sureste (ASR) announced that total passenger traffic for December 2017 declined 3.5% when compared to December 2016. Passenger traffic rose 6.1% in Mexico, and declined 23.9% in San Juan and 12.3% in Colombia
·      PriceSmart (PSMT) Q1 EPS 74c/$767.1M vs. est. 85c/$765.58M
·      Starwood Property (STWD) announced that it has signed a definitive agreement to acquire an institutional-quality multifamily affordable housing portfolio in Florida comprised of 28 properties and 6,185 units for approximately $600M
·      Oneok (OKE) said it will invest approximately $1.4B to construct new pipeline and related infrastructure, to transport natural gas liquids from the Rocky Mountain region to the company’s existing Mid-Continent NGL facilities; filed to sell 19M shares of stock
·      EOG Resources (EOG) said it currently expects non-cash decrease to income tax provision of ~$2.2B for quarter ended Dec. 31
·      Sempra Energy (SRE) 23.4M share Secondary priced at $107.00
·      Stifel Financial (SF) said it sees Q4 charge of $105M-$115M due to Tax Act
·      Franklin Covey (FC) Q1 EPS loss (17c)/$47.93M vs. est. loss (33c)/$43.47M
·      AveXis Inc. (AVXS) said it was preparing to respond to FDA information requests about AveXis’s primary gene therapy, which would be used to treat a form of spinal muscular atrophy.
·      Argos Therapeutics (ARGS) files to sell 5.73M shares of common stock for holders
·      Aurinia Pharmaceuticals (AUPH) files $250M mixed securities shelf
·      Amarin (AMRN) sees Q4 revenue $51M-$54M vs. est. $49.6M saying Q4 net revenue growth was driven by increased prescriptions for Vascepa capsules
·      Envision Healthcare (EVHC) provided a business and governance update regarding a number of initiatives to execute on its long-term strategy and increase shareholder value; its board is exploring a full range of alternatives to enhance shareholder value
·      T2 Biosystems (TTOO) reiterated its expectations for FDA clearance of its T2Bacteria Panel in 1Q18; remains in talks with the FDA regarding market clearance of its T2Bacteria Panel; said Q4 revs expected to top the previously guided range of $1.1M-$1.3M
·      BioCryst Pharmaceuticals (BCRX) says it has advanced a program exploring activin receptor-like kinase-2 inhibitors for treatment of Fibrodysplasia Ossificans Progressiva
Industrials & Materials
·      Greenbrier (GBX) Q1 EPS 83c/$559.5M vs. est. 93c/$591.1M; reaffirms FY 2018 Guidance
Technology, Media & Telecom
·      Apple (AAPL) said on its websites that security researchers have recently uncovered security issues known by two names, Meltdown and Spectre. These issues apply to all modern processors and affect nearly all computing devices and operating systems. All Mac systems and iOS devices are affected, but there are no known exploits impacting customers at this time
·      Datawatch Corp (DWCH), a U.S. data analytics software company, has hired a financial adviser after receiving expressions of interest from potential acquirers, sources familiar with the matter said on Thursday – Reuters
·      Travis Kalanick, who co-founded Uber and was ousted as its CEO last year, plans to sell about a third of his stake in the company, Bloomberg News reported. The sale of 29% of his shares will earn him about $1.4B in a transaction with Japan’s SoftBank Group
·      Xilinx Inc. (XLNX) said that CEO Moshe Gavrielov will retire from his position on Jan. 28 and be replaced by COO Victor Peng. Gavrielov has been at the helm of Xilinx for 10 years
·      Aehr Test Systems (AEHR) Q2 EPS 2c/$7.9M vs. est. 0c/$7.1M; said Q1 backlog as of November 30, 2017 was $12.2M; backs FY18 revenue growth view of at least 50%


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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