Morning Preview: November 21, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, November 21, 2018

Stock futures are pointing to a rebound after major averages sink the first two days of this holiday shortened week (markets closed tomorrow for Thanksgiving and close early at 1:00 PM EST on Friday). Oil prices, which lost nearly 7% Tuesday, also pointed to a bounce for Wednesday as futures are up around 1.5% early. Treasuries slip and the dollar fell against major currencies, except for the yen, while Bitcoin rises, looking to snap its 9-day losing streak. In Asian markets, The Nikkei Index fell -75 points to settle at 21,507, the Shanghai Index inched higher 5 points to 2,651 and the Hang Seng Index rose 131 points to 25,971. In Europe, the German DAX rises 60 points to 11,130, while the FTSE 100 is up around 40 points but still holding under 7,000. Theresa May is meeting up with European Commission President Jean-Claude Juncker later today in a bid to finalize a Brexit deal in time for Sunday’s EU summit. In stock news, Deere shares point lower on its earnings miss. Overnight, the OECD was cautiously optimistic on world growth, while headlines out of Italy as well. A busy day of economic data in the U.S., with some data points pushed up (jobless claims), due to markets closing tomorrow for a holiday. It was another tough day on Wall Street Tuesday as the Dow tumbled 550 points (falling 648 points at its low) with all 30 components ending in the red in a broad market rout. The benchmark S&P 500 closed 1.8% lower, with all 11 sectors ending in negative territory as well, pushing both indexes into the red for the year. Concerns over slower global growth, U.S.-China trade tensions, plunging oil prices and rising interest rates have all weighed on the equity market’s momentum the last few weeks.

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:30 AM EST Weekly Jobless Claims…est. 215K

· 8:30 AM EST Continuing Claims…est. 1.65M

· 8:30 AM EST Durable Goods Orders, Oct-P…est. (-2.6%)

· 9:45 AM EST Bloomberg Consumer Comfort Index…prior 60.5

· 10:00 AM EST Existing Home Sales MoM for Oct…est. 5.2M

· 10:00 AM EST Leading Index for Oct…est. 0.1%

· 10:00 AM EST University of Michigan Confidence, Nov-F…est.

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

· 10:30 AM EST Weekly DOE Inventory Data

Earnings Calendar:

· Earnings Before the Open: ALOT, DAKT, DE

Market Closing Prices Yesterday

· The S&P 500 Index dropped -48.84 points, or 1.82%, to 2,641.89

· The Dow Jones Industrial Average fell -551.80 points, or 2.21%, to 24,465.64

· The Nasdaq Composite plunged -119.65 points, or 1.70%, to 6,908.82

· The Russell 2000 Index declined -27.53 points, or 1.84% to 1,469.0

World News

· U.S. trade representative accused Beijing of failing to change economic policies that threaten America’s industry. “China has not fundamentally altered its unfair, unreasonable and market-distorting practices,” U.S. Trade Representative Robert Lighthizer said in a news release. The U.S. accused China of continuing to steal IP and technology in a report released by Trade Rep Robert Lighthizer. It comes 10 days before Donald Trump is due to meet Xi Jinping at the G-20 summit.

· OECD cautiously optimistic on world growth. The overall forecast for 2019 was cut back to 3.5% from 3.7% with trade tensions and rising rates taking their toll, but it seems the organization is cautiously optimistic that a hard landing can be avoided. Instead the global economy is heading for a fragile soft landing as the expansion has reached its limit for now. U.S. growth is seen at 2.9% this year, falling to 2.7% and 2.1% in 2019 and 2020. For the Eurozone the OECD sees growth of 1.9% this year, followed by 1.8% and 1.6% over the next two year

· Out of Brussels, the Italian news service Ansa reported early that Italy’s debt criteria is not compliant with EU rules and that it was justified to put Italy in the EU’s disciplining process

· Saudi oil output surged to a record near 11 million barrels a day in early November as the kingdom met stronger-than-usual demand from clients preparing for a disruption in Iranian supply, Bloomberg reported

Sector News Breakdown


· BJ’s Wholesale (BJ) Q3 EPS 39c/$3.22B vs. est. 34c/$3.17B; Q3 comparable club sales rose 3.6% compared to Q3 of FY17; excluding the impact of gasoline sales, merchandise comparable sales increased 1.9%; sees FY net sales $12.65B-$12.75B vs. est. $13B; sees FY comparable sales +1.9% to +2.1%

· Foot Locker (FL) Q3 EPS 95c/$1.86B vs. est. 92c/$1.85B; Q3 comp sales rose 2.9% vs. est. 2%; 3Q gross margin +31.6%

· Gap (GPS) Q3 EPS 69c/$4.09B vs. est. $4.0B; 3Q Old Navy comparable sales +4% vs. estimate +4.5%, 3Q Gap Global comparable sales (-7%) vs. est. (-3.8%) and Q3 Banana Republic comparable sales +2% vs. estimate +0.6%; narrows FY18 EPS view to $2.55-$2.60 from $2.55-$2.70 (est. $2.56); backs FY18 comp sales view of flat to up slightly; now expects its fiscal year 2018 effective tax rate to be about 25% compared with previous guidance of 26%

· Caleres (CAL) Q3 EPS 81c/$775.8M vs. est. 88c/$765M; Q3 Famous Footwear same-store-sales were up 2.8%, while total sales of $448.8M were down 5.1% in Q3; brand portfolio sales of $327.1M were up 8.5% in Q3; sees year EPS $2.55-$2.60 from prior $2.55-$2.70

Energy, Materials and Industrials

· Deere (DE) Q4 EPS $2.30/$8.34B vs. est. $2.45/$8.64B; sees FY equipment sales +7% and sees FY construction & forestry equipment sales +15%

· Albemarle (ALB) has signed an exclusivity pact with Mineral Resources on the potential creation of a 50/50 lithium joint venture in Western Australia; the purchase price for Albemarle’s 50% interest in the JV would be $1.15 billion

· The American Petroleum Institute (API) reported U.S. crude supplies fell by roughly -1.5M barrels for the week ended Nov. 16, showed gasoline supplies climbed by 706,000 barrels while distillate stockpiles declined by -1.8M barrels

· Esterline (ESL) Q4 EPS $1.87/$535.3M vs. est. $1.43/$531.7M; said booked more than $2.3 billion of new orders in fiscal 2018, resulting in a book-to-bill ratio of 1.12; backlog has increased over the past twelve months, and stood at a record $1.5 billion at the end of fiscal 2018, compared with a $1.3 billion backlog at the end of fiscal 2017

· Star Bulk Carriers (SBLK) Q3 EPS 35c/$188.5M vs. est. 47c/$140.78M; Q3 adjusted EBITDA $80.1M vs. $28.6M last year

· Thyssenkrupp AG said that its Q4 net loss widened but that it remains cautiously optimistic for the year ahead and has issued new guidance; reported a net loss of 182 million euros ($207.8 million) for Q4 compared with a loss of EUR84 million a year earlier; sales climbed to EUR11.06 billion from EUR10.68 billion

· GenMark (GNMK) files $150M mixed securities shelf


· The U.S. Court of Appeals for the Federal Circuit rejected Johnson & Johnson’s (JNJ) request to prevent generic versions of its prostate cancer drug Zytiga from entering the U.S. market while the company appeals a trial judge’s ruling that invalidated a patent on the medicine, Bloomberg reports. Teva (TEVA)and Mylan (MYL) can now enter the market with a generic version of Zytiga

· AmerisourceBergen (ABC) filed mixed securities shelf

Technology, Media & Telecom

· Apple (AAPL) iPhone assembler Foxconn is said to plan $2.9B of cost cuts and eliminate 10% of non-technical staff, warning of difficult and competitive year, Bloomberg reported

· Autodesk (ADSK) Q3 EPS 29c/$661M vs. est. 27c/$640.11M; sees Q4 non-GAAP EPS 40c-44c on revs $700M-$710M vs. est. 40c/$688.87M; sees FY19 non-GAAP EPS 95c-99c on revs $2.495B-2.505B vs. est. 93c/$2.5B; 3Q total subscriptions 4.08 million; said to buy Plangrid for $875M

· Keysight Technologies (KEYS) Q4 EPS $1.01/$1.047B vs. est. 91c/$1.02B; sees Q1 adjusted EPS 76c-82c on revs $962M-$982M vs. est. 75c/$965.05M

· Mark Zuckerberg quelled speculation about leadership changes at Facebook Inc. (FB), throwing his support behind Chief Operating Officer Sheryl Sandberg and saying he has no plans to step down as chairman

· Amazon (AMZN) seeks to expand Amazon Pay to brick-and-mortar merchants, targeting gas stations and restaurants as a start, Dow Jones reports


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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