Morning Preview: November 29, 2018

Terrie AmengualDaily Market Report

Early Look

Thursday, November 29, 2018

U.S. stock futures are lower, paring some of yesterday’s market surge, while WTI crude futures decline 1% to fall below $50 per barrel for the first time in almost 14 months. Investors are rotating into safe havens early, with the yen, gold and Treasuries rallying while U.S. stock futures slip. The 10-year yield fell to 3% and the dollar extended losses while the pound declined as Brexit vote in Parliament nears. European stocks held gains even as Deutsche Bank shares plunged after its offices were raided by prosecutors probing money-laundering. Economic data plentiful today with weekly jobless claims, inflation gauges in the form of PCE data for October as economists see the PCE deflator picking up to 2.1% from 2% with the core measure slipping back to 1.9%. The highly anticipated G20 meeting begins this weekend, with all eyes on the U.S. and China relating to trade/tariff talks, and hopes are high that the two sides can come close to some sort of deal. In Asian markets, The Nikkei Index rose for a 5th straight session, gaining 85 points to settle at 22,262, the Shanghai Index fell -34 points to settle at 2,567 and the Hang Seng Index fell -231 points to close at 26,451. In Europe, the German DAX is up over 25 points at 11,325, while the FTSE 100 is up around 40 points at 7,050.

U.S. stocks posted their best one-day gains since March on Wednesday, fueled by comments from Federal Reserve Chairman Jerome Powell who used a softer tone to describe where interest-rate policy presently is, in what could be construed as implying fewer interest-rate hikes to come. His comments on their face appear more dovish than in early October, when Powell said, in reference to the Fed’s interest rates, “we may go past neutral, but we’re a long way from neutral at this point, probably.” The Dow Industrial Average rallied more than 600 points while the Nasdaq Comp jumped nearly 3%. Bonds rallied on his comments as 10-year Treasury yields hit six-week lows on the perceived dovish shift.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 61.61 points, or 2.30%, to 2,743.78

· The Dow Jones Industrial Average rose 617.70 points, or 2.50%, to 25,366.43

· The Nasdaq Composite spiked 208.89 points, or 2.95%, to 7,291.59

· The Russell 2000 Index advanced 37.53 points, or 2.51% to 1,530.38

Events Calendar for Today

· 8:30 AM EST Weekly Jobless Claims…est. 220K

· 8:30 AM EST Continuing Claims…est. 1.663M

· 8:30 AM EST Personal Income for Oct…est. 0.4%

· 8:30 AM EST Personal Spending for Oct…est. 0.4%

· 8:30 AM EST PCE Deflator MoM for Oct…est. 0.2%

· 8:30 AM EST PCE Core MoM for Oct…est. 0.2%

· 8:30 AM EST PCE Core YoY for Oct…est. 1.9%

· 9:45 AM EST Bloomberg Consumer Comfort Index…prior 61.3

· 10:00 AM EST Pending Home Sales MoM for Oct…est. 0.5%

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

· 2:00 PM EST FOMC Meeting Minutes from Nov 8th meeting

· 2:00 PM EST Fed’s Evans speaks on panel in Boston

Earnings Calendar:

· Earnings Before the Open: ANF, BBW, DLTR, EXPR, LZB, TECD, PDCO, TD, TITN

· Earnings After the Close: AMBA, AMSW, AVAV, HPQ, NWY, PAGS, PANW, PVH, SPLK, VMW, WDAY, YEXT

Other Key Events:

· 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

Sector News Breakdown


· Guess (GES) Q3 EPS 13c/$605M vs. est. 16c/$603.08M; sees Q4 adjusted EPS 69c-74c vs. est. 75c; sees Q4 revenue in constant currency up 7.5%-9.5%, vs. consensus $810.72M; raises FY19 EPS view to 96c-$1.03 from 94c-$1.03 (est. $1.09) and raises FY19 revenue growth view to up 10%-10.5% from 8%-8.5%

· La-Z-Boy (LZB) Q2 EPS 48c/$439.3M vs. est. 44c/$434.3M; 2Q comparable sales +4.4%, 2Q operating income $28.5 million

· Tilly’s (TLYS) Q3 adjusted EPS 24c/$146.8M vs. est. 23c/$149.15M; Q3 comparable store net sales, including e-commerce, increased 4.3%; comparable store net sales in physical stores increased 1.3% and represented approximately 86% of total net sales; e-commerce net sales increased 26.7% and represented approximately 14% of total net sales; sees Q4 sales $163M-$168M vs. est. $165M; sees opening 15 to 20 new, full-size stores

· Altria Group Inc (MO) is in talks to take a minority stake of 20%-40% in e-cigarette maker Juul Labs Inc, people familiar with the matter said on Wednesday.

· Norwegian Cruise Line (NCLH) files to sell 18.88M ordinary shares for holders

· McDonald’s (MCD) upgraded to Overweight from Equal Weight at Morgan Stanley


· Crude oil prices dropped late session Wednesday, falling -2.5% to $50.29 per barrel to its lowest settlement in nearly 14 months (Brent -2.4% to $58.76 per barrel) as U.S. crude inventories rose for the 10th week in a row, jumping by a much larger than forecast 3.6M barrels

· WhiteWater Midstream LLC is exploring a sale that its private equity owners hope will value the U.S. oil and gas pipeline operator at more than $2 billion, including debt, people familiar with the matter said – Reuters

· Atmos Energy (ATO) 7.01M share secondary priced at $92.75 per share

· Rio Tinto PLC (RIO) approved a $2.6 billion iron-ore mine in the Australian Outback that will be the miner’s most high-tech operation to date and buoy future production as older pits are depleted.

Financials, Industrials and Materials

· German prosecutors and police searched Deutsche Bank AG (DB) offices in and around Frankfurt in relation to suspicions that the bank helped clients set up offshore entities in tax havens and failed to alert authorities to possible money laundering; shares fall over 4%

· TD Bank (TD) Q4 adjusted EPS C$1.63 vs. estimate C$1.60; 4Q common equity Tier 1 ratio 12%, 4Q return on equity +15.8%, 4Q adjusted ROE +16.3% and 4Q efficiency ratio 52.9%

· Cubic (CUB) 3.3M share secondary priced at $60.00 per share

· Golub Capital (GBDC) Q4 net investment income excluding capital gain incentive fee per share 32c, 4Q net investment income $20.3 million and 4Q net asset value per share $16.10


· Merck (MRK) announced that the European Commission has approved DELSTRIGO and PIFELTRO for the treatment of HIV-1 infection. DELSTRIGO is a new once-daily fixed-dose combination tablet of doravirine, lamivudine and tenofovir disoproxil fumarate

· Quest Diagnostics (DGX) raises quarterly dividend 6% to 53c per share; cuts FY18 EPS view to greater than $6.30 from $6.53-$6.60 (est. $6.56) and cuts FY18 revenue view to roughly $7.57B from roughly $7.62B (est. $7.62B)

· Varian (VAR) says its Halcyon system has been approved by the China National Medical Product Administration, which allows the company to market its cancer treatment system in China.

· Novartis (NVS) announced that the European Commission has approved Gilenya for the treatment of children and adolescents 10 to 17 years old with relapsing-remitting forms of multiple sclerosis

Technology, Media & Telecom

· Micron Technologies (MU) said it sees Q1 revenue at the low end of its $7.9B-$8.3B range vs. est. $8.06B and sees Q1 EPS “somewhat above” guidance midpoint $2.95

· Box (BOX) Q3 adjusted EPS loss (8c)/$155.9M vs. est. loss (7c)/$154.61M; raises FY19 EPS view to (16c)-(15c) from (18c)-(16c) and raises FY19 revenue view to $608.2M-$609.2M from $606M-$608M (est. $607.52M); Q3 billings $155.6M, up 10%

· Veeva (VEEV) Q3 adjusted EPS 45c/$224.7M vs. est. 38c/$216.02M; raises FY19 EPS view to $1.58 from $1.47-$1.48 (est. $1.48) and raises FY19 revenue view to $855.8-$856.8M from $840M-$843M (est. $843.02)

· Paul Jacobs, the ousted chairman of Qualcomm Inc. (QCOM), is still thinking about taking the chipmaker private. Jacobs discussed the potential for a deal, and his new company XCOM, during an interview Wednesday at Bloomberg’s Year Ahead conference in NY

· Yelp (YELP) announces new $250M share repurchase authorization

· Semtech (SMTC) Q3 EPS 63c/$173.6M vs. est. 61c/$173.03M; sees Q4 EPS 53-57c on sales $155M-$165M vs. est. 56c/$165.9M and sees Q4 non-GAAP gross margin is expected to be in the range of 61.5% to 62.5%

· Dell (DVMT) said that on November 9, 2018, it detected unauthorized activity on its network attempting to extract customer information, which includes names, email addresses and hashed passwords; said that although “it is possible some of this information was removed from Dell’s network, our investigations found no conclusive evidence that any was extracted

· Qualys (QLYS) announced an integration with Amazon (AMZN) Web Services Security Hub, introducing Qualys vulnerability and policy compliance findings within AWS Security Hub

· iQIYI (IQ) announces $500M convertible senior notes offering due 2023


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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