Morning Preview: December 11, 2018

Scott GreenDaily Market Report

Early Look

Tuesday, December 11, 2018

U.S. stock index futures are edging higher after China said in statement that Vice Premier Liu He spoke with U.S. Treasury Sec. Steven Mnuchin and U.S. Trade Representative Robert Lighthizer via phone. They talked about purchases of agricultural products and changes to Chinese economic policies, according to reports. It appears that both sides want to keep the negotiations separate from the issues surrounding the arrest of Huawei Technologies Co. CFO Meng Wanzhou, which has led to fears over the future of the talks. Economic data also a focus today with monthly producer price index data (PPI) at 8:30 AM EST (ahead of the CPI data tomorrow). Oil rose along with gold and most industrial metals as the dollar pares gains. The pound rebounded back above $1.26 in a small recovery from the previous day’s 1.3% fall against the dollar after the Brexit vote was delayed in Parliament by UK Prime Minister May. Late yesterday, U.S. stocks staged a late-day comeback to push equity benchmarks into positive territory, as the Dow Industrial Average recovered from losses of more than -500 points earlier. In Asian markets overnight, the Nikkei Index fell -71 points to 21,148, the Shanghai Index gained 9 points to settle at 2,594 and the Hang Seng Index rose 19 points to 25,771. In Europe, the German DAX is up about 150 points at 10,775, while the FTSE 100 rebounds after yesterday’s slide, up roughly 70 points back near the 6,800 level.

Market Closing Prices Yesterday

· The S&P 500 Index climbed 4.64 points, or 0.18%, to 2,637.72

· The Dow Jones Industrial Average rose 34.31 points, or 0.14%, to 24,423.26

· The Nasdaq Composite gained 51.27 points, or 0.74%, to 7,020.52

· The Russell 2000 Index declined -4.99 points, or 0.34% to 1,443.09

Events Calendar for Today

· 6:00 AM EST NFIB Small Business Optimism for Nov…est. 107.0

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:30 AM EST Producer Price Index (PPI) Final Demand MoM for Nov…est. 0.0%

· 8:30 AM EST PPI Ex: Food & Energy MoM (core) for Nov…est. 0.1%

· 8:30 AM EST PPI Ex: Food & Energy YoY (core) for Nov…est. 2.5%

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 4:30 PM EST API Weekly Inventory Data

Earnings Calendar:

· Earnings Before the Open: DEST, DSW, FRAN

· Earnings After the Close: AEO, ARWR, PLAY, POWL, PVTL

World News

· The National Federation of Independent Business (NFIB) small-business optimism index fell 2.6 points in November to a seasonally adjusted level of 104.8, the lowest in seven months. Most of the decline coming from expectations about future sales and business conditions.

· Confidence in the German economy among investors unexpectedly edged higher, as the ZEW gauge measuring expectations for the next six months increased to minus -17.5 in December vs. Bloomberg est. -25

· India’s rupee fell in the wake of central bank governor Urjit Patel’s resignation on Monday

Sector News Breakdown

Consumer

· Ascena (ASNA) Q1 EPS 6c/$1.59B vs. est. 5c; sees 2Q adjusted loss per share (15c-25c) on revs $1.68B-$1.71B vs. est. loss (15c)/$1.70B; sees 2Q comparable sales +2% to +4%; Q1 Total Premium Fashion comparable sales +8%, 1Q Justice comparable sales +12%, 1Q Lane Bryant comparable sales -2%, 1Q Maurice’s comparable sales -3%, 1Q Dressbarn comparable sales -4% and 1Q Catherine’s comparable sales -3%; maintains year outlook

· Casey’s General Stores (CASY) Q2 EPS $1.80/$2.54B vs. est. $1.61/$2.54B; lowers FY19 Fuel SSS view to (1.0%)-0.5% from 1.5%-3.0% while backs FY19 Grocery and other Merchandise SSS at 1.5%-3.0%; backs FY19 Prepared Food and Fountain SSS at 1.5%-3.5%

· Stitch Fix (SFIX) Q1 EPS 10c/$366.2M vs. est. 3c/$357.97M; reports Q1 active clients of 2.9M, an increase of 22% year over year

· Quanex (NX) Q4 EPS 22c/$244.1M vs. est. 43c/$246.16M; sees FY19 revenue growth 4%-6% vs. est. $923.74M and sees FY19 adjusted EBITDA $97M-$107M vs. est. $106.7M; Q4 adjusted Ebitda $25.2M vs. Bloomberg est. $34.1M

Energy, Industrials and Materials

· Oil prices slid 3.1% on Monday to its worst loss in two weeks, erasing all the gains from last week’s pact between Russia, Saudi Arabia and other top producers to crimp supplies. Worries about demand also took a toll as data showed Chinese imports rising less than expected

· United Continental (UAL) November Capacity +5.5% while November traffic +7.1%; UAL’s November 2018 consolidated load factor increased 1.2 points compared to November 2017 to 83.0%

· Honeywell International (HON) files mixed securities shelf

· Construction Partners (ROAD) Q4 EPS 29c/$215.7M and sees FY19 revenue $760M-$810M and FY19 adjusted EBITDA $85M-$91.5M

Financials

· BNY Mellon (BK) announces $830M increase to stock repurchase program

· Cohen & Steers, Inc. (CNS) preliminary assets under management of $58.6B as of November 30, 2018, an increase of $741 million from October 31, 2018 due to market appreciation of $1.5 billion, partially offset by net outflows of $530 million and distributions of $198 million

· Franklin Resources (BEN) reports preliminary AUM $683.3B as of November 30 compared to $682.7B at October 31, 2018. The increase in assets under management was due to net market gains that more than offset net outflows. Preliminary average assets under management for the quarter, through November 30, 2018, were $694.4B

· Horace Mann (HMN) to acquire National Teachers Associates in $405M deal

Healthcare

· RA Pharmaceuticals (RARX) announces $100M common stock offering

· Jazz Pharmaceuticals (JAZZ) announces $400M increase to share repurchase program

· HCP (HCP) announces offering of 14M shares of common stock

· Avid Bioservices (CDMO) Q2 EPS loss (5c)/$10.2M vs. est. loss (8c)/$10.9M; 2Q gross margin +3%, backlog $36 million while reaffirms year rev outlooks to $51M-$55M vs. est. $54.3M

· Pfizer (PFE) downgraded to Neutral from Overweight at JPMorgan

Technology, Media & Telecom

· Cars.com Inc. (CARS) active after hedge fund Starboard Value, which owns 9.2% of outstanding shares, told Cars.com in a letter that the company has seen customer losses and revenue declines for nearly two years while operating expenses have risen, all while missing targets. Starboard said that if the business was properly managed it “should easily be able” to achieve about $4 a share of adjusted free cash flow by the end of 2020.

· CalAmp (CAMP) lowers Q3 EPS view to 23c-25c from 29c-35c (est. 32c) and lowers Q3 revenue view to $88M-$89M from $94M-$99M vs. consensus $97.8M

· Aspen Group (ASPU) Q2 EPS loss (13c)/$8.1M vs. est. loss (13c)/$8.24M; Aspen Group’s 1,565 enrollments are up 50% as compared to 1,044 in the prior fiscal year Q2

· SeaChange (SEAC) Q3 EPS loss (1c)/$18.6M vs. est. loss (4c)/$17.6M; sees 4Q revenue $16M-$20M vs. est. $25.3M; sees FY revenue $61M-$65M vs. est. $69.6M

· WPP PLC (WPP) said that it will simplify its structure as the world’s largest advertising holding company pursues annual savings of 275 million pounds ($348.1 million) by the end of 2021, adding that it will prioritize dividends over buy-backs over the next three years.

· AT&T (T) upgraded to Buy from Neutral at Citi

 

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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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