Morning Preview: March 29, 2018

Scott GreenDaily Market Report

Early Look
Thursday, March 29, 18
Stock futures are moving higher after U.S. equity markets closed lower on Wednesday, as continued weakness in the technology sector weighed on the main indexes. The Dow Jones Industrial Average ended marginally lower, while the S&P slipped on technology weakness, while defensive REITs, Healthcare and Telecom advanced. But it was the Nasdaq Composite that underperformed again, falling roughly 1% (but ended well off its lows), as shares of Amazon and Netflix Inc. slumped over 4% on the continued exodus of high-flying technology stocks. The U.S. dollar extended its advance against rivals on Wednesday, adding on from its first positive day in three sessions on Tuesday. With the greenback trading above the 107 level against the yen late day in a more than 1.5% move as a meeting between North Korean and Chinese leaders was taken as a sign of easing geopolitical risk.
On this final day of trading for the month and quarter (markets closed tomorrow in observance of Good Friday), the Dow Jones Industrial Average is down 3.5%. If it closes in negative territory for the period, it will snap a nine-quarter streak of gain (longest since Q3 of 1997). The S&P 500 also entered the year’s first quarter with nine straight quarterly gains, matching a streak that ended in the first quarter of 2015. Currently the S&P 500 is down 2.6% for the quarter. The Nasdaq Composite is currently up 0.7% thus far in the first quarter, but only represents its seventh straight quarterly gain. For the month of March, the Dow is down 4.7%, the S&P 500 is off 4%, and the Nasdaq has lost 4.5%. It would be the second straight monthly loss for all three after surging in January.
In Asian markets, The Nikkei Index gained 127 points to settle at 21,159, the Shanghai Index gained 38 points to settle at 3,160 and the Hang Seng Index rose 70 points to end at 30,093. In Europe, the German DAX is up over 100 points at 12,050, while the FTSE 100 is up around 30 points at 7,075. In crypto currencies, Bitcoin prices are down over 5% trading under $7,450 after China’s central bank will launch a crackdown on all types of virtual currencies this year, a vice governor of the central bank said on Thursday.
Market Closing Prices Yesterday
·      The S&P 500 Index dropped -7.62 points, or 0.29%, to 2,605.00
·      The Dow Jones Industrial Average fell -9.29 points, or 0.04%, to 23,848.42
·      The Nasdaq Composite slumped -59.58 points, or 0.85%, to 6,949.23
·      The Russell 2000 Index declined -0.55 points, or 0.04% to 1,513.02
Events Calendar for Today
·      8:30 AM EST       Weekly Jobless Claims…est. 230K
·      8:30 AM EST       Continuing Claims…est. 1.87M
·      8:30 AM EST       Personal Income for Feb…est. 0.4%
·      8:30 AM EST       Personal Spending for Feb…est. 0.2%
·      8:30 AM EST       PCE Core MoM for Feb…est. 0.2%
·      8:30 AM EST       PCE Core YoY for Feb…est. 1.6%
·      8:30 AM EST       PCE Deflator MoM for Feb…est. 0.2%
·      9:45 AM EST       Chicago Purchasing Managers index for March…est. 62.0
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 56.8
·      10:00 AM EST     University of Michigan Confidence, Mar-F…est. 102.0
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
·      1:00 PM EST        Fed’s Harker speaks on the Economic Outlook
World News
·      German unemployment extended its decline in March as unemployment down by 19,000 vs. estimated 15,000 drop and rate reaches record low of 5.3% in third month
·      China’s official manufacturing Purchasing Managers’ Index (PMI) is expected to have risen to 50.5 in March from February’s 50.3, that would mark the 20th straight month of expansion for China’s vast manufacturing sector
·      Philadelphia Federal Reserve President Patrick Harker expects Fed officials to hike interest rates three times in 2018, compared with his earlier projection for two rises, The Wall Street Journal reported Thursday.
Sector News Breakdown
·      Renault SA (RNLSY) and Nissan Motor Co. (NSANY) are in talks to merge, seeking to solidify their two-decade-old alliance under a single stock as an unprecedented shift toward electric and shared cars transforms the industry – Bloomberg
·      GameStop (GME) Q4 EPS $2.02/$3.5B vs. est. $2.00/$3.27B; 4Q comparable sales +12.2% vs. estimate +10.6%; sees FY18 adjusted EPS $3.00-$3.35 vs. est. $3.45 and sees FY18 revenue declining 2%-6%; 4Q new hardware sales +44.8% and 4Q new software sales +12.4%
·      PVH Corp. (PVH) Q4 EPS $1.58/$2.5B vs. est. $1.47/$2.35B; sees Q1 EPS $2.20-$2.25 vs. est. $1.96 and sees Q1 revenue growth 15% (est. $2.15B); said revenue for the Calvin Klein business in the first quarter is projected to increase approximately 17% and Tommy Hilfiger about 19%; sees FY18 adjusted EPS $9.00-$9.10 vs. est. $8.96 and FY18 revenue growth roughly 7%
·      Sportsman’s Warehouse (SPWH) Q4 EPS 20c/$243.2M vs. est. 27c/$241.7M; sees Q1 adjusted EPS loss (8c)-(11c) on revs $173M-$180M vs. est. loss (9c)/$166.57M saying outlook based on a same store sales increase in the range of 2%-6%
·      Oxford Industries (OXM) Q4 EPS 93c/$293.2M vs. est. 91c/$293.1M; sees FY18 adjusted EPS $4.40-$4.60 on revs $1.12B-$1.14B vs. est. $3.65/$1.09B, though guided Q1 EPS and revenue below consensus views; raises quarterly dividend to 34c from 29c
·      Cnooc Ltd. (CEO) said its 2017 net profit surged, thanks partly to increased revenue from sales of oil and gas amid higher international oil prices; said its net profit for the year ended Dec. 31 rose to 24.68 billion yuan (US$3.92 billion) from CNY637 million a year earlier, but it was below the average forecast of CNY30.93 billion; said its 2017 revenue rose 27% to CNY186.39 billion
·      8Point3 Energy (CAFD) Q1 EPS 35c/$10.9M vs. est. $10.7M; sees 2Q revenue $16M-$18M vs. est. $18.5M; sees 2Q adjusted Ebitda $25.5M-$28M
·      Cloud Peak (CLD) downgraded to Underweight from Neutral at JPMorgan
·      C&J Energy Services (CJ) will replace Lumentum Holdings (LITE) in the S&P SmallCap 600 effective prior to the open on trading on Wednesday, April 4
·      Utilities at Goldman Sachs: EXC upgraded to neutral from sell as sees higher sum-of-parts value, potential upside to consensus estimates, and few near-term negative catalysts;DUK downgraded to sell from neutral given leverage concerns and increased equity financing needs, resulting in lowered estimates
·      Oil prices are likely to rise this year thanks to supply disruptions and an OPEC-led deal to limit production, but doubts over the future of compliance with the multilateral agreement and rising U.S. production could stem the upward momentum, a Reuters poll showed
·      CME Group (CME) said on it had reached an agreement to buy Michael Spencer’s NEX Group (NEXGY), valuing the British firm at about 3.9 billion pounds ($5.5B)
·      MSCI (MSCI) to replace CSRA in S&P 500 at open on April 4th as S&P 500 constituent General Dynamics (GD) is acquiring CSRA 
·      American Renal Associates (ARA) withdraws secondary offering of common stock
·      PTC Therapeutics (PTCT) 4M share Secondary priced at $27.04
·      Unum Therapeutics (UNUM) 5.77M share IPO priced at $12.00
·      pSivida (PSDV) said Essex Woodlands Healthcare Partners and a third-party investor will make an equity investment of up to about $60.5M and SWK Holdings Corporation will also provide pSivida with up to $20M in a debt facility; pSivida will change its name to EyePoint Pharmaceuticals on April 2 and will trade under the new Nasdaq ticker symbol “EYPT”
·      Gevo (GEVO) Q4 EPS loss (26c) on revs $6.68M and 4Q cash and cash equivalents $11.6M
·      Five Prime Therapeutics (FPRX) starts dosing in FPA150 phase I trial; starts patient dosing in its Phase 1 clinical trial of FPA150, a immuno-oncology antibody that targets B7-H4
Industrials & Materials
·      Boeing Co. (BA) computer systems have reportedly contracted the WannaCry virus, raising fears the attack could slow down production
·      H.B. Fuller (FUL) Q1 EPS 35c/$713.1M vs. est. 34c/$664.5M; Q1 adjusted EBITDA $84.0M, up 42% YoY; plans to deliver $465 million in EBITDA this year and $600 million in EBITDA by 2020 remain on track; backs year EPS and rev outlook
·      A Schulman (SHLM) Q2 EPS 12c/$650.1M vs. est. 35c/$643M
Technology, Media & Telecom
·      Japan’s SoftBank is said to eye $9.6B stake in Swiss Re, according to a late day report by Bloomberg, offering about 100-105 francs a share for 25% stake and deal would include 16% premium on Swiss Re’s Feb. 7 price
·      Progress Software (PRGS) Q1 EPS 54c/$94.2M vs. est. 47c/$92.57M; sees Q2 adjusted EPS 51c-53c on revs $93M-$96M vs. est. 52c/$94.69M
·      Verint (VRNT) Q4 EPS $1.05/$322.7M vs. est. $1.00/$314.3M; sees FY19 eps $3.09 at the midpoint on revs $1.23B, plus or minus 2%, vs. est. $3.06/$1.22B
·      iQIYI (IQ) 125M share IPO priced at $18.00
·      S&P SmallCap 600 constituent Lumentum Holdings (LITE) will replace MSCI in the S&P MidCap 40


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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