Morning Preview: January 17, 2018

Scott GreenDaily Market Report

Early Look
Wednesday, January 17, 18
Stock futures are once again on the rise after a brief hiccup yesterday that saw stocks slip from intraday records, as investors turn to earnings optimism with results from Goldman Sachs and Banc America expected later this morning. Stocks posted their biggest decline of the year yesterday as major averages pulled back from record intraday highs as the S&P 500 posted its worst reversal in two years. S&P 500 down 0.4% after rising as much as 0.8% and topping 2,800 for the first time (S&P had been up 4.2% YTD prior) as all but three industries declined, led lower by commodity and industrial stocks. The Dow Industrials erased a 1.1% gain after exceeding 26K earlier (only took 7 trading days to go from 25K to 26K), falling nearly 400 points at one point from its best levels. The CBOE Volatility index (VIX) rose 14%, the most since Sept. The other big story yesterday was the sharp sell-off in crypto-currencies, with bitcoin tumbling to a 6-week low, trading as low as $10,050 (down over 26%) after more regulatory fears as South Korean Finance Minister Kim Dong-yeon said banning trading in virtual currencies was “a live option.” Number 2 virtual currency Ethereum was down 27%, Ripple slumped 40% and bitcoin cash shed 30%. This morning, the dollar is mixed while crypto currencies are extending declines. There are a few economic data points and Fed speakers on the calendar today along with earnings. In Asian markets, The Nikkei Index fell -83 points to 23,868, the Shanghai Index gained 8 points to settle at 3,444 and the Hang Seng Index rose 78 points to end at 31,983. In Europe, the German DAX is down about -20 points at 13.22, while the FTSE 100is down about -10 points at 7,740.
Market Closing Prices Yesterday
·     The S&P 500 Index slumped -9.82 points, or 0.35%, to 2,776.42
·     The Dow Jones Industrial Average slid -10.33 points, or 0.04%, to 25,792.86
·     The Nasdaq Composite dropped -37.38 points, or 0.51%, to 7,223.69
·     The Russell 2000 Index declined -19.00 points, or 1.19% to 1,572.97
Events Calendar for Today
·     7:00 AM EST       MBA Mortgage Applications Data
·     9:15 AM EST       Industrial Production MoM for December…est. 0.5%
·     9:15 AM EST       Capacity Utilization for December…est. 77.4%
·     10:00 AM EST     NAHB Housing Market Index for January…est. 72
·     2:00 PM EST        Fed Beige Book Released
·     3:00 PM EST        Fed’s Evans speaks on Economy and Monetary Policy
·     4:00 PM EST        Net Long-term TIC Flows for November
·     4:30 PM EST        API Weekly Inventory Data
Earnings Calendar
·     Earnings Before the Open: ASML, BAC, FAST, GS, SCHW, USB
·     Earnings After the Close: AA, BHP, BPFH, EGBN, HBHC, PLXS, PTC, SLM
World News
·     Ford Motor Co. (F) said it expects lower operating EPS profit in 2018, with higher commodity costs and adverse exchange rates offsetting gains from cost-cutting efforts and continued demand for high-margin pickup trucks; said it sees 2018 EPS $1.45-$1.70 vs. est. $1.62
·     Spirit Airlines (SAVE) sees Q4 RASM down 2% YoY vs. prior view of down 4%-6%; sees Q4 ASMs up 17.6%; sees Q4 adjusted operating expense ex-fuel per ASM down roughly 4%
·     Bruce R Berkowitz, Beneficial owner sells 567,600 on 1/11/18 of Sear’s Holding (SHLD) according to filing
·     ONE Gas (OGS) expects net income and earnings per share to increase by an average of 5% to 7% annually between 2017 and 2022; raises FY17 EPS view to $3.06-$3.10 from $2.94-$3.04, and above consensus $3.03
·     US Bank (USB) Q4 EPS 88c vs. est. 87c; Q4 net-charge offs $325M and provision for credit losses $335M
·     Interactive Brokers (IBKR) Q4 EPS loss (2c)/$515M vs. est. $415.6M; said Q4 cut $84M by new tax laws
·     MetLife, Inc. (MET) announced that it intends to merge its subsidiary, General American Life Insurance Company, with and into another subsidiary, Metropolitan Tower Life Insurance Company
·     New Residential (NRZ) files to sell $25M shares of common stock
·     Citigroup (C) downgraded to Market Perform from Outperform at Keefe Bruyette
·     Celgene Corp. (CELG) is in talks to buy biotechnology company Juno Therapeutics Inc. (JUNO), just days after announcing another major deal to bolster its portfolio of blood-cancer drugs. The talks could produce a deal in the coming weeks, assuming they don’t fall apart, people familiar with the matter said.
·     AveXis (AVXS) 3.921M share Secondary priced at $102.00
·     Exelixis Inc. (EXEL) and Ipsen (IPSEY) said that a cancer drug achieved its target in a late-stage study and will be submitted to the FDA before the end of the quarter; said that its cabozantinib drug helped patients with advanced hepatocellular carcinoma survive a median 2.2 months longer than patients who received placebos in a phase 3 trial
·     eHealth (EHTH) sees Q4 adjusted EBITDA ($19.3M)-($18.3M) and sees Q4 revenue $39M-$40M; sees FY17 revenue $172.5M-$173.5M vs. consensus $170.61M
·     BeiGene (BGNE) files to sell $650M in ADSs
Industrials & Materials
·     CSX Corp. (CSX) Q4 EPS 64c/$2.86B vs. est. 56c/$2.88B; 4Q volume -8%; Q4 adjusted operating income $1.01B; Q4 operating ratio 60.9% and Q4 Intermodal volume -5%; sees 2018 revs up slightly
·     Tahoe Resources Inc. (TAHO) reported record gold production of 445,000 ounces in 2017, achieving the high end of its annual gold production guidance range of 400,000 to 450,000 ounces, which was revised upward in September 2017
·     Patrick Industries (PATK) files to sell $125M of convertible senior notes due 2023
·     Boeing Co. (BA) and Adient Plc (ADNT) said they formed a joint venture, Adient Aerospace, to develop, manufacture, and sell airplane seat
·     Fastenal (FAST) raises quarterly dividend to 37c from 32c
·     Eldorado Gold (EGO) reports FY17 gold production 285,919 ounces; FY17 revised gold production guidance was 280,000-310,000 ounces
Technology, Media & Telecom
·     A10 Networks (ATEN) sees preliminary Q4 adjusted EPS 5c-6c on revs $55.5M-$56.0M vs. est. 3c/$65.1M; CEO said “are disappointed with our revenue results for the quarter, which were below our guidance primarily due to a shortfall in North America sales as we experienced lower than expected seasonal demand trends in the region”
·     Aerohive (HIVE) cuts Q4 revenue view to roughly $37M from $40M-$42M vs. est. $40.89M; expects non-GAAP gross margin to be between 67.5%-68.5%, above the Company’s previously stated guidance of 66%-67%
·     Nutanix, Inc. (NTNX) announced its intention to offer, subject to market conditions and other factors, $400 million aggregate principal amount of convertible senior notes due 2023
·     Adtran (ADTN) Q4 EPS 5c/$126.5M vs. est. 1c/$125M


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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