Morning Preview: January 9, 2018

Scott GreenDaily Market Report

Early Look
Tuesday, January 9, 18
Stock futures are pointing to another record open, adding to its daily gains to start the year, amid continued support from an expanding global economy, growth in corporate profits and enthusiasm over the Trump administration’s tax cuts. Economic data continues to surprise to the upside after a December figure for small-business confidence showed a dip to post its strongest year on record. Markets are also preparing for the start of quarterly earnings, which kicks off this Friday with results from large cap banks JPM and WFC. Oil is higher, the dollar mixed and bonds sliding as the 10-year yield once again approaches the 2.50% mark. In Asian markets, The Nikkei Index re-opened after a one-day holiday, rising 135 points to settle at 23,849, the Shanghai Index gained 4 points to settle at 3,413 and the Hang Seng Index gained 111 points to close at 31,011. In Europe, the German DAX is higher by about 20 points at 13,385, while the FTSE 100 is up over 20 points at 7,725.
U.S. stocks ended mixed, reversing earlier losses on Monday while the S&P 500 index posted its fifth consecutive day of gains. However, outside of technology gains (led), defensive sectors such as utilities and real estate were among the top performers. Financials slipped ahead of earnings later this week from large cap banks (JPM, WFC). Overall, the S&P 500 has now risen in each of the five trading sessions of 2018 thus far, and also closed at a record in each.
EMarket Closing Prices Yesterday
·      The S&P 500 Index climbed 4.56 points, or 0.17%, to 2,747.71
·      The Dow Jones Industrial Average fell -12.87 points, or 0.05%, to 25,283.00
·      The Nasdaq Composite gained 20.83 points, or 0.29%, to 7,157.39
·      The Russell 2000 Index advanced 1.80 points, or 0.12% to 1,561.81
Events Calendar for Today
·      6:00 AM EST       NFIB Small Business Optimism for December…est. 107.5
·      7:45 AM EST       ICSC Weekly Retail Sales
·      8:55 AM EST       Johnson/Redbook Weekly Sales
·      10:00 AM EST     JOLTs Job Openings for November…est. 6025
·      10:00 AM EST     Fed’s Kashkari speaks on Moderated Panel
·      4:30 PM EST        API Weekly Inventory Data
Other Key Events
·      Consumer Electronic Show (CES) 1/8-1/12, in Las Vegas
·      ICR Retail Conference, 1/8-1/10, in Orlando, FL
·      JP Morgan Healthcare Conference, 1/8-1/11 in San Francisco, CA
·      Goldman Sachs Energy Conference, 1/9-1/10, in Miami, FL
·      Citigroup Global TMT West Conference, 1/9-1/10 in Las Vegas
·      German industrial production and imports/exports for November
World News
·      The index of small-business optimism from the National Federation of Independent Businesses fell 2.6 points to 104.9 in December. The closely watched index of sentiment among small-business owners soared after the 2016 presidential election, pushing 2017 average monthly readings to the highest levels in the four-decade history of the index
·      North Korea plans to send a delegation that includes athletes to next month’s Winter Olympics in South Korea, according to multiple published reports
·      The Eurozone’s unemployment rate has hit its lowest rate for almost nine years, falling to a rate of 8.7%
Sector News Breakdown
·      Urban Outfitters (URBN) shares fell -6%; total company net sales for the two months ended December 31, 2017, up 3.6%, and comparable Retail segment net sales increased 2%; said two-month Wholesale segment net sales increased 6.8%
·      Big 5 Sporting Goods (BGFV) shares fell -17%; sees Q4 EPS loss (13)-(8c) below prior view of 16c-28c (est. 25c); reports Q4 revenue $243.2M vs. est. $263.47M and reports Q4 comp sales down (-9.4%); said company’s merchandise margins decreased approximately 130 bps
·      Express Inc. (EXPR) sees AQ4 EPS 31c-33c, below estimates 43c and comp sales down (1%-2%)
·      Fitbit Inc. (FIT) is said to be considering developing a wearable device for children, as the company struggles to revive demand for its fitness products by pushing into new hardware categories – Bloomberg
·      e.l.f. Beauty (ELF) backs FY17 EPS 55c on revs $270M vs. est. 56c/$270.2M; now expects a compound annual net sales and Adjusted EBITDA growth rate of 10-15% from fiscal 2016 to 2019
·      Citi Trends (CTRN) said that Nov/Dec comp Sales rose 4.8% and sees Q4 EPS 40c-45c on sales about $211M; guidance doesn’t reflect a one-time, non-cash charge that is expected to be required in Q4 as a result of Tax Act; comp store sales increased 5.5% in Nov. and 4.5% in Dec
·      Limoneira (LMNR) Q4 EPS loss (19c)/$15.9M vs. est. loss (20c)/$15M; backs FY18 EPS view 55c-65c; expects to sell between 3.1 million and 3.3 million cartons of fresh lemons at an average price of approximately $24.50 per carton
·      Encana (ECA) Q4 core assets production up 31% YoY; sees 4q Permian production more than 80,000 boe/d; sees 2018 capital program similar to 2017; 70% directed to Permian and Montney
·      Tallgrass Energy Partners (TEP) raises quarterly distribution 2.1% to 96.5c per unit
·      Tallgrass Energy GP (TEGP) raises quarterly distribution 3.5% to 36.75c per unit
·      The Hartford (HIG) said it Q4 results will be cut by about $850M due to the impact of the new U.S. tax law and $117M for catastrophe losses; says charge from the new U.S. tax law is due to the reduction in the U.S. corporate tax rate from 35% to 21% and its effect on co’s net deferred tax asset position; says charge won’t affect core earnings
·      Net Element (NETE) files to sell 1.08M shares of common stock for holders
·      Jamie Dimon says he “regrets” his now infamous criticism of bitcoin, in which he called the cryptocurrency a “fraud”.
·      Boston Scientific (BSX) sees Q4 prelim sales about $2.41B vs. est. $2.35B
·      Dexcom (DXCM) Q4 revs about $218M vs. est. $212.9M; sees 2018 revs $830M-$850M vs. est. $853.5M; said growth outlook is driven by continued strength in sensor volumes, international revenue and the expansion of DexCom’s worldwide patient base, each of which are expected to exceed its overall revenue growth rate in 2018
·      Conformis (CFMS) sees 2018 revs $79.6M-$83.6M vs. est. $84.2M; said prelim Q4 revs $20.8M vs. est. $19.9M; expects 2018 total gross margin in a range of 44% to 46%, est. 45.1%
·      Danaher (DHR) said it sees both 4Q adj. eps and 4Q core revs growth above the high-end of previously announced guidance ranges
Industrials Transports & Materials
·      A. Schulman (SHLM) Q1 adjusted EPS 55c/$674.6M vs. est. 44c/$639.1M; reiterates FY’18 guidance
·      AZZ Inc. (AZZ) delays Q3 form 10-Q, citing a review of accounting methodology; reports that historically it should have accounted for certain contracts within its Energy segment differently, should have applied the percentage of completion method
·      Southwest Airlines (LUV) reaffirms forecast for 4Q operating RASM and reports Dec. traffic rose 2.6%; Dec. capacity rose 1.8%; still sees 4Q operating RASM up 1%-2%
·      Hawaiian Holdings (HA) ups Q4 operating revenue per ASM to 2.5%-3.5% from 1.5%-3.5%; raises FY17 operating revenue per ASM view to 6.1%-6.6% from 5.5%-6.5%
Technology, Media & Telecom
·      Samsung Electronics Co. said Q4 operating profit will be its highest ever, as the company benefits from strong demand for its electronics components; said it expected an operating profit of 15.1 trillion South Korean won ($14.1 billion) for the quarter, up 64% from 9.22 trillion won a year earlier. Samsung expects revenue will rise to 66 trillion won from 53.33 trillion won.
·      Altice will spin off its two-thirds-plus stake in Altice USA (ATUS) by the end of Q2, according to filings; the Altice USA board has authorized a share buyback program of up to $2B
·      Facebook’s (FB) Oculus said it is working with Xiaomi as its hardware partner for the global launch of Oculus Go and is also announcing Mi VR Standalone-a VR headset based on Oculus technology exclusively for the Chinese market
·      Seagate (STX) sees prelim 2Q revs about $2.9B vs. est. $2.74B; sees prelim non-Gaap gross margin about 30%, vs. est. 29.5% (had seen Q2 revs up 3-5% vs 1q); entered previously announced NAND supply pact with Toshiba Memory in Dec quarter
·      Barracuda Networks (CUDA) Q3 EPS 21c/$94.7M vs. est. 18c/$93.8M; 3Q gross billings $110.6M compared with $100.4M in the Q3’17; billings for core products increased 24% to $76.6M (in November had entered into a definitive agreement to be acquired by Thoma Bravo, LLC in an all-cash transaction valued at $27.55 per share, or approximately $1.6 billion)
·      Roku, Inc. (ROKU) said that based on preliminary data, active accounts exceeded 19M at December 31, 2017; said active accounts represent distinct users who have streamed any content on the Roku platform in the last thirty days of the period presented
·      Alibaba Group Holding Ltd. (BABA) founder Jack Ma has promised to seriously “consider” listing the e-commerce giant in Hong Kong, media reports said Tuesday


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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