Monday, November 26, 2018
Global stocks gained across the board following a tumble in stocks last week, as U.S. markets points to gains of more than 1% led by a rebound in oil futures. Dow futures surged nearly 300 points and Nasdaq-100 futures also indicated a strong start as markets rebound after the S&P 500 ended in correction territory last Friday, down more than 10% from its Sept. 20th peak, while all major index closed lower late last week. Last week, the Nasdaq tumbled 4.3%, the Dow ended the week 4.4% lower, while the S&P 500 notched a week-on-week decline of 3.8%. It marked the worst Thanksgiving week since 2011 for all three U.S. indexes. As earnings wind down, attention turns back to the Fed and rising rates, oil prices (bouncing after sliding 7.7% on Friday), and macro concerns, while investors look to see how well retailers did this weekend with Black Friday and ahead of Cyber Monday. Cyber Monday holiday shopping is expected to generate $7.8 billion in sales this year, a gain of 18% on the previous year, making for the biggest online shopping day in the U.S. ever, according to Adobe Analytics.
In Asian markets, The Nikkei Index rose 165 points to settle at 21,812, the Shanghai Index slipped -3 points to close at 2,575 and the Hang Seng Index jumped 448 points to 26,376. In Europe, the German DAX is higher by about 130 points at 11,320, while the FTSE 100 is higher by more than 50 points back above the 7,000 level. In Europe, reports of a meeting between Prime Minister Giuseppe Conte and European Commission President Jean-Claude Juncker that could mean an end to a budget standoff between Italy and the EU has provided support for Europe stocks. U.K. Prime Minister Theresa May also walked away from an EU meeting with approval for her Brexit deal.
Market Closing Prices Yesterday
· The S&P 500 Index dropped -17.37 points, or 0.66%, to 2,632.56
· The Dow Jones Industrial Average fell -178.74 points, or 0.73%, to 24,285.95
· The Nasdaq Composite sunk -33.27 points, or 0.48%, to 6,938.98
· The Russell 2000 Index inched higher 0.40 points, or 0.03% to 1,488.68
· 8:30 AM EST Chicago Fed Nat Activity Index for Oct…est. 0.18
· 10:30 AM EST Dallas Fed Manufacturing Activity for Nov…est. 24.5
· Earnings Before the Open: JKS
· Earnings After the Close: BKE, ENTA, MTSC
Other Key Events:
· Credit Suisse 22nd Annual Technology, Media and Telecom Conference, 11/26-11/28, in Arizona
· Jefferies Energy Conference, 11/26-11/28, in Houston, TX
· Piper Jaffray Southeast Regional Bank Symposium, 11/26-11/27, in Atlanta, GA
· Italy and the European Commission will work in the coming days to bring closer their positions on Italy’s 2019 draft budget, which the EU executive says breaks EU laws by not reducing the country’s huge public debt.
· Japanese manufacturing activity expanded at the slowest pace in two years in November and new orders contracted for the first time since September 2016. The Flash Markit/Nikkei Japan Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 51.8 in November from a final 52.9 in October.
· U.S. Customs and Border Protection closed a section of the southern border with Mexicoon Sunday and fired tear gas at a group of migrants that tried to breach a fence separating the two countries
Sector News Breakdown
· Online sales rose more than 23%, crossing $6 billion on Black Friday, according to data from Adobe Analytics, which tracks transactions at 80 of the top 100 U.S. retailers. On Thanksgiving, it estimated sales grew 28% to $3.7 billion. Preliminary data from analytics firm RetailNext showed net sales at brick-and-mortar stores fell 4%-7% over the two days, while traffic fell 5%-9%
· Target (TGT) mentioned positively in Barron’s noting shares plunged 11% after the company fell short of estimates for same-store sales and earnings in its Q3 report and it is down 15.5% for the week, but is unlikely that the business is really that bad. The article said investors want out of retail stocks because the entire stock market has looked balky of late
· Campbell Soup (CPB) and Third Point LLC are close to settling a bitter proxy contest by adding two of the hedge fund’s nominees to the U.S. food company’s board and giving the activist investor a say in selecting Campbell’s next CEO – Reuters reported
· General Motors Co. (GM) plans to close its manufacturing operations in the Canadian city of Oshawa, according to people familiar with the plans, the latest in a series of cost-cutting moves under way at the Detroit car maker.
Energy, Materials and Industrials
· Venezuela settled a $1.4 billion arbitration claim that will prevent a creditor from stripping away its crown jewel foreign asset, the U.S.-based Citgo Petroleum Corp refining business, according to Canadian court documents – Reuters https://on.mktw.net/2TLGok7
· Rio Tinto (RIO) said Monday it would sell its stake in a Namibian uranium mine to a Chinese buyer for up to US$106.5 million (A$147 million).
· State and local governments could have to pay millions more to finance projects as the Trump administration’s steel tariffs, combined with a strong economy and a tight labor market, push up construction costs – WSJ
· JinkoSolar (JKS) reports Q3 EPS 76c on revs $974.8M vs. consensus $934.62M; total solar module shipments were 2,953 megawatts, an increase of 5.7% QoQ
· Regional mall REITs mentioned mixed in Barron’s such as Simon Property (SPG), Macerich (MAC), Taubman Centers (TCO), CBL (CBL), Washington Prime (WPG), as they sport dividend yields in the mid-single digits or higher and have solid economic prospects. REITs can be attractive income vehicles, since they are required to pay out at least 90% of their taxable income to shareholders, but investors should approach the sector cautiously, partly owing to rising interest rates
· Warren Buffett has amassed stakes in seven of the nation’s top 10 banks, a move that may make sense given their strong earnings growth and generous capital return plans. Barron’s suggests investors play the bank trade by buying any of Buffett’s favorites, including JPMorgan Chase (JPM) and Bank of America (BAC), or ETFs like Invesco KBW Bank (KBWB) or the Financial Select Sector SPDR Fund (XLF).
· Worldpay (WP) and Paysafe Group announced a new strategic partnership, with sights set on establishing an industry-leading standard in iGaming and Sports Betting digital payments acceptance and security in the U.S
· AstraZeneca PLC (AZN) said the FDA has granted orphan drug destination status to Fasenra, which is aimed at treating EGPA, a rare autoimmune disease.
· PerkinElmer (PKI) announced that its Vanadis NIPT system has obtained CE-IVD mark for commercialization and distribution throughout Europe and other countries that accept CE marking
Technology, Media & Telecom
· Logitech International SA (LOGI) is in discussions to acquire Plantronics Inc (PLT),a U.S. maker of Bluetooth earpieces and gaming headsets, people familiar with the matter said
· The FAANGs – Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet (GOOGL) – have lost $1.1T since their peaks according to Barron’s, and among the list of top 10 S&P 500 tech stocks in 2018, Netflix is now the only FAANG to make the cut.
· Facebook (FB) shares are trading like a value stock according to Barron’s noting while Facebook stock is down 25% during a year when revenue is expected to jump 36%, Barron’s continues to see value in the shares. Barron’s said its time to “bottom fish”, even amid concerns about user privacy and election meddling, because the company is expected to post double-digit revenue growth that should increase earnings per share