Morning Preview: February 01, 2019

Auto PostDaily Market Report

Early Look

Friday, February 1, 2019

Futures

Up/Down

%

Last

DJ Industrials

30.00

0.12%

25,006

S&P 500

-1.50

0.06%

2,702

Nasdaq

-33.50

0.48%

6,881

 

 

Stock futures are mixed ahead of the monthly jobs report and another round of quarterly earnings as investors put behind one of the best January totals in decades behind them, as attention turns to trade for February. Next market focus though, the non-farm payrolls report at 8:30 AM EST today with an estimate of 165K jobs added, private payrolls to add 175K jobs and the unemployment rate to hold steady at 3.9% with a 0.3% rise in wages. Overnight Nasdaq futures slide following mixed guidance out of Amazon.com results. In Asian markets, The Nikkei Index gained 14 points to settle at 20,788, the Shanghai Index jumped 33-points (1.3%) to finish at 2,618 and the Hang Seng Index slipped -11 points to 27,930. In Europe, the German DAX is little changed at 11,175, while the FTSE 100 is up around 50 points back above the 7,000 level. U.S. stocks were mixed on Thursday, led by gains in technology as the Nasdaq Comp advanced more than 1% while the S&P 500 notched its best January in over three decades, after the Federal Reserve signaled that rate increases are on pause and that its next policy move will depend on economic data. Overall there were big gains for the month of January as the S&P 500 climbed 7.9% for its best January since 1987, while the Dow rose 7.2%, its best January since 1989. The Nasdaq had its best January since 2001 on the back of a 9.7% monthly gain. Yesterday’s move was driven largely by better than expected earnings from companies including Facebook and General Electric. Note the Nasdaq Comp is on track for six-straight week of gains. Also yesterday, improved trade relations helped sentiment after China pledged to buy substantially more U.S. crops, services and energy and cooperate on IP rights and tech transfers. President Trump hailed “tremendous progress” but said a deal hinges on a meeting with Xi Jinping.

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 23.05 points, or 0.86%, to 2,704.10

·     The Dow Jones Industrial Average fell -15.19 points, or 0.06%, to 24,999.67

·     The Nasdaq Composite spiked 98.66 points, or 1.37%, to 7,281.74

·     The Russell 2000 Index advanced 12.48 points, or 0.84% to 1,499.42

 

Events Calendar for Today

·     8:30 AM EST      Change in Nonfarm payrolls for January…est. 165K

·     8:30 AM EST      Change in Private Payrolls for January…est., 175K

·     8:30 AM EST      Change in Manufacturing Payrolls for January…est. 9K

·     8:30 AM EST      Unemployment Rate for January…est. 3.9%

·     8:30 AM EST      Average Hourly Earnings for January…est. 0.3%

·     9:45 AM EST      Markit US Composite PMI, Jan-F…est. 54.9

·     10:00 AM EST    ISM Manufacturing Index for January…est. 54.0

·     10:00 AM EST    Construction Spending MoM for December…est. 0.2%

·     10:00 AM EST    University of Michigan Confidence, Jan-F…est. 90.7

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

Earnings Calendar:

·     Earnings Before the Open: BAH, BERY, CI, CVX, D, HON, IDXX, ITW, JCI, KKR, LYB, MRK, MSG, ROP, SPG, SPR, VRTS, WETF, WY, XOM, ZBH

 

Macro

Up/Down

Last

WTI Crude

-0.03

53.76

Brent

-0.08

60.76

Gold

1.10

1,326.30

EUR/USD

0.0027

1.1475

JPY/USD

-0.02

108.87

10-Year Note

-0.013

2.624%

 

 

World News

·     China’s manufacturing sector contracted more at the start of 2019, as the Caixin China manufacturing purchasing managers’ index (PMI) fell to 48.3 in January from 49.7 in December the lowest reading since February 2016 and has held below 50 for two straight months. New order sub-index dropped further into contractionary territory

·     U.S. Net Long-Term Portfolio Securities Inflow (TIC) was $37.6B in November; U.S. total cross-border investment inflows at $31B in November; China holds $1.12 trillion of U.S. Treasuries, a decrease of $17.5B from last month while Japan holds $1.04 trillion, an increase of $18.1B from last month; Foreign net selling of Treasuries at $9.3B and Foreign net selling of equities at $5.6B

·     Secretary of State Mike Pompeo will announce on Friday that the U.S. is suspending compliance with the Intermediate-Range Nuclear Forces (INF) treaty that dates to the ending of the Cold War after discussions with Russia to save the pact have failed, NBC News reported, citing three administration officials

·     UK Jan Manufacturing PMI missed: 52.8 vs 53.5 consensus; series-record stockpiling of inputs at UK manufacturers as Brexit prep continues; Employment fell

 

Sector News Breakdown

Consumer

·     Amazon (AMZN) Q4 EPS $6.04/$$72.38B vs. est. $5.56/$71.92B; sees 1Q net sales $56B-$60B vs. est. $60.99B and sees 1Q operating income $2.3B-$3.3B vs. est. $2.99B; 4Q operating income $3.79B vs. est. $3.65B; 4Q AWS net sales $7.43 billion and 4Q Amazon Web Services net sales +45%; more customers signed up for Prime worldwide in 2018 than ever before it said

·     Yum China (YUMC) Q4 adjusted EPS 12c/$1.91B vs. est. 9c/$1.92B; total system sales grew 6% year over year, with 9% growth at KFC partially offset by a 2% decline at Pizza Hut, excluding F/X; Q4 comparable sales +2% vs. est. -0.4%; Q4 KFC comp. sales +3%, estimate +0.8% and Q4 Pizza Hut Casual Dining Comparable Sales -4% vs. estimate -3.8%

·     Decker’s Brands (DECK) Q3 EPS $6.59/$873.8M vs. est. $5.28/$820.96M; sees Q4 non-GAAP EPS 0c-10c on revs $360M-$374M vs. est. 27c/$392.03M; sees FY19 non-GAAP EPS $7.85-$7.95 on revs $1.986B-$2.0B vs. est. $7.38/$1.97B; boosts share repurchase authorization to $350M; UGG brand revenue increased 3.6% Y/Y to $761M, while Hoka One revenue was up 79% to $57M

·     Fortune Brands (FBHS) Q4 EPS 86c/$1.42B vs. est. 93c/$1.47B; sees FY19 EPS $3.53-$3.77 vs. est. $3.78 on FY19 revenue growth of 6%-7.5% (which implies $5.81B-$5.90B, consensus $5.90B) and organic growth of 3% to 5%

·     Matthews (MATW) Q1 EPS 50c/$374.2M vs. est. 55c/$373.8M; Q1 adjusted Ebitda $46.5M; re-affirms earnings targets for FY19; continues to expect higher operating cash flow in fiscal 2019

·     Post Holdings (POST) Q1 adjusted EPS $1.11/$1.4B vs. est. 97c/$1.38B; raises FY19 adj. EBITDA view to $1.2B-$1.24B from $1.19B-$1.24B; management continues to expect fiscal year 2019 capital expenditures to range between $300M-$310M

·     SkyWest (SKYW) Q4 EPS $1.28/$803.5M vs. est. $1.08/$792.1M; in multi-year extension with Delta on 15 CRJ900 aircraft, 14 CRJ200 aircraft and three CRJ700 aircraft; also secured a new flying contract with Delta to acquire nine new E175s and operate the aircraft for a nine-year term

·     Macau Casino revenue for January drops 5% from a year earlier to 24.9B patacas, according to data published on the website of the city’s Gaming Inspection and Coordination Bureau. This compares with median est. of 9% decline – Bloomberg (watch WYNN, LVS, MLCO, MGM)

 

Energy

·     Dow components ExxonMobil (XOM) and Chevron (CVX) are expected to report earnings later this morning

·     Anadarko Petroleum (APC) announced Mozambique LNG1 Company Pte. Ltd., the jointly owned sales entity of the Mozambique Area 1 co-ventures, has signed a Sale and Purchase Agreement with CNOOC

 

Financials

·     Aflac (AFL) Q4 adjusted EPS $1.02/$5.1B vs. est. 94c/$5.36B; backs year EPS view of $4.10-$4.30 vs est. $4.20 and boosts dividend to 27c

·     Deutsche Bank AG (DB) reported its first annual profit in four years for 2018, after its fourth-quarter net loss narrowed sharply

·     Arthur J Gallagher (AJG) Q4 EPS 53c/$1.66B vs. est. 51c; 4Q brokerage rev. $1.00 billion

·     LPL Financial (LPLA) Q4 EPS $1.36/$1.32B vs. est. $1.37/$1.36B; 4Q Ebitda $231.8M

 

Healthcare

·     Merck (MRK) Q4 EPS $1.04/$11.0B vs. est. $1.03/$10.95B; sees 2019 EPS $4.57-$4.72 vs. est. $4.69; Q4 Keytruda sales $2.15B vs. est. $2.13B

·     Edwards Lifesciences (EW) Q4 adjusted EPS $1.17/$978M vs. est. $1.17/$975.92M; reiterates 2019 sales and EPS guidance; forecasts 1Q revenue between $950M-$1.01B vs. est. $998.1M; sees 1Q adjusted EPS of $1.15-$1.25 vs. est. $1.29; Transcatheter Heart Valve Therapy (THVT) adj. sales $592.4M, Surgical Heart Valve Therapy sales $212.2M and Critical Care sales $178.1M

·     Zimmer Biomet (ZBH) Q4 adj. EPS $2.18/$2.07B vs. est. $2.17/$2.06B; sees FY19 adj. EPS $7.70-$7.90 vs. est. $7.92B and sees FY19 revenue growth of (0.5%)-0.5%

·     Watch shares of CVS (CVS) and Cigna (CI) after President Trump proposed ending rebates to pharmacy benefit managers as the discounts would go directly to customers instead.

·     McKesson (MCK) Q3 adjusted EPS $3.40/$56.2B vs. est. $3.16/$55.11B; narrows FY19 EPS view to $13.45-$13.65 from $13.20-$13.80 (est. $13.40);

·     PerkinElmer (PKI) Q4 EPS $1.18/$756.5M vs. est. $1.16/$747M; sees 2019 adjusted EPS from continuing operations $4.00-$4.05 vs. est. $4.02

·     Corcept (CORT) guides 2019 revenue guidance between $285M-$315M, missing est. of $320.2M; preliminary 4Q revs of $66.8M below $70.4M est.; said plans to start Phase 2 trials in metastatic ovarian, pancreatic and castration-resistant prostate cancers, non-alcoholic steatohepatitis

·     OxyContin maker Purdue Pharma hatched a secret plan to get into the business of selling drugs to treat the opioid addiction that its own products fueled, newly unsealed court filings allege.

 

Industrials & Materials

·     Honeywell (HON) Q4 EPS $1.91/$9.73B vs. est. $1.89/$9.70B; sees 2019 EPS $7.80-$8.10 vs. est. $7.89

·     Eastman Chemical (EMN) Q4 EPS $1.39/$2.38B vs. est. $1.61/$2.37B; reports Q4 EBIT $276M vs. $353M last year; Q4 free cash flow $593M vs. $435M last year; sees FY19 EPS growth of 6%-10%

·     Esterline (ESL) Q1 EPS $1.24/$485M vs. est. 66c/$458.5M; said in light of the previously announced agreement with TransDigm, will not hold a first quarter earnings conference call or provide financial guidance for fiscal 2019

·     Haynes (HAYN) Q1 EPS loss (13c)/$107.1M vs. est. loss (21c)/$101.7M; 1Q backlog $237.8 million; said sees 2Q revenue higher than 1Q

·     Wesco Aircraft (WAIR) Q1 EPS 17c/$395.3M vs. est. 16c/$390.1M; backs FY19 revenue growth at mid-single-digit percentage rate

 

Technology, Media & Telecom

·     Cypress Semiconductor (CY) Q4 EPS 35c/$604.5M vs. est. 33c/$598.9M; sees Q1 EPS 22c-26c on revs $520M-$550M vs. est. 26c/$558.51M

·     Proofpoint (PFPT) Q4 EPS 51c/$198.5M vs. est. 35c/$192.42M; reports Q4 billings of $269.9M, up 43% YoY; sees FY19 EPS $1.60-$1.67 on revenue $870M-$874M vs. est. $1.65/$875.37M

·     Symantec (SYMC) Q3 EPS 44c/$1.21B vs. est. 39c/$1.18B; sees Q4 EPS 37c-41c on revs $1.19B-$1.22B vs. est. 38c/$1.21B; sees FY19 EPS $1.57-$1.61 (up from prior view $1.47-$1.57) on revs $4.76B-$4.79B vs. est. $1.54/$4.74B; announced its CFO is leaving; boosts share buyback authorization to $1.3B

·     Bottomline Technologies (EPAY) Q2 EPS 35c/$104.85M vs. est. 35c/$103.42M.

·     Celestica (CLS) Q4 IFRS EPS 29c/$1.73B vs. est. 31c/$1.73B

·     Kulicke & Soffa (KLIC) Q1 EPS 25c/$157.2M vs. est. 20c/$155.06M

·     Sony (SNE) cuts FY sales and operating revenue view to Y8.5T from Y8.7T; still sees FY operating income Y870B; cuts FY net income view to Y835B from Y705B citing lower than expected sales in the Financial Services, Semiconductors, MC and IP&S segments for the lowered sales and operating revenue outlook

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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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