Morning Preview: January 30, 2018

Scott GreenDaily Market Report

Early Look
Tuesday, January 30, 18
Stock futures are pointing to a lower open, with futures tumbling a second day as a rise in borrowing costs look to weigh on stocks in a repeat of Monday’s action. U.S. stocks declined on Monday, sending the S&P 500 to its biggest decline in almost five months, as rising yields weighed on interest rate sensitive sectors and tech giant Apple slumped amid renewed concern over demand for its latest iPhone model (ahead of earnings this Thursday). Stocks halted a four-week rally as investors await Janet Yellen’s last policy meeting as Federal Reserve chair (2-day meeting starts today and ends tomorrow) and the first State of the Union address from President Donald Trump tonight. Dow components McDonald’s and Pfizer also report earnings later this morning in a busy day of results. The Dow Jones Industrial Average logged a triple-digit drop on Monday, its worst one-day decline since early September, as the yield for benchmark 10-year Treasury note hit the highest level since April 2014 above 2.7%. In Asian markets, The Nikkei Index dropped -337 points to settle at 23,291, the Shanghai Index fell -35 points to settle at 3,488 and the Hang Seng Index fell -359 points to end at 32,607. In Europe, the German DAX is down over -50 points at 13,265, while the FTSE 100 is down around -40 points at 7,630. The dollar is lower along with oil prices.
Market Closing Prices Yesterday
·      The S&P 500 Index dropped -19.34 points, or 0.67%, to 2,853.53
·      The Dow Jones Industrial Average fell -177.23 points, or 0.67%, to 26,439.48
·      The Nasdaq Composite dropped -39.27 points, or 0.52%, to 7,466.51
·      The Russell 2000 Index declined -9.95 points, or 0.62% to 1,598.11
Events Calendar for Today
·      7:45 AM EST       ICSC Weekly Retail Sales
·      8:55 AM EST       Johnson/Redbook Weekly Sales
·      9:00 AM EST       S&P CoreLogic’s CS 20-city index for November…est. 0.6%
·      10:00 AM EST     Consumer Confidence for January…est. 123.0
·      4:30 PM EST        API Weekly Inventory Data
Earnings Calendar
·      Earnings Before the Open: AKS, ALLY, ALV, AOS, BEN, CIT, DHR, DOV, EAT, GLW, HCA, HOG, MCD, NUE, PCAR, PFE, PHM, PNR, SAP, TROW, WDR, ZBH
·      Earnings After the Close: LGN, AMD, BXP, CA, CB, CHRW, DOX, EA, EQR, ILMN, JNPR, KNX, NATI, PKG, PLT, SYK, WRB
World News
·      Eurozone GDP up 2.7% in fourth quarter year-over-year
·      Eurozone GDP up 0.6% in fourth quarter of 2016, meeting forecasts
·      The U.S. IPO market has started the year with a bang, with a total of 17 deals pricing so far to raise an aggregate $7.9 billion, the most capital raised in the IPO market during any January on record, according to data firm Dealogic. That surpassed the previous record of $5.3 billion set in January 2014, when 12 deals came to market, according to Dealogic.
Sector News Breakdown
·      PulteGroup (PHM) Q4 EPS 85c/$2.79B vs. est. 85c/$2.82B; Q4 net new orders increased 22% over the prior year to $2B, while the number of orders increased 14% to 4,805 homes; Backlog value at the end of the fourth quarter was $4B, which is up 35% over the prior year
·      Polaris Industries (PII) Q4 EPS $1.47/$1.431B vs. est. $1.47/$1.36B; sees FY18 adjusted EPS $6.00-$6.20 vs. est. $6.03 and sees FY18 adjusted sales up 3%-5% over 2017 adjusted sales of $5.428B
·      Autoliv (ALV) Q4 revs $2.73B vs. est. $2.69B; sees Q1 revenue growth of less than 1% vs. last year
·      In Auto parts, Lear Corp (LEA) upgraded to neutral from sell at Goldman Sachs and Adient (ADNT) tgt cut to $62 from $72 after evaluating earnings from the two auto parts suppliers, and the backlog update from Detroit Auto show
·      Wal-Mart Stores Inc. (WMT) plans to ask suppliers to deliver more goods to warehouses exactly on time or face fines. At an annual conference for suppliers this week, Wal-Mart executives plan to announce that large suppliers need to deliver full orders within a specified one- or two-day window 85% of the time or face a fine of 3% of the cost of delayed goods (previously, suppliers had to hit a 75% threshold to avoid fines)
·      Hawaiian Holdings (HA) Q4 EPS $1.10/$686.5M vs. est. $1.04/$686.3M; sees 1Q capacity +3.3% to +6.7% and sees FY capacity +1.9% to +5.4%; 4Q capacity +4.9%
·      J&J Snack Foods (JJSF) Q1 EPS $1.93/$265.2M vs. est. 80c/$248.7M (1Q Results Incl. $1.11 gain)
·      Inter Parfums (IPAR) Q4 revenue $149.5M vs. est. $141.2M saying final quarter was stronger than expected with our new Coach for Men contributing much of the upside surprise; sees FY17 EPS ‘at high end’ of $1.27-$1.29 range vs. est. $1.29 backs 2018 rev outlook
·      BP PLC (BP) said that it has invested $5 million in mobile electric vehicle charging company FreeWire Technologies Inc., and plans to trial the company’s technology at selected retail sites throughout the U.K. and Europe this year.
·      Gulfport Energy (GPOR) forecasted 2018 full year net production is estimated to average 1,250 MMcfe to 1,300 MMcfe per day, an increase of approximately 15% to 19% over 2017; budgeted 2018 total capital expenditures of $770 million to $835 million; announces $100M stock buyback 
·      Parsley Energy (PE) said it expects to report 2017 net production of approximately 68 MBoe/day, up 78% relative to full-year 2016 net production. The company expects to report 2017 net oil production up 75% vs. 2016 to approximately 45 MBoe/day. Full-year expected production is based on anticipated 4Q17 net production of 80-81 MBoe/day and 51-52 MBoe/day. Parsley completed 41 wells in Q4. The company expects to report Q4 CapEx of $410M-$420M, translating to full-year 2017 CapEx of $1.2B
·      MetLife (MET) shares fell -8%; said material weakness found in annuity reserves review; expects to report 4Q prelim EPS 61c-66c vs. est. $1.08
·      JPMorgan Chase & Co. (JPM) named Daniel Pinto and Gordon Smith, who run the firm’s two largest businesses, as co-presidents, positioning them as the frontrunners to succeed Chief Executive Officer Jamie Dimon
·      Stifel (SF) Q4 EPS $1.47/$804.1M vs. est. 98c/$745.5M
·      Blackstone Group LP (BX) is in talks to buy a controlling stake in Thomson Reuters Corp.’s key business that provides data, analytics and trading platforms to Wall Street and financial professionals around the world. Blackstone is in talks to buy about 55% of the business – Bloomberg
·      Alexandria Real Estate (ARE) Q4 AFFO $1.53/$298.8M vs. est. $1.54/$297M; sees FY 2018 FFO $6.45-$6.65 vs. est. $6.57
·      Heartland Financial (HTLF) Q4 EPS 45c below estimate 80c; 4Q net interest margin 4.14%, estimate 4.22%; Q4 provision for loan losses $5.33M
·      Reinsurance Group (RGA) Q4 operating EPS $2.60/$3.23B vs. est. $2.84/$3.22B; Q4 consolidated net premiums totaled $2.5B, up slightly from last year’s fourth quarter, with favorable net foreign currency effects of $43.2M; Q4 adjusted book value per share $118.88
·      Houlihan Lokey (HLI) Q3 EPS 69c/$258.9M vs. est. 61c/$243.0M; CEO said “We are pleased to report the highest quarterly revenues in our firm’s history. This was achieved with all three of our business segments reporting an increase in quarterly revenues when compared to the same period last year”
·      Oritani Financial (ORIT) Q2 EPS 9c vs. est. 26c; 2Q cash and cash equivalents $39.0 million; raises dividend to 25c from 17.5C; reports $8.9M 4Q charge on tax reform
·      Principal Financial (PFG) Q4 EPS $1.19 vs. est. $1.37; ended the quarter with record AUM of $430.9 billion
·      Green Bancorp (GNBC) will replace Healthcare Services Group in the S&P SmallCap 600 effective prior to the open of trading on Monday, February 5.
·      Pfizer (PFE) Q4 EPS 62c/$13.7B vs. est. 56c/$13.67B; sees repatriation tax liability of about $15B; sees year revs $53.5B-$55.5B vs. est. $53.82B
·      Aetna (AET) Q4 operating EPS $1.25/$14.74B vs. est. $1.17/$14.85B
·      Teva (TEVA) files $5B mixed securities shelf
·      S&P SmallCap 600 constituent Healthcare Services Group (HCSG) will replace Buffalo Wild Wings (BWLD) in the S&P MidCap 400 prior to the open of trading on Monday, February 5
·      Corbus Pharma (CRBP) said the FDA agreed that the event rate of pulmonary exacerbation is acceptable as a sole primary efficacy endpoint in clinical development to support registration of lenabasum for the treatment of cystic fibrosis (CF).
Industrials & Materials
·      Ashland (ASH) Q1 EPS 42c/$842M vs. est. 43c/$838.38M; lowers FY18 EPS outlook to $2.90-$3.10 from $3.20-$3.40 vs. est. $3.37; reaffirmed its FY18 adjusted EBITDA estimates for each of its operating segments
·      Crane Co (CR) Q4 EPS $1.18/$714.2M vs. est. $1.17/$702.6M; raises quarterly dividend to 35c from 33c; sees year EPS $5.35-$5.55 up from $4.85-$5.05 on tax reform and recent acquisition
·      Graco (GGG) Q4 adjusted EPS 34c/$374.9M vs. est. 35c/$369.02M; Initiating outlook for full-year 2018 of mid-single-digit growth on organic, constant currency basis, with growth expected in every region and reportable segment
·      Harris (HRS) Q2 EPS $1.67/$1.53B vs. est. $1.39/$1.49B; raises FY18 non-GAAP EPS view to $6.30-$6.50 from $5.85-$6.05 and narrows FY18 revenue view to $6.08B-$6.14B from $6.02B-$6.14B
·      Werner (WERN) Q4 ex-items EPS 42c/$567.37M vs. est. 39c/$553.88M
·      Sun Hydraulics (SNHY) files to sell 4M shares of common stock; prelim 2017 net sales $341.5M-$343.5M vs. est. $340.0M and 2017 prelim adj. eps $1.54-$1.58 vs. est. $1.64; says estimated federal tax rate for the 2018 fiscal year will be between 24.5% to 26.5%
·      Trinseo (TSE) raises FY17 net income view to $327M-$331M from $$280M-$288M; full year 2017 net income is estimated to be between $327M-$331M
Technology, Media & Telecom
·      Maxim Integrated (MXIM) shares spiked over 25% late Monday (before paring gains) after CNBC reported Japanese chipmaker Renesas is in talks to buy Maxim; deal could be up as much as $20 billion; Renesas beat out Maxim to buy Intersil in 2016;
·      Chip maker Maxim Integrated Products Inc. fell after hours as Japan-based Renesas Electronics Corp. denied that is in discussions to buy Maxim for close to $20 billion.
·      Integrated Device (IDTI) Q3 non-GAAP EPS 42c/$217.1M vs. est. 41c/$215.31M; sees Q4 adjusted EPS 41c-47c on revs roughly $222M, plus or minus $5M vs. est. 41c/$215.31M
·      Rambus (RMBS) shares fell -7%; Q4 adjusted EPS 19c/$101.9M vs. est. 19c/$101.13M; sees Q1 adjusted EPS 12c-19c on revs $94M-$100M, below est. 20c/$100.73M
·      Sanmina (SANM) Q1 EPS and revs in-line with prior reduced guidance a week ago; sees Q2 adjusted EPS 40c-50c on revs $1.6B-$1.7B vs. est. 51c/$1.69B


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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