Morning Preview: January 30, 2019

Auto PostDaily Market Report

Early Look

Wednesday, January 30, 2019

Futures

Up/Down

%

Last

DJ Industrials

75.00

0.31%

24,628

S&P 500

6.50

0.24%

2,646

Nasdaq

48.00

0.72%

6,686

 

 

Stock futures are moving higher, getting a boost from Dow component and tech giant Apple (AAPL) and semi chip company AMD after earnings results were not as bad as feared while investors prepare for another round of earnings today including Dow names MCD and Boeing. U.S. equities were mixed on Tuesday as better earnings from Dow component 3M Co. helped lift the Industrial Average, while technology and communication services stocks paced the declines. Outside of earnings, the focus for investors will be the outcome of the Fed’s two-day policy-setting meeting with Chairman Jerome Powell expected to hold a news conference to discuss the central bank’s plans on Wednesday 2:30 PM EST, where the FOMC is widely expected to keep rate hikes on hold. Also, U.S.-China trade talks will begin following the tough stance by the White House over Huawei, after federal prosecutors accused it of violating U.S. sanctions on Iran and of intellectual property theft. Meetings are scheduled for the next two days with markets hoping for some sort of positive resolution. In Asian markets, The Nikkei Index dropped -108 points to 20,556, the Shanghai Index fell -18 points to 2,575 and the Hang Seng Index gained 111 points to settle at 27,642. In Europe, the German DAX is down over -30 points at 11,180, while the FTSE 100 is up around 80-points at 6,915. Venezuelan president Nicolás Maduro is ready to begin negotiations with the country’s opposition after six days of political crisis.

Market Closing Prices Yesterday

·     The S&P 500 Index slipped -3.85 points, or 0.15%, to 2,640.00

·     The Dow Jones Industrial Average rose 51.74 points, or 0.21%, to 24,579.96

·     The Nasdaq Composite dropped -57.39 points, or 0.81%, to 7,028.29

·     The Russell 2000 Index declined -2.09 points, or 0.14% to 1,471.45

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:15 AM EST      ADP Employment Change for January…est. 181K

·     10:00 AM EST    Pending Home Sales MoM for December…est. 0.5%

·     10:30 AM EST    Weekly DOE Inventory Data

·     2:00 PM EST       FOMC Rate Decision (no change expected)

 

Earnings Calendar:

·     Earnings Before the Open: ADP, ALLY, ANTM, AVY, AXTA, BA, BEN, BOKF, CPF, EVR, GD, GNTX, HES, HESM, HP, IR, IVZ, LFUS, MCD, MKTX, NDAQ, NYCB, OSK, RCL, SC, SIRI, SLAB, SMG, T, TMO, TROW, TUP

·     Earnings After the Close: AGNC, ALGT, AMP, BDN, CACC, CACI, CREE, CRUS, CSII, DLB, DRE, EFII, EGOV, FB, FICO, FLEX, GHL, HOLX, ISBC, IVAC, MDLZ, MSFT, MTH, MUR, MUSA, NOW, PYPL, QCOM, TSLA, TTEK, V, WYNN, X         

 

 

Macro

Up/Down

Last

WTI Crude

0.37

53.68

Brent

0.45

61.77

Gold

2.80

1,318.00

EUR/USD

-0.0005

1.1428

JPY/USD

0.01

109.41

10-Year Note

+0.008

2.719%

 

 

World News

·     German consumer sentiment is set to improve in February, as the GfK’s forward-looking confidence index is expected to rise to 10.8 points in February from an upward-revised 10.5 points in January, GfK said Wednesday (first estimate for January was 10.4 points).

 

Sector News Breakdown

Consumer

·     eBay (EBAY) Q4 adjusted EPS 71c/$2.9B vs. est. 68c/$2.87B; initiates 14c per share dividend, expands share repurchase by $4B; sees Q1 adjusted EPS 62c-64c on revs $2.55B-$2.6B vs. est. 61c/$2.66B; sees FY19 adjusted EPS $2.62-$2.68 on revs $10.7B-$10.9B vs. est. $2.59/$11.18B

·     Hawaiian Holdings (HA) Q4 adjusted EPS $1.00/$697.46M vs. est. $1.01/$695.57M; sees Q1 ASMs up 1.5%-3.0% and sees Cost per ASM excluding fuel up 1.0%-4.0%

·     Robert Half (RHI) Q4 EPS 95c/$1.48B vs. est. 91c/$1.46B; 4Q operating income $153.9M

·     Caesars Entertainment (CZR) will replace Dril-Quip (DRQ) in the S&P MidCap 400 and Dril-Quip will replace Essendant (ESND) in the S&P SmallCap 600. Staples is acquiring Essendant in a deal expected to close soon pending final conditions. Conn’s (CONN) will replace Electro Scientific Industries (ESIO) in the S&P SmallCap 600

 

Energy

·     The American Petroleum Institute (API) reported that U.S. crude supplies rose by 2.1 million barrels for the week ended Jan. 25, showed that gasoline stockpiles climbed by 2.2 million barrels, while distillate inventories edged up by 211,000 barrels.

 

Financials

·     Houlihan Lokey (HLI) Q3 EPS 77c/$298M vs. est. 70c/$268.8M

·     W. R. Berkley (WRB) Q4 EPS $1.03 vs. est. 79c; Q4 gross premiums written $1.95B and Q4 net premiums written $1.52B

·     First Horizon (FHN) says it increased its prior buyback authorization to $500 million with an additional $250 million to the program.

·     Principal (PFG) Q4 adjusted EPS $1.11 vs. est. $1.30; reports AUM of $626.8B for the quarter, down 6%; 4Q book value per share $40.75 and 4Q net cash flow $700 million

·     Total System Services (TSS) Q4 adjusted EPS $1.08/$1.02B vs. est. $1.07/$973.15M; Sees FY revenue $4.19B-$4.29B vs. est. $4.25B; sees 2019 adj. eps $4.75-$4.90 vs. est. $4.80

·     Nasdaq AB, an indirect subsidiary of Nasdaq (NDAQ), announced that it will make a public offer to acquire all of the issued shares of Oslo Bors VPS Holding ASA at NOK 152 per share.

·     Redwood Trust (RWT) 10M share Spot Secondary priced at $15.60

 

Healthcare

·     Amgen (AMGN) Q4 adjusted EPS $3.42/$6.23B vs. est. $3.28/$5.87B; said Q4 product sales grew 8% globally; sees 2019 adj. eps $13.10-$14.30, below the consensus estimate of $14.59 and revenue of $21.8B-$22.9B vs. est. $22.9B; 4Q sales by product: Enbrel $1.32B, Neulasta $1.17B, Prolia $655M, Aranesp $474M, Xgeva $456M and Sensipar/Mimpara $448M

·     Align Technology (ALGN) shares fell -11%; Q4 EPS $1.20/$534M vs. est. $1.15/$512.7M; said Q4 revenues were better than expected reflecting higher Invisalign ASPs and volume growth of 31% year-over-year, as well as another record quarter for our iTero scanners with revenue up 55% year-over-year; sees Q1 EPS 78c-84c on revs $525M-$535M vs. est. $1.19/$529.33M; forecast1Q gross margin between 70.3% and 71% vs. expectations for 72.8%

·     Illumina (ILMN) Q4 adjusted EPS $1.32/$867M vs. est. $1.36/$863.54M; sees FY adjusted EPS $6.50-$6.60 vs. est. $6.44 and sees FY revenue +13% to +14%

·     Stryker (SYK) Q4 EPS $2.18/$3.8B vs. est. $2.15/$3.74B; sees FY19 EPS $8.00-$8.20 vs. est. $8.01 and sees FY19 organic net sales growth to be in the range of 6.5% to 7.5%

·     Anthem (ANTM) Q4 EPS $2.44/$23.3B vs. est. $2.20/$23.34B; Q4 medical membership 39.9M and benefit expense ratio 86.8%; raises dividend

 

Industrials & Materials

·     Canadian National (CNI) Q4 EPS C$1.49/$C3.81B vs. est. $C1.47/$C3.81B; 4Q operating ratio 61.9%, 4Q carloads +5% and sees high single-digit RTM volume growth in 2019; sees 2019 EPS growth in low double-digit range, adjusted EPS est. C$6.22 vs. est. C$6.32; boosts dividend

·     C.H. Robinson (CHRW) Q4 EPS $1.34/$4.14B vs. est. $1.21/$4.27B; says remain focused on top-line growth and operating margin expansion and believe our continued investments in technology will help enable us to achieve these objectives

·     IDEX Corp. (IEX) Q4 EPS $1.31/$614.1M vs. est. $1.27/$618.82M; orders of $610.3 million were up 1 percent compared with the prior year period. Gross margin of 44.6% was up 10 basis points compared with the prior year

·     Ingersoll-Rand (IR) Q4 EPS $1.32/$3.895B vs. est. $1.29/$3.85B; sees year EPS $6.15-$6.35 vs. est. $6.30 and revenue growth up 4%-5% and organic revenues up 5%-6%

·     Vale (VALE) has announced plans halt 40m tonnes of production, around 10% of its annual output, so that it can replace dams similar to the one that burst last week

 

Technology, Media & Telecom

·     Apple (AAPL) shares rise 5%; Q1 EPS $4.18/$84.3B vs. est. $5.17/$83.97B; sees 2Q revenue $55B-$59B vs. est. $58.97B; sees 2Q gross margin 37% to 38% vs. estimate 38%; Q1 service revs $10.88 billion; 1Q cash and cash equivalents $44.77 billion vs. $25.91 billion q/q and 1Q iPhone revenue $7.42B down 15% YoY

·     CDK Global (CDK) is expected to make a takeover bid next week for Cars.com (CARS), the New York Post reports, citing two sources close to the process. Cars.com, which has 19M unique monthly visitors, has been pressured by activist investor Starboard Value https://nyp.st/2GaHcLh 

·     Silicon Motion (SIMO) sees Q1 revenue 97.5M-$103.6M below consensus $121.18M and sees Q1 non-GAAP gross margin 47.0%-50.0%, and non-GAAP operating margin 12.0%-16.0%

·     AMD (AMD) Q4 EPS 8c/$1.42B vs. est. 8c/$1.45B; said delivered our second straight year of significant revenue growth, market share gains, expanded gross margin and improved profitability based on our high-performance products; for full year 2019, AMD expects high single digit percentage revenue growth driven by Ryzen, EPYC and Radeon datacenter GPU product sales; sees Q1 sales $1.2B-$1.3B vs. est. $1.47B

·     Juniper (JNPR) shares fell -8%; Q4 EPS 59c/$1.18B vs. est. 57c/$1.22B; said its revenue forecast “reflects continued weakness” with cloud customers, in addition to negative impact from U.S. government shutdown and geopolitical uncertainty; sees Q1 revs $950M-$1.1B vs. est. $1.11B

·     KLA-Tencor (KLAC) Q2 EPS $2.44/$1.12B vs. est. $2.20/$1.07B; 2Q product revenue $852.2M and Q2 service revs $267.7M

·     Maxim Integrated (MXIM) Q2 adjusted EPS 60c/$577M vs. est. 62c/$591.38M; sees Q3 adjusted EPS 49c-55c on revs $520M-$560M below consensus 65c/$599M; sees Q3 Gross Margin: 63%-65% GAAP (64%-66% excluding special items)

·     MKS Instruments (MKSI) Q4 EPS $1.54/$460.5M vs. est. $1.51/$441.44M; sees Q1 EPS 95c-$1.18 on revs $400M-$440M below est. $1.54/$449.71M; says financial guidance excludes the effects of our announced acquisition of Electro Scientific Industries

·     National Instruments (NATI) Q4 adjusted EPS 53c/$360.1M vs. est. 44c/$380.03M

·     Inphi (IPHI) Q4 EPS 45c/$86.5M vs. est. 42c/$86.54M; sees Q1 EPS 27c-29c on revs $80M-82M vs. est. 28c/$81.6M; sees 1Q adjusted gross margin 69.5% to 70.5% after Q4 GM 69.3%

·     MicroStrategy (MSTR) reported Q4 EPS that missed the lowest analyst estimate and said it expects to report a material weakness in its internal control over financial reporting as of Dec. 31

·     Facebook Inc. (FB) has been secretly paying users for installing an app that harvests all their phone and web activity, the according to a new report. TechCrunch reported that since 2016, Facebook has paid users between the ages of 13 and 35 up to $20 a month if they install a “Facebook Research” mobile app that gives the company root access to their devices

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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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