Morning Preview: November 28, 2018

Terrie AmengualDaily Market Report

Early Look

Wednesday, November 28, 2018

U.S. stocks point to a higher open, following Asian markets ahead of a busy day for major averages with GDP data, Fed Chairman Powell speaking, and as investors prepare for the G20 meeting later this week. Stocks rose while the dollar, oil and Treasuries were steady before Powell’s speech. Rallies for Japanese and Chinese shares helped Asia outperform Europe’s markets, while U.S. equity-index futures pointed to a third day of gains. Economic data will be closely watched today as U.S. growth is set to be confirmed at 3.5% in the third quarter (GDP data) with today’s second print of quarter. More pressure ramped up on the Fed after President Trump told the Washington Post he’s “not even a little bit happy” with the Fed boss, blaming him for the stock rout. Note later today, Fed Chairman Powell to speak to the Economic Club of New York. Vice Chairman Richard Clarida and Chicago’s Charles Evans yesterday restated support for continued hikes toward neutral. Stocks finished slightly higher on Tuesday even as trade tensions returned after President Donald Trump refused to rule out increasing tariffs on Chinese imports in 2019. Trump’s remarks come ahead of the G-20 summit in Buenos Aires later this week where he will meet China’s leader Xi Jinping. In Asian markets, The Nikkei Index gained 224 points to settle at 22,177, the Shanghai Index rose 27 points to 2,601 and the Hang Seng Index jumped 350 points to end at 26,682. In Europe, the German DAX is up around 20 points at 11,330, while the FTSE 100 is down slightly holding above the 7,000 level.

Events Calendar for Today

· 7:00 AM EST MBA Mortgage Applications Data

· 8:30 AM EST Gross Domestic Product (GDP) Q3-S…est. 3.5%

· 8:30 AM EST Personal Consumption for Q3-S…est. 3.9%

· 8:30 AM EST GDP Price Index, Q3-S…est. 1.7%

· 8:30 AM EST Core PCE QoQ for Q3-S…est. 1.6%

· 8:30 AM EST Advance Goods Trade Balance for Oct…est. (-$77.0B)

· 8:30 AM EST Wholesale Inventories MoM for Oct-P…est. 0.4%

· 10:00 AM EST New Home Sales MoM for Oct…est. up 4% to 575K

· 10:00 AM EST Richmond Fed Index for Nov…est. 15

· 10:30 AM EST Weekly DOE Inventory Data

· 12:00 PM EST Fed’s Powell speaks to Economic Club in New York

Earnings Calendar:

· Earnings Before the Open: BURL, CHS, DKS, RY, SINA, SJM, TIF, WB

· Earnings After the Close: BOX, GBDC, GES, LZB, VEEV

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

· 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 gained 8.75 points, or 0.33%, to 2,682.20

· The Dow Jones Industrial Average rose 108.49 points, or 0.44%, to 24,748.73

· The Nasdaq Composite inched higher 0.85 points, or 0.01%, to 7,082.70

· The Russell 2000 Index declined -13.10 points, or 0.87% to 1,492.86

World News

· President Donald Trump upped the ante in his long-running grumbling about Federal Reserve Chair Jerome Powell’s interest-rate policy. In an interview with the Washington Post, he said he is “not even a little bit happy” with his choice to lead the central bank.

· China’s ambassador to the United States said on Tuesday he does not believe Beijing is seriously considering using its massive U.S. Treasury debt holdings as a weapon in the U.S.-China trade war. “We don’t want to cause any financial instability in global markets. This is very dangerous, this is like playing with fire,” Ambassador Cui Tiankai told Reuters in an interview – Reuters

· UK chancellor Hammond said: the British people want to leave the EU but do not want to be made poorer; if we can deliver may’s deal there will be no impact on food prices in UK; no deal Brexit would create impediments to trade with EU and thus increase costs and prices; May’s deal is the best one for the UK economy

· Investor Intelligence poll shows equity newsletter writers classified as bulls tumble to 38.3% from 39.6%, remain at the lowest level since May 2016; while those expecting a correction rises to 41.1% from 40.6%, now at the highest since September 2015 and bearish sentiment rise to 20.6%, highest since May 9, vs 19.8% last week

Sector News Breakdown


· Tiffany (TIF) Q3 EPS 77c inline with estimates and total comp sales ex FX up 3%, missing the 5.6% Bloomberg estimate; maintains its full-year earnings outlook

· Alaska Air (ALK) raises Q4 RASM forecast, sees capacity up 1.1%; guided to Q4 revenue per ASM, or RASM, of 12.6c-12.8c, up from its prior view of 12.4c-12.6c and representing a percentage change of 3.0%-5.0%; backed a Q4 forecast for capacity, measured in ASMs in millions, of 16,055 – 16,105, representing growth of 1.1%; sees FY18 capacity growth of about 5.3% and cost per ASM ex-fuel and special items to be up 3.2%

· Stein Mart (SMRT) Q3 EPS loss (36c) on revs $279.1 million, 3Q comparable sales +1.4% and 3Q gross margin +25%; said continues to project 4Q operating income will be higher than year earlier

· Unilever PLC (UN) is in talks to acquire GlaxoSmithKline PLC’s (GSK) nutrition business, people familiar with the matter said, a deal that would hand the consumer-goods giant one of India’s best-known brands.

· BMW AG is mulling the construction of a second manufacturing plant in the U.S., Reuters reported Tuesday

Energy, Materials and Industrials

· The American Petroleum Institute (API) reported U.S. crude supplies rose by nearly 3.5M barrels for the week ended Nov. 23, showed gasoline supplies declined by -2.6M barrels, but distillate stockpiles rose by 1.2M barrels

· Southwest Gas (SWX) 3.1M share Secondary priced at $75.50

· Union Pacific (UNP) upgraded to Buy from Hold at Deutsche Bank saying it is now positioned for at least $3B in profit improvement


· Royal Bank of Canada (RY) Q4 EPS C$2.24 vs. estimate C$2.12; 4Q total trading revenue C$754M; Q4 revenue C$10.67B vs. C$10.52B a year ago; reports Q4 ROE of 17.6%, up 100 bps y/y; CET ratio of 11.5%, up 60 bps y/y

· On Deck Capital (ONDK) upgraded to Buy from Neutral at UBS

· CME Group (CME) downgraded to Neutral from Buy at UBS

· Global Net Lease (GNL) files to sell 4M shares of common stock


· Humana (HUM) raises 2019 Medicare Advantage membership estimate to 350K-400K from 250K-300K and announces $750 mln accelerated stock buyback program

· Catalyst Pharmaceuticals (CPRX) reported that no decision has yet been received from the FDA with respect to the company’s New Drug Application, or NDA, for Firdapse. The company reported that a contractor working on a web page unintentionally allowed a live screen to be seen that reflected that the possible approval of the company’s NDA had already been received

· Galapagos NV (GLPG) said the FDA has granted GLPG1972/S201086 Fast Track designation for the treatment of patients with osteoarthritis. In June 2018, Galapagos and Servier announced the start of the global 52-week ROCCELLA Phase 2 trial with GLPG1972/S201086 in knee osteoarthritis patients

· Acadia (ACAD) 16.175M share Secondary priced at $17.00

· Rocket Pharmaceuticals (RCKT) 3.55M share Secondary priced at $15.50

· DaVita (DVA) upgraded to Outperform from Market Perform at Raymond James

Technology, Media & Telecom

· Salesforce (CRM) Q3 EPS 61c/$3.39B vs. est. 50c/$3.37B; sees Q4 adjusted EPS 54c-55c on revs $3.551B-$3.561B vs. est. 57c/$3.53B; raises FY19 adjusted EPS view to $2.60-$2.61 from $2.50-$2.52 (est. $2.51) and raises FY19 revenue view to $13.23B-$13.24B from $13.125B-$13.175B (est. $13.17B); 3Q subscription and support revenue $3.17 billion

· Nutanix (NTNX) Q1 adjusted EPS loss (13c)/$313.3M vs. est. loss (27c)/$305.26M; said core business continues to grow strongly and put us on a solid path to meet our goal of at least $3 billion in software and support billings by 2021; 1Q adjusted gross margin +78.6% and Q1 billings growth +50%; sees Q2 EPS loss about (25c) on revs $325M-$335M vs. est. loss (26c)/$325.9M

· Ooma (OOMA) Q3 EPS loss (3c)/$32.6M vs. est. loss (6c)/$31.73M; adjusted EBITDA was ($0.2M) vs. $0M last year; sees Q4 (6c)-(4c) on revs revenue $33.0M-$33.5M vs. est. loss (6c)/$32.92M; sees FY19 EPS (18c)-(16c) on revs $127.5M-$128.0M vs. est. loss (20c)/$126.5

· BrightView (BV) Q4 adjusted EPS 35c/$581.8M vs. est. 29c/$586.47M; sees FY19 revenue $2.400B-$2.470B vs. est. $2.43B; sees FY19 adjusted EBITDA $310M-$318M; managed Exits of $15M-$25M in revenue, declining over the course of the fiscal year

· Weibo (WB) Q3 EPS 75c/$460.2M vs. est. 70c/$456.42M; sees Q4 revenue $480M-$490M vs. consensus $499.47M


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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