Morning Preview: November 30, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, November 30, 2018

U.S. stock futures are lower as major averages pare weekly gains ahead of the highly anticipated G20 meeting in Buenos Aires front and center this weekend, highlighted by the gathering between President Trump and Chinese leader Xi dinner, with trade and tariff talk the main course. In news yesterday, reports indicated Russian leader Vladimir Putin may not have a sit-down with Trump, but he will discuss oil policy with Saudi Crown Prince Mohammed bin Salman. Stocks turn lower before the Trump-Xi meeting, with European shares falling while Asian markets rise despite China posting weak manufacturing data, as its PMI data fell to its lowest level in about 15-months. Oil prices fell below $51 a barrel, heading for its worst month in a decade, while Bloomberg reports Natural gas is on track for its biggest monthly gain on record. In Asian markets, The Nikkei Index gained 88 points to 22,351, the Shanghai Index rose 20 points to 2,588 settlement and the Hang Seng Index rose 55 points to 26,506. In Europe, the German DAX is down about -70 points at 11,225, while the FTSE 100 is down roughly -50 points, trading back under the 7,000 level ahead of Parliament vote in next two weeks on Brexit. It was a good night for software earnings with shares of SPLK, VMW, WDAY all indicated higher after results.

Despite the apparent slow starts for U.S. averages today, stocks are on track for strong gains this week, as the Dow is set to post a gain of 4.3% and a monthly advance of about 0.9%, the S&P 500 is poised for a weekly rise of 4% and a 1% November increase, while the Nasdaq is set to show a weekly climb of 4.8%, but a monthly decline of 0.5%, as of Thursday’s close on the final trading day of November. Stocks ended the day slightly lower after a late afternoon push into positive territory fizzled just before the closing bell. The declines snapped a three-day winning streak for the major averages. Stocks soared on Wednesday after Fed Chairman Jerome Powell delivered a dovish speech that led investors to scale back expectations about the pace of future rate increases by the central bank.

Market Closing Prices Yesterday

· The S&P 500 Index slipped -6.03 points, or 0.22%, to 2,737.76

· The Dow Jones Industrial Average fell -27.59 points, or 0.11%, to 25,338.84

· The Nasdaq Composite dropped -18.51 points, or 0.25%, to 7,273.08

· The Russell 2000 Index declined -5.00 points, or 0.33% to 1,525.39

Events Calendar for Today

· 9:00 AM EST Fed’s Williams speaks on Global Economy at G30 in New York

· 9:45 AM EST Chicago PMI for November

· 1:00 PM EST Baker Hughes Weekly Rig Count

World News

· China’s official Purchasing Managers’ Index (PMI), released on Friday, fell to 50 in November, missing market expectations and down from 50.2 in October and at lowest level in 15-months.

· British Prime Minister Theresa May said on Thursday she was focused on persuading lawmakers to back her Brexit deal at a vote in parliament on Dec. 11 rather than preparing a plan B

· China and the United States can reach a trade agreement at the G20 meeting in Argentina this week, the state-run China Daily newspaper said in an editorial on Friday, but Washington must be “fair minded” if it wants to defuse spiraling tensions – Reuters

· Euro-area inflation eased off a six-year high rising 2% in November from 2.2% in October. The core measure slipped to 1% from 1.1

Sector News Breakdown


· GameStop (GME) shares fell -12%; Q3 EPS 67c/$2.1B vs. est. 57c/$2.03B; sees FY18 EPS $2.55-$2.75 vs. est. $3.04; sees FY18 total sales decrease of 2%-6%; Q3 comparable store sales increase of 2.1%; Q3 total global sales increased 4.8% to $2.1B, resulting in a consolidated comparable store sales increase of 2.1%-3.4% increase in the U.S. and 0.5% decrease internationally

· PVH Corp. (PVH) Q3 EPS $3.21/$2.5B vs. est. $3.14/$2.53B; sees Q4 adjusted EPS $1.58-$1.60 vs. est. $1.58 and sees Q4 revenue down 4%; raises FY18 adj. EPS view to $9.33-$9.35 from $9.20-$9.25 (est. $9.33); revenue in 2018 is projected to increase approximately 7% (also on a constant currency basis) as compared to 2017

· Marriott (MAR) disclosed a “data security incident” of its Starwood guest reservation database that contains information on up to 500 million guests. For 327 million of the guests, the information includes some combination of name, phone number, passport number email address, mailing address, date of birth and gender

Energy, Industrials and Materials

· AeroVironment (AVAV) Q2 EPS 25c/$73M vs. est. 16c/$74.54M; raises FY19 EPS view to $1.30-$1.50 from $1.10-$1.40 (est. $1.35); raises FY19 revenue view to $300M-$310M from $290M-$310M vs. est. $307.11M

· Air Lease Corporation (AL) announced the delivery of one new Airbus A321-200 aircraft on long-term lease to Frontier Airlines

· Ocean Rig UDW (ORIG) announced that its shareholders have approved the merger of the company with Transocean (RIG) by which, upon the closing of the merger, Ocean Rig will become a wholly-owned subsidiary of Transocean. Holders of 86.76% of the outstanding shares of Ocean Rig voted, of which 99.99% approved the merger

· Vivint Solar (VSLR) announces offering of 8M shares of common stock for holders

· Petrobras (PBR) is considering divesting up to $15 billion in its 2019-23 business plan, Reuters reported. The board is set to approve the plan in December


· Deutsche Bank (DB) extended declines as German authorities continued searching its headquarters for evidence of money laundering; shares fell over 4% yesterday amid the initial reports of the raids

· Arbor Realty (ABR) 8.7M share Spot Secondary priced at $11.81

· SL Green Realty (SLG) raises quarterly dividend to 85c from 81.25c


· Anthem Inc. (ANTM) said the Blue Cross Blue Shield of Minnesota Medicaid partnership is now expected to go live in 1Q 2019; fully insured membership now seen about 14.2M, self-funded membership now seen about 25.3M; reaffirms EPS forecast greater than $15.60

Technology, Media & Telecom

· AT&T (T) provided an update on its strategy following the acquisition of Time Warner, now known as Warner Media, as well as guidance for 2019; sees FY19 adjusted EPS growth in the low single digits; sees FY19 free cash flow in the $26B range; sees FY19 gross capital investment in the $23B range; expects to use about $12B in free cash flow after dividends to pay down debt in ‘19

· AT&T (T) plans to offer three versions of a new streaming video service next year that will feature original movies and television series from Warner Bros., Turner and HBO, The Wall Street Journal report

· HP Inc. (HPQ) Q4 EPS 54c/$15.4B vs. est. 54c/$15.1B; sees FY19 EPS $2.12-$2.22 vs. est. $2.02

· Palo Alto Networks (PANW) Q1 EPS $1.17/$656M vs. est. $1.05/$631.89M; sees Q2 adjusted EPS $1.20-$1.22 on revs $675M-$685M vs. est. $1.20/$668.73M

· Splunk (SPLK) Q3 adjusted EPS 38c/$481M vs. est. 32c/$433.26M; raises FY20 revenue view to roughly $2.15B from roughly $2B (est. $2.1B); raises FY19 revenue view to roughly $1.74B from $1.685B; raises FY19 adjusted operating margin view to 11.5%-12% from roughly 11.5%; sees Q4 revenue roughly $560M (est. $556.73M) and sees Q4 adjusted operating margin 25%-26%

· Workday (WDAY) shares rose 10%; Q3 EPS 31c/$743.2M (up 33.8% YoY) vs. est. 15c/$722.8M; says subscription revenue up 34.7% Yoy to $624.4M in Q3

· VMware (VMW) Q3 EPS $1.56/$2.2B vs. est. $1.50/$2.17B; raises 2019 EPS view to $6.22 vs. est. $6.17 and raises FY19 total revenue guidance to $8.882B from prior guidance of $8.820B; says Q3 license revenue up 17% year-over-year

· Ambarella (AMBA) Q3 EPS 21c/$57.3M vs. est. 9c/$57.1M; sees Q4 revenue $51M plus or minus 3% vs. est. $55.6M

· (ALRM) announces $75M stock buyback

· Amtech Systems (ASYS) Q4 EPS loss (61c)/$28.8M vs. est. $27.17M; Q4 EPS net loss was primarily due to a $7.0M non-cash impairment in the Solar segment; sees Q1 revenue $27M-$29M vs. est. $32.13M

· Symantec (SYMC) said that Michael Fey, who joined Symantec upon closing of the Blue Coat acquisition two years ago and successfully led the Enterprise Security product and field integration, has resigned as President and COO

· Yext (YEXT) Q3 EPS loss (12c)/$58.7M vs. est. loss (12c)/$58.35M; sees Q4 non-GAAP EPS (10c)-(9c) on revs $62M-$63M vs. est. loss (9c)/$63.03M; sees FY19 non-GAAP EPS (42c)-(41c) on revs $227M-$228M vs. est. loss (42c)/$227.57MM;

· Zuora (ZUO) Q3 adjusted EPS loss (10c)/$61.6M vs. est. loss (13c)/$58.98M; Q3 subscription revenue grew 43% from last year and customers with annual contract value equal to or greater than $100,000 increased to 504 customers, or 30% from last year; sees Q4 EPS loss (12c)-(11c) on revs $62.3M-$63.3M vs. est. loss (12c)/$60.68M; sees Q4 subscription revenue of $45.0M-$45.5M


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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