Morning Preview: November 15, 2018

Terrie AmengualDaily Market Report

Early Look

Thursday, November 15, 2018

U.S. stock futures are pointing to a higher open despite uncertainty in the UK, as the British pound tumbles around 1.5% to lows of $1.28 (off yesterday highs of $1.3408) as Theresa May’s Brexit deal, and her government, is on the brink of falling apart as two cabinet ministers quit. Both Brexit Secretary Dominic Raab and Work and Pensions Secretary Esther McVey resigned after May told lawmakers it’s this deal, no deal or no Brexit at all. In an address to Parliament, she also said the treaty is still a “draft,” and what has been agreed is not the final deal. In Asian markets, The Nikkei Index slipped-42 points to 21,803, the Shanghai Index rose 35 points to end at 2,668 and the Hang Seng Index jumped 448 points to finish at 26,103. In Europe, the German DAX is up around 15 points at 11,425, while the FTSE 100 is little changed around 7,040. It is a busy day of economic data in the U.S. with monthly retail sales, NY manufacturing data, Philly business outlook, weekly jobless claims and import prices for October, which may move the needle for the U.S. dollar. The oil industry got more bearish data last night as weekly API data showed oil inventories swelled by 8.8M barrels, with data coming ahead of today’s EIA data at 11:00 AM EST. Natural gas slid for the first time in five days after surging over 70% yesterday, while WTI held around $56 a barrel. Earnings from Dow component and retail giant Wal-Mart is expected later this morning. U.S. stocks reversed lower on Wednesday, as the Dow Industrial Average sunk for a 4th straight day and the S&P its 5th as Apple Inc. extended losses for a fifth day. Apple’s stumbles, amid continued worries about revenues at the technology behemoth, come as oil’s abrupt and sharp price decline has stabilized, rallying 1% yesterday and snapped its 12-days losing streak.

Market Closing Prices Yesterday

· The S&P 500 Index slipped -20.60 points, or 0.76%, to 2,701.58

· The Dow Jones Industrial Average fell -205.99 points, or 0.81%, to 25,080.50

· The Nasdaq Composite dropped -64.48 points, or 0.90%, to 7,136.39

· The Russell 2000 Index declined -12.30 points, or 0.81% to 1,502.51

Events Calendar for Today

· 8:30 AM EST Weekly Jobless Claims…est. 213K

· 8:30 AM EST Continuing Claims…est. 1.625M

· 8:30 AM EST Empire Manufacturing Index for Nov…est. 20.0

· 8:30 AM EST Retail Sales Advance MoM for Oct…est. 0.5%

· 8:30 AM EST Retail Sales – Less Autos for Oct…est. 0.5%

· 8:30 AM EST Philly Fed Survey for Nov…est. 20.00

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

· 9:45 AM EST Bloomberg Consumer Comfort Index…prior 61.3

· 10:00 AM EST Business Inventories for Sept…est. 0.3%

· 10:00 AM EST Fed’s Quarles to appear before Senate Banking Panel

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

· 11:00 AM EST Weekly EIA inventory data

Earnings Calendar:

· Earnings Before the Open: BRC, CSIQ, CUB, JCP, MANU, WMT

· Earnings After the Close: AMAT, JWN, NVDA, POST

Other Key Events:

· Craig Hallum 9th Annual Alpha Select Conference in New York

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

World News

· Federal Reserve Chairman Jerome Powell answered questions posed to him by Dallas Fed President Rob Kaplan, as well as from the audience last night. “I’m very happy about the state of the economy right now,” he said early in his address. “We’re in a good place, and I believe our economy can grow and grow faster,” he said at the end. He said, however, that the Fed is at a point where it has to take risks from moving either too quickly or too slowly “seriously,” and he did identify risks to the economic outlook. Twice he noted that the global economy was slowing, which Powell called “concerning.”

· Dominic Raab, the Brexit Secretary, has resigned saying he cannot support the EU withdrawal agreement approved by the cabinet on Wednesday

· Saudi Arabia prosecutors said 11 people have been charged and 21 held over the murder of Jamal Khashoggi

Sector News Breakdown

Consumer

· Smart & Final (SFS) Q3 EPS 23c/$1.5B vs. est. 16c/$1.51B; Q3 comp sales 0.6% vs. est. 1.4%; sees FY adjusted Ebitda $180M-$185M and sees FY net sales change +3.5% to +3.75% and FY comparable sales +1% to +1.25%; raises FY18 adjusted EPS view to 46c-48c from 42c-47c

· Dunkin’ Brands Group Inc. (DNKN) announced that new espresso drinks will be added to the menu, made with new espresso equipment on Wednesday. The new items are an iced cappuccino and the iced Americano.

· Macau government is “cautiously optimistic” on the gaming sector’s outlook next year, says Macau Chief Executive Fernando Chui at a briefing in the territory

· The FDA is expected as soon as Thursday to announce it is working on a rule to ban menthol-flavored cigarettes, The Wall Street Journal reports, citing a senior agency official. The cigarette industry says it may fight such a measure in the courts – WSJ

· National General (NGHC) 5M share Secondary priced at $24.00

· VICI Properties (VICI) 30M share Secondary priced at $21.00

· Ethan Allen (ETH) declares $1.00 special cash dividend

· Ezcorp (EZPW) Q4 EPS 0c/$206.3M vs. est. 16c/$195M

· Six Flags (SIX) raises quarterly dividend to 82c from 78c per share

· Wingstop (WING) declares $3.05 special cash dividend

· Red Lion Hotels (RLH) says tracking for 33%-35% franchise divisional profit margin; announced the company has executed 34 mid and upscale hotel franchise agreements in 2018

Energy, Materials, Industrials

· The American Petroleum Institute (API) reported that U.S. crude supplies rose by 8.8 million barrels for the week ended Nov. 9, showed gasoline supplies edged up by 188,000 barrels while distillate stockpiles fell 3.2 million barrels

· Canadian Solar (CSIQ) Q3 EPS $1.09/$768M vs. est. $775.8M; guides year revs to $3.53B-$3.64B below the $3.93B est.; and sees Q4 revs $690M-$800M below the $1.12B est.; sees 4Q solar module shipments 1.67 to 1.72 gw after total solar module shipments in the third quarter of 2018 were 1,590 MW

· Arcosa Inc. (ACA) agreed to acquire ACG Materials, a Norman, Oklahoma-based producer of specialty materials, for about $315 million.

· 3M (MMM) sees 2019 sales growth 1%-3%; vs. est. $33.56B which implies 2.5% growth; sees 2019 EPS $10.65-$11.05 vs. est. $10.80

Financials

· European banks Deutsche Bank (DB) and Royal Bank of Scotland (RBS) declined on news that the U.K. Brexit minister Raab has quit, sending shock through European stock markets

· Credit Suisse (CS) said to weigh job cuts as soon as this year to lower costs – Bloomberg

· Everest Re (RE) raises quarterly dividend by 8% to $1.40 from $1.30

· Capital One (COF) reports October net charge-offs 4.25% vs. 4.13% last month while reports October 30-plus day performing delinquencies 3.99% vs. 3.80% last month

· AGNC Investment (AGNC) 40M share Spot Secondary priced at $17.27

· Bain Capital Specialty Finance (BCSF) 7.5M share IPO price $20.25

Healthcare

· Agilent (A) raises quarterly dividend to 16.4c per share

· Cytori Therapeutics (CYTX) Q3 EPS loss (27c) vs. est. loss (16c); Q3 product revenue $0.86 million; 3Q cash and cash equivalents $6.81 million

· Five Prime Therapeutics (FPRX) announced it initiated patient dosing in a Phase 1 clinical trial of FPT155, a first-in-class CD80 fusion protein. The trial was initiated in Australia

· Novartis (NVS) said it is “completely committed” to its $10B-per-year Sandoz generics division following a report that CEO Vas Narasimhan had plans to split the unit off, Reuters reports

Technology, Media & Telecom

· Cisco (CSCO) Q1 EPS 75c/$13.1B vs. est. 72c/$12.87B; sees Q2 EPS 71c-73c vs. est. 72c and sees Q2 revenue growth of 5%-7% year-over-year

· NetApp (NTAP) Q2 adjusted EPS $1.06/$1.52B vs. est. 99c/$1.51B; sees Q3 adjusted EPS $1.12-$1.18 on revs $1.55B-$1.65B vs. est. $1.12/$1.6B; 2Q adjusted gross margin +64.9%

· AMS AG (AMSSY) cut its forecast for Q4 rev outlook to $480M-$520M down from prior $570M-$610M, adding to a number of Apple Inc. suppliers cutting outlooks because of lower-than-expected sales.

· Privately held Uber generated $2.95 billion in revenue in Q3 while its losses widened 20% compared with the previous quarter

· Vipshop (VIPS) Q3 EPS 11c/$2.6B vs. est. 9c/$2.53B; Vipshop reports number of active customers up 11% y/y to 26.5M from 23.8M in the prior year period, total orders up 29% year over year to 95.7M from 74M in the prior year period; sees Q4 net revenue growth of approximately 8%-13%

· Perspecta (PRSP) Q2 adjusted EPS 45c/$1.07B vs. est. 45c/$1.05B; narrows FY19 EPS view to $1.85-$1.95 from $1.80-$1.95 and narrows FY19 pro forma revenue view to $4.2B-$4.25B from $4.15B-$4.25B

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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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