Morning Preview: April 12, 2018

Scott GreenDaily Market Report

Early Look
Wednesday, April 11, 18

After stocks mostly slipped on Wednesday given geopolitical tensions, rising rate fears after hawkish minutes from the March FOMC meeting, and trade war concerns, U.S. futures are pointing to a higher open. Worries about a potential global trade war are persisting, as a Chinese government spokesman denied Thursday that recently announced policy changes constitute concessions to the Trump administration in the countries’ trade skirmish. However, futures are noting the lack of military response against Syrian President Bashar al-Assad, who is backed by Russia related to the chemical-weapons attack killed civilians in Damascus over the weekend, as stocks bounce. In Asian markets, The Nikkei Index dipped -26 points to settle at 21,660, the Shanghai Index dropped -27 points to end at 3,180 and the Hang Seng Index dropped -66 points to finish at 30,831. In Europe, the German DAX is up a few points above 12,300, while the FTSE 100 is flat at 7,255

U.S. stocks ended mixed on Wednesday, with Small Caps outperforming as the Russell 2000 climbed 0.3%, but the Dow Industrials underperformed, falling over -0.9% as worries about geopolitical developments lightened the mood on Wall Street. An early morning tweet by President Donald Trump implied the possibility of a military strike in Syria and set the downbeat tone for the session in response to an aggressive tone by Russia overnight. Fear that a response by the U.S. could lead to a retaliation from Syria’s ally Russia hung over the market all day.

Market Closing Prices Yesterday

·      The S&P 500 Indexdropped -14.68 points, or 0.55%, to 2,642.19

·      The Dow Jones Industrial Averagefell -218.55 points, or 0.90%, to 24,189.45

·      The Nasdaq Composite slipped -25.27 points, or 0.36%, to 7,069.03

·      The Russell 2000 Indexadvanced 3.26 points, or 0.21% to 1,546.70


Events Calendar for Today

·      8:30 AM EST       Weekly Jobless Claims…est. 230K

·      8:30 AM EST       Continuing Claims…est. 1.843M

·      8:30 AM EST       Import Prices MoM for March…est. 0.1%

·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 57.2

·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data


Sector News Breakdown

Consumer

  • Bed Bath & Beyond (BBBY) shares fell -13%; Q4 EPS $1.41/$3.72B vs. est. $1.39/$3.68B; Q4 comp sales fall (-0.6%) vs. est. (-2.3%); sees FY18 EPS in low-to-mid $2.00 range, below the consensus $2.76
  • Costco (COST) March same-store sales comps rose 8% while total March net sales rose 10.9% to $12.9B
  • Zumiez (ZUMZ) shares rose 4%; said March comp sales rose 12.6% well above the 4.2% Retail Metric estimate; total net sales for the five-week period ended April 7, 2018 increased 14.7% to $82.3M
  • Apogee Enterprises (APOG) Q4 EPS 96c/$353.3M vs. est. 62c/$363.31M; sees 2019 EPS $3.43-$3.63 vs. est. $4.05 and sees FY19 revenue growth up 10%
  • Ford Motor Co’s (F) premium Lincoln brand plans to build as many as five new vehicles in China by 2022, according to Reuters, in a move to expand sales in the world’s largest vehicle market that would also blunt the impact of trade U.S-China trade spats
  • Puma SE (PUM.XE) slightly raised its full-year guidance for 2018 on the back of strong sales in the first quarter; said Q1 sales were 1.13 billion euros ($1.40 billion) compared with EUR1 billion in the same period a year earlier

Energy

  • Apache (APA) estimates 1Q pretax dry-hole costs $15M-$20M and sees $47M realized pretax loss on oil and gas price derivatives; sees $49M
  • American Water Works (AWK) announced that it has agreed to acquire Pivotal Home Solutions from Southern Company Gas, a subsidiary of Southern Company, for approximately $365 million in cash, including estimated working capital; announces 2.32M share common stock offering
  • U.S. Silica (SLCA) downgraded to Neutral on frac sand price concerns at Goldman Sachs
  • TechnipFMC (FTI) upgraded to Buy with raised $39 price target at Goldman Sachs
  • Exxon Mobil (XOM) announced that the size of the natural gas resource at the P’nyang field in Papua New Guinea has increased to 4.36 trillion cubic feet of gas, an 84% increase from a previous assessment completed in 2012

Financials

  • BlackRock (BLK) Q1 EPS $6.70/$3.58B vs. est. $6.38/$3.42B; 1Q iShares net inflows $34.65B vs. $54.8B q/q; 1Q net inflows $56.95B vs. $102.93B q/q; 1Q retail net inflows $16.69B vs. $11.39B q/q and 1Q Institutional net inflows $3.29B vs. $14.39B
  • Commerce Bancshares (CBSH) Q1 EPS 92c/$312.58M vs. est. 79c/$316.7M; Q1 return on average assets was 1.66%, the return on average common equity was 15.6% and the efficiency ratio was 58.2%
  • Everest Re Group, Ltd. (RE) said it expects to incur $100 million of estimated catastrophe losses, net of reinsurance recoverables and reinstatement premiums, in Q1 largely arising from the California wildfires and related events
  • Waddell & Reed Financial, Inc. (WDR) reported preliminary assets under management of $80.2 billion for the month ended March 31, 2018, compared to $81.4 billion on February 28, 2018
  • Virtus Investment Partners, Inc. (VRTS) reported preliminary long-term and total assets under management as of March 31, 2018 of $87.4 billion and $89.1 billion (including $1.6 billion of liquidity assets), respectively

Healthcare

  • Bellicum Pharmaceuticals (BLCM) announced that the FDA has lifted the clinical hold on studies of BPX-501 in the U.S
  • Novavax (NVAX) files to sell common stock
  • GlaxoSmithKline PLC (GSK) signed a deal that transfers its rare-disease gene-therapy portfolio to Orchard Therapeutics in exchange for a 19.9% stake in the company as well as royalty and milestone payments.

Technology, Media & Telecom

  • AXT (AXTI) lowers Q1 revenue guidance to $24M-$24.5M from $26M-$27M, consensus $26.74M
  • QuinStreet (QNST) shares rose 15%; reports preliminary Q3 revenue over $115M vs. est. $91.9M and sees Q3 Adjusted EBITDA growth expected to be greater than 8% (notes shares dropped yesterday after Kerrisdale Capital said it went short the shares)
  • Zuora Inc. (ZUO) priced 11M share IPO at $14 a share, above its estimated range of $11 to $13 a share, raising about $154 million
  • The U.K. Takeover Panel said Thursday that Walt Disney Co. (DIS) will be obliged to make a mandatory offer for Sky PLC (SKY.LN) if its proposed acquisition of assets from 21st Century Fox Inc. (FOXA). The regulatory body said that Disney would have to bid within 28 days of completion of its acquisition of Fox assets and that it its offer would have be of 10.75 pounds a share ($15.25), unless Fox has acquired 100% of Sky or Comcast Corp. (CMCSA) or any other party has bought more than 50% of Sky by that time. https://on.mktw.net/2HgzKPq
  • Playtech PLC (PTEC.LN) said that it will buy Italy’s SNAITech SpA (SNA.MI) for 846 million euros ($1.05 billion) in a bid to grow revenue from regulated markets https://on.mktw.net/2qrjYYC
  • HP Inc.’s (HPQ) PC sales and market share increased in Q1 while Apple Inc.’s (AAPL) declined as overall industry sales were flat from the year-ago quarter, according to data from IDC. IDC said “exceeded expectations,” PC sales were flat from the year-ago quarter at 60.4 million units shipped. Compared with the year-ago quarter, HP saw 4.3% growth to 13.7 million units, while Apple shipments declined 4.8% to 4 million units. Also, HP’s share of the PC market increased to 22.6% from 21.7% in the year-ago period, while Apple’s share declined to 6.6% from 7% in the year-ago period. The largest percentage growth in units shipped came from Dell Inc., which saw a 6.4% increase in units shipped to 10.2 million – Marketwatch.com
  • Exala Technologies (XELA) 7M share Secondary priced at $5.00

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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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