Morning Preview: January 16, 2019

Scott GreenDaily Market Report

Early Look

Wednesday, January 16, 19

Futures

Up/Down

%

Last

DJ Industrials

43.00

0.18%

24,027

S&P 500

4.50

0.16%

2,609

Nasdaq

3.00

0.04%

6,679

 

 

Stock futures are edging higher, rising with mixed European shares after China pledged to step up efforts to support growth and ECB President Mario Draghi eased recession concerns. The partial government shutdown rolls into day-26 in the United States as VP Mike Pence doubled down on Trump’s wall demand and said the president won’t back down. No meetings are scheduled with lawmakers today. Another buys morning of bank earnings with BAC, GS, BLK, BK, PNC and USB among those reporting results. Mark Carney, the governor of the Bank of England, has warned that market volatility is to be expected following the voting down of the UK government’s Brexit deal on Tuesday night. Meanwhile, expectations are for Theresa May to likely survive today’s no-confidence vote.

 

U.S. stocks snapped a two-session skid yesterday as the S&P 500, Dow Industrials and the Nasdaq finished above psychologically important levels (2,600, 24,000 and 7,000 respectively) for the first time in a month, following a strong tech rally that offset lackluster results from major U.S. banks, including Dow-component JPMorgan Chase & Co. News of a fresh round of stimulus in China, and a tame inflation reading in the form of Producer Prices (PPI) for December also helped market sentiment. Tech stocks jumped led by shares of Netflix which gained over 6% after saying it would raise U.S. prices by 13% to 18%, the biggest rise since launching its streaming service 12 years ago. In the U.K., Prime Minister Theresa May’s plan to leave the European Union was rejected overwhelmingly by the parliament.

 

In Asian markets, The Nikkei Index fell -112 points to 20,442, the Shanghai Index was little changed at2,570 and the Hang Seng Index rose 71 points to 26,902. In Europe, the German DAX is down -20 points at 10,870, while the FTSE 100 is down over 40 points at 6,850 ahead of UK PM May confidence vote later today.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 27.69 points, or 1.07%, to 2,610.30

·     The Dow Jones Industrial Average rose 155.75 points, or 0.65%, to 24,065.59

·     The Nasdaq Composite spiked 117.92 points, or 1.71%, to 7,023.83

·     The Russell 2000 Index advanced 12.40 points, or 0.87% to 1,445.22

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Advance Retail Sales MoM for December…postponed due to gov’t shutdown

·     8:30 AM EST      Retail Sales Less Autos MoM for December…postponed

·     8:30 AM EST      Import Prices MoM for December…est. (-1.3%)

·     10:00 AM EST    Business Inventories for November…postponed

·     10:00 AM EST    NAHB Housing Market Index for January…est. 56

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       Fed Beige Book released

·     4:00 PM EST       Net Long-term TIC flows for November…postponed

·     6:30 PM EST       Fed’s Kashkari speaks about 10th anniversary crisis

 

Earnings Calendar:

·     Earnings Before the Open: BAC, BK, BLK, CMA, GS, PNC, SCHW, USB

·     Earnings After the Close: AA, CSX, PLXS

 

 

Macro

Up/Down

Last

WTI Crude

-0.31

51.80

Brent

-0.13

60.51

Gold

0.40

1,288.80

EUR/USD

-0.002

1.1393

JPY/USD

0.11

108.79

10-Year Note

+0.031

2.736%

 

 

World News

·     Mark Carney, the governor of the Bank of England, has warned that market volatility is to be expected following the voting down of the UK government’s Brexit deal on Tuesday night. Meanwhile, expectations are for Theresa May to likely survive today’s no-confidence vote

·     Consumer prices in Germany increased nearly 2% on an annual average last year, but fell sharply in the final month of 2018. The consumer price index was confirmed to have risen 0.3% on month and 1.7% on year, with provisional CPI figures verified at 0.1% on month and 1.7% on year.

·     China’s home prices gained momentum in December from a year earlier, as average prices rose 10.6% in December, which compared with a 10.3% gain in November.

 

Sector News Breakdown

Consumer

·     United Continental (UAL) Q4 EPS $2.41/$10.49B vs. est. $2.05/$10.33B; sees year EPS $10.00-$12.00 vs. est. $10.99; sees 1Q capacity +5% to +6%, sees 1Q PRASM 0% to +3% and sees FY capacity +4% to +6%

·     Nordstrom Inc. (JWN) said sees full-year EPS to be around the low end of its guidance of $3.27-$3.37 a share as a result of the holiday-shopping season; adjusted for a credit-related charge it expects $3.55-$3.65 (est. $3.60); said that sales jumped 1.3% for the nine weeks ending Jan. 5, compared with the year-earlier period. Nordstrom said “full-price” comparable sales increased 0.3% relative to Q3 year-to-date increase of 1.9% because of weaker in-store foot traffic.

·     Ford (F) prelim ’18 EPS $1.30 vs. est. $1.32; results for FY18 include a non-cash pretax re-measurement loss of $877 million related to year-end revaluation of global pension and other postretirement employee benefits; will use a blockchain-based platform to trace supplies of cobalt from a Chinese-owned mine in the Congo to the batteries in its electric cars

·     Pearson (PSO) relied on cost cuts to keep it on track to meet its full-year guidance following declining sales in the U.S.

·     Energizer (ENR) 4.1M share Secondary priced at $46.00

 

Energy, Industrials & Materials

·     The American Petroleum Institute (API) reported that U.S. crude supplies fell by 560,000 barrels for the week ended Jan. 11, showed that gasoline stockpiles climbed by 6 million barrels, while distillate inventories rose 3.2 million barrels

·     G&W’s (GWR) total traffic in December 2018 was 242,846 carloads, a decrease of 12,353 carloads, or 4.8%, compared with December 2017. G&W’s same railroad traffic in December 2018 decreased 1,677 carloads, or 0.7%, compared with G&W’s traffic in December 2017

·     Embraer (ERJ) lowers FY18 revenue view to approximately $5.1B from $5.4B-$5.9B (est. $5.51B); delivered 91 total executive jets in 2018. As a result of the reduction in executive jet deliveries, the company now expects revenues in the executive jets segment to be approximately $1.1B

·     Mercer International Inc. (MERC) will replace Green Dot (GDOT) in the S&P SmallCap 600 prior to the open of trading on Friday, January 18

 

Financials

·     Bank America (BAC) Q4 EPS 70c; Q4 equities trading revs $1.06B vs. Bloomberg est. $1.01B; investment banking revs $1.3B; Q4 FICC trading revs ex-DVA $1.45B vs. est. $1.64B

·     Bank of New York (BK); Q4 EPS 99c vs. est. 93c; Q4 net interest margin 1.24% below the Bloomberg est. 1.28%

·     BlackRock (BLK) Q4 EPS $6.08/$3.43B vs. est. $6.28/$3.43B; 4Q iShares net inflows $81.4 billion vs. $33.67 billion q/q; Assets under management $5.98 trillion

·     US Bank (USB) Q4 EPS $1.10 vs. et. $1.06; net interest margin 3,15%, net charge-offs $353M and provision for credit losses $368M

·     Fulton Financial (FULT) Q4 EPS 33c vs. est. 35c and Q4 net interest margin 3.44%

·     Hanmi Financial (HAFC) Q4 EPS 37c vs. estimate 51c and 4Q net interest margin 3.51%

·     The Hanover Insurance Group, Inc. (THG) estimated catastrophe activity would impact Q4 results by approximately $50M before taxes, or 4.6% of net premiums earned, compared to its Q4 catastrophe assumption of 3.6%

·     S&P SmallCap 600 constituent Green Dot Corp. (GDOT) will replace Teleflex (TFX) in the S&P MidCap 400 prior to the open of trading on Friday, January 18

 

Healthcare

·     S&P MidCap 400 constituent Teleflex Inc. (TFX) will replace PG&E Corp. (PCG) in the S&P 500 prior to the open of trading on Friday, January 18

·     Acceleron (XLRN) 5.35M share secondary priced at $43.00

·     Stemline (STML) 8.9M share Secondary priced at $9.00

·     Five Prime Therapeutics (FPRX) announced a corporate restructuring to focus resources on its development pipeline, comprising five clinical-stage cancer programs in various solid tumor types and addressing multiple cell types in the tumor microenvironment. The company is eliminating 41 current positions, representing approximately 20% of its current headcount

·     Revance announces (RVNC) $100M common stock offering

·     At a confirmation hearing Tuesday, attorney general nominee William Barr said that the current system around marijuana laws is ‘untenable’ and he personally supports prohibiting marijuana across the U.S.

 

Technology, Media & Telecom

·     Electronics for Imaging (EFII) guides lower; sees Q4 EPS 45c-47c on revs $255M-$257M, below consensus of 60c/$280.71M as results were impacted by weakening economic conditions experienced across its direct businesses, with customers delaying spend on capital equipment and software, which materially reduced the Company’s close rates at quarter end

·     Electronic Arts Inc. (EA) has cancelled a planned game based on the “Star Wars” universe, according to a Tuesday evening report. Kotaku cited three anonymous sources “familiar with goings-on at the company” in reporting that the game had ceased development.

·     Snap Inc. (SNAP) disclosed that its chief financial officer, Tim Stone, plans to leave the company to “pursue other opportunities.”

·     Uniti Group (UNIT) announced strategic transactions involving its leasing and fiber business units

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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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