Morning Preview: November 27, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, November 27, 2018

Stock futures are pointing to a lower open, weighed down on trade concerns after President Trump took another shot at China just days before meeting with Chinese President Xi after telling the WSJ he expects to move ahead with boosting tariffs on $200 billion of Chinese goods to 25%. Trump comments also hurt UK PM May after telling reporters late yesterday that May’s Brexit plan may jeopardize the U.K.’s ability to strike a trade pact with the U.S. Apple shares slumped after a WSJ interview showed President Donald Trump expects to move ahead with boosting tariff levels on $200B of Chinese goods to 25%, calling it “highly unlikely” that he would accept Beijing’s request to hold off on the increase. “If we don’t make a deal, then I’m going to put the $267 billion additional on,” at a tariff rate of either 10% or 25%,” Trump said. Trump said tariffs could also be placed on iPhones and laptops imported from China. There are also four Fed speakers later today (Clarida, Bostic, Evans and George) may help clarify the rate path for 2019 ahead of the FOMC central bank meeting in two-weeks.

U.S. stocks rallied back Monday with beaten-down tech shares leading the rebound along with a bounce in energy shares as WTI crude posted its best one-day return in about 7-weeks. The S&P 500 moved out of correction territory after posting its worst week in a month and the Dow Industrials had their best day since November 7th. As mentioned, tech outperformed, led by strong gains in Amazon on reports of strong holiday sales. In Asian markets, The Nikkei Index gained 140 points to settle at 21,952, the Shanghai Index was little changed at 2,574 and the Hang Seng Index slipped -44 points to 26,331. In Europe, the German DAX is down around -40 points at 11,310, while the FTSE 100 is off about -20 points

Events Calendar for Today

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:30 AM EST Fed Vice Chairman Clarida speaks in New York

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 9:00 AM EST FHFA House Price Index MoM for Sept…est. 0.4%

· 9:00 AM EST S&P CoreLogic Case Shiller for Sept…est. 0.2%

· 10:00 AM EST Consumer Confidence for Nov…est. 135.9

· 2:30 PM EST Fed’s Bostic, Evans, and George speak on panel

· 4:30 PM EST API Weekly Inventory Data

Earnings Calendar:

· Earnings Before the Open: AQUA, CBRL, EV, HIBB

· Earnings After the Close: CRM, NTNX, OOMA, SMRT

Other Key Events:

· Credit Suisse 22nd Annual Technology, Media and Telecom Conference, 11/26-11/28, in Arizona

· Jefferies Energy Conference, 11/26-11/28, in Houston, TX

· Piper Jaffray Southeast Regional Bank Symposium, 11/26-11/27, in Atlanta, GA

· Credit Suisse 6th Annual Industrials Conference, 11/27-11/29, in Palm Beach, FL

· Evercore/ISI HealthConx 2018, 11/27-11/29, in Boston, MA

· Piper Jaffray 30th Annual Healthcare Conference, 11/27-11/29, in New York

· Scotiabank 20th Annual Mining Conference, 11/27-11/28, in Toronto

Market Closing Prices Yesterday

· The S&P 500 Index jumped 40.89 points, or 1.55%, to 2,673.45

· The Dow Jones Industrial Average rose 354.29 points, or 1.46%, to 24,640.24

· The Nasdaq Composite surged 142.87 points, or 2.06%, to 7,081.85

· The Russell 2000 Index advanced 17.28 points, or 1.16% to 1,505.96

World News

· Speaking at the European Parliament in Brussels, ECB President Mario Draghi confirmed that the ECB would likely phase out QE after next month. The decision is likely to be formalized at the ECB’s next policy meeting on Dec. 13

· Paul Manafort lied repeatedly after striking a plea deal with prosecutors and pledging to cooperate, Robert Mueller said. The former Trump campaign chairman denied the accusations

Sector News Breakdown


· Thomas Cook Group PLC (TCG.LN) suspended its final dividend for fiscal 2018 as it warned that underlying earnings before interest and taxes (Ebit) will be below last year’s figure.

· Francesca’s (FRAN) guides Q3 EPS loss (17c)-(19c) on revs $95M vs. est. loss (3c) and $106.4M; said boutique traffic declines persisted throughout the quarter; sees non-cash asset impairment of approximately $15 million taken in 3q

· Hibbett Sports (HIBB) Q3 EPS 14c/$216.9M vs. est. 16c/$217.28M; lowers year EPS view to $1.55-$1.65 from prior outlook $1.57-$1.75

· Cyber Monday online shopping was projected to hit $7.9 billion, Adobe said. That would be a 20% increase year-over-year and make it the largest online shopping day of all time in the U.S.

· Tesla’s (TSLA) car sales in China plunged 70% in October from last year, the China Passenger Car Association tells Reuters

· Sabre (SABR) 23.39M share Spot Secondary priced at $24.95

· Buckle (BKE) Q3 EPS 42c/$215.1M vs. est. 46c/$218.5M; 3Q comparable sales fell (-1.4%)

· Sotheby’s (BID) approves $100M increase to share repurchase authorization

· Lamb Weston Holdings (LW) will replace Rockwell Collins (COL) in the S&P 500 prior to the open of trading on Monday, December 3


· Diamondback Energy (FANG) will replace Stericycle (SRCL) in the S&P 500, and Stericycle will replace Energen (EGN) in the S&P MidCap 400.

· Southwest Gas (SWX) to acquire 80% ownership of Linetec Services for approximately $299M in cash; files to sell 3.1M shares of common stock

· Kosmos (KOS) 15M share Spot Secondary priced at $5.43

· A bill to help PG&E (PCG) absorb billions of dollars in potential liabilities from this month’s deadly wildfires will be introduced in January with the goal of passage in the first quarter, California Assemblyman Chris Holden said

· Dominion Energy, Inc. (D), and Dominion Energy Midstream Partners, LP (DM) entered into a definitive agreement under which Dominion Energy will acquire all outstanding public common units of Dominion Energy Midstream in exchange for 0.2492 Dominion Energy common shares per unit representing an increase from the original offer of nearly 1%

· SJW Corp. (SJW) files offering of 6.75M shares of common stock


· US Bancorp (USB) downgraded to hold from buy at Deutsche Bank

· Cubic (CUB) announces offering of 3.3M shares of common stock


· UnitedHealth (UNH) backs FY18 adjusted EPS view $12.80 (est. $12.81) and sees FY18 revenue roughly $226B vs. est. $225.6B; sees 2019 EPS $14.40-$14.70 vs. est. $14.56 and revs about $243B-$245B vs. est. $244B

· Bristol-Myers Squibb Company (BMY) announced that the Phase 3 CheckMate -451 study did not meet its primary endpoint of overall survival (OS) with Opdivo (nivolumab) 1 mg/kg in combination with Yervoy(ipilimumab) 3 mg/kg versus placebo as a maintenance therapy for patients with extensive-stage small cell lung cancer (SCLC) without disease progression after completion of first-line platinum-based chemotherapy

· Halozyme (HALO) says FDA agreed to its request to change the primary endpoint of the HALO-301 study to a single primary endpoint of overall survival. As a result, the previously planned interim analysis will not be conducted

· G1 Therapeutics (GTHX) reports positive topline data from its randomized, double-blind, placebo-controlled Phase 2 trial evaluating trilaciclib in combination with chemotherapy and the checkpoint inhibitor Tecentriq as a treatment for 1L SCLC

· Acadia (ACAD) announces $200M common stock offering

· DexCom (DXCM) announces offering of $750M of convertible senior notes

· Enanta (ENTA) Q4 EPS $1.30/$67.2M vs. est. $1.19/$69M; 4Q cash and cash equivalents $63.9M

· Rocket Pharmaceuticals (RCKT) announces $50M common stock offering

· Zymeworks (ZYME) and BeiGene (BGNE) announced that the two companies have entered into a strategic collaboration for the clinical development and commercialization of Zymeworks’ investigational ZW25 and ZW49 HER2-targeted bispecific antibodies

Industrials & Materials

· United Technologies (UTX) announced its intention to split into three companies, following calls for a break-up from Daniel Loeb’s activist investment fund Third Point. United Technologies lowers FY18 EPS view to $7.10-$7.20 from $7.20-$7.30 while raises FY18 revenue view to $64.5B-$65.0B from $64.0B- $64.5B. Lowers FY18 free cash flow view to $4.25B-$4.50B from $4.5B-$5.0B. All outlook changes are related to the acquisition of Rockwell Collins

· Ferroglobe (GSM) Q3 EPS 0c/$526.8M vs. est. 15c/$564M; 3Q total shipments 255,930 Mt

· S&P SmallCap 600 constituent CACI International (CACI) will replace Lamb Weston Holdings in the S&P MidCap 400 prior to the open of trading on Monday, December 3rd

Technology, Media & Telecom

· Apple (AAPL) shares fell in after-hours trading after President Trump told the Wall Street Journal in an interview that iPhones could be hit with 10% tariffs. Trump said he expects to move ahead with boosting tariff levels on Chinese goods to 25%

· Maxim Integrated Products (MXIM) will replace Aetna (AET) in the S&P 500. CVS Health (CVS) is acquiring Aetna in a deal expected to close on November 28 pending final conditions

· MTS Systems (MTSC) Q4 EPS 61c/$197.9M vs. est. 69c; sees FY revenue $830M-$870M vs. estimate $835.0M; sees FY EPS $2.30 to $2.60

· Micron Technology Inc.’s (MU) price target was cut to $41 from $52 at UBS citing concerns about the economic cycle for DRAM chips


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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