Morning Preview: November 14, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, November 14, 2018

For a change, stock futures are pointing to a flattish open, as U.S. stocks look to rebound after starting the ween under pressure, as the S&P 500 index looks to snap its 4-day losing streak. Inflation data center stage today as the CPI report hits a few hours before Jerome Powell speaks on the economy, with headline CPI expected to rise to 2.5% in October from 2.3% while the core rate is expected to stay at 2.2%, though the Fed’s favored gauge has remained anchored at its target of 2%. Also today Vice-Chairman Randal Quarles testifies on banking supervision before a House panel. UK Prime Minister Theresa May convenes her Cabinet today at 2:00 PM local time to ask them to sign off on her Brexit deal. There were several economic data points overseas last night as German GDP shrank, as did Japan’s, while China posted mixed data with a beat on industrial production but weaker retail sales. In Asian markets, The Nikkei Index rose 35 points to 21,846, the Shanghai Index fell -22 points to 2,632 and the Hang Seng Index fell -138 points to end at 25,654. In Europe, the German DAX is down around -50 points at 11,420, while the FTSE 100 is little changed around 7,060. The Dow and S&P 500 on Tuesday finished an up-and-down session lower, extending Monday’s rout for the Dow and S&P as crude-oil prices registered their worst daily drop in more than three years, falling for a 12th consecutive day. The sharp declines in oil have weighed on market sentiment, raising concerns about global economic growth, and dragged the energy sector lower.

Market Closing Prices Yesterday

· The S&P 500 Index dropped -4.04 points, or 0.15%, to 2,722.18

· The Dow Jones Industrial Average fell -100.69 points, or 0.40%, to 25,286.49

· The Nasdaq Composite little changed, or 0.00%, to 7,200.87

· The Russell 2000 Index declined -3.99 points, or 0.26% to 1,514.80

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:30 AM EST Consumer Price Index (CPI) MoM for Oct…est. 0.3%

· 8:30 AM EST CPI Ex: Food & Energy MoM for Oct…est. 0.2%

· 8:30 AM EST Consumer Prices YoY for Oct…est. 2.5%

· 9:00 AM EST Fed’s Quarles to appear before House Financial Services Panel

· 10:30 AM EST Weekly DOE Inventory Data

· 6:05 PM EST Fed’s Powell to discuss economy at Dallas event

Earnings Calendar:

· Earnings Before the Open: APRN, M, Merck KGaA, MTOR, TCEHY

· Earnings After the Close: CSCO, NTAP, NTES, WYY

Other Key Events:

· UBS Global Technology Conference, 11/12-11/14, in San Francisco

· Credit Suisse 27th Annual Healthcare Conference, 11/12-11/15, in Arizona

· Morgan Stanley Global Chemicals & Agriculture Conference, 11/13-11/14, in Boston

· RBC Capital Technology, Internet and Media Conference, 11/13-11/14, in New York

· Morgan Stanley Global Consumer & Retail Conference, 11/14-11/15, in New York

· Stifel 2018 Healthcare Conference, 11/13-11/14, in New York

· China Oct retail sales and Industrial production data

World News

· China’s industrial output grew 5.9% in October from a year earlier (vs. est. 5.7%) and fixed-asset investment rose 5.7% in the first 10 months, both above forecasts, but retail sales rose less than expected last month, data showed on Wednesday. Retail sales rose 8.6% in October from a year earlier, below Reuters estimate of up 9.1%.

· China Housing sales by value for the January-October period rose 15% from a year earlier, according to data released Wednesday by the National Bureau of Statistics. That compared with a 15.6% gain in the first nine months of the year

· German GDP shrank at a quarterly clip of 0.2% which translates to an annualized rate of minus 0.8%, according to the office. That is the lowest rate since the first quarter of 2013, falling well short of U.S. third-quarter growth of 3.5% in annualized terms

· Investor Intelligence poll showed newsletter writers classified as bulls rise following five weeks of declines to 42.9% vs 42.5% last week, which was the lowest since April 11; bearish sentiment fell to a three-week low of 19% form 19.8% prior and those looking for a correction remains at seven-month high, rises to 38.1% vs 37.7% last week

· Japan’s economy shrank for a second time this year after an earthquake, typhoons and torrential rain battered production at home and exports declined. GDP is forecast to recover from its annualized 1.2% drop in the third quarter and to continue growing until a sales-tax hike in October 2019

Sector News Breakdown

Consumer

· Blue Apron (APRN) Q3 EPS loss (18c)/$150.6M vs. est. loss $157.3M; said customers 646,000 vs. 717,000 QoQ; Q3 adjusted Ebitda loss $18.8Mand said to cut 4% of total workforce as sees severance charge and costs about $1.6M in 4Q

· O’Reilly Automotive (ORLY) announces additional $1B share repurchase authorization

· President Trump and his top trade advisers met Tuesday to discuss a draft report by the Commerce Department on the national security implications of auto tariffs, Bloomberg reported, and agreed to hold off on tariffs at least until the report could undergo revision (F, GM, FCAU)

· VICI Properties (VICI) and Penn National Gaming (PENN), entered into definitive agreements to acquire the real property and operations of the Greektown Casino-Hotel located in downtown Detroit, Michigan, for an aggregate purchase price of approximately $1B in cash

Energy

· The U.S., Russia and Saudi Arabia are pumping crude at record levels, causing global supply to significantly outrun demand, a monthly update from the International Energy Agency (IEA) showed Wednesday. The IEA said oil output from the world’s three biggest producers is holding global supply steady, at around 100.7 million barrels a day last month. That’s 2.6 million barrels a day higher than the same period last year

· Electrical power equipment owned by California’s largest utility company appeared to have malfunctioned in an area where the state’s deadliest wildfire started last week, according to a PG&E Corp. (PCG) securities filing.

· Cloud Peak (CLD) said it has engaged J.P. Morgan as its financial advisor and Allen & Overy LLP as legal counsel in connection with the strategic alternatives review; said has not made any decisions related to any transactions at this time

· Consolidated Edison (ED) files to sell $1.05B in common stock

· Natural Gas Services (NGS) files $150M mixed securities shelf

Financials

· Cushman & Wakefield (CWK) reports Q3 EPS 45c vs. 16c last year on revenue $2.08B vs. $1.71B last year; Q3 adjusted EBITDA $179.0M vs. $102.2M last year; fee revenue was $1.5 billion, an increase of $239.2 million or 18% on a local currency basis; sees FY18 adjusted EBITDA $630M- $650M

· SVB Financial (SIVB) will repurchase up to $500 million of its outstanding common stock, and will acquire Leerink Holdings for $280M in cash upfront. The new entity, SVB Leerink, will operate as a wholly-owned subsidiary of SVB Financial Group

· National General (NGHC) announces 5M share common stock offering

Healthcare

· Tilray Inc. (TLRY) Q3 EPS (8c) on revs $10M and a lower average selling price per gram as the cannabis producer prepared for legal sales in Canada; its net loss was $18.7M, or 20 cents a share, compared with $1.8M; sold 1,613-kilogram equivalents of cannabis in the quarter, more than double the prior year’s sales of 684 kilograms. Its average net selling price per gram was $6.21 (C$7.98), down from $7.53 a year ago

· CareDx (CDNA) 2M share secondary priced at $24.50

· PetIQ (PETQ) Q3 EPS 13c/$131.4M vs. est. 26c/$125.21M

· Quest Resource (QRHC) Q3 EPS loss (4c)/$25.9M vs. est. loss (2c)/$31.14M

· Teligent (TLGT) Q3 EPS loss (7c)/$18.3M vs. est. loss (3c)/$18.55M; 3Q adjusted Ebitda $3.34M; noted an error in the company’s accounting for the partial extinguishment of December 2019 convertible bonds recorded in the second quarter

· PetIQ (PETQ) Q3 sales $131.4M vs. est. $125.2M; boosted its 2018 net sales outlook to $515M from $500M vs. est. $502.3M

· Vapotherm (VAPO) 4M share IPO priced at $14.00

Industrials & Materials

· Amyris (AMRS) Q3 EPS loss (63c)/$14.9M vs. est. loss (17c)/$46.72M

· Linde reported a jump in half year profits on Wednesday and said it was on track to complete a merger with rival Praxair (PX) before the year end

· Resideo (REZI) Q3 EPS $2.53 on revs $1.2B; backs FY18 revenue $4.77B-$4.83B vs. est. $5.12B

Technology, Media & Telecom

· The U.S. Justice Department and SEC have subpoenaed Snap Inc (SNAP) for information about its March 2017 initial public offering, the social media app maker told Reuters. Snap said in a statement it has responded to the government subpoenas and other requests for information https://reut.rs/2OKkcTY

· WeWork Cos has secured an additional $3 billion in funding from Japan’s SoftBank Group Corp. according to Reuters. https://reut.rs/2z9yw3f

· Macom (MTSI) Q4 EPS 16c/$151.2M vs. est. 16c/$152.17M; sees Q1 adjusted EPS 18c-22c on revs $150M-$156M vs. est. 19c/$155.69M

· SurveyMonkey (SVMK) Q3 EPS loss (1c)/$65.2M vs. est. loss (5c)/$62.86M; sees Q4 revenue $64.8M-$66.8M vs. est. $64.87M; sees Q4 non-GAAP operating margin 2%-3%

· Switch (SWCH) Q3 EPS 0c on revs $102.8M vs. 8c last year and consensus $102.81M; Q3 churn of 0.3% vs. 0.3% last year; Q3 adjusted EBITDA margin of 49.5%, compared to 50.9% for the same quarter in 2017; backs FY18 revenue view $405M-$408M and FY18: back adjusted EBITDA in the range of $197M-$200M; signs over 450M contracts in Q3

· Wix.com (WIX) Q3 EPS 39c/$155.6M vs. est. 24c/$152.8M; sees 4Q revenue $161M-$162M vs. est. $161.5M and year revs $601M-$602M vs. est. $598.5m; Authorizes $100M share buyback

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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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