Morning Preview: March 27, 2018

Scott GreenDaily Market Report

Early Look
Tuesday, March 27, 18
  
Stock futures are rising, adding to yesterday gains and continuing its rally after tumbling last week, with many attributing the easing about a potential global trade war between China and the U.S. yesterday after reports the two are conducting behind-the-scenes talks to avert a global trade war. Treasury Secretary Steven Mnuchin said Sunday that he’s “cautiously hopeful” that the world’s two biggest economies will reach an agreement to avoid tariffs. Fears about a possible trade war have weighed on markets around the world this month, as President Donald Trump threatens tariffs on at least $50 billion of Chinese goods and China retaliating.
 
Stocks surged on Monday, erasing all of Friday’s declines, as the Dow Jones Industrial Average closed higher by 669 points, the third highest single session point gain for the index (top two 936 and 889 were in October 2008), according to Bespoke. The Nasdaq Composite Index soared for its biggest one-day advance in more than two years (rose 3.1%) as concerns of a potential trade war lessened and technology stocks rallied. Treasury yields climbed Monday, after mostly dropping last week, as the threat of a trade clash between the U.S. and China eased. Among the blue-chip companies, all but one closed higher (GE), led by Microsoft, Intel Corp and Apple Inc., rising between 5.5% and 7.5%.
 
In Asian markets, The Nikkei Index jumped 551 points (2.65%) to settle at 21,317, the Shanghai Index gained 32 points to settle at 3,166 and the Hang Seng Indexgained242 points to close at 30,790. In Europe, the recovery is underway in an attempt to bounce off 1-year lows as the German DAX is jumps over 230 points to trade back above 12,000, while the FTSE 100 is up over 125 points at 7,020

 

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 January…est. 0.60%
·      10:00 AM EST     Richmond Fed Manufacturing Index for March…est. 22
·      10:00 AM EST     Consumer Confidence for March…est. 131.0
·      11:00 AM EST     Fed’s Bostic speaks at Economic Conference in Atlanta
·      4:30 PM EST        API Weekly Inventory Data       
 
Market Closing Prices Yesterday
·      The S&P 500 Index spiked 70.29 points, or 2.72%, to 2,658.55
·      The Dow Jones Industrial Average rose 669.40 points, or 2.84%, to 24,202.60
·      The Nasdaq Composite surged 227.88 points, or 3.26%, to 7,220.54
·      The Russell 2000 Index advanced 33.63 points, or 2.23% to 1,543.72
   
World News
·      Federal Reserve Bank of Cleveland President Loretta Mester, who voted in favor of last week’s FOMC interest-rate increase, said last night the U.S. central bank will be striking the right balance if it continues a gradual pace of rate hikes
·      China’s central bank guided the yuan to its strongest level against the U.S. dollar since its surprise devaluation more than 2½ years ago on Tuesday. The People’s Bank of China set the dollar’s reference rate at 6.2816 yuan on Tuesday, putting the yuan at its strongest since August 11, 2015
 
Sector News Breakdown
Consumer
·      McCormick (MKC) reports Q1 EPS $1.00/$1.24B vs. est. 90c/$1.24B; sees year EPS $4.85-$4.95 vs. est. $4.87
·      At Home Group (HOME) announces offering of 6M shares of common stock for holders
·      Overstock.com (OSTK) announces offering of 4M shares of common stock
·      General Mills (GIS) files mixed securities shelf
·      Bright Horizons (BFAM) files to sell 4.6M shares of common stock
·      Avon Products Inc. (AVP) plans to cede a board seat to an activist investor, the company said Monday, as part of a deal that will help the company avoid a proxy fight
 
Energy
·      SM Energy Company (SM) announced that it completed the previously announced sale of the majority of its assets in the Powder River Basin for $500M; assets sold include approximately 112,200 predominantly contiguous net acres with average December 2017 net production of approximately 2,200 Boe per day (51% oil, 18% NGLs and 31% natural gas).
·      Eclipse Resources Corporation (ECR) said it has initiated a process to evaluate and consider a full range of potential strategic, operational and financial alternatives to maximize shareholder value. Eclipse Resources has retained Jefferies LLC as its financial advisor and Norton Rose Fulbright US LLP as its legal counsel to assist with the process
·      ProPetro (PUMP) Q4 EPS 12c/$313.7M; sees Q1 revenue $372M-$382M and sees Q1 adjusted EBITDA $64M-$70M
·      Pioneer Natural Resources (PXD) signs purchase and sale pact with Sundance Energy to sell about 10,200 net acres in western portion of Eagle Ford Shale acreage position, valued at $102M
 
Financials
·      Brookfield Property Partners L.P. (BPY) signed a deal to acquire GGP Inc. (GGP) for $9.25 billion in cash, as well as 254 million shares; GGP shareholders can elect to receive $23.50 per share in cash, a share of Brookfield, or a share of a new U.S. REIT https://goo.gl/UYk297
·      London-listed trading platforms’ shares were hit after the European Union’s markets regulator (ESMA) said it has agreed to temporarily ban the provision of binary options trading products to retail investors and implement tighter leverage limits on contract-for-difference products.
·      Valley National (VLY) files automatic mixed securities shelf
 
Healthcare
·      GlaxoSmithKline PLC (GSK) agreed to pay Novartis AG (NVS) $13 billion for its 36.5% stake in their consumer health care joint venture, moving to consolidate the unit just three years after it and Novartis joined forces https://goo.gl/fExukY
·      AnaptysBio (ANAB) announced positive preliminary results from a Phase 2a proof-of-concept clinical trial assessing lead drug ANB020 in adult patients with peanut allergy
·      Tesaro (TSRO) announced presentation of maturing data from the TOPACIO trial of niraparib in combination with an anti-PD-1 monoclonal antibody, KEYTRUDA during a plenary session today at the 2018 Society for Gynecologic Oncology Annual Meeting on Women’s Cancer in New Orleans, Louisiana
·      American Renal (ARA) announces offering of 5M shares of common stock for holders
·      MacroGenics (MGNX) commences offering of 4.5M shares of common stock
·      Invitae (NVTA) announces offering of $50M of common stock
 
Industrials & Materials
·      A consortium led by U.S. private equity giant Carlyle Group LP agreed Tuesday to buy the specialty chemicals business of Dutch paints giant Akzo Nobel N.V. (AKZOY) for EUR10.1 billion ($12.6 billion) including debt https://goo.gl/iucNrq
·      Chemours Co. (CC) raised its 2018 profit outlook thanks to heightened demand for products including its pigments, propellants and resins; sees 2018 revs at the high end of a previously announced range between $1.7B-$1.85B and EPS at the high end of a previously expected range of $4.95-$5.60
·      Ryder System Inc (R) said it is launching an asset-sharing platform for commercial vehicles, paving the way for owners to rent out under-utilized vehicles from vans to big rigs the same way consumers use apps to share cars and homes – Reuters
 
Technology, Media & Telecom
·      Red Hat (RHT) shares rose 4%; Q4 EPS 91c/$772.3M vs. est. 81c/$761.9M; sees Q1  EPS 68c on revs $800M-$810M vs. est. 72c, consensus $794.8M; sees Q1 non-GAAP operating margin is expected to be approximately 20.5%; sees FY19 EPS $3.38-$3.41 on revs $3.425B-$3.460B vs. est. $3.34/$3.37B; sees FY19 non-GAAP operating margin is expected to be approximately 23.9% v 23.9% in FY18; reports FY18 total backlog over $3.4B, up 24% from prior year
·      IHS Markit (INFO) Q1 EPS 53c/$932M vs. est. 50c/$906.96M; sees FY18 adjusted EPS $2.23-$2.27 on revs $3.825B-$3.875B vs. est. $2.26/$3.85B; sees FY18 Adjusted EBITDA in a range of $1.5B-$1.525B

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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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