Morning Preview: March 1, 2018

Scott GreenDaily Market Report

Early Look
Thursday, March 1, 18
  
Stock futures are trending lower, adding to yesterday’s late day decline as Federal Reserve chief Jerome Powell is due to testify before Senate committee at 10:00 AM EST, two days after his hawkish remarks weighed on stocks, sending markets lower. His comments regarding the strength of the economy helped spark a rally for the dollar and Treasury yields, as well as the selloff for equities. However, before Powell’s testimony, the January update of the Fed’s preferred inflation measure, core PCE is expected out at 8:30 AM EST, along with another busy day of economic data. In Asian markets, The Nikkei Index fell -343 points to settle at 21,724, the Shanghai Index rose 14 points to settle at 3,273 and the Hang Seng Index rose 199 points to settle at 31,044. In Europe, the German DAX is down over -170 points at 12,265, while the FTSE 100 is down around -30 points trading under 7,200.
 
Stocks ended on a down note to end February, posting its worst monthly return in a little over two-years (January 2016) as more fears of rising rates took its toll on market sentiment. The losses in February (Dow fell -4.3%, S&P 500 -3.9% and Nasdaq -1.9%) came on concerns over stronger-than-expected inflation, which stoked fears of an aggressive pace of Fed interest-rate hikes. All 11 S&P 500 sectors also closed out February in negative territory, with the S&P 500 and Down Industrials snapping 10-month winning streaks. However, according to wires, on a total-return basis, the S&P 500 fell 2.6% over the course of the month and snaps a 15-month winning streak (the S&P is up 36% over that period)
 
The price of bitcoin sank late Wednesday after a report by the Wall Street Journal that the SEC is ramping up pressure on the initial-coin-offerings industry, issuing scores of subpoenas and information requests to companies. The Journal reported the SEC is seeking information about the structure of ICO sales and pre-sales https://goo.gl/8FGnj8
 
Market Closing Prices Yesterday
·      The S&P 500 Index slumped -30.45 points, or 1.11%, to 2,713.83
·      The Dow Jones Industrial Average fell -380.83 points, or 1.50%, to 25,029.20
·      The Nasdaq Composite dropped -57.35 points, or 0.78%, to 7,273.01
·      The Russell 2000 Index declined -24.03 points, or 1.56% to 1,512.45
 
Events Calendar for Today
·      8:30 AM EST       Weekly Jobless Claims…est. 225K
·      8:30 AM EST       Continuing Claims…est. 1.925M
·      8:30 AM EST       Personal Income for Jan…est. 0.3%
·      8:30 AM EST       Personal Spending for Jan…est. 0.2%
·      8:30 AM EST       PCE Core YoY, for January…est. 1,5%
·      8:30 AM EST       PCE Core MoM for Jan…est. 0.3%
·      8:30 AM EST       PCE Deflator MoM for January…est. 0.4%
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 56.6
·      9:45 AM EST       Markit US Manufacturing PMI, Feb-F…est. 55.9
·      10:00 AM EST     Construction Spending MoM for Jan…est. 0.3%
·      10:00 AM EST     ISM Manufacturing for February…est. 58.6
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
·      N/A                        Monthly U.S. auto sales for February
 
Other Key Events
·      Monthly U.S. auto sales for February
·      BTIG Healthcare Conference 2/26-3/1, in Utah
·      Morgan Stanley Technology, Media and Telecom Conference, 2/26-3/1, in San Francisco
·      Piper Jaffray 18th Annual Energy Conference, 2/28-3/2, in Las Vegas
·      KBW Inc. Cards, Payments & Financial Tech Symposium, in NY
   
World News
·      China Feb Caixin Manufacturing PMI (final): 51.6 vs 51.3 cons (51.5 previous); growth in new orders quickened vs last month but growth in new export orders slowed; business confidence strengthened to highest level in nearly a year
·      According to Trimtabs, US corporates have announced more than $218B of share buybacks since the tax changes in December. They say that the value of buybacks in February alone rose to $153.77B from $59.9B in January
 
Sector News Breakdown
Consumer
·      Monster Beverage (MNST) Q4 EPS 35c/$810.4M vs. est. 37c/$843.0M; 4Q gross profit margin 62.1%below ests around 64% and 4Q volume 86.5 million-unit cases
·      Limited Brands (LB) Q4 EPS $2.11/$4.82B vs. est. $2.05/$4.72B; sees Q1EPS 15c-20c below est. 31c and sees year EPS $2.95-$3.25 vs. est. $3.50
·      Nordstrom’s (JWN) founding family is “struggling” to take the company private due to an inability to secure financing., The New York Post reports. According to the publication, obtaining enough financing from Leonard Green & Partners “is not a sure thinghttps://goo.gl/QwU7PC 
·      Walmart (WMT) raises age requirement for firearm purchases to 21
·      Best Buy Co. (BBY) said it will be closing all of its 250 mobile-phone stores in the U.S. by end of May; said the cellphone business is no longer as lucrative as it was when the company began opening the small shops in malls across the country
·      Hostess Brands (TWNK) Q4 adjusted EPS 17c/$196.2M vs. est. 14c/$189.83M; sees year E{S 65c-70c vs. est. 67c; Q4 cash and equivalents $135.7M
·      ILG (ILG) Q4 adjusted EPS 24c/$438M vs. est. 26c/$425.04M; said Hurricanes Irma and Maria affected several Vistana and HVO resorts and sales centers, as well as nearly 300 properties within the Interval Network
·      La Quinta (LQ) Q4 EPS loss (5c)/$214.3M vs. est. loss (1c)/$222M; 4Q comparable hotel RevPAR +3.4%; said given timeline to close transaction with Wyndham Worldwide, company is not providing guidance for 2018 at this time
·      Scientific Games (SGMS) Q4 EPS loss (48c)/$823M vs. est. loss (29c)/$810.43M
·      Habit Restaurants (HABT) Q4 EPS loss (0c)/$85.1M vs. est. loss (1c)/$85.68M; 4Q Company-owned restaurant comp sales -1% vs. est. -1.3%; sees 2018 Company-operated COMP restaurant sales of flat to slightly positive; sees FY18 revenue $389M-$393M vs. est. $389.33M
 
Energy
·      Exxon Mobil Corp. (XOM) is ending projects with Russia’s state-controlled energy giant, PAO Rosneft, because of international sanctions on Moscow. The withdrawal for now marks the end of Exxon’s hopes of drilling in Russia’s Arctic ocean oil fields
·      QEP Inc. (QEP) shares rose 9%; Q4 EPS $1.13 and 4Q production 34.1 Bcfe; has hired advisors for sale of Williston & Uinta Basin Assets; authorizes $1.25B share buyback; said it expects to deliver year-over-year total oil-equivalent production growth of approximately 15% in 2018, compared with 2017 volumes after adjusting for the impact of the Pinedale Divestiture
·      Quaker Chemical (KWR) Q4 adjusted EPS $1.27/$211.1M vs. est. $1.26/$208.07M; sees one-time tax on deemed repatriation of undisturbed earnings of its foreign subsidiaries, net of the impact of eliminating U.S. federal income taxes on dividends from foreign subsidiaries in the current year, to be approximately $17.8 million
·      Eclipse Resources (ECR) Q4 EPS 2c/$104.1M vs. est. 0c/$99.8M; sees 1Q production 304 to 311 MMcfe/d and sees FY production 335 to 355 mmcfe/d; 4Q production 311.7 Mcfe/d; reaffirmed its previously issued first quarter and full year 2018 guidance
·      Halcon Resources (HK) Q4 EPS loss (12c)/$25.3M vs. est. loss (5c)/$28M; 4Q production 6,283 boe/d
 
Financials
·      Toronto-Dominion (TD) Q1 adjusted EPS C$1.56 vs. C$1.33 a year ago and reports Q1 revenue C$9.36B vs. C$9.27B a year ago
·      Hamilton Lane (HLNE) 3.94M share Secondary priced at $34.25
·      Triangle Capital (TCAP) Q4 net investment income per share 38c vs. est. 33c; Q4 Total investment income $31.7M
 
Healthcare
·      Mylan (MYL) Q4 adjusted EPS $1.43/$3.24B vs. est. $1.41/$3.3B; sees FY18 adjusted EPS $5.20-$5.60 and revs $11.75B-$13.25B vs. est. $5.39/$12.76B
·      Concert Pharmaceuticals (CNCE) says CTP-692 is poised to enter clinical development in 2018 as an adjunctive treatment of schizophrenia.
·      Novavax (NVAX) reports ’positive’ top-line results from its Phase 1/2 clinical trial in older adults of its NanoFlu recombinant influenza vaccine, which includes its proprietary Matrix-M™ adjuvant, compared to the leading licensed egg-based, high-dose influenza vaccine for older adults
·      Universal Health (UHS) Q4 EPS $2.00/$2.64B vs. est. $1.84/$2.63B; sees FY18 adjusted EPS $9.25-$9.90 on revs $10.923B-$11.063B vs. est. $9.74/$10.96B; 4Q acute care adjusted admissions +7.3%; 4Q behavioral health adjusted admissions +2.5%
·      Health Insurance Innovations (HIIQ) shares rose 7%; Q4 EPS 37c/$69.5M vs. est. 34c/$59.61M; sees FY18 EPS $2.45-$2.55 on revs $290M-$300M vs. est. $1.92/$273.58M
·      Cross Country Healthcare (CCRN) Q4 adjusted EPS 17c/$219.7M vs. est. 19c/$225.74M; Q4 adjusted EBITDA $12.3M, up 2% from last year; sees Q1 EPS 1c-3c on revs $205M-$210M, vs. est. 10c/$227.45M
·      Glaukos (GKOS) Q4 EPS 3c/$41.7M vs. est. 1c/$41.09M; sees FY18 revenue $160M-$165M below consensus $169.56M
·      Merit Medical (MMSI) Q4 EPS 33c/$188.2M vs. est. 32c/$187.62M; sees full-year revenue in the range of $838M-$851M vs. est. $822.56M
·      Mylan (MYL) and Revance Therapeutics (RVNC) announced a global collaboration and license agreement for the development and commercialization of a proposed biosimilar to BOTOX
 
Industrials & Materials
·      Ferro (FOE) Q4 EPS 29c/$377.5M vs. est. 28c/$338M
·      Kratos Defense (KTOS) Q4 EPS 9c/$202.2M vs. est. 7c/$194.99M
·      Greif (GEF) Q1 EPS 49c/$905.7M vs. est. 66c/$867.24M; backs FY18 EPS view $3.25-$3.55 vs. est. $3.42; backs FY18 CapEx view $100M-$120M
·      Itron (ITRI) Q4 EPS $1.01/$550.8M vs. est. 93c/$532.61M; consolidated gross margin of 31.7% increased 10 bps vs. Q4’16, driven by higher volume and mix of smart solutions primarily in the Electricity segment, offsetting lower gross margins in the Gas and Water segments
 
Technology, Media & Telecom
·      Salesforce (CRM) Q4 adjusted EPS 35c/$2.85B vs. est. 34c/$2.81B; sees 1Q adjusted EPS 43c-44c on revs $2.93B-$2.94B vs. est. 37c; sees FY adjusted EPS $2.02-$2.04 vs. est. $1.73; 4Q billings growth +28% and 4Q subscription and support revenue $2.66B; sees Q1 deferred revenue growth 23%-24% YoY
·      Box (BOX) shares fell -13%; Q4 adjusted EPS loss (6c)/$136.7M vs. est. loss (8c)/$136.71M; sees Q1 adjusted EPS loss (9c)-(8c) on revs $139M-$140M vs. est. loss (8c)/$144.27M; 4Q billings growth +28%
·      Harmonic (HLIT) Q4 EPS 0c/$101.1M vs. est. 1c/$96.8M; sees Q1 EPS loss (10c-1c) on revs $83M-$93M vs. est. loss (2c)/$92.6M;
·      WPP PLC (WPP) shares tumbled 13% after the company logged its worst year since the financial crisis and forecast no growth for 2018 (watch ad stocks IPG, OMC on news)

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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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