Friday, December 21, 2018
Stock futures slip, adding to yesterday’s declines as the possibility of a government shutdown and ongoing fears of slowing global growth weigh on sentiment once again. Regarding the potential gov’t shutdown today, the House voted to give Trump $5 billion for his border wall but Senate leaders from both parties said the spending bill won’t pass the chamber (Senate will begin discussing the measure at noon). Without an agreement, nine government departments will close at midnight. WTI slides further, holding below $46 a barrel and heading for a drop of more than 10% this week while precious metals were lower across the board. Its has been a bleak week for U.S. stocks, as all three indexes are looking at losses of over 5%, as of Thursday’s close. Of note today, markets will get a final read on third-quarter gross domestic product at 8:30 AM EST. In Asian markets, The Nikkei Index fell -226 points to settle at 20,166, the Shanghai Index fell -20 points to settle at 2,516 and the Hang Seng Index rose 129 points to25,753. In Europe, the German DAX is down around -40 points at 10,560, while the FTSE 100 is down about -30 points under 6,700. Volume may be higher today given quadruple witching, the simultaneous expirations of stock-index and individual stock futures and options.
Note equity and bond markets on Monday will end early on the eve of Christmas and will be closed on Tuesday for the holiday. On Thursday, the Nasdaq Composite tumbled 1.6% to 6,528.41, on the brink of ending in bear-market territory, defined as a drop of at least 20% from its most recent high. U.S. stocks overall closed sharply lower Thursday, near to their 52-week lows, with investors rattled after the Federal Reserve’s interest-rate policy and fresh concerns of a partial government shutdown. The S&P fell, closing 15.8% from its most recent highs and the Dow down 14.8% from its early-October peak.
Market Closing Prices Yesterday
· The S&P 500 Index dropped -39.54 points, or 1.58%, to 2,467.42
· The Dow Jones Industrial Average fell -464.06 points, or 1.99%, to 22,859.60
· The Nasdaq Composite plunged -108.42 points, or 1.63%, to 6,528.41
· The Russell 2000 Index declined -23.23 points, or 1.72% to 1,326.00
· 8:30 AM EST Gross Domestic Product (GDP) for Q3-T…est. 3.5%
· 8:30 AM EST Personal Consumption for Q3-T…est. 3.6%
· 8:30 AM EST GDP Price Index for Q3-T…est. 1.7%
· 8:30 AM EST Core PCE QoQ for Q3-T…est. 1.5%
· 8:30 AM EST Durable Goods Orders, Nov-P…est. 1.6%
· 10:00 AM EST Personal Income for November…est. 0.3%
· 10:00 AM EST Personal Spending for November…est. 0.3%
· 10:00 AM EST PCE Deflator MoM for November…est. 0.0%
· 10:00 AM EST PCE Core MoM for November…est. 0.2%
· 10:00 AM EST University of Michigan Confidence, Dec-F…est. 97.4
· 11:00 AM EST Kansas City Fed Manufacturing for December…est. 13
· 1:00 PM EST Baker Hughes Weekly Rig Count
· German consumer sentiment is set to be stable at the start of the new year, with as GfK’s forward-looking confidence index is expected to come in at 10.4 points in January, unchanged from December, and vs. a forecast of a 10.3-point reading.
· Defense Secretary Jim Mattis quit, citing policy differences, as Trump ordered U.S. forces to pull out of Syria and an official said he’ll cut its presence in Afghanistan
· China pledged big tax cuts and signaled easier monetary policy in 2019 to counter a slowdown. Fiscal policy will be proactive and monetary policy prudent, though the term “neutral” was dropped from a statement after a key planning meeting.
Sector News Breakdown
· Nike (NKE) Q2 EPS 52c/$9.37B vs. est. 46c/$91.7B; 2Q gross margin +43.8% vs. Bloomberg estimate +43.5%; 2Q North America revs $3.78B, Q2 EMEA revs $2.31B and Q2 Greater China revs $1.54B; 2Q effective tax rate 15%; sees FY19 revenue growth in high single-digit range
· Cintas (CTAS) Q2 EPS $2.18/$1.72B vs. est. $.70B; sees FY revenue $6.87B-$6.91B vs. est. $6.84B; 2Q gross margin +45.1%, estimate +44.8%; raises FY19 EPS view to $7.30 to $7.38 from previous view $7.19 to $7.29
· The Del Frisco’s Board (DFRG), in consultation with its financial and legal advisors, will review and consider a full range of options focused on maximizing shareholder value, including a possible sale of the Company or any of its dining concepts
· Lamb Weston (LW) announces $250M share repurchase program
· Altria Group (MO) downgraded to sell at Citigroup
Energy, Industrials and Materials
· Anglo American will restart its Minas-Rio iron ore mine in Brazil following a months-long shutdown that began after a pipeline sprung leak. It expects an underlying Ebitda loss of $320 million for Minas-Rio in 2018
· Boeing (BA) and Green Africa Airways announced a commitment for up to 100 737 MAX 8 aircraft, evenly split into 50 firm aircraft and 50 options
· Sterling Bancorp (STL) increases stock repurchase plan to 20M shares from 10M
· Signature Bank (SBNY) upgraded to Outperform from Neutral at Wedbush with $125 tgt
· Merck & Co. (MRK) said the FDA extended the action date for the supplemental Biologics License Application for KEYTRUDA.
· Pfizer Inc. (PFE) said the Phase 2b trial STRIVE evaluating the company’s investigational Staphylococcus aureus multi-antigen vaccine (PF-06290510) is being discontinued due to futility
· Gritstone Oncology (GRTS) said FDA has granted Fast Track designation to GRANITE-001 for the treatment of colorectal cancer.
· Perrigo Co. PLC (PRGO) disclosed that the Irish Office of the Revenue Commissioners had decided that subsidiary Elan Pharma Ltd. paid an incorrect tax rate on proceeds from a 2013 sale of intellectual property toBiogen Inc. (BIIB). The Irish agency said that Elan should have paid a tax rate of 33% on the sale
· Canopy Growth Corp. (CGC) said the company planned to enter the U.S. hemp sector following the passage of the farm bill Thursday that legalized industrial hemp.
Technology, Media & Telecom
· CalAmp (CAMP) Q3 adjusted EPS 25c/$88.5M vs. est. 28c/$93.4M; sees 4Q adjusted EPS 23c-29c on revs $86M-$92M vs. est. 30c/$95.6M; reports Q3 gross margin 41.1% vs. 40.8% last year
· CyberArk (CYBR) upgraded to buy from hold at Deutsche Bank with an unchanged price target of $85 as firm’s recently conducted channel checks on the identity and privilege account-management space came back with a number of positive data points
· Zynga Inc. (ZNGA) said it was acquiring 80% of Small Giant Games for $560 million in cash and stock, and raised its Q4 bookings guidance to $260M, up from $250M previously
· Tencent (TCEHY) active after Chinese regulatory officials have cleared some new video games from the company after having stopped approving new titles from March amid a regulatory overhaul