Morning Preview: January 8, 2019

Scott GreenDaily Market Report

Early Look

Tuesday, January 8, 2019

 

Stock futures are trading higher in the U.S. after stocks gained on Monday, building on Friday’s powerful rally, as investors watched for further signs of improvement related to the ongoing trade dispute between the U.S. and China as talks move into day 2 between the two power houses. Note the partial U.S. government shutdown rolls into day-18 today, with President Trump set to deliver a prime-time televised address on border security tonight (9:00 PM EST) before he travels to the U.S.-Mexico border later in the week as he battles Democrats over his proposed border wall. Back to trade, senior officials from China unexpectedly showed up for negotiations in an effort to resolve longstanding trade disagreements that have triggered uncertainty in global markets. Trade officials from both countries are looking to hammer out an agreement over the next 48 hours, but skepticism remains. Elsewhere, British Prime Minister Theresa May set a Jan. 15 date for a parliamentary vote on her plan for exiting from the European Union, which she is widely expected to lose. In Asian markets, The Nikkei Index rose 165 points to 20,204, the Shanghai Index fell -6 points to 2,526 and the Hang Seng Index gained 39 points to 25,875. In Europe, the German DAX is higher by 70 points at 10,820, while the FTSE 100 is up over 50 points at 6,870. Attention is shortly set to turn towards quarterly earnings, with the big banks kicking off results late next week. In tech, Samsung Electronics was the latest to offer a profit warning, following Apple’s lower guidance last week that crushed the sector.

Market Closing Prices Yesterday

· The S&P 500 Index gained 17.75 points, or 0.70%, to 2,549.69

· The Dow Jones Industrial Average rose 98.19 points, or 0.42%, to 23,531.35

· The Nasdaq Composite jumped 84.61 points, or 1.26%, to 6,823.47

· The Russell 2000 Index advanced 24.62 points, or 1.78% to 1,405.37

 

Events Calendar for Today

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

· 7:45 AM EST ICSC Weekly Retail Sales

· 8:30 AM EST Trade Balance for November…postponed due to gov’t shutdown

· 8:55 AM EST Johnson/Redbook Weekly Sales

· 10:00 AM EST JOLTs Job Openings for November…est. 7050

· 3:00 AM EST Consumer Credit for November…est. $17.5B

· 4:30 PM EST API Weekly Inventory Data

 

Other Key Events:

· Consumer Electronics Show (CES) 2019 in Las Vegas

· JPMorgan 37th Annual Healthcare Conference, 1/7-1/10, in San Francisco, CA

· Citigroup Technology, Media and Telecom West Conference, 1/8-1/9, in Las Vegas

· Goldman Sachs Annual Energy Conference, 1/8-1/9, in Miami, FL

 

World News

· The National Federation of Independent Business (NFIB) small-business optimism index fell 0.4 point in December to a seasonally adjusted level of 104.4, the lowest in 14 months.

· German Industrial output surprisingly fell in November, dropping (-1.9%) compared with consensus for a 0.3% gain; that follows October’s (-0.8%) dip

· Euro-area economic confidence slid for a 12th month in December, marking the worst streak since the depths of the financial crisis.

 

Sector News Breakdown

Consumer

· Helen of Troy (HELE) Q3 EPS $2.40/$431.1M vs. est. $2.38/$427.3M; Q3 adjusted Ebitda $74.5M

· Monster Beverage (MNST) upgraded to buy from hold at SunTrust and raised its tgt to $65

· Southwest (LUV) reported its December 2018 preliminary traffic statistics. The company flew 11.1B revenue passenger miles, or RPMs, in December 2018, an increase of 3.3% from the 10.7B RPMs flown in December 2017. Available seat miles, or ASMs, increased 5.4% to 13.6B in December 2018, compared with December 2017 ASMs of 12.9B

· Haverty’s Furniture (HVT) Q1 prelim sales $209M vs. est. $215.5M

· SkyWest (SKYW) reported 147,300 block hours in December 2018, compared to 151,400 block hours in December 2017, a decrease of 4,100 or 2.7%

 

Energy, Industrials & Materials

· Union Pacific (UNP) named Jim Vena chief operating officer, effective Jan. 14. He served as executive vice president and chief operating officer atCanadian National (CNI) until retiring in June 2016 after a 40-year CN career

· AZZ (AZZ) Q3 EPS 59c/$239.5M vs. est. 61c/$238.96; narrows FY19 EPS view to $1.95-$2.20 from $1.90-$2.25 and narrows FY19 revenue view to $940M-$960M from $930M-$970M (est. $2.15 and $952.05M)

· Steel sector at Credit Suisse: US Steel (X) downgraded to neutral from outperform, while Steel Dynamics (STLD) and Nucor (NUE) were upgraded to outperform from neutral

· Newfield Exploration (NFX) updated its 4Q outlook to include its view of daily net liquids production in the Anadarko Basin coming in above the high end of its 80-86 Mbbls/D view; preliminary FY proved reserves seen increasing more than 100 MMBOE (or 15%) y/y to over 780 MMBOE

· S&P Global Ratings lowered the issuer credit ratings on utility holding company PG&E Corp. (PCG) and subsidiary Pacific Gas & Electric Co. to ‘B’ from ‘BBB-‘, and lowered the short-term rating on both entities to ‘B’ from ‘A-3

· TechnipFMC (FTI) in consortium with MMHE, has signed a Long-Term Offshore Agreement with Saudi Aramco as agreement, valid for 6 years

 

Financials

· Voya Financial (VOYA) upgraded to buy from neutral at Goldman Sachs while downgraded Principal Financial (PFG) to neutral from buy

· Pzena Investment (PZN) reports preliminary AUM $33.4B at December 31, 2018, compared to $35.9B as of November 30, 2018

 

Healthcare

· Novocure (NVCR) Q4 revenue $69.6M vs. est. $70.47M; reports Q4 active patients up 30% from last year at 2.4K and prescriptions received up 21% at 1.3K

· Quidel (QDEL) guides Q4 revenue $132M-$133M vs. est. $131.5M; company’s performance were driven significantly by the integration of the acquired Triage assets

· Tactile Systems (TCMD) sees Q4 revenue $45.5M-$46M vs. consensus $38.86M and sees FY18 revenue $142.8M-$143.3M vs. est. $137.72M

· Boston Scientific (BSX) sees prelim Q4 sales $2.56B, in-line with consensus

 

Technology, Media & Telecom

· Samsung Electronics Co. said it expects Q4 operating profit will decline 29%, well below analysts’ estimates “amid mounting macro uncertainties” and pointed to “lackluster demand” for memory chips and “intensifying competition” in its handsets business. The warning comes a week after rival Apple made a surprise cut to its revenue guidance, blaming China’s slowing economy

· Intel Corp. (INTC) announced a series of new products at CES, including new chips for artificial intelligence and 5G wireless connectivity; announced new versions of its 9th-generation chips for PCs, with six new chips in that family adding to a first that was introduced last year

· Asure Software (ASUR) raises FY19 revenue view to $104M-$107M from $100M-$103M as it updated guidance follows Asure Software acquisition of Payroll Maxx.

· Cree (CREE) announces that it signed a multi-year agreement to produce and supply its Wolfspeedsilicon carbide, SiC, wafers to STMicroelectronics (STM)

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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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