Morning Preview: January 17, 2019

Scott GreenDaily Market Report

Early Look

Thursday, January 17, 19

Futures

Up/Down

%

Last

DJ Industrials

-68.00

0.28%

24,083

S&P 500

-8.50

0.33%

2,604

Nasdaq

-26.50

0.40%

6,639

 

 

U.S. stock index futures are pointing to a lower open ahead of another round of bank earnings this morning (MS, BBT, KEY, SBNY) and following a mixed session in Asia as trade tensions between the U.S. and China resurfaced late yesterday amid a federal investigation into Huawei Technologies for allegedly stealing trade secrets. European markets are lower following a profit warning from SocGen. Opec expects demand for the cartel’s crude in 2019 at almost 1m barrels a day less than last year as supply is expected to outweigh demand. The partial gov’t shutdown moves into day 27 as the House again passed a bill to reopen the government, but didn’t include funding the border wall, so will fail again for Trump to sign. Tech space will be watching Netflix tonight as they report quarterly earnings after the close. In Asian markets, The Nikkei Index fell -40 points to 20,402, the Shanghai Index fell -10 points to 2,559 and the Hang Seng Index dropped -146 points to 26,755. In Europe, the German DAX is down over -30 points trading just below 10,900, while the FTSE 100 is down around -25 points at 6,835. U.S. stocks closed higher on Wednesday, buoyed by gains in the financial sector after strong earnings results from GS, BAC and others, while small caps also outperformed.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 5.80 points, or 0.22%, to 2,616.10

·     The Dow Jones Industrial Average rose 141.57 points, or 0.59%, to 24,207.16

·     The Nasdaq Composite gained 10.86 points, or 0.15%, to 7,034.69

·     The Russell 2000 Index advanced 9.48 points, or 0.66% to 1,454.70

 

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 220K

·     8:30 AM EST      Continuing Claims…est. 1.734M

·     8:30 AM EST      Housing Starts MoM for December…postponed due to gov’t shutdown

·     8:30 AM EST      Building Permits MoM for December…postponed due to gov’t shutdown

·     8:30 AM EST      Philly Fed Survey for January…est. 9.5

·     9:45 AM EST      Bloomberg Consumer Comfort Index…prior 58.5

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

·     10:45 AM EST    Fed’s Quarles speaks at Insurance Industry Forum

 

Earnings Calendar:

·     Earnings Before the Open: BBT, FAST, KEY, MS, MTB, PPG, TSM

·     Earnings After the Close: AXP, JBHT, NFLX, OZK, PBCT, RIO

 

 

Macro

Up/Down

Last

WTI Crude

-0.61

51.70

Brent

-0.59

60.73

Gold

0.30

1,294.10

EUR/USD

0.0012

1.1404

JPY/USD

-0.29

108.80

10-Year Note

-0.009

2.713%

 

 

World News

·     OPEC keeps 2019 global oil demand growth est. at 1.29M b/d; OPEC oil output falls by 751,000 barrels per day to 31.6 million bpd in December; Saudi Arabia cut December production more than expected, by 468,000 bpd to about 10.5 million bp

·     Jack Bogle, founder of Vanguard and creator of the world’s first index fund, has died at the age of 89

·     Rudy Giuliani, the president’s personal attorney, said he doesn’t deny that the Trump campaign may have colluded with Russians in the 2016 election — only that Donald Trump himself did not

·     Chairman of the Senate Finance Committee Grassley said that the Trump administration’s trade negotiations may be delayed as a result of the partial government shutdown, which is now on day 27

 

Sector News Breakdown

Consumer

·     Spirit Airlines (SAVE) estimated fourth quarter capacity rose 16.2%, ahead of its prior 15% guidance, due to higher-than-expected completion factor; expects adjusted CASM excluding fuel to rise about 5.5% year over year

·     Revenue at Primark was up 4% as the UK fast-fashion chain continued to expand its retail selling space, despite a “modest decline” in comp sales

 

Energy

·     Kinder Morgan (KMI) Q4 EPS 21c/$3.78B vs. est. 26c/$3.81B; sees FY adjusted Ebitda $7.8B, vs. estimate $7.66B; 4Q adjusted Ebitda $1.96B vs. est. $1.92B; 2019 budget contemplates DCF of ~$5.0B, or $2.20 per share, and adj. Ebitda ~$7.8B; forecasts $3.1b investment in growth projects and contributions to joint ventures in 2019

 

Financials

·     Société Generale SA France (GLE.FR) said Q4 was affected by a challenging environment in global capital markets, and this will cause a decline in revenue in its Global Markets and Investor Services business; expects revenue in this business to fall by around 20% in Q4

·     BB&T (BBT) Q4 EPS $1.05 vs. est. $1.05; 4Q net interest margin 3.49%, 4Q common equity Tier 1 ratio 10.2%, 4Q non-interest income $1.24 billion, 4Q net interest income $1.73 billion and 4Q net charge-offs $143M

·     Commerce Bancshares (CBSH) Q4 EPS 96c/$345.3M vs. est. 94c/$337.64M; Q4 loan loss provision $12.26M vs. $10M a year ago and Q4 net charge-offs $12.06M vs. $9.8M a year ago

·     KeyCorp (KEY) Q4 EPS 48c/$1.65B vs. est. 47c/$1.64B; 4Q NIM on taxable-equivalent basis 3.16%

·     Signature Bank (SBNY) Q4 EPS $2.94 vs. est. $2.80; reports Q4 book value per share $80.07, Q4 CET1 capital ratio 12.09% and Q4 net charge-offs (0.03%)

·     WEX (WEX) agrees to buy Discovery Benefits, an employee benefits administrator, for a total cash consideration of about $425 million

·     Eagle Bancorp (EGBN) Q4 EPS $1.17 vs. est. $1.14; Q4 net interest income (NII) increased 8% YoY, resulting from growth in average earning assets of 13% partially offset by a 16-basis point reduction of the net interest margin; Q4 net interest margin (NIM) was 3.97% vs. 4.13% YoY

·     Entegra Financial (ENFC) postponed its Q4 release to January 24th to complete its review of certain accounting matters related to its proposed merger with SmartFinancial

 

Healthcare

·     Aerie Pharmaceuticals (AERI) reports FDA has reviewed its investigational new drug application for AR-1105 (dexamethasone intravitreal implant) and it is now in effect

·     Becton Dickinson (BDX) Q1 EPS $2.70/$4.16B vs. est. $2.62/$4.12B; backs FY19 adj. EPS view $12.05-$12.15 vs. est. $12.12 and sees FY19 revenue up 8.5%-9.5%

·     Mirati Therapeutics (MRTX) 1.6M share Spot Secondary priced at $62.00

·     Revance (RVNC) 5.9M share Secondary priced at $17.00

·     Neurocrine Biosciences (NBIX) announced that a new analysis of INGREZZA capsules, published in the Journal of Affective Disorders, demonstrated sustained improvement in tardive dyskinesia symptoms in patients with primary mood disorders

·     Novartis (NVS) Sandoz announces U.S. market introduction of Symjepi (epinephrine) for emergency treatment of allergic reactions, including anaphylaxis

·     Qiagen (QGEN) announced that the Japanese Pharmaceuticals and Medical Device Agency, PMDA, has approved the therascreen EGFR RGQ PCR Kit to allow its use as a companion diagnostic with Pfizer’s (PFE) VIZIMPRO, dacomitinib

 

Industrials & Materials

·     Alcoa (AA) Q4 EPS 66c/$3.34B vs. est. 58c/$3.32B; sees FY Aluminum Shipments 2.8M-2.9M metric tons; sees FY Alumina Shipments 13.6 to 13.7 metric tons; sees FY global aluminum deficit 1.7 million to 2.1 million metric tons; sees restructuring-related charges 48c-62c; sees global aluminum deficit ranging between 1.7M-2.1M metric tons in 2019, with demand growth of 3-4%

·     CSX Corp. (CSX) Q4 EPS $1.01/$3.14B vs. est. 99c/$3.12B; 4Q volume +3%, 4Q Intermodal volume +2% and 4Q operating ratio 60.3%; announces $5B share repurchase plan; expects low single-digit revenue growth in 2019 and expects 2019 operating ratio to outperform 2020 target of 60%

·     H.B. Fuller (FUL) Q4 adjusted EPS 90c/$768.4M below est. 98c/$806.96M; Q4 gross margin 28.1% vs. Bloomberg est. 29.8%; sees FY19 adjusted EPS $3.15-$3.45 below consensus $3.76; FY19 organic revenue growth is expected to be 3%-5% vs. 2018; expects to invest approximately $100M in capital items in 2019

·     PPG Industries (PPG) Q4 adjusted EPS $1.15/$3.6B vs. est. $1.11/$3.66B; sees Q1 EPS $1.18-$1.23 vs. est. $1.43

 

Technology, Media & Telecom

·     Taiwan Semiconductor (TSM) said it expects a sharp downturn in revenue growth in the first three months of 2019; reports Q4 EPS 63c (in-line) and reports Q4 revenue $9.4B vs. est. $9.36B; said Q4 business benefited from the strong demand for our 7-nanometer technology covering both mobile and high-performance computing applications

·     Netflix (NFLX) is set to deliver earnings results after the close tonight

·     F5 Networks (FFIV) downgraded to Market Perform from Outperform at William Blair

·     Xilinx (XLNX) upgraded to Buy from Neutral at Mizuho with $100 tgt

·     Hitachi (HTHIY) said that it was suspending work on a nuclear power project in North Wales after failing to agree on financial terms with the British and Japanese governments

·     Plexus (PLXS) Q1 EPS 91c/$765.54M vs. est. 90c/$764.36M; sees Q2 EPS 80c-90c on revs $760M-$800M vs. est. 90c/$781.52M

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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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