Mid Day Outlook: April 26, 2018

Scott GreenDaily Market Report

Mid-Morning Look

Thursday, April 26, 18

Information overload with the busiest earnings day of the quarter being received well by Wall Street, as the Tech heavy Nasdaq Composite outperforms on the back of better earnings results from FB in the Internet space and AMD in the chip space, while the Dow Jones Industrial Average and benchmark S&P 500 are also rising on better earnings results, up roughly 0.7%. The euro slid vs. rival currencies as the ECB says QE will continue running at EU30B per month until end of September “or beyond, if necessary, while leaving interest rates and asset-purchase target unchanged. Transportation stocks one of the standout decliners after AAL lowered its year profit forecast and LUV also with cautious commentary, weighing on airlines and UNP drags rails lower after its report. In telco space, AT&T shares fall over 6% after missing its top and bottom line results (after rival VZ posted strong results earlier this week). Restaurant stocks buoyed by CMG earnings and comps, ahead of SBUX earnings tonight. Autos also active after F, GM, FCAU, BWA all report earnings. Out-of-favor sectors like staples (MO, PM, HSY) and defense (RTN) continue after mixed earnings results. Very busy night of earnings again, highlighted in tech with AMZN, INTC and MSFT all expected.

Treasuries, Currencies and Commodities

· In currency markets, the U.S. dollar held steady around a three-month high, as the euro gives up early gains after keeping rates unchanged at its policy meeting earlier today (Euro falls to lows vs. the dollar, down -0.3% at 1.2122, off earlier highs 1.2210 after ECB meeting results), while the dollar slips vs. the Japanese yen

· Commodity prices: Precious metals give up early gains, with gold slipping below the $1,320 an ounce level as the dollar climbs against the euro; gold comes into the day at its lowest finish in five weeks. Energy futures advance as the dollar holds steady; riskier assets such as stocks and bonds outperform on the day – WTI crude above $68 per barrel

· Treasury market’s rally as the benchmark 10-year Treasury yield pulls back from a psychologically significant level at 3% (down over 4 bps under 2.99%), after trading as high as 3.03% yesterday, its best levels since December 2014; economic data today came in stronger than expected for weekly jobless claims and monthly durable goods orders

Economic Data

· Durable Goods Orders for March rise 2.6%, topping the 1.6% estimate helped by a big increase in contracts for Boeing planes; Durable goods new orders revised up to 3.5% for Feb. from 3%; New orders ex-trans. unchanged in March after 0.9% rise and new orders ex-defense rose 2.8% in March after 3% rise; non-defense capital goods orders ex-aircraft fell 0.1% in March

· Weekly Jobless Claims fell 24K to 209K, well below the 230K estimate; the 4-week moving avg. at 229.25k in the week ending April 21, while continuing claims fell 29K to 1.837M

· Advanced Goods Trade deficit for March stood at (-$68B) vs. the est. (-$75.0B), and narrowed from (-$75.9B) last month; imports fell 2.1% in March to $208.124B from $212.548B in Feb., while exports rose 2.5% in March to $140.087B from $136.674B in Feb.

· The 30-year fixed-rate mortgage averaged 4.58%, according to Freddie Mac’s weekly survey, out Thursday. That marked an 11 basis point gain during the previous week, and the highest since August 2013. The 15-year fixed-rate mortgage averaged 4.02%, up from 3.94%

Sector Movers Today

· Auto movers; auto parts retailers after ORLY Q1 adjusted EPS and comp sales topped estimates (AAP, AZO) and said sees long-term drivers for industry intact; in auto’s, Ford (F) rises initially after Q1 EPS/sales beat and reiterated all key FY18 targets and forecasts an 8% EBIT margin by 2020; GM Q1 EPS topped views on revs $36.1B, which was down 3.1% YoY and still expect 2018 core adjusted automotive free cash flow to be in line with 2017; FCAU reported Q1 adjusted Ebit that missed the lowest analyst estimate; CVNA 11M share Secondary priced at $27.50; in auto suppliers, BWA Q1 results topped views while mid-point of year guidance just missed est

· Airlines fall after AAL lowered its profit outlook for the year as reported higher revenue amid strong travel demand, but rising fuel costs ate into its bottom line; LUVwarned of weaker bookings after the recent passenger fatality (shares of JBLU, UAL, SAVE, JBLU also active)

· Casino, Lodging & Leisure; cruise lines active after RCL reported 1Q EPS that topped analysts’ highest estimate and raised its year EPS forecast (CCL and NCLH also move)/RCL also reported better than expected quarterly net yields, and raised its 2018 view; In gaming, LVS beats estimates for Macau and Singapore results better; MGM Q1 revs missed estimates; in regional gaming, PENN 1Q results that beat its own forecast and boosted its year view (shares of GLPI, RRR, CZR active on report); BYD reports tonight

· Restaurants; CMG surges after being upgraded by at least three analysts, as Wall Street turns positive after change in leadership turned margin recovery path more quickly and improved comp sales; CAKE Q1 revs, comp top consensus views, while EPS missed by wide margin (12c) amid higher labor costs; DNKN named as a short by Jim Chanos of Kynikos (on CNBC today), though company posted beat and raise quarter; BLMN Q1 EPS/revs comps top views

· Large Cap Pharma; ABBV shares benefit from strong Hep C results, as one analyst said beat by more than 45%; BMY Q1 EPS beat and raised 2018 EPS guidance to $3.35-$3.45 from $3.15-$3.30 as management now sees worldwide revenues increasing in the mid-single digits; ALXN posted positive results for its late-stage study of ALXN1210 in an extremely rare blood disorder, while also posted quarterly results

· Transports; rails fall after UNP reported earnings and said it will miss its 2019 target of a 60% operating ratio, and that coal and international intermodal are dragging on pricing; UPS Q1 EPS and revenue topped consensus estimates with wide outlook for year EPS $7.03-$7.37 vs. est. $7.24; in trucking space, LSTR Q1 EPS/rev beat and higher Q2 outlook; KNX mixed Q1 as EPS beat by 4c with a revenue miss

· Telecom and Media; AT&T (T) with a 2c EPS miss on lower revs, underperforming stronger results from its rival VZ earlier this week/margins weak driven by the ongoing shift to lower-margin OTT video and wireless promotional activity; CIEN shares declined on lower spending from AT&T; CRTO shares fell after unexpected CEO change


· AA +2%; after Oleg Deripaska is said to plan on keeping control of Rusal (U.S. had said additional sanctions against Russia could be lifted if Oleg gave up control)

· ALGN +2%; shipments, revenue, and EPS nicely exceeding Street and raised full-year rev growth

· AMD +14%; after Q1 EPS topped views, but guided Q2 revenue well above consensus

· CMG +22%; upgraded by at least three analysts, as Wall Street turns positive after change in leadership turned margin recovery path more quickly and improved comp sales

· CRK +49%; as Jerry Jones’ Arkoma Drilling LP is buying about 84% of the company for $620M https://yhoo.it/2r5nNCq

· FB +7%; delivered Q1 results well ahead of expectations driven by broad-based growth across products and regions – analysts positive post results

· ORLY +13%; Q1 adjusted EPS and comp sales topped estimates (AAP, AZO) and said sees long-term drivers for industry intact

· PYPL +4%; delivered solid operating metrics, with account growth benefiting from all around growth from core PayPal, Venmo and consumer choice; steadily higher consumer engagement and new as well as existing partnerships ramping.

· V +3%; delivered a solid beat as several key business drivers accelerated, helped by an improving macro environment – debit growth picked up both in the U.S. and internationally


· AAL -4%; lowered its profit outlook for the year

· ARCH -10%; reported disappointing Q1 results and guidance with adjusted EBITDA $105MM below consensus of $135MM

· BGG -10%; FQ3 results were mixed – revenue was shy of expectations and reduced guidance

· EBAY -5%; posted mostly in-line quarterly result though revs slightly miss and guidance disappoints

· K -2%; named a new “short” at Prescience saying shares could fall 35%

· MGM -8% after quarterly results missed

· SPB -31%; after Ebitda and organic sales missed estimates

· T -6%; with a 2c EPS miss on lower revs, underperforming stronger results from its rival VZ earlier this week/margins weak

· UHS –6%; missed Q1 EPS and revs driven by weaker-than-expected patient volumes in hospitals and behavioral centers, as well as wage pressures (shares of hospitals THC, LPNT, HCA decline)


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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