Thursday, January 10, 2019
Stock futures in the U.S. point to a weaker open, coming into the day riding a 4-day win streak, but faltering as global markets took a breather with little fresh news on the trade front and no resolution the gov’t shutdown to sustain positive momentum. Data in China overnight also spooking markets early as both consumer and producer prices decelerated sharply in Beijing last month. The U.S. government shutdown enters day-20, while the House passed funding bills to reopen some agencies, including the Treasury, SEC and IRS, but the Senate won’t vote on them as long as the president vows to veto. Oil prices lower for the first day in the last nine while safe haven assets are higher early. The dollar climbed against most peers after sliding the last few sessions. President Trump heads to the border today to rally support for his wall, a day after storming out of a meeting with Nancy Pelosi and Chuck Schumer. Also on the agenda today, weekly jobless claims and a slew of Fed speakers. Earnings season right around the corner with big banks kicking things off next week. Yesterday, U.S. stocks ended higher as investors reacted to the more dovish approach mentioned in notes from the latest Federal Reserve meeting, but gains were pared by concerns that the partial government shutdown may continue for some time. In Asian markets, The Nikkei Index fell -263 points to 20,163, the Shanghai Index fell -9 points to 2,535 and the Hang Seng Index rose 59 points to 26,521. In Europe, the German DAX is down about -30 points at 10,850, while the FTSE 100 is down, trading under 6,900.
· 8:30 AM EST Weekly Jobless Claims…est. 226K
· 8:30 AM EST Continuing Claims…est. 1.74M
· 8:35 AM EST Fed’s Barkin speaks on Ensuring Long-term growth
· 9:45 AM EST Bloomberg Consumer Comfort Index…prior 59.6
· 10:00 AM EST Wholesale Inventories MoM, Nov-F…postponed due to gov’t shutdown
· 10:30 AM EST Weekly EIA Natural Gas Inventory Data
· 12:00 PM EST Fed’s Powell to speak to the Economic Outlook of Washington
· 12:30 PM EST Fed’s Bullard speaks on Economy and Monetary Policy
· 1:00 PM EST Fed’s Evans speaks at Economic Forecast Event
Market Closing Prices Yesterday
· The S&P 500 Index jumped 10.55 points, or 0.41%, to 2,584.96
· The Dow Jones Industrial Average rose 91.67 points, or 0.39%, to 23,879.12
· The Nasdaq Composite gained 60.08 points, or 0.87%, to 6,957.08
· The Russell 2000 Index advanced 12.25 points, or 0.86% to 1,438.81
· China consumer prices rose in December at their slowest pace in six months, 1.9% from a year earlier by China’s benchmark index, while prices charged by producers increased by the lowest rate in two years, at 0.9%,
· British secretary of state for business Greg Clark has warned that crashing out of the European trading bloc would be a “disaster” for the U.K. Clark told the BBC morning that the U.K. needed to “resolve concern” about the possibility of no-deal to secure future investment in the country
Sector News Breakdown
· Bed Bath & Beyond (BBBY) +22%; Q3 EPS 18c/$3B vs. est. 17c/$3.04B; Q3 comparable sales declined approximately -1.8% vs. est. -0.2%, and included strong sales growth from the company’s customer-facing digital channels, and sales from stores that declined in the mid-single-digit percentage range; continues to see FY18 EPS about $2.00 vs. est. $1.99; said is ahead of plan with respect to its longer-term financial goals to moderate the declines in its operating profit and net EPS, this year and next
· Costco (COST) total comparable sales for December +6.1%, vs. Bloomberg estimate +5.7%; December U.S. comparable sales excluding fuel, currencies +7.1% vs. estimate +6.4%; E-commerce comparable sales were up 23.9%. Total company comparable sales excluding the impacts from changes in gasoline prices, foreign exchange and a previously disclosed accounting change were up 7.0%
· KB Home (KBH) +4%; Q4 adjusted EPS 96c/$1.35B vs. est. 93c/$1.33B; Deliveries increased slightly to 3,389 homes; Average selling price declined 5% to $395,200 due primarily to a shift in geographic mix of homes delivered; Net orders for Q4 decreased 12% to 2,013. Net order value declined 21% to $738.3 million
· Zumiez (ZUMZ) sees Q4 EPS $1.08-$1.10 (up from prior $1.02-$1.08) vs. est. $1.06; December comparable sales +4.9% and expects 4Q comparable sales growth of approximately 3% up from 0%-2% range previously
· PriceSmart (PSMT) Q1 EPS 48c (inc items) on revs $779.6M vs. est. 67c/$795.17M. Q1 EPS was negatively impacted by 13c from costs associated with Aeropost and omni-channel development initiatives in addition to being negatively impacted by 13c per share from the separation related costs; comparable net merchandise sales decreased 2.1% for the 13-week period ended December 2, 2018 compared to the same period in the prior year
· WD-40 (WDFC) Q1 EPS 95c/$101.3M vs. est. 95c/$99.1M; sees FY19 EPS $4.51-$4.58 on revs $425M-$437M vs. est. $4.53/$426.6M; sees FY19 gross margin near 55%
· Target (TGT) said CFO to retire; Nov/Dec comp sales up 5.7%
· Ford Motor Co. (F) has launched talks with trade unions in Europe about job cuts that could run into the thousands as it shuts European plants and cancels production of unprofitable models
· To prevent wildfires, Pacific Gas & Electric Co. (PCG) should re-inspect its entire electric grid and cut off power during certain wind conditions regardless of the inconvenience to customers or loss of profit, a U.S. judge proposed Wednesday.
· Cohen & Steers (CNS) reported preliminary assets under management of $54.8B as of December 31, 2018, a decrease of $3.8B from November 30, 2018. The decrease was due to market depreciation of $2.9B, distributions of $443M and net outflows of $384M
· Franklin Resources, Inc. (BEN) reported preliminary month-end assets under management of $649.9B at December 31, 2018, compared to $683.3B at November 30, 2018. The decrease in assets under management was due to net market change and other that more than offset positive net flows
· Saratoga Investment (SAR) increased its assets under management to $443.8M, an increase of 13.0% from $392.9M as of August 31, 2018, and an increase of 31.0% from $338.8M as of November 30, 2017
Industrials & Materials
· Aerospace/Defense sector: Boeing (BA) was upgraded to overweight from equal-weight at Morgan Stanley and raised tgt to $450 from $400, while downgraded Lockheed Martin (LMT) to equal-weight and cut tgt to $300 from $366
· Union Pacific (UNP) now expects to report a record full-year 2018 operating ratio of 62.7%, a 0.1% improvement from its 2017 adjusted non-GAAP operating ratio performance. Drivers of this improvement versus previous expectations included higher revenue, lower diesel fuel prices and improved cost performance. Said December carloadings were stronger than expected, led by international container imports
· United Airline (UAL) December 2018 consolidated traffic (revenue passenger miles) increased 6.9% and consolidated capacity (available seat miles) increased 6.4% versus December 2017. UAL’s December 2018 consolidated load factor increased 0.4 points compared to December 2017.
· BASF SE (BASFY) said that it has signed an agreement with China’s Guangdong Province, setting out further details for the company’s planned $10 billion production site in the region.
· Jaguar Land Rover is set to announce plans to cut up to 5,000 jobs from its U.K. workforce, amid ongoing Brexit uncertainty.
Technology, Media & Telecom
· Veritone (VERI) raises Q4 revs view to $10.7M-$10.9M from prior $9.3M-$9.7M and vs. est. $9.49M citing strong demand for its aiWARE operating system
· Yelp Inc. (YELP) was downgraded to underweight from equal-weight at Morgan Stanley which forecast negative revisions to the company’s earnings and revenue expectations, something it said would drive underperformance in the stock
· Taiwan Semi (TSM) reports December 2018 revenue of NT$89.83B (-8.7% M/M) (-0.1% Y/Y); FY18 revenue of NT$1031.4B (+5.5% Y/Y).
· ChipMOS TECHNOLOGIES (IMOS) reports December revenue of $50.2M, down 5.1% M/M and up 9% Y/Y; revenue for the quarter increased 12.8% Y/Y to $162.4M