Morning Preview: January 11, 2019

Terrie AmengualDaily Market Report

Early Look

Friday, January 11, 2019


Stock futures are steady, to slightly lower heading into the final day of trading for the week. Oil prices are higher, looking to make it a 10th straight day of gains (has risen off 18-month lows late December). The partial government shutdown rolls into day 21, with both sides nowhere close to a resolution on the funding of the Border Wall to Mexico which President Trump is firm on, while many government employees miss paychecks today. The British pound spiked higher than trimmed gains after London’s Evening Standard newspaper reported that Prime Minister Theresa May’s cabinet ministers see the U.K.’s exit from the EU as increasingly likely to be delayed beyond the planned Brexit date of March 29. In Asian markets, The Nikkei Index gained 195 points to end the week at 20,359, the Shanghai Index rose 18 points to settle at 2,553 and the Hang Seng Index gained 145 points to close at 26,667. In Europe, the German DAX is down about -20 points at 10,900, while the FTSE 100 is up around 20 points at 6,960. Note so far, the 7-session start to the year is the best for the Dow, S&P 500 and Nasdaq since 2006 and has climbed about 10% since the Christmas Eve lows


U.S. stock markets rallied on Thursday, as major averages managed to post a fifth straight daily advance, the longest such win streaks for the Dow and S&P 500 since October and September respectively. The gains also helped to lift the Dow and the S&P 500 out of correction (a drop of at least 10% from a recent peak). Stocks rebounded from early declines as several retailers issued lower outlooks including Macy’s, Kohl’s and Limited Brands along with weakness in airlines following a lower forecast from America Airlines. Health-care stocks underperformed the broader market, as pharmaceutical shares slipped amid a renewed political focus on drug pricing. Biotech stocks, meanwhile, rose for an eighth day, marking their longest winning streak since 2015 (IBB up about 13% YTD). Reports about progress in trade talks between China and Washington have provided upward momentum for stocks of late to start the year. Gains picked up late afternoon as Federal Reserve Chairman reiterated the central bank’s intention to patiently normalize interest-rate policy, while paying attention to financial markets. The one lingering focus remains the partial government shutdown.

Market Closing Prices Yesterday

· The S&P 500 Index jumped 11.68 points, or 0.45%, to 2,596.64

· The Dow Jones Industrial Average rose 122.80 points, or 0.51%, to 24,001.92

· The Nasdaq Composite gained 28.99 points, or 0.42%, to 6,986.07

· The Russell 2000 Index advanced 6.63 points, or 0.46% to 1,445.43


Events Calendar for Today

· 8:30 AM EST Consumer Price Index (CPI) MoM for December…est. (-0.1%)

· 8:30 AM EST CPI Ex: Food & Energy MoM for December…est. 0.2%

· 8:30 AM EST CPI Ex: Food & Energy YoY for December…est.

· 1:00 PM EST Baker Hughes Weekly Rig Count

· 2:00 PM EST Monthly Budget Statement for December


World News

· Fed Vice Chairman Richard Clarida reiterated Fed Chair Powell’s dovish tone, saying policy should be adjusted if “crosswinds” to the economy are sustained.

· The Confederation of British Industry, the influential lobby group for U.K. businesses, is to warn that a crash-out Brexit will shrink the country’s economy by 8% and put thousands of jobs at risk.


Sector News Breakdown


· Urban Outfitters (URBN) reported sales for the two and eleven months ended December 31, 2018, with two-month net sales up 5.0%. Two-month comparable retail segment net sales increased 6% at Free People, 5% at Urban Outfitters and 4% at the Anthropologie Group 11-month total company net sales increased 10.0%, with comparable retail sales up 9%

· Hawaiian Airlines (HA) expects to report operating revenue per available seat mile fell 3%-4% in 4Q, had seen drop of 3%-5%; December total traffic, measured by revenue passenger miles, increased 5.1%; December capacity, measured by available seat miles, up 5.6%; December load factor 84%, down 0.4 points; Q4 passengers were down 0.8%, RPMs were up 3.9%, ASMs up 5.6% and load factor down 1.4 points YoY

· PVH Corp. (PVH) said it sees Q4 revs at least $2.4 billion and full-year 2018 revenue of $9.6 billion, above its prior expectations; said it can’t project GAAP Q4 and full-year 2018 EPS; but projected adjusted EPS of at least $1.75 for the quarter, 15c above the high end of its guidance range announced in November


Energy, Industrials & Materials

· PG&E’s (PCG) long-term corporate family rating was downgraded by Moody’s to Ba3 from Baa2; outlook remains watch negative



· Arch Capital (ACGL) said there were a number of catastrophes around the globe in Q4, including Hurricane Michael, wildfires in California and a series of smaller events and has established a range of pre-tax losses of $110M to $130M for these events, net of reinsurance recoveries and reinstatement premiums

· Invesco (IVZ) reported preliminary month-end assets under management of $888.2B, a decrease of 4.1%. The decrease was driven by unfavorable market returns, net long-term outflows, and lower money market AUM, partially offset by reinvested distributions of $8.2 billion, non-management fee earning AUM inflows, and foreign exchange

· Artisan Partners Asset Management Inc. (APAM) reported that its assets under management as of December 31, 2018 totaled $96.2 billion. Separate accounts1 accounted for $49.6 billion of total firm AUM, while Artisan Funds and Artisan Global Funds accounted for $46.6 billion

· BlackRock (BLK) downgraded to Hold from Buy at Deutsche Bank



· Codexis (CDXS) clinical trial protocol for CDX6114-003 may proceed as the U.S. FDA completed its safety review of the company’s investigational new drug application for CDX-6114

· Health-care stocks underperformed the broader market Thursday, as pharmaceutical shares slipped amid a renewed political focus on drug pricing. Biotech stocks, meanwhile, rose for an eighth day, marking their longest winning streak since 2015 (IBB up about 13% YTD).


Technology, Media & Telecom

· Apple Inc. (AAPL) plans to push out three new iPhone models this autumn, according to sources cited by The Wall Street Journal. The report comes more than a week after CEO Tim Cook lowered the company’s revenue forecast amid slowing iPhone sales and pressure in China.

· Netflix (NFLX) upgraded to buy from neutral at UBS

· Activision Blizzard Inc. (ATVI) is cutting ties with Bungie Inc., the development studio responsible for the science-fiction shooter “Destiny,” a surprise move that sent shares lower after the close

· SYNNEX (SNX) Q4 adjusted EPS $3.65/$5.62B vs. est. $3.10/$5.43B; sees Q1 EPS $2.70-$2.80 on revs $5.225B-$5.425B vs. est. $2.51/$5.08B; raises dividend to 37.5c from 35c

· AT&T (T) says it will stop selling all location data from mobile phones to brokers following a report that companies are still selling that information to shadowy companies without customer knowledge

· Global PC sales fell 4.3% to 68.6 million units in the fourth quarter, and 1.3% to 259.4 million in 2018, Gartner said. Overall worldwide PC sales declined for both the fourth quarter and year in 2018, while Lenovo Group Ltd. and Dell Technologies Inc.’s share of the market grew

· Slack Technologies Inc. will sell its shares directly to bidders on the stock market, choosing a direct listing over an initial public offering, the Wall Street Journal said

· Infosys (INFY) Q3 EPS 12c/$2.99B vs. est. 12c/$2.95B



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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