Morning Preview: March 21, 2018

Scott GreenDaily Market Report

Early Look
Wednesday, March 21, 18
  
Stock futures are mixed ahead of the two-day FOMC meeting results later this afternoon, as markets are widely anticipating a 25-bps interest rate hike, which would be the 6th since December 2015. U.S. stocks bounced yesterday after Monday’s technology-led selloff and continue to watch the developments in the trade conflict between the U.S. and China. Energy stocks rallied Tuesday as oil prices climbed over 2% (and is now trading above $64 per barrel this morning ahead of inventory data), while technology prices still lagged on the Facebook data leak news and ORCL’s weaker cloud growth forecast. Treasury yields are inching higher, with the 10-year yield approaching 2.90% (after rising 4 bps to 2.88%), while the 2-yr yield is up at 2.345% (after rising 3 bps yesterday to 2.336%, its biggest one-day gain in three weeks and a new 52-week high). Couple of non-market related news items, snowstorms in the Northeast close federal offices in Washington and cancel over 1,000 flights, while reports indicate the suspect in the Austin, Texas bombing is dead. In Asian markets, The Nikkei Index declined -99 points to settle at 21,380. the Shanghai Index dipped -9 points to end at 3,280 and the Hang Seng Index dropped -135 points to settle at 31,414. In Europe, the German DAX is down around -20 points at 12,285, while the FTSE 100 is down over -40 points at 7,020.
 
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 12.58 points, or 0.65%, to 2,540.45
·      The Dow Jones Industrial Average rose 98.58 points, or 0.59%, to 23,836.10
·      The Nasdaq Composite spiked 44.58 points, or 0.05%, to 6,296.23
·      The Russell 2000 Index advanced 22.72 points, or 0.55% to 1,443.94
 
Events Calendar for Today
·      7:00 AM EST       MBA Mortgage Applications Data
·      8:30 AM EST       Current Account Balance for Q4
·      10:00 AM EST     Existing Home Sales MoM for February
·      10:30 AM EST     Weekly DOE Inventory Data
·      2:00 PM EST        FOMC Policy Rate Decision (expected for 25 bps hike)
 
Earnings Calendar:
·      Earnings Before the Open: ATU, FVE, GIS, WGO
·      Earnings After the Close: ALTR, FIVE, GES, MLHR, SCHL
 
Other Key Events:
·      FOMC Policy Rate Decision (expected for 25 bps hike) at 2:00 PM EST
·      Oppenheimer 28th Annual Healthcare Conference, 3/20-3/21, in New York
·      Telsey Advisory 10th Annual Spring Consumer Conference, 3/20-3/21, in New York
·      Morgan Stanley European Financials Conference, 3/20-3/22, in London
   
World News
·      A suspect in the Austin bombings is dead, according to reports early Wednesday from ABC affiliate KVUE and CBS Austin. Police were closing in on the male suspect when he killed himself by detonating an explosive device, the reports said.
·      Federal-government offices in Washington were closed on Wednesday due to an early-spring snowstorm, meaning the government will release economic data live on an agency website. The Commerce Department’s current-account report for Q4 will be released at 8:30 AM EST
·      Investor Intelligence Poll shows newsletter writers classified as bulls rises a third week to 55.5% from 54.9%; remains at highest since Jan. 31 reading of 66.0% just before stocks plunged. Bears remain at 5-month high, rise a third week to 16.8% from 15.7% and those looking for a correction slips for a third week, falls to 27.7% from 29.4%; remains at lowest since Jan. 31
 
Sector News Breakdown
Consumer
·      Nordstrom Inc.’s (JWN) board is ending talks with the company’s founding family over a proposal to take the department-store chain private, saying the two sides couldn’t agree on a price. The move follows a rejected proposal earlier this month that would have valued Nordstrom at about $8.4 billion, or $50 a sharehttps://goo.gl/JwMyL2
·      Southwest (LUV) cuts Q1 RASM outlook to in line with a year ago from up 1%-2%; recast certain financial information to reflect adoption of new accounting rules; sees ‘immaterial’ impact of new accounting standards to Q1, 2018 RASM comparisons
·      Laureate Education (LAUR) Q4 EPS 48c/$1.26B vs. est. 29c/$1.23B; Sees FY revenue $3.89B-$3.92B vs. est. $4.05B; sees FY total enrollment 955,000 to 959,000
·      Steelcase (SCS) Q4 EPS 24c/$772.7M vs. est. 16c/$750.7M; sees Q1 EPS 12c-16c on revs $740M-$765M vs. est. 19c/$746M; increases quarterly dividend
·      Wynn Resorts (WYNN) files to sell 12.13M shares of common stock for holders
 
Energy
·      The American Petroleum Institute (API) reported that U.S. crude supplies fell by 2.7 million barrels for the week ended March 16; data also showed a decline of 1.1 million barrels in gasoline stockpiles, while inventories of distillates fell 1.9 million barrels
 
Healthcare
·      Prothena (PRTA) and Celgene (CELG) sign R&D pact for neurodegenerative diseases as Prothena will receive $100M upfront payment and a $50M equity investment from Celgene under an agreement to develop new therapies for a range of neurodegenerative diseases.
·      Arena Pharmaceuticals (ARNA) files to sell 7.5M shares of common stock
·      Herbalife Ltd. (HLF) said that it intends, subject to market and other conditions, to offer $500M aggregate principal amount of convertible senior notes due 2024 in a private offering
·      Alder BioPharmaceuticals (ALDR) said Randall C. Schatzman and the board mutually determined now is the right time for him to step down as president, CEO and as a director
·      GlycoMimetics (GLYC) 7M share Secondary priced at $17.00
·      Xencor (XNCR) 7.3M share Secondary priced at $31.00
 
Industrials & Materials
·      FedEx (FDX) Q3 adjusted EPS $3.72/$16.5B vs. est. $3.11/$16.15B; 3Q adjusted operating margin +6.7% and 3Q Ground segment operating margin 12.1%; Sees FY adjusted EPS $15.00-$15.40 vs. est. $13.67; sees FY capital expenditure $5.8B vs. est. $5.89B
·      Bayer (BAYRY) won conditional European Union approval for its $66B takeover of Monsanto (MON) after pledging to sell off assets worth more than EU6b; mostly to strengthen BASF’s position in seeds and pesticides
·      AAR Corp. (AIR) Q3 EPS 49c/$456M vs. est. 50c/$477.09M; reaffirms guidance for FY19; FY19 EPS view $2.50-$2.80 (est. $2.73) and backs FY19 revenue view $2.1B-$2.2B (est. $2.2B)
·      REV Group (REVG) authorizes share repurchase program of up to $50M
 
Technology, Media & Telecom
·      Salesforce (CRM) agrees to acquire MuleSoft (MULE) for enterprise value of $6.5 billion; MuleSoft acquisition consideration will be composed of $36.00 in cash and 0.0711 shares of Salesforce common stock per MuleSoft Class A and Class B common share, which represents a per share price for MuleSoft common shares of $44.89 https://goo.gl/8rzLV1
·      Advanced Micro Devices Inc. (AMD) addressed a report earlier this month that its chips were uniquely susceptible to specific attacks. In a blog post posted late Tuesday, the company acknowledged the vulnerabilities’ existence and but said that to deploy each exploit would require administrative access to the system
·      Chinese internet giant Tencent Holdings Ltd. (TCEHY) reported a 98% jump in Q4 net profit, beating market expectations; said its net profit for the October-December period rose to 20.80 billion yuan ($3.29 billion) from CNY10.53 billion a year earlier
·      In a preview of arguments in a trial over AT&T’s (T) deal to buy Time Warner Inc (TWX), government lawyers said on Tuesday the deal will raise prices for consumers while AT&T’s lawyer argued the company has no reason to withhold programming from competitors as feared
·      Cision (CISN) 5.75M share Secondary priced at $10.75
·      DBV Technologies (DBVT) 3.528M share Spot Secondary priced at $21.26
·      ForeScout (FSCT) 4.41M share Secondary priced at $29.00

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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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