Morning Preview: December 13, 2018

Terrie AmengualDaily Market Report

Early Look

Thursday, December 13, 2018

For a change, U.S. futures are pointing to a mixed open, holding yesterday’s gains (despite major averages closing well off their session lows), as investors digest news out of the UK and China again overnight. Late yesterday, U.K. Prime Minister Theresa May won the vote of no-confidence the Conservative Party, leaving her untouchable by her party for another such vote for the next 12 months. Earlier in the day May said she was not going to lead the Tories into the next election, implying she would step down at some point beforehand. Options for Brexit remain the same as before: going with May’s deal or a slightly amended version if the EU allows for it, hold a second referendum, walk back on the decision to exit, or allow for a hard Brexit. There were more also more glimmers of hope in the trade war for investors this morning, as China reiterated a willingness to talk with the U.S. and resumed buying of American soybeans. In Asian markets, The Nikkei Index rose 213 points (1%) to settle at 21,816, the Shanghai Index jumped 31 points to 2,634 and the Hang Seng Index gained 337 points to 26,524. In Europe, the German DAX is up a few points at 10,940, while the FTSE 100 is down slightly around 6,870. There were a few central bank news items overnight (SNB, Turkey) while the European Central Bank wraps things up this morning with its decision at 7:45 AM EST and press conference by ECB President Draghi at 8:30 AM EST. Markets are anticipating that the ECB will lower its inflation and GDP forecasts for 2019 today.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 14.29 points, or 0.54%, to 2,651.07

· The Dow Jones Industrial Average rose 157.03 points, or 0.64%, to 24,527.27

· The Nasdaq Composite spiked 66.48 points, or 0.95%, to 7,098.31

· The Russell 2000 Index advanced 15.19 points, or 1.05% to 1,455.32

Events Calendar for Today

· 8:30 AM EST Weekly Jobless Claims…est. 226K

· 8:30 AM EST Continuing Claims…est. 1.649M

· 8:30 AM EST Import Prices MoM for Nov…est. (-1.0%)

· 9:45 AM EST Bloomberg Consumer Comfort Index

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

· 2:00 PM EST Monthly Budget Statement…est. (-$199.0B) – was delayed yesterday

Earnings Calendar:

· Earnings Before the Open: CIEN, FRED, VERU, VNCE

· Earnings After the Close: ADBE, CHKE, CIVI, COST, GTIM, LRAD

Other Key Events:

· European Central Bank (ECB) Decision at 7:45 AM EST

· ECB Press conference with President Draghi at 8:30 AM EST

World News

· The ECB will lower its inflation and GDP forecasts for 2019 today, according to reports, though Mario Draghi will want to prevent rate-hike expectations slipping further. Plans for QE reinvestments will draw attention.

· Turkey’s central bank left its benchmark interest rate on hold, in line with expectations, as it tries to bring down inflation stuck above 20%

· The Swiss National Bank left the key interest rate unchanged at -0.75%; SNB will remain active in FX mkt as necessary, while taking the overall currency situation into consideration

Sector News Breakdown

Consumer

· Oxford Industries (OXM) Q3 EPS 14c/$233.7M vs. est. 17c/$243M; sees 4Q adjusted EPS 96c-$1.11 below estimate $1.33 and sees FY adjusted EPS $4.20-$4.35 below estimate $4.60; 3Q comp sales increased 7%

· Tailored Brands (TLRD) Q3 EPS $1.01/$812.7M vs. est. 94c/$819.5M; Q3 2018 retail segment comparable sales up 2.3% with all brands positive; cuts FY18 adjusted EPS view to $2.30-$2.35 from $2.35-$2.50 and expects comparable sales for: Men’s Wearhouse to be flat-to-up slightly versus previous guidance of up low-single-digits Jos. A Bank to be up low-single digits

· Boyd Gaming (BYD) announces new $100M share repurchase plan

· NVR Inc. (NVR) announces $300M share repurchase program

· Fred’s (FRED) Q3 EPS loss (83c) vs. ($1.35) a year ago and reports Q3 revenue $306.4M vs. $324.3M a year ago; Q3 comparable store sales decreased 5.3% in Q3 2018 versus a 1.0% decline in Q3 2017

Energy

· The IEA said crude output in the OPEC rose by 100,000 barrels a day on month to reach 33.03 million barrels a day in November. Saudi Arabia — the de-facto head of OPEC — churned out a surge of 410,000 barrels a day to a historic high of 11.06 million barrels a day.

· TechnipFMC (FTI) announces authorization for additional $300M stock buyback; sees 2019 subsea segment Ebitda margin of at least 11%, 2019 onshore/offshore revenue $5.7B-$6B and sees 2019 surface technologies revenue $1.7B-$1.8B; sees 2019 capital expenditures of about $400M

Financials

· Waddell & Reed Financial, Inc. (WDR) reported preliminary assets under management of $72.0 billion for the month ended November 30, 2018, compared to $72.2 billion on October 31, 2018

· AllianceBernstein L.P. (AB) said preliminary assets under management increased to $533 billion during November 2018 from $530 billion at the end of October. The 0.6% increase was due to market appreciation, partially offset by total firm wide net outflows.

· Hannon Armstrong (HASI) 5M share Spot Secondary priced at $22.30

Healthcare

· Applied Genetic (AGTC) reported topline interim six-month data from its Phase 1/2 clinical trial of rAAV2tYF-CB-hRS1, an investigational AAV-based gene therapy delivered via intravitreal injection for X-linked retinoschisis, or XLRS, due to mutations in the RS1 gene

· Zoetis (ZTS) authorizes $2B share repurchase program

· The Medicines Co. (MDCO) files to sell $150M of convertible senior notes due 2024

· The CVS-Aetna (CVS, AET) merger will probably be blocked by U.S. District Judge Richard Leon at a hearing Tuesday, the NY Post reported. People familiar said Leon may take the procedural step, which could delay the $68 billion transaction by months, not weeks

· Biohaven Pharmaceutical (BHVN) 3.3M share Secondary priced at $37.25 per share

· Marinus Pharmaceuticals (MRNS) 12M share Secondary priced at $3.75 per share

· Tocagen (TOCA) 3M share Secondary priced at $10.00 per share

Industrials & Materials

· Nordson (NDSN) Q4 adjusted EPS $1.44/$569.3M vs. est. $1.47/$560.99M

· Danaher (DHR) initiates 2019 outlook ahead of investor meeting as sees 2019 EPS $4.75-$4.85 vs. estimate $4.83 and assumes adj. core revenue growth of about 4%

· Linde will sell a portion of its HyCO business and assets in the U.S. to Taiyo Nippon Sanso for $413 million. The sale is part of the FTC’s conditions for the approval of the Linde-Praxair merger

· The House of Representatives passed a $867 billion measure reauthorizing farm programs and sent it to President Donald Trump. The farm bill, which passed the Senate on Tuesday, ultimately left out a provision that would have required stronger work requirements for receiving food stamps. The measure also legalizes hemp production.

· Kratos Defense & Security Solutions (KTOS) said it won an indefinite-delivery/indefinite-quantity contract to support the U.S. Air Force’s Sounding Rocket Program-4 as the seven-year contract has a total potential value of up to $424M

Technology, Media & Telecom

· Apple Inc. (AAPL) announced a plan to expand its Austin, TX, operations and invest $1 billion to build a new campus in North Austin, the company said in a press release

· Limelight Networks (LLNW) cuts FY18 EPS view to 10c-11c from 14c-17c (est. 15c) and cuts FY18 revenue view to $195M-$196M from $200M-$203M vs. est. $202.24M

· Arrow Electronics (ARW) announces additional $600M stock buyback

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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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