Morning Preview: January 18, 2018

Scott GreenDaily Market Report

Early Look
Thursday, January 18, 18
  
Stock futures are little changed, with major averages looking to hold their record all-time levels that were reached Wednesday, while bonds extend yesterday’s slide, with the yield on the benchmark 10-year hitting 2.60% for the first time since March. Optimism over the economy and earnings have helped fuel gains in the new year, with the week already delivering a more than 1% advance for the Dow. Outside of earnings, which is dominating this week’s action thus far, markets are watching Washington to see if they can carve out a deal to avoid a looming government shutdown for Saturday. Republican leaders are scheduled to bring forward a short-term spending bill to keep the government running through mid-February, the WSJ reported.
 
The Dow Jones Industrial Average posted its best single-session rise in about seven weeks on Wednesday on the back of a sharp rise in shares of Boeing Co. (BA) which contributed about 110 points to that rally to the close, sending the Dow Industrials above the 26,000 level. Meanwhile, the S&P 500 index closed above the 2,800 level, while the Nasdaq Composite Index rallied sharply higher, to finish up 1% at 7,298. The run-up for equities followed an upbeat report from the Federal Reserve’s Beige book which suggested that stubbornly low wage growth may be on the rise.
 
In Asian markets, The Nikkei Index dropped -104 points to settle at 23,763, the Shanghai Index gained 30 points to end at 3,474 and the Hang Seng Index rose 138 points to settle at 32,121. In Europe, the German DAX is up around 50 points at 13,230, while the FTSE 100 is down around -30 points just below 7,700. The FTSE-100 index is on course for a fourth straight losing session. Last week, it hit an all-time closing high of 7,778.64.
 
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 26.14 points, or 0.94%, to 2,802.56
·      The Dow Jones Industrial Average rose 322.79 points, or 1.25%, to 26,115.65
·      The Nasdaq Composite spiked 74.59 points, or 1.03%, to 7,298.28
·      The Russell 2000 Index advanced 13.69 points, or 0.87% to 1,586.66
 
Events Calendar for Today
·      8:30 AM EST       Weekly Jobless Claims…est. 249K
·      8:30 AM EST       Continuing Claims…est. 1.9M
·      8:30 AM EST       Housing Starts MoM for December…est. 1.275M
·      8:30 AM EST       Building Permits MoM for December…est. 1.295M
·      8:30 AM EST       Philly Fed Business Outlook for January…est. 25.0
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 53.5
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
 
Earnings Calendar
·      Earnings Before the Open: BBT, BK, CBSH, GATX, JBHT, KEY, MS, MTB, MTG, PPG, TSM
·      Earnings After the Close: AXP, CP, IBM, MLNX, PBCT
   
World News
·      U.S. net long-term portfolio securities inflows at $57.5B in November while China holds $1.18T of U.S. Treasuries, a decrease of $12.6B from last month and Japan holds $1.08T, a decrease of $9.9B from last month; overall foreign net selling of Treasuries at $18.83B and foreign net buying of equities at $12.7B
·      China’s economic growth accelerated for the first time in seven years in 2017, as the world’s second-largest economy expanded at a steady pace in the last three months of 2017 to bring overall growth for the year to 6.9%, up from 6.7% in 2016, the National Bureau of Statistics said
·      China’s housing sales growth accelerated in December, as housing sales by value in December rose 21.2% from a year earlier, which compared with a 12.4% gain in November. For the full 2017, housing sales by value rose 11.3% from the year before
 
Sector News Breakdown
Consumer
·      La Quinta (LQ) announced that Wyndham Worldwide (WYN) and La Quinta have entered into a definitive agreement under which Wyndham Worldwide will acquire La Quinta’s hotel franchise and hotel management businesses for $1.95B in cash
·      Peugeot owner PSA will sell only electric or hybrid cars by 2025, the company’s chief executive said on Tuesday
·      Boot Barn (BOOT) 6M share Secondary priced at $17.25
 
Energy
·      The American Petroleum Institute (API) said U.S. crude supplies dropped by 5.1 million barrels for the week ended Jan. 12, showed a rise of 1.8 million barrels in gasoline stockpiles, while inventories of distillates rose by 609,000 barrels
·      Iraq plans to sign a deal with BP on Thursday that will boost production capacity at its northern Kirkuk oil fields, Reuters reports, citing Oil Minister Jabar al-Luaibi. The move, which comes after the fields were taken back from Kurdish fighters in October, is aimed at increasing production capacity to more than 700,000 barrels a day, according to the report. https://goo.gl/cJRGDx
·      Kinder Morgan (KMI) Q4 EPS adjusted EPS 21c/$3.63B vs. est. $3.4B; Q4 adjusted Ebitda $1.90B; reaffirms 2018 adj. Ebitda $7.5B
·      Antero Midstream (AM) provided distribution growth guidance of 28%-30% in 2018 vs. 2017. Reaffirms 28%-30% annual distribution growth from 2018 to 2020 and initiated distribution growth targets of 20% in each of 2021 and 2022
·      Keane Group (FRAC) 13.3M share Secondary priced at $18.25
·      Sanchez Energy (SN) 2018 capital budget calls for total spending of $420 million to $470 million, a reduction of approximately $100 million when compared to 2017 capital spending
·      Solar stocks First Solar (FSLR), Vivint Solar (VSLR) downgraded to neutral at Guggenheim
·      Royal Dutch Shell (RDSA) and BP Plc (BP) have each agreed to annual deals to purchase Libyan crude, Bloomberg reports. Shell’s agreement with Libya’s National Oil Corp. was the first of its kind since 2013
 
Financials
·      BB&T (BBT) Q4 EPS ex-items 84c/$2.9B vs. est. 79c/$2.83B; sees 1Q average total loans up 1%-3% vs 4Q
·      BNY Mellon (BK) Q4 EPS $1.08/$3.7B vs. est. 91c/$4B; Q4 book value per share $37.21
·      KeyCorp (KEY) Q4 EPS 36c/$1.61B vs. est. 36c/$1.59B; Q4 book value per share $13.09
·      TransUnion (TRU) upgraded to buy at Bank America with $70 tgt
·      Cardtronics (CATM) downgraded to underperform at Bank America and tgt cut to $23
·      First Data (FDC) upgraded to buy at Bank America with $20.50 tgt
·      SLM Corp. (SLM) Q4 core EPS 19c (in-line); sees FY EPS 97c-$1.01 vs. est. $1.04
·      Hancock Holding (HBHC) Q4 EPS 64c vs. est. 83c; 4Q core net interest margin 3.35%; 4Q provision for loan losses $15.0 million; said Q4 includes $19.5M or 22c on tax reform
·      Ameriprise (AMP) said it sees $320M charge in 4Q earnings due to tax laws; says the charge primarily related to the re-measurement of net deferred tax assets using the lowered corporate tax rate, repatriation tax and lower future tax benefits
·      Boston Private Financial (BPFH) Q4 EPS 24c vs. est. 23c; average Total Deposits increased 7% YoY to $6.4 billion
·      Eagle Point Credit (ECC) files to sell 1.75M shares of common stock
 
Healthcare
·      Amgen (AMGN) says FDA approves addition of overall survival data to Kyprolis label; Phase III data showed Kyprolis and Dexamethasone reduced the risk of death by 21% versus Velcade and Dexamethasone in patients with relapsed or refractory multiple myeloma
·      Agios Pharmaceuticals (AGIO) files to sell $400M in common stock
·      Paratek Pharmaceuticals (PRTK) files to sell $50M in common stock
 
Industrials & Materials
·      Alcoa (AA) shares fell -4%; Q4 EPS ex-items $1.04/$3.17B vs. est. $1.22/$3.29B; recorded $22M charge in Q4 after tax reform; Q4 adjusted Ebitda $775M vs. est. $814.8M; sees FY18 adjusted EBITDA $2.6B-$2.8B
·      Mistras Group (MG) reaffirms 2017 revenue guidance of $675M-$700M and adjusted Ebitda guidance of $66M-$70M; said a large customer within the challenged region plans to discontinue using the company’s services in 2Q of 2018; sees revenue for this specific customer within its challenged region to be reduced by about $40M in 2018
·      Johnson Controls (JCI) downgraded to Market Perform from Outperform at Cowen and lowered his price target for the shares to $42 from $44
·      Fluor (FLR) upgraded to Outperform from Neutral at Credit Suisse and raised price target for the shares to $71 from $43
 
Technology, Media & Telecom
·      Electro Scientific (ESIO) shares rise 20%; sees prelim Q3 EPS to exceed 48c-60c  (est. 55c) and preliminary Q3 revenue $106M-$111M vs.  consensus $85M; sees Q3 bookings of approximately $134M; sees Q4 revenue to be “approximate” to Q3
·      PTC Inc. (PTC) shares rise 7%; Q1 EPS 31c/$307M vs. est. 30c/$301M; Q1 license & subscription bookings $104M; says new licenses for core solutions, ThingWorx to be subscription-only; raises FY18 EPS view to $1.29-$1.39 from $1.27-$1.37 (est. $1.32) and raises FY18 revenue $1.235B-$1.250B vs. prior view was $1.225B-$1.24B
·      Plexus (PLXS) shares fall -7%; Q1 EPS 75c/$677.3M vs. est. 80c/$685M; sees Q2 EPS 68c-78c on revs $670M-$710M vs. est. 82c/$693.7M
·      TSMC (TSM) Q4 EPS 64c/$9.21B vs. est. 62c/$9.23B; gross margin for the quarter was 50.0%, operating margin was 39.2%, and net profit margin was 35.8%; sees Q1 revenue $8.4B-$8.5B vs. est. $8.4B
·      Verizon (VZ) said the biggest American tax overhaul in decades will drive a one-time reduction in net deferred income tax liabilities of about $16.8bn and boost its Q4
 

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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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