Wednesday, December 12, 2018
U.S. futures are pointing to a strong open, tracking gains in both Asian and European markets overnight after comments by President Donald Trump and bail for the jailed Huawei Technologies Co. CFO revived optimism over trade negotiations between the U.S. and China. President Trump said he would intervene in the arrest of Huawei’s chief financial officer Meng Wanzhou if it would help ensure a trade deal with China, in an interview with Reuters. Meanwhile, the CFO was granted bail by a Canadian judge on Tuesday after more than a week in detention, but with conditions. In Asian markets, The Nikkei Index jumped 454 points to 21,602, the Shanghai Index inched higher 8 points to close at 2,602 and the Hang Seng Index gained 415 points to settle at 26,186. In Europe, markets are broadly higher as the German DAX is up around 90 points at 108,70, while the FTSE 100 gains about 70 points to 6,880. Oil prices rise after the American Petroleum Institute reported yesterday that U.S. crude supplies fell by a bigger-than-expected drop of 10.2 million barrels for the latest week.
Stocks were on another wild ride on Tuesday, opening the day higher on China trade talk hopes as Chinese vice premier talked trade with Mnuchin, Lighthizer overnight (as China agreed to reduce tariffs on US autos to 15% from 40%), only to sink late morning after President Donald Trump and Democratic leaders Chuck Schumer and Nancy Pelosi fought over border security, with Trump threatening to shut down government. When it was all over, the Dow Industrial Average traded in a range of more than 500-points, but major averages closed down only slightly.
Market Closing Prices Yesterday
· The S&P 500 Index slipped -0.94 points, or 0.04%, to 2,636.78
· The Dow Jones Industrial Average fell -53.02 points, or 0.22%, to 24,370.24
· The Nasdaq Composite gained 11.31 points, or 0.16%, to 7,031.83
· The Russell 2000 Index declined -2.96 points, or 0.21% to 1,440.13
· 7:00 AM EST MBA Mortgage Applications Data
· 8:30 AM EST Consumer Price Index (CPI) MoM for Nov…est. 0.0%
· 8:30 AM EST CPI Ex: Food & Energy (core) MoM for Nov…est. 0.2%
· 8:30 AM EST CPI Ex; Food & Energy (core) YoY for Nov…est. 2.2%
· 10:30 AM EST Weekly DOE Inventory Data
· 2:00 PM EST Monthly Budget Statement for Nov…est. (-$198.0B)
· Earnings Before the Open: PLAB, SKIS, VRA
· Earnings After the Close: NCS, NDSN, OXM, TLRD
· UK PM Theresa May has declared that she will fight for her job in Wednesday’s vote, telling reporters in Downing Street: “I will contest that vote with everything that I’ve got.” Sterling sat close to a 20-month low on Wednesday after a late tumble in the previous trading session.
· Investor Intelligence Poll shows equity newsletter writers classified as bulls slip to 45.4% from 46.7%; prior week’s 38.3% was the lowest since May 2016, while those expecting a correction rises to 34.2% from 31.8%; prior week’s 41.1% was the highest since September 2015. Bearish sentiment tumbles to three-week low 20.4% from last week’s 21.5%, the highest since 2016
Sector News Breakdown
· American Eagle (AEO) Q3 adjusted EPS 48c/$1.00B vs. est. 48c/$1.02B; Q3 Consolidated comparable sales increased 8% (vs. est. 8.4%) over the comparable period following a 3% increase last year; sees Q4 EPS 40c-42c vs. est. 46c and sees Q4 com sales up in mid-single digits; Q3 inventories up 11% to $592M
· Dave & Buster’s (PLAY) Q3 EPS 30c/$282.1M vs. est. 24c/$277.66M; Q3 comparable store sales decrease of (-1.3%) vs. est. loss (-0.7%); sees FY18 revenue $1.243B-$1.255B vs. est. $1.25B and sees FY18 net income $106M-$113M; sees FY18 EBITDA $268M-$277M; sees FY18 comparable store sales decrease of low single-digits
· Elliott Management Corp. said that it holds an interest of more than 2.5% in Pernod Ricard SA (RI.FR) and is recommending changes to generate value for stakeholders.
· Fortune Brands (FBHS) raises quarterly dividend by 10% to 22c per share
· Lululemon (LULU) upgraded to Buy from Neutral at Citi
· The American Petroleum Institute (API) reported that U.S. crude supplies fell by -10.2M barrels for the week ended Dec. 7; showed that gasoline stockpiles fell by -2.5M barrels, while distillate inventories climbed by 712,000 barrels
· First Solar, Inc. (FSLR) announced full-year 2019 guidance; forecasted net sales for 2019 are $3.25B-$3.45B vs. est. $2.95B, with solar power systems net sales expected to comprise approximately 55% to 60% of the total net sales and third party module sales the remainder; sees EPS between $2.25-$2.75 which is inclusive of production ramp costs of $20M-$30M and production start-up expenses of $90M-$100M, associated with the deployment of Series 6 capacity in 2019.
· Invesco Ltd. (IVZ) preliminary month-end assets under management (AUM) of $926.0 billion, a decrease of less than 0.1%. The decrease was driven by net long-term outflows and non-management fee earning AUM outflows, offset by favorable market returns, higher money market AUM, foreign exchange and reinvested distributions.
· SEI Investments (SEIC) announces $250M increase to share repurchase program
· RA Pharmaceuticals (RARX) 8.4M share Secondary priced at $15.50
· AC Immune (ACIU) enters pact with Eli Lilly (LLY) to develop tau aggregation inhibitor small molecules as potential treatments of Alzheimer’s disease and other neurodegenerative diseases.
· Synergy Pharmaceuticals (SGYP) said it will sell substantially all of its assets, including rights to Trulance, to Bausch Health for about $200 million in cash in conjunction with filing for voluntary Chapter 11 bankruptcy
· Boston Scientific (BSX) announced that a jury in the United States District Court for the District of Delaware determined that the Boston Scientific U.S. patent 8,992,608 is valid and that Edwards Lifesciences’ (EW) Sapien 3 Aortic Valve infringes this patent and that Edwards owes Boston Scientific infringement damages through the end of 2016 worth $35M
· Arrowhead (ARWR) FY18 EPS loss (65c)/$16.14M vs. est. loss (65c)/$12.89M.
· Fluidigm (FLDM) 8.15M share secondary priced at $6.75
· Marinus (MRNS) announces offering of 12M shares of common stock
· Amgen (AMGN) announced a novel multi-year collaboration with Magellan Rx Management, that will leverage each company’s capabilities and resources to identify clinical gaps for some of the healthcare system’s most difficult-to-treat diseases.
Industrials & Materials
· Rolls-Royce Holdings PLC (RYCEY) said it is stockpiling inventory in preparation for Brexit as it guided for 2018 results at the upper end of its guidance range; said it is in talks with all its suppliers, and has reviewed its logistics options
· Southwest Airlines (LUV) said it now expects Q4 fuel costs to be in the range of $2.25 to $2.30 per gallon; saw $2.30 to $2.35 per gallon; reaffirms 4Q RASM, CASM excl. fuel and expenses, and capacity growth guidance
· ABB (ABB) has confirmed it is in discussions with Japan’s Hitachi about a possible deal involving the Swiss engineering group’s power grids division
· United Rentals (URI) backs FY18 revenue view $7.89B-$7.99B vs. est. $7.92B
Technology, Media & Telecom
· Apple Inc.’s (AAPL) suppliers will consider shifting iPhone production away from China should tariffs on U.S. imports skyrocket, but the U.S. company plans to sit tight for now, Bloomberg reported
· Tencent Music (TME) 82M share IPO priced at $13.00
· EBAY downgraded to equal-weight from overweight at Morgan Stanley and slashed tgt to $33 from $55 saying they were wrong about how quickly core marketplaces would deteriorate
· Angi HomeServices (ANGI) 1.5M share Spot Secondary priced at $16.40
· Pivotal Software (PVTL) Q3 EPS loss (5c)/$168.1M vs. est. $163.17M; Q3 subscription revenue was $100.8M, up 53% from last year; Q3 Subscription customers increased 17% from last year to 368; sees Q4 EPS (10c)-(9c) on revs $169M-$171M vs. est. $167.2M; raises FY19 EPS to (32c)-(31c) from (36c)-(34c) and ups FY19 revenue view to $657M-$659M from $647M-$653M
· Huawei CFO granted bail in Canada as China detains former Canadian diplomat. After three days of hearings, a British Columbia justice granted bail of $10 million Canadian (US$7.5 million) to Meng, but required her to wear an ankle bracelet, surrender her passports, stay in Vancouver