Morning Preview: January 25, 2019

Scott GreenDaily Market Report

Early Look

Friday, January 25, 19

Futures

Up/Down

%

Last

DJ Industrials

181.00

0.74%

24,639

S&P 500

19.50

0.75%

2,653

Nasdaq

67.50

1.01%

6,742

 

 

Stock futures are pointing to a strong open on hopes of revived negotiations to re-open the government as the partial government shutdown moved into day 35. New negotiations between the Senate’s top Republican and Democrat and the White House signaled the potential for a deal even as President Donald Trump continued to insist on money for a border wall that Democrats reject. Senate Majority Leader Mitch McConnell opened negotiations with Minority Leader Chuck Schumer Thursday after the chamber blocked two rival spending bills to reopen the government. In breaking news this morning, Roger Stone, the longtime informal adviser to Donald Trump, has been arrested on charges brought by Robert Mueller, the special counsel’s office said on Friday. In corporate news, Dow component INTC stock drops after earnings show weak outlook, revenue miss, while WDC shares rally overnight after Q3 guidance while homebuilder DHI slips on results. WTI crude rose for a third day, narrowing a weekly loss, amid a deepening crisis in Venezuela. In Asian markets, The Nikkei Index rose 198 points to settle at 20,773, the Shanghai Index rose 10 points to settle at 2,601 and the Hang Seng Index jumped 448 points (1.65%) to 27,569. In Europe, the German DAX is higher by 150-points to 11,285, while the FTSE 100 is up over 20 points to 6,850.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 3.63 points, or 0.14%, to 2,642.33

·     The Dow Jones Industrial Average fell -22.38 points, or 0.09%, to 24,553.24

·     The Nasdaq Composite spiked 47.69 points, or 0.68%, to 7,073.46

·     The Russell 2000 Index advanced 10.15 points, or 0.70% to 1,464.41

 

Events Calendar for Today

·     8:30 AM EST      Durable Goods Orders, Dec-P…est. 1.7%

·     8:30 AM EST      Durables Goods Ex: Transportation, Dec-P…est. 0.2%

·     10:00 AM EST    New Home Sales MoM for December…est. down (-5.5%) to 574K

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: ABBV, APD, CL, DHI, LEA, NEE

 

 

Macro

Up/Down

Last

WTI Crude

0.14

53.27

Brent

0.00

61.09

Gold

3.50

1,289.40

EUR/USD

0.0041

1.1345

JPY/USD

0.14

109.78

10-Year Note

+0.01

2.724%

 

 

World News

·     German business sentiment deteriorated sharply in January, as the Ifo Institute said Friday that its business-climate index fell to 99.1 points in January from 101.0 points in December.

 

Sector News Breakdown

Consumer

·     Starbucks (SBUX) Q1 EPS 75c/$6.63B vs. est. 65c/$6.49B; raises year EPS to $2.68-$2.73 from prior view $2.61-$2.66 (est. $2.65) and sees year global comps up 3%-4%, saw low end up 3%-5% and reiterates year revenue growth 5%-7%; Q1 global comparable store sales increased 4% (vs. est. 3%), driven by a 3% increase in average ticket. Americas and U.S. comparable store sales increased 4% (vs. est. 3.3%), with transactions flat

·     D.R. Horton (DHI) Q1 EPS 76c/$3.52B s. est. 78c/$3.5B; 1Q cancellation rate 24%, 1Q orders $3,225 and 1Q net sales orders increased 3%

·     Lear (LEA) Q4 EPS $4.05/$4.94B vs. est. $3.95/$5.02B; backs FY19 revenue view $20.9B-$21.7B (vs. est. $21.18B) and backs FY19 adjusted EBITDA view of $2.12B-$2.22B

 

Energy, Industrials and Materials

·     WTI crude rose for a third day, narrowing a weekly loss, amid a deepening crisis in Venezuela

·     Hi-Crush Partners LP (HCLP) announced that it resumed operations at its Northern White frac sand production facility in Whitehall, Wisconsin

·     Air Products (APD) Q1 EPS $1.86/$2.22B vs. est. $1.87/$2.26B; backs FY19 EPS view of $8.05-$8.30 (est. $8.17) and also backs FY19 capital spending guidance of $2.3B-$2.5B

·     Alaska Air (ALK) Q4 EPS 75c/$2.06B vs. est. 71c/$2.06B; 4Q traffic +1%, 4Q capacity +1.1% and 4Q PRASM +5.2%

·     Norfolk Southern (NSC) Q4 EPS $2.57/$2.9B vs. est. $2.29/$2.84B; 4Q operating ratio 62.8%; 4Q Intermodal revenue $755M, 4Q coal revenue $457M; reports Q4 overall volumes up 3%

·     Marten Transport (MRTN) Q4 EPS 29c/$203.96M vs. est. 27c/$208.87M; sees continued organic growth across all of operating platforms in 2019

·     OSI Systems (OSIS) Q2 adjusted EPS $1.19/$303M vs. est. 96c/$287.18M; raises FY19 EPS view to $3.93-$4.10 from $3.85-$4.05 (est. $3.93) and raises FY19 revenue view to $1.15B-$1.185B from $1.14B-$1.175B (est. $1.15B)

 

Financials

·     Discover (DFS) Q4 EPS $2.03/$2.81B vs. est. $2.06/$2.81B; Q4 total Discover card volume $40.7B vs. $38.6B last year; Q4 loans delinquency rate 30-days 2.43% vs. 2.28% last year

·     E-Trade (ETFC) Q4 EPS $1.06/$735M vs. est. $1.03/$746.37M; EPS includes benefit of 3c per diluted share related to benefit to provision for loan losses; reports Q4 Daily Average Revenue Trades (DARTs) of 296,000, including derivative DARTs of 93,000

·     Federated Investors (FII) Q4 EPS 61c/$307.2M vs. est. 60c/$295M

·     First Hawaiian (FHB) Q4 core EPS 58c vs. est. 52c; 4Q net interest margin 3.23%

·     Everest Re Group Ltd. (RE) expects to incur in the Q4 catastrophe losses of $695 million, net of reinsurance, reinstatement premiums and taxes; the catastrophe losses related to Hurricane Michael, the Camp and Woolsey wildfires in California, and hailstorm event in Australia

·     SVB Financial (SIVB) Q2 EPS $4.96 vs. est. $4.71; Q2 net interest income $517.4M vs. Bloomberg est. $524.1M; 4Q net interest margin 3.69%

·     Western Alliance (WAL) Q4 EPS $1.13/$258.2M vs. est. $1.07/$260.35M

 

Healthcare

·     Intuitive Surgical (ISRG) Q4 EPS $2.96/$1.05B vs. est. $3.07/$1.04B; said Q4 worldwide da Vinci procedures grew approximately 19% YoY, driven primarily by growth in U.S. general surgery procedures and worldwide urologic procedures; said shipped 290 da Vinci Surgical Systems compared with 216 YoY

·     ResMed (RMD) Q2 EPS $1.00/$651.1M vs. est. 95c/$672.91M; Q2 Gross Margin expanded 70bps to 58.9%; 2Q gross margin expanded 70 basis points to 58.9%, estimate 58.3%; has temporarily suspended stock repurchase program due to recent acquisitions

 

Technology, Media & Telecom

·     Intel (INTC) shares fell -7%; Q4 EPS $1.28/$18.66B vs. est. $1.22/$$19.01B; sees 1Q revenue about $16B well below the $17.34B est. and EPS about 87c below the $1.02 est.; raises dividend by 5%; sees FY adj EPS about $4.60 vs. est. $4.51

·     Western Digital (WDC) shares rose 8% as Q2 EPS $1.45/$4.23B vs. est. $1.50/$4.25B; sees Q3 revenue $3.6B-$3.8B vs. est. $3.90B, sees Q3 gross margin 28% and sees Q3 Operating Expense $760M-$780M

·     Avnet (AVT) Q2 EPS $1.04/$5.05B vs. est. $1.04/$5.07B; sees 3Q adjusted EPS $1.03-$1.13 on revs $4.5B-$4.9B vs. est. $1.10/$5.05B

·     Vodafone Group PLC (VOD) said that revenue dropped in the third quarter of fiscal 2019, and backed its guidance for the full year; VOD said it generated revenue of 11.00 billion euros ($12.48 billion) in the quarter to Dec. 31, compared with EUR11.80 billion in the year-earlier period.

·     Ericsson AB’s (ERIC) Q4 EPS loss narrowed as they saw continued momentum in its networks business as operators race to launch new fifth-generation networks; reported a quarterly net loss of 6.55 billion Swedish kronor ($723.3 million) from a previous loss of SEK18.48 billion as sales rose 10% to SEK63.81 billion.

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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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