Morning Preview: March 14, 2018

Scott GreenDaily Market Report

Early Look
Wednesday, March 14, 18
Stock futures gain, rebounding from the prior session decline, helped by stronger industrial production data out of China (lifting material stocks), while markets await data on U.S. retail sales and producer prices (PPI). Stocks dropped sharply on Tuesday, led by declines in technology as the Nasdaq Composite snapped its 7-day losing streak, as technicals, politics and trade fears all played a hand in the weakness. Inflation fears eased after the February Consumer Price index (CPI) came in-line with economist estimates and slowed from the prior month (next up PPI later this morning). Stocks lost steam midday as the Dow Industrials fell below 25K and the S&P 500 failed to hold above 2,800. President Trump’s appointment of Mike Pompeo, a CIA director, replacing Secretary of State Tillerson raised concern that the administration may take a harder stance on issues such as national security and trade. Comments midday that President Trump was seeking tariffs of more than $30B on China imports (as per a Politico article) and executive order from the President blocking Broadcom from acquiring chipmaker Qualcomm, citing the tie-up’s threat to U.S. national security also played a part. In Asian markets, The Nikkei Index fell -190 points to settle at 21,777, the Shanghai Index fell -18 points to end at 3,291 and the Hang Seng Index dropped -166 points to settle at 31,435. In Europe, the German DAX is up over 30 points at 12,250, while the FTSE 100 is up around 20 points above 7,150.

Market Closing Prices Yesterday
·      The S&P 500 Index dropped -17.71 points, or 0.64%, to 2,765.31
·      The Dow Jones Industrial Average fell -171.58 points, or 0.68%, to 25,007.03
·      The Nasdaq Composite spiked -77.31 points, or 1.02%, to 7,511.01
·      The Russell 2000 Index declined -9.00 points, or 0.56% to 1,592.05
Events Calendar for Today
·      7:00 AM EST       MBA Mortgage Applications Data
·      8:30 AM EST       Advance Retail Sales MoM for February…est. 0.3%
·      8:30 AM EST       Retail Sales – Less Autos for February…est. 0.4%
·      8:30 AM EST       Producer Price Index MoM for February…est. 0.1%
·      8:30 AM EST       PPI Ex: Food & Energy MoM for February…est. 0.2%
·      10:00 AM EST     Business Inventories for January…est. 0.6%
·      10:30 AM EST     Weekly DOE Inventory Data
Other Key Events:
·      Cowen Healthcare Conference, 3/12-3/14, in Boston
·      Barclays Healthcare conference, 3/13-3/15, in Miami
·      Bank America Merrill Consumer & Retail Technology Conference, 3/13-3/14, in NY
World News
·      U.S. President Donald Trump is seeking to impose tariffs on up to $60 billion of Chinese imports and will target the technology and telecommunications sectors, two people who had discussed the issue with the Trump administration said on Tuesday.
·      China’s industrial output expanded faster than expected at the start of the year, as output rose 7.2% in the first two months this year from the same period a year earlier, above estimates for a rise of 6.1% and picking up sharply from 6.2% in December.
·      Investor Intelligence Poll shows newsletter writers classified as bulls rises to 54.9% from 48.6%; now at the highest since Jan. 31 while bearish sentiment inched up to 5-month high of 15.7% vs 15.5% last week and those expecting a correction slips to 6-week low of 29.4% from 35.9%
·      Senate Majority Leader Mitch McConnell all but ruled out advancing legislation to undo President Donald Trump’s steel and aluminum tariffs, saying that such an action would be unlikely to succeed
Sector News Breakdown
·      Caleres (CAL) Q4 EPS 48c/$702.5M vs. est. 44c/$695.61M; Q4 Famous Footwear total sales of $393.1M were up 7.0%, while same-store-sales were up 2.8% on a 13-week basis; Brand Portfolio sales of $309.4M were up 13.8% including contribution from Allen Edmonds; sees FY18 adjusted EPS $2.40-$2.50 vs. est. $2.48 and sees FY18 revenue roughly $2.8B vs. est. $2.84B
·      Walmart Inc. (WMT) will offer home delivery of groceries in 100 cities by the end of the year and launch same-day delivery in New York City, adopting a model it previously resisted as Amazon (AMZN), Kroger (KR) and Target (TGT) invest in similar services. Uber Technologies Inc. will be one of the initial partners, expanding a test started in 2016
·      Ford Motor (F) upgraded to overweight from underweight saying that negative sentiment on Ford has taken valuation to attractive levels and the F-150 franchise may be worth more than 150% of the company’s enterprise value
·      Camping World (CWH) Q4 adjusted EPS 25c/$889M vs. est. 42c/$1.05B; Q4 Adjusted EBITDA increased 76.0% to $65.3M and Adjusted EBITDA Margin increased 180 basis points to 7.3%
·      Inter Parfums (IPAR) Q4 adjusted EPS 14c/$149.5M vs. est. 11c/$149.6M; gross margin was 66.1% compared to 63.7%; backs FY18 EPS $1.44 and revs $620M vs. est. $1.43/$625.87M
·      PetIQ (PETQ) said it will open 20 veterinary services clinics in Walmart locations, marking the start of PetIQ’s plan to expand veterinary services after it bought VIP Petcare in January
·      Tesla Inc.’s (TSLA) corporate treasurer and vice president of finance has left the electric-car maker, according to a person familiar with the matter. Susan Repo, who had worked at Tesla for about five years, left to become the CFO of another company
·      The American Petroleum Institute (API) reported U.S. crude supplies rose nearly 1.2M barrels for the week ended March 9, showed a decline of -1.3M barrels in gasoline stockpiles, while inventories of distillates fell of -4.3M barrels
·      Pioneer Natural Resources (PXD) said a fire occurred at a compressor station in its West Panhandle field on March 6 in Texas which resulted in extensive damage to the facility and production had to be shut in; still expects 1Q total production within previously announced outlook range of 304-314 Mboepd
·      Abraxas Petroleum (AXAS) Q4 EPS 4c/$29.6M vs. est. 4c/$29.1M; Q4 Production of 808 MBoe vs. 732 last year and Q4 EBITDA $17.6M vs. $9.5M last year
·      Clean Energy (CLNE) Q4 adjusted EPS loss (18c)/$89.3M vs. est. loss (9c)/$83.6M; said 4q was negatively impacted by a $6.5M loss from the combination of our compressor company CEC with Landi Renzo’s SAFE and a $7.0 million charge related to LCFS credits that were invalidated
·      Sunoco (SUN) downgraded to Sell from Neutral at Goldman Sachs
·      Bill Ackman took advantage of a share price increase to sell about $125 million worth of his holdings in Automatic Data Processing Inc. (ADP), the payroll outsourcer that he targeted in an unsuccessful proxy fight last year
·      Everi Holdings (EVRI) Q4 EPS loss (37c)/$247.9M vs. est. loss (8c)/$234.1M; sees FY18 adjusted EBITDA growth of 6%-8%; sees revenue from the sale and service of fully integrated kiosks and compliance products is expected to be higher in 2018 compared to 2017
·      CatchMark Timber (CTT) files to sell 4.5M shares of common stock
·      Black Knight (BKI) files to sell 4M shares of common stock
·      Apollo Commercial (ARI) announces offering of 13.5M shares of common stock
·      Western banks First Hawaiian (FHB), Heritage Commerce (HTBK) and TriCo Bancshares (TCBK) upgraded to outperform at KBW saying they consistently have the highest level of profitability (in terms of ROA) among regions, along with outperforming net interest margins
·      Bridgewater Bancshares (BWB) 6.7M share IPO priced at $11.75
·      Valeant (VRX) Chairman and CEO Joseph Papa disclosed the purchase of 30,000 common shares of the company at a price of $16.05 per share, according to a filing
·      AveXis, Inc. (AVXS) and Genethon said they have entered into an exclusive, worldwide license agreement for in vivo gene therapy delivery of AAV9 vector into the central nervous system (CNS) for the treatment of spinal muscular atrophy (SMA).
·      Aratana Therapeutics (PETX) Q3 EPS loss (37c)/$10.4M vs. est. loss (22c)/$6.82M; Q4 EPS loss included $7.4M of impairment charges for intangible assets
·      Trillium Therapeutics (TRIL) granted orphan drug status by FDA for CNFDA for Cutaneous T-Cell Lymphoma
Technology, Media & Telecom
·      Silicom (SILC) shares plunged -27% after hours (after falling over 30% during) after 8K revealed cancelation of contract awarded by top-10 player; said the customer responsible for the company’s largest-ever design win decided to cancel the new cloud infrastructure architecture for which it had ordered the Silicom 100-Gigabit-Switch-Fabric-On-A-NIC product
·      MongoDB (MDB) Q4 adjusted EPS loss (40c)/$45M vs. est. loss (43c)/$42.16M; sees FY19 adjusted EPS loss ($1.66)-($1.62) on revs $211M-$215M, vs. est. loss ($1.63)/$205.89M
·      Cognizant Technology (CTSH) announces $300M accelerated share buyback
·      Rapid7 (RPD) 2M share Spot Secondary priced at $26.25


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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