Morning Preview: March 26, 2018

Scott GreenDaily Market Report

Early Look
Monday, March 26, 18
  
Stock futures are moving higher, getting a boost on signs global trade tensions could be cooling after reports of deal improvement with China and South Korea. According to the WSJ, the Trump Administration sent a letter to China last week asking for reduction of Chinese tariffs on US Autos; also asked for more Chinese purchases of US semiconductors and greater access to China’s financial sector; China/US quietly seeking trade solutions after days of loud threats; Mnuchin said he is “hopeful” that a truce can be reached with China on trade. Also, the U.S. and South Korea agreed to amend their free-trade deal to address American concerns about a growing deficit and resolve friction over tariffs on South Korean steel, Seoul’s trade ministry said in a statement Monday. Speaking on “Fox News Sunday,” Treasury Secretary Steven Mnuchin said the U.S. expected to sign the agreement with South Korea soon. The stories have helped boost U.S. futures (and lifted foreign markets as well) after a dreadful end to last week.
 
It was not a pretty picture for U.S. stocks (or global stocks for that matter) last week, with major averages posting hefty losses. The S&P 500 Index dropped over 2% Friday and was down 5.9% for the week, its biggest drop in more than 2-years, the Dow Industrials fell -1.7% Friday, falling over 425 points to the lowest since November 22nd. The Nasdaq Composite plunged -2.43% Friday, down over 6.5% for the week while the Nasdaq 100 Index dropped 7.2%, the most since August 2015, led by declines in FB following its data leak news.
 
In Asian markets, The Nikkei Index gained 148 points to settle at 20,766, the Shanghai Index dropped -19 points to finish at 3.133 and the Hang Seng Index advanced 239 points to close at 30.548. In Europe, the German DAX is up over 70 points at 11,960, while the FTSE 100 is higher by about 20 points around 6,950. The dollar is mixed, while bond yields inch higher to start the week.
 
Market Closing Prices Yesterday
·      The S&P 500 Index plunged -55.43 points, or 2.10%, to 2,588.26
·      The Dow Jones Industrial Average fell -424.69 points, or 1.77%, to 23,533.20
·      The Nasdaq Composite sunk -174.01 points, or 2.43%, to 6,992.67
·      The Russell 2000 Index declined -33.79 points, or 2.19% to 1,510.08
 
Events Calendar for Today
·      8:30 AM EST       Chicago Fed Nat Activity Index for February…prior 0.12
·      10:30 AM EST     Dallas Fed Manufacturing Activity for March…est. 33.5
·      12:30 PM EST     Fed’s Dudley speaks on the future of financial regulation
·      4:30 PM EST        Fed’s Mester speaks on Monetary Policy
·      7:10 PM EST        Fed’s Quarles to speak in Atlanta
   
World News
·      Dozens of Cambridge Analytica employees who were not U.S. citizens were deployed to provide campaign strategy and advice for Republican candidates in the 2014 elections, the Washington Post reported Sunday night. That may have been in violation of U.S. law, which restricts how much involvement foreign citizens may have in election campaigns. https://goo.gl/okiGA1
·      John Williams, the current president of the San Francisco regional branch, is a front-runner to succeed William Dudley as head of the powerful New York Fed – Bloomberg
·      Saudi Arabia said it intercepted seven ballistic missiles fired at Riyadh and other cities by Houthi forces in Yemen
·      S&P upgraded Spain to A- from BBB+; maintains outlooks at positive; expect Spain GDP will grow faster than EZ avg over 2018-21
 
Sector News Breakdown
Consumer
·      Britain’s JD Sports Fashion (JD) is entering the lucrative U.S. market after agreeing to buy Finish Line Inc (FINL) for $558 million in cash, the sportswear retailer said; JD Sports has agreed to pay $13.50 per share for Finish Line, compared to its $10.55 close on Friday https://goo.gl/Wk15QX
·      Tesla (TSLA) CEO Elon Musk announces in Twitter message that company will slow down deliveries in Norway, the automaker’s best market per capita, days before the electric-car maker reports quarterly sales
·      La-Z-Boy (LZB) mentioned positively in Barron’s saying shares could rally 20% within a year or two, noting shares currently trade at 13.8x forecast earnings for the next 12 months, which is well below the small-cap Russell 2000 index’s price/earnings ratio of 25, the Standard & Poor’s 500 index’s 17, and its own five-year average of 16.3x forward earnings
·      Dana Inc. (DAN) said it has increased its offering for GKN PLC’s Driveline business by $140M, bringing it to a total of about $1.77B plus $1B in pension liabilities and 133M Dana shares issued to GKN shareholders. https://goo.gl/ZGVLfk
·      Firearms maker Remington Outdoor Co. sought for Chapter 11 bankruptcy protection Sunday, in the face of a heavy debt load, falling sales and lawsuits
 
Financials
·      The KBW Bank Index plunged 8% last week, its worst showing since January 2016
·      Interactive Brokers (IBKR) topped Barron’s 2018 ranking of Best Online Brokers, getting high marks in user trading experience, portfolio analysis and range of offerings. Fidelity fell to second place, followed by TD Ameritrade (AMTD) in third, then Charles Schwab (SCHW), TradeStation, Merrill Edge (BAC), E-Trade (ETFC) in Barron’s annual ranking
·      U.S. Bancorp (USB) upgraded to Outperform from Neutral at Baird
 
Industrials & Materials
·      Boeing (BA) is near a deal to secure a closely contested aircraft supply contract from American Airlines (AAL), Reuters reported. The report adds that American Airlines was looking to purchase 25-30 wide-body jets, and Boeing’s 787 Dreamliner beat out Airbus (EADSY) A330new
·      Atlantia SpA (ATL.MI) has decided to exercise a call option to buy some or all of Abertis Infraestructuras SA’s (ABE.MC) stake in Cellnex Telecom SA (CLNX.MC) for between 21.20 and EUR21.50 euros ($26.20-$26.60) per share https://goo.gl/fpjS1f
·      Eaton Corp. (ETN) upgraded to buy from hold at Jefferies
·      Jacobs Engineering (JEC) upgraded to Outperform from Neutral at Baird
 
Technology, Media & Telecom
·      Japan’s SoftBank Group Corp (9984.T) is looking to invest $1 billion in Chinese delivery firm Manbang Group, the Wall Street Journal reported on Monday, citing people familiar with the matter https://goo.gl/Vyu5dj
·      The U.K. government will direct Facebook (FB), Google (GOOGL), Twitter (TWTR) and other tech companies to simplify their data management policies for consumers following recent breaches, according to Bloomberg
·      Shares of young cloud software companies like MongoDB (MDB) and SendGrid (SEND) have soared since the Nasdaq’s bottom on February 8, in part on speculation of a takeover, Barron’s reported. Takeover targets form a long list in addition to the aforementioned, and include Dropbox (DBX), Appian (APPN), Veeva Systems (VEEV), Atlassian (TEAM), ServiceNow (NOW)
·      Apple’s (AAPL) CEO Tim Cook urged President Donald Trump to support free-trade policies as a series of tariffs and other actions raise tensions between the country and China, according to The Wall Street Journal
·      Uber Technologies Inc. has agreed to sell its Southeast Asian business to bigger regional rival Grab, the firms said on Monday

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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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