Morning Preview: November 20, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, November 20, 2018

U.S. stock futures are down globally as a rout in U.S. stocks yesterday, led by sharp declines in the technology space, carried over to weakness in Europe and Asia overnight on this holiday shortened week. In Asian markets, The Nikkei Index fell -238 points to 21,583, the Shanghai Index dropped -57 points (2.13%) to settle at 2,645 and the Hang Seng Index plunged -531 points or over 2% to finish at 25,840. In Europe, the German DAX is down around -90 points at 11,150, while the FTSE 100 is down over -30 points moving back under the 7,000 level. Asian market declines were led by technology shares, following the sharp declines in the U.S. the day prior. In the U.S. today, a very busy morning of earnings in the retail space, with shares of Target (TGT) falling after quarterly results missed estimates. Oil prices are little changed while the dollar looks to rebound off losses yesterday following a weak housing data report. The continued plunge in Bitcoin continues, as prices fall another 8% to around $4,400, nearly 80% off its all-time highs. U.S. stocks tumbled on Monday sending all major indexes into the red for the month, with technology the biggest drag as the Nasdaq Composite fell over 3% on the day in broad based selling of software, semiconductors and Internet stocks. The iShares North American Tech-Software ETF (IGV) fell the most on Monday, down -5.4%, with weakness in shares of CRM, ADBE, ORCL, SPLK, OKTA, ZS among them. Trade concerns amid heated trade talk from Vice President Pence against China over the weekend at a summit also weighed on market sentiment. Meanwhile, the Dow Industrials fell over -500 points at its lows while the S&P 500 index closed back below the 2,700 level.

Market Closing Prices Yesterday

· The S&P 500 Index dropped -45.54 points, or 1.66%, to 2,670.73

· The Dow Jones Industrial Average fell -395.78 points, or 1.56%, to 25,017.44

· The Nasdaq Composite plunged -219.40 points, or 3.03%, to 7,028.48

· The Russell 2000 Index declined -30.99 points, or 2.03% to 1,496.54

Events Calendar for Today

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:30 AM EST Housing Starts MoM for Oct…est. 1.228M

· 8:30 AM EST Building Permits MoM for Oct…est. 1.26M

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 4:30 PM EST API Weekly Inventory Data

Earnings Calendar:

· Earnings Before the Open: ADI, BBY, BKS, CPB, DY, HRL, JEC, KSS, LOW, MMS, NJR, ROST, SSI, TGT, TJX

· Earnings After the Close: ADSK, BJ, CAL, ESL, FL, GPS, KEYS, QADB, RAVN

Sector News Breakdown


· Target (TGT) shares fall -9%; Q3 EPS $1.09/$17.8B vs. est. $1.12/$17.8B; Q3 comp sales growth rose 5.1% vs. est. 5.2%; comparable digital channel sales grew 49% and contributed 1.9 percentage points of comparable sales growth

· Lowe’s (LOW) Q3 EPS $1.04/$17.4B vs. est. 98c/$17.36B; reports Q3 comp sales up 1.5% vs. est. 2.9% and U.S. comp sales up 2%; lowers year EPS view to $4.08-$4.24 vs. prior $4.50-$4.60 and sees year comp sales about 2.5%

· Hormel Foods (HRL) Q4 EPS 51c/$2.52B vs. est. 49c/$2.57B

· L Brands (LB) Q3 EPS 16c/$2.77B vs. est. 15c/ $2.78B; increased its full year 2018 adjusted earnings per share guidance to $2.60-$2.80 from $2.45-$2.70 previously; to cut annual dividend to $1.20 from $2.40

· Jack in the Box (JACK) Q4 EPS 77c/$177.5M vs. est. 85c/$175.02M; authorizes additional $60M stock buyback program; 4Q Jack system comparable sales +0.5%, vs. estimate +1% and 4Q Jack company comparable sales +0.8%, estimate +1.1%

· Urban Outfitters (URBN) Q3 EPS 70c/$973.5M vs. est. 62c/$968.4M; as of October 31, 2018, total inventory increased by $1.7 million, or 0.4%, on a year-over-year basis; Q3 comp sales 8% vs. est. 6.3%; Comparable retail segment sales growth by brand: Free People +12%, Urban Outfitters +7%, Anthropologie Group +8%.

· Beacon Roofing (BECN) Q4 adjusted EPS $1.07/$1.94B vs. est. $1.36/$2.01B

· Limbach (LMB) Q3 EPS loss (46c) vs (12c) last year and reports Q3 revenue $135.1M vs. est. $140.77M; backs FY18 revenue view $530M-$550M and backs FY18 adjusted EBITDA view $8M-$10M

Energy, Materials and Industrials

· A bill that would help PG&E Corp. (PCG) absorb liabilities from this year’s fatal wildfires in California is being drafted at the request of a state assemblyman who helped shepherd earlier legislation on the issue. Kellie Smith, an adviser to assemblyman Chris Holden, said she is writing the bill that could be introduced as early as Dec. 3

· Boeing (BA) will answer questions about the 737 Max today on a conference call with airlines that fly the model involved in the Indonesia crash, Bloomberg reported

· Jacobs Engineering (JEC) Q4 EPS $1.31/$4.14B vs. est. $1.24/$4.28B


· Intuit (INTU) Q1 EPS 29c/$1.02B vs. est. 11c/$969.18M; sees Q2 EPS 85c-88c on revs $1.47B-$1.49B vs. est. 77c/$1.45B; backs FY19 adjusted EPS view $6.40-$6.50 and backs FY19 revenue view $6.53B-$6.63B (est. $6.48/$6.61B)

· LPL Financial (LPLA), a wholly owned subsidiary of LPL Financial Holdings released its monthly activity report for October. Total brokerage and advisory assets served at the end of October were approximately $649 billion, a 4.7% decrease compared to the end of September 2018. Total net new assets for October were an inflow of $2.2B.


· Agilent (A) Q4 EPS 81c/$1.29B vs. est. 74c/$1.25B; sees Q1 adjusted EPS 71c-73c on revs $1.265B-$1.28B vs. est. 72c/$1.27B; sees FY19 adjusted EPS $3.00-$3.05 on revs $5.13B-$5.17B vs. est. $2.96/$5.18B; authorizes new $1.75B share repurchase program

· Boston Scientific Corp. (BSX) agreed to buy rival BTG Corp. for 3.3 billion pounds ($4.2 billion) to expand its offering of medical devices to treat cancer and other disorders

· Medtronic (MDT) Q2 EPS $1.22/$7.48B vs. est. $1.15/$7.35B; boosts FY19 organic revenue growth guidance to up 5%-5.5% from prior view 4.5%-5%

Technology, Media & Telecom

· Nuance (NUAN) Q4 EPS 38c/$536.2M vs. est. 32c/$525M; Q4 organic revenue grew 12%, operating margin of 30.5%, compared to 20.7% in the prior year period; announced its intention to spin off its Automotive business segment into a new, independent, publicly traded company

· Pure Storage (PSTG) Q3 EPS 13c/$372.8M vs. est. 9c/$367.4M; Q3 gross margin: 66.8% GAAP; 68.1% non-GAAP, representing an all-time high; announced Pure Storage Cloud Data Services, a suite of new cloud offerings that run on Amazon Web Services; sees Q4 revenue $438M-$446M vs. est. $440.65M; sees Q4 Non-GAAP gross margin 64.5%-67.5% and non-GAAP operating margin 8%-12%; raises FY19 revenue view to $1.376B-$1.384B from $1.35B-$1.38B

· Brooks Automation (BRKS) Q4 EPS 40c/$159.6M vs. est. 38c/$205.6M; sees Q1 revs $170M-$180M and EPS 10c-14c


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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