Morning Preview: January 8, 2018

Scott GreenDaily Market Report

Early Look
Monday, January 8, 18
  
After a stellar start to the New Year last week, with stocks roaring higher to close at record highs each trading session, U.S. futures are pointing to a modestly higher open. Stocks surged the first week of 2018, with the Nasdaq Comp rising 3.3%, the S&P 500 climbing 2.6% and the Dow Industrials rose 2.3% each eclipsing a major milestone. The Dow Jones Industrial Average on Friday rallied by more than 200 points, putting the benchmark a quarter of the way from breaching 26,000, just 24 hours after marking a round-number milestone at 25,000 (remember it took just 23 days to go from 24K to 25K – the fastest 1,000 point move ever). The Nasdaq Comp closed above the 7,000 level for the first time early in the week, ending Friday at 7,136 and the S&P 500 closing well above 2,700. Bonds fell as yields climbed, with the benchmark 10-year up around 2.47% and the 2-yr extended gains, with its yield now up 70 bps in just under four months. The U.S. dollar records its third weekly loss in a row despite post-jobs rebound. In Asian markets, The Nikkei Index was closed, the Shanghai Index gained 17 points to settle at 3,409 and the Hang Seng Index rose 84 points to 30,899. In Europe, the German DAX is up over 40 points at 13,365 and while the FTSE 100 is flat around 7,720.
 
Market Closing Prices Yesterday
·      The S&P 500 Index jumped 19.16 points, or 0.70%, to 2,743.15
·      The Dow Jones Industrial Average rose 220.74 points, or 0.88%, to 25,295.87
·      The Nasdaq Composite spiked 58.64 points, or 0.83%, to 7,136.56
·      The Russell 2000 Index advanced 4.29 points, or 0.28% to 1,560.01
 
Events Calendar for Today
·      12:40 PM EST     Fed’s Bostic Speaks on Economic Outlook in Atlanta
·      1:35 PM EST        Fed’s Williams Speaks at Inflation Targeting Conference
·      4:00 PM EST        Fed’s Rosengren Speaks at Inflation Targeting Conference
·      3:00 PM EST        Consumer Credit for November…est. $18.0B
 
Other Key Events
·      Consumer Electronic Show (CES) 1/8-1/12, in Las Vegas
·      ICR Retail Conference, 1/8-1/10, in Orlando, FL
·      JP Morgan Healthcare Conference, 1/8-1/11 in San Francisco, CA
·      EuroZone Confidence and Retail Sales data
   
World News
·      Former Trump senior strategist Stephen Bannon expressed regret Sunday for his role in a new book critical of the Trump administration as senior White House officials sharpened the administration’s attack on it. “My support is also unwavering for the president and his agenda,” Bannon said in the statement. “I regret that my delay in responding to the inaccurate reporting regarding Don Jr has diverted attention from the president’s historical accomplishments in the first year of his presidency.”
·      Eurozone manufacturers are more optimistic about their prospects than at any time since the sentiment in the sector was first measured in 1985 as the EC Economic Sentiment Indicator, which aggregates business and consumer confidence, rose to 116.0 in December from 114.6 in November to reach its highest level since October 2000.
·      China’s foreign exchange reserves rose to their highest in more than a year in December, notching up their 11th straight month of gains, reserves rose $20.2B in December to $3.14 trillion, the highest since September 2016 and the biggest monthly increase since July.
·      The latest AAII investor sentiment survey, (last Thursday) showed that 59.8% of polled investors are bullish on the market, meaning they expect prices will be higher in six months. That’s the highest level in about seven years, since a reading of 63.3% on Dec. 23, 2010
 
Sector News Breakdown
Consumer
·      Helen of Troy (HELE) Q3 EPS $2.52/$453M vs. est. $2.12/$451.5M; sees FY EPS $6.85-$7.10 vs. est. $6.72 and sees year sales $1.44B-$1.46B vs. est. $1.58B
·      Floor & Décor (FND) sees Q4 EPS 17c-18c vs. est. 16 and sees Q4 comp sales growth about 24.4%
·      Casinos mentioned in Barron’s saying despite a rough week for shares of Las Vegas Sands (LVS), Wynn Resorts (WYNN) and Melco Resorts & Entertainment (MLCO),after Macau’s monthly revenue data showing that gross gaming revenue only grew 15%, missing forecasts, and China placing increased restrictions on the amount of money that can be taken out of ATMs abroad, its not as bad as it looks
·      Heidrick & Struggles (HSII) announces restructuring plan, sees $11M-$13M in savings; sees Q4 impairment charge of $6M-$12M
 
Energy
·      A tanker carrying Iranian oil and run by the country’s top oil shipping firm was on fire and spewing oil into the East China Sea after colliding with a Chinese freight ship, leaving the tanker’s 32 crew members missing, the Chinese government said
 
Financials
·      Deutsche Bank AG (DB) said Friday that it expects to book a charge of about 1.5 billion euros ($1.81 billion) in its fourth-quarter results, stemming from the recent U.S. tax reforms
·      Bank earnings could “me messy” according to Barron’s saying the backdrop for banks could not be much better but earnings season is about to begin – with JPMorgan (JPM), Wells Fargo (WFC) and PNC Financial (PNC) expected to report on Friday. While tax reform should be a boon it will also produce one-time charges and gains that will need to be accounted for
·      Nxt-ID (NXTD) files to sell 4.45M shares of common stock for holders
·      Riot Blockchain (RIOT) files to sell 3.29M shares of common stock, warrants for holders
 
Healthcare
·      Celgene Corp. (CELG) agreed to buy privately-held blood-disease biotechnology company Impact Biomedicines for as much as $7 billion; will make an upfront payment of $1.1 billion with the potential for another payment of as much as $1.4 billion could be forthcoming in milestones and more if global sales top $5Bhttps://goo.gl/GAQe34
·      Pfizer (PFE) will stop trying to discover new drugs for Alzheimer’s disease and Parkinson’s disease, according to The Wall Street Journal https://goo.gl/RrLWcR
·      Alnylam Pharmaceuticals Inc. (ALNY) and Sanofi (SNY) agreed to restructure their RNAi therapeutics alliance to streamline and optimize development of certain products for the treatment of rare genetic diseases.
·      German healthcare group Fresenius (FMS) will continue to look for acquisitions even if that leads to a temporary rise in debt, Boersen-Zeitung quoted the company’s finance chief as saying – Reuters https://goo.gl/ggoMbi
·      Acorda Therapeutics (ACOR) is exploring a sale of the company, the Wall Street Journal reported late Friday, citing people familiar with the matter; ACOR may not move forward with any formal action as the proceedings were at an early stage, the WSJ report said https://goo.gl/me5mKw
·      Akcea Therapeutics (AKCA), and affiliated of Ionis Pharmaceuticals (IONS), announced the initiation of a Phase 2b clinical study of AKCEA-APOCIII-LRx in patients with hypertriglyceridemia and established cardiovascular disease
·      Bristol-Myers Squibb Co. (BMY) said Friday it expects to pay an extra $3 billion in taxes on its overseas cash in the fourth quarter, a result of the tax overhaul
·      Several companies issuing guidance ahead of the JP Morgan Healthcare conference this week:
·      Exact Sciences (EXAS) Q4 prelim revs seen $86.9M vs. est. $79.1M
·      MiMedx (MDXG) sees Q4 revs $90.9M vs. est. $88M; sees Q1 revs $90.5M-$92M vs. est. $87M; sees year revs $383M-$387M vs. est. $384M
·      Neurocrine Biosciences (NBIX) said it sees net product sales of INGREZZA to be about $64M for Q4 and total company revenues for Q4 about $94M inclusive of a $30M milestone payment received from AbbVie (ABBV)
·      Vanda (VNDA) announces preliminary 2017 total revenues of $165M vs. est. $164.16M; reports preliminary 2018 total revenues of $180M-$200M vs. est. $193.2M; says ended 2017 with approximately $143M in cash, cash equivalents and marketable securities, representing an increase to Cash of approximately $2M in 2017
 
Industrials & Materials
·      Caterpillar (CAT) mentioned cautiously in Barron’s saying it is time to sell after shares soared; said investors should not expect the stock to move quickly from here, as cyclical companies like Caterpillar tend to trade at high multiples of earnings at the bottom of the cycle and low multiples at the top
·      FedEx (FDX) EPS growth should more than triple next year, Barron’s said saying the U.S. postal rates look likely to rise, pinching Amazon (AMZN) and benefiting FedEx and UPS (UPS). While for now UPS enjoys higher profit margins, investors should favor FedEx as years-long investment in automating and expanding its hubs has given the company a speed and efficiency advantage
·      Air Lease (AL) sees revaluation resulting from tax overhaul reducing deferred tax liability by 40%
 
Technology, Media & Telecom
·      Nvidia Corp. (NVDA) landed a big deal with Uber Technologies Inc., along with new developments in Nvidia’s self-driving push; said it will supply self-driving hardware for the largest U.S. ride-hailing company
·      Snap Inc. (SNAP) downgraded to hold at Jefferies with a $15 tgt
·      Ultra-Clean (UCTT) files automatic mixed securities shelf
·      Verizon (VZ) has removed Bloomberg L.P.’s news network, Bloomberg TV, from 4.6M of its pay-TV customers after the financial news provider asked the carrier to pay it for its content for the first time ever, Reuters reports

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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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