Morning Preview: January 22, 2018

Scott GreenDaily Market Report

Early Look
Monday, January 22, 18
  
U.S. stock futures point to a lower open as the U.S. government shutdown stretched into a third day after a House-passed bill failed to garner enough votes to clear the Senate. The two sides fought over a battle regarding immigration and spending. Funding expired as most Senate Democrats voted against the House bill that would have extended operations through Feb. 16. There are several potential market moving catalysts this week (outside of earnings) including central bank action, as both the European Central Bank and the Bank of Japan hold their first meetings of the year. Shutdown-related uncertainty appears to be weighing on markets, but as has been the case over the last several months, investors have used any pullback as a buying opportunity…will today me more of the same?
 
Stock indexes rose on Friday to finish the week strong, with even fears of a government shutdown failing to dampen bullish investor sentiment. The Dow and Nasdaq were both up 1% for the week, and the S&P was up 0.9% over the same period as the S&P and Nasdaq rallied to hit fresh all-time highs while the Dow closed just below its all-time best levels. All three benchmark indexes also clinched their third straight weekly advance. The S&P 500 also marked 395 sessions without falling 5%, the longest such stretch in the stock market’s history. The U.S. dollar pared earlier losses on Friday, but still managed a fifth consecutive weekly loss, and are on track for another daily decline.
 
In Asian markets, The Nikkei Index inched higher 8 points to end at 23,816, the Shanghai Index gained 13 points to settle at 3,501 and the Hang Seng Index rose 138 points to settle at 32,393. In Europe, the German DAX is up a few points at 13,440, while the FTSE 100 is up a few points around 7,735.
 
Market Closing Prices Yesterday
·      The S&P 500 Index climbed 12.27 points, or 0.44%, to 2,810.30
·      The Dow Jones Industrial Average rose 53.91 points, or 0.21%, to 26,071.72
·      The Nasdaq Composite spiked 40.33 points, or 0.55%, to 7,336.38
·      The Russell 2000 Index advanced 20.90 points, or 1.33% to 1,597.63
 
Events Calendar for Today
·      Chicago Fed Nat Activity Index for December
 
Earnings Calendar
·      Earnings Before the Open: BOH, CBU, HAL, RMD, UBS
·      Earnings After the Close: BRO, NFLX, STLD, ZION
   
Sector News Breakdown
Consumer
·      Barron’s notes that some Walmart’s (WMT) experiments, like curbside pickup for groceries, are getting solid results, and points out that late-year shopping was robust and corporate tax cuts have warmed investors to retailers
·      Homebuilders Lennar (LEN) and Meritage Homes (MTH) upgraded to outperform at Credit Suisse
·      In a decision expected to test the Trump administration’s approach to tobacco regulation, U.S. health advisers will vote this week on whether to allow Philip Morris International Inc (PM) to sell its novel iQOS tobacco device and claim it is less harmful than cigarettes.
 
Energy
·      Saudi Arabia’s energy minister said Sunday that OPEC and other big-oil producing allies like Russia should find ways to cooperate beyond their petroleum-production limits this year. “We should not limit our efforts to 2018. We need to be talking about a longer framework for our cooperation,” Saudi Arabia’s top oil official Khalid al-Falih said ahead of an OPEC meeting in Oman’s capital
·      Halliburton (HAL) Q4 EPS 53c/$5.9B vs. est. 47c/$5.63B; Q4 operating profit $764M
·      Matador Resources (MTDR) reports pact between a unit of its 51%-owned midstream joint venture, San Mateo Midstream, and a unit of Plains All American Pipeline (PAA) for Rustler Breaks asset area.
 
Financials
·      UBS Group AG (UBS) posted a Q4 loss, making it the latest bank to take a short-term hit from the recently enacted legislation; reported a net loss of 2.22 billion francs ($2.3 billion) between October and December, versus a profit of 636 million Swiss francs for the comparable period a year earlier; the loss was slightly larger than the net loss of about 2.15 billion francs expected by analysts.
·      Bank of Hawaii (BOH) Q4 EPS $1.01 vs. est. $1.08
 
Healthcare
·      Sanofi SA (SNY) is nearing a deal to buy hemophilia drugmaker Bioverativ Inc. (BIVV) for more than $11.5 billion according to the WSJ as the French drugmaker looks set to clinch a big deal while it braces for generic competition for its top-selling product; the deal would value the former Biogen Inc. unit at $105 a share.https://goo.gl/WSBycz
·      Celgene (CELG) agreed to buy Juno Therapeutics (JUNO) for $87 per share
·      Celgene (CELG) announced primary endpoint findings and updated results of secondary endpoints from the phase II international LAPACT trial of Abraxane plus gemcitabine in patients with locally advanced pancreatic cancer; Abraxane exceeds primary endpoint target in pancreatic cancer trial
·      Bristol-Myers Squibb (BMY) said responses were durable, with median duration of response not yet reached and 94% of responses ongoing at the time of data cutoff; cites results of Opdivo (nivolumab) and Yervoy (ipilimumab) phase 2 CheckMate – 142 trial in patients with DNA mismatch repair deficient (dMMR) or microsatellite instability-high (MSI-H) metastatic colorectal cancer (mCRC)
·      Exelixis (EXEL) reported updated results from phase 1b trial of its discovered MEK inhibitor, cobimetinib, with Roche’s Genentech’s atezolizumab, in patients with metastatic colorectal cancer
 
Industrials & Materials
·      Archer-Daniels-Midland Co. (ADM) sought merger talks with Bunge Ltd. (BG), said a person briefed on the matter, potentially setting up a battle for control of the giant agricultural trader with Glencore Plc (GLNCY) – Bloomberg (late Friday) https://goo.gl/DumKGG
·      Boeing (BA) stock has come quite far, quite fast and the pace has only accelerated in 2018, but such a rapid rise could reflect an overly optimistic outlook for the airplane manufacturer that could be difficult to meet – Barron’s
 
Technology, Media & Telecom
·      Sanmina (SANM) shares fell -16%; guides prelim Q1 EPS to 48c on revs $1.74B, below est. 71c/$1.77B, saying the disappointing financial results are driven by slower than expected new program ramps and an unfavorable program mix
·      Xerox Corp.’s (XRX) first- and third-biggest investors, billionaires Carl Icahn and Darwin Deason, have formed an alliance and plan to encourage the printer and copier giant to explore a potential sale, according to people familiar with the matter. https://goo.gl/H4emw6
·      Daiwa Securities, said there were some concerns Apple (AAPL) could stop using OLED screens because of quality issues. They come as iPhone X sales continue to be a source of concern. After channel checks with Apple vendors by Taiwan-based Daiwa, the brokerage firm now expects first-quarter orders to be 20% to 30% below its previous forecasts. https://goo.gl/ZdpUfz
·      With cash hoards swollen by the corporate tax cut and the repatriation of overseas holdings, big tech companies like Apple (AAPL) will have trouble putting all their money to work, Barron’s said
·      With more money in hand, Microsoft (MSFT), Oracle (ORCL) and VMware (VMW) could repatriate cash to use for M&A Barron’s said; cites small- and mid-cap software targets including Red Hat (RHT), Veeva Systems (VEEV), Citrix Systems (CTXS), Talend (TLND), Okta (OKTA) and Twilio (TWLO)
 

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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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