Monday, November 19, 2018
U.S. stock futures are lower, under pressure after the APEC summit ends over the weekend with reports indicating the meetings end in disarray as U.S.-China trade tensions dominate. US futures slip on reports Vice President Mike Pence sharpened attacks on China during a week of summits that ended Sunday, erasing what small hopes markets had late last week of improved relations with China. The U.S. and China failed to agree on the language in a final statement. Pence said the U.S. isn’t in a rush to end the trade war and won’t change course until China changes its ways, according to reports. Bonds slip in early action after surging last week as 2-year Treasury yields posted their steepest weekly drop in two years following dovish Fed remarks. The 2-year Treasury note yield slipped 5 basis points to 2.813%, adding to a week-long drop of 12.2 basis points. Oil prices are little changed early after falling a 6th straight week on Friday. In Asian markets, The Nikkei Index gained 140 points to settle at 21,821, the Shanghai Index rose 24 points to 2,703 and the Hang Seng Index rose 188 points to 26,372. In Europe, the German DAX is up about 20 points at 11,360, while the FTSE 100 is up around 30 points at 7,040. Markets with an abbreviated trading session this week ahead of Thanksgiving Day holiday on Thursday.
Market Closing Prices Yesterday
· The S&P 500 Index climbed 6.07 points, or 0.22%, to 2,736.27
· The Dow Jones Industrial Average rose 123.95 points, or 0.49%, to 25,413.22
· The Nasdaq Composite dropped -11.16 points, or 0.15%, to 7,247.87
· The Russell 2000 Index advanced 3.41 points, or 0.22% to 1,527.53
· 10:00 AM EST NAHB Housing Market Index for Nov…est. 67
· Earnings Before the Open: SPB
· Earnings After the Close: A, BECN, BRKS, GH, INTU, JACK, LB, LMB, PSTG, URBN
· U.S. total cross-border investment outflows (TIC) at $29.1B in Sept.; China holds $1.15T of U.S. Treasuries, a decrease of $13.7B from last month; Japan holds $1.03T, a decrease of $1.9B from last month; foreign net selling of Treasuries at $11.5B and Foreign net selling of equities at $16.9B. China cut its holdings of US Treasuries by the most since January in September, as foreign investors pull back from the market even as the US government ramped up its debt issuance.
· Republican Rick Scott won Florida’s contested U.S. Senate race over incumbent Democrat Bill Nelson after a second recount, flipping the seat to the GOP and expanding the party’s Senate majority. The race had hung in limbo for nearly two weeks before state officials released vote totals Sunday from a hand recount of more than 65,000 ballots
· Japan posted a bigger-than-expected trade deficit in October, with the U.S. Japan’s monthly balance of trade tumbled to a deficit of 449 billion yen ($3.95 billion), more than nine times bigger than an expected Y48 billion deficit in a Nikkei survey
Sector News Breakdown
· Nissan (NSANY) ousted Chairman Carlos Ghosn after the company said it found “significant acts of misconduct.” Nissan said: “Nissan has been providing information to the Japanese Public Prosecutors Office and has been fully cooperating with their investigation.” Details about the alleged misconduct weren’t immediately disclosed. Ghosn had stepped down as CEO about a year ago to take a broader oversight role of the alliance that links Nissan with Renault SA and Mitsubishi Motors Corp.
· Treehouse Foods (THS) could hit $60 a share if it achieves earnings per share of $3 according to Barron’s. It closed Friday at $51.88. Its third-quarter adjusted earnings were higher than expected, but obfuscated by onetime charges as it restructures its business
· Spectrum Brands (SPB) Q4 EPS 79c/$787.8M vs. est. $1.03/$803.9M; sees FY19 adjusted EBITDA $560M-$580M; expects meaningful reported net sales growth from continuing operations in fiscal 2019 due to innovation
· Barron’s said companies that have leveraged their infrastructure footprint to develop e-commerce businesses are set to rise the most; includes Target (TGT) and Kohl’s (KSS) as Kohl’s is offering e-shopper’s incentives like gift cards to pick up items in store, and Target expanding curbside pickup
· Barron’s said Investors should avoid J.C. Penney (JCP), Sears Holdings (SHLDQ) and Macy’s (M), which are burdened with the costs of being anchor tenants, while Tiffany (TIF) is suffering from a slowdown in China
Energy, Materials and Industrials
· Cimarex (XEC) to buy Resolute Energy Corporation (REN) in cash and stock deal valued at $35.00 per share, or a total purchase price of approximately $1.6 billion, including Resolute’s long term debt of $710 million. https://yhoo.it/2KfOSvJ
· QEP Resources (QEP) agrees to sell Northwest Louisiana natural gas assets for $735 million to Aethon III, an affiliate of Aethon Energy
· Helmerich & Payne (HP) upgraded to Buy from Neutral at Citi
· ConocoPhillips (COP) is in talks to sell its U.K. oil and gas fields to chemicals and commodities group Ineos. The sale may raise up to $3 billion and would include Conoco’s stake in the Clair Field but not its Teesside or London assets – Bloomberg
· More than a dozen top U.S. energy companies have pledged $100 million toward easing stresses on health care, education and civic infrastructure from the shale oil and gas boom in West Texas and New Mexico, the group said – Reuters
· Investors have been shaken by concerns that demand for oil and natural gas will weaken, but those worries may be overblown according to Barron’s which says investors may want to consider BP (BP), Chevron (CVX), ExxonMobil (XOM), Royal Dutch Shell (RDS.A), Anadarko Petroleum (APC), EOG Resources (EOG), Occidental Petroleum (OXY), Cabot Oil & Gas (COG), EQT (EQT), Halliburton (HAL) and Schlumberger (SLB)
· Iraq and the Kurdistan Regional Government have resumed oil exports from the disputed region of Kirkuk for the first time in more than a year – Financial Times
· TD Ameritrade (AMTD) upgraded to Buy with $60 price target at UBS
· Charles Schwab (SCHW) downgraded to Neutral with $51 price target at UBS
· Amgen (AMGN) positive mention in Barron’s saying shares could rise to $220 on new products, including Aimovig, for migraines, and Repatha, which increases the effectiveness of cholesterol-fighting statins; says the company is well positioned because it has low debt and high free cash flow, despite spending $36 billion on stock buybacks and $17 billion in dividends since 2011.
· Boston Scientific (BSX) is recalling SQ-RX Pulse Generators according to the GDA, a component of Subcutaneous Implantable Cardioverter Defibrillator (S-ICD) System citing accelerated battery depletion and a shortened replacement interval due to latent internal battery malfunctions
Technology, Media & Telecom
· Zayo Group Holdings Inc. (ZAYO) has attracted takeover interest from a group of investors including funds managed by Blackstone Group LP and Stonepeak Partners LP, according to Bloomberg. Funds managed by KKR & Co., I Squared Capital, GTCR and Charlesbank Capital Partners are also part of the group that has expressed interest in a take-private deal
· Apple (AAPL) stock could continue to slide according to Barron’s noting the stock plunged 17% after being up nearly 40% through early October as cracks in the company’s narrative began to form with the tech giant’s earnings report earlier this month. Says investors should probably wait to buy Apple stock until the Wall Street fully appreciates the company’s weak product cycle
· Chinese smartphone maker Xiaomi Inc said it swung to a net profit in Q3, beating analyst estimates, driven by robust sales in India and Europe; Profit for the three months through September reached 2.48 billion yuan ($357.23 million), versus an 11-billion-yuan loss in the same period a year earlier.
· JD.com (JD) Q3 ADS 80c/104.77B yuan vs. est. 77c/105.69B yean; sees 4Q revenue 130 billion yuan to 135 billion yuan, vs. estimate 134.32 billion yuan – Bloomberg; 3Q gross merchandise vol. 394.8 billion yuan; sees 4Q Rev Growth Rate 18%-23%