Monday, December 3, 2018
Stock futures are surging, looking to add to last week’s gains with US futures up nearly 2% following positive developments at the G20 meeting over the weekend between the U.S. and China, while oil prices jump after Russia and Saudi Arabia have agreed to extend OPEC’s efforts to stabilize oil markets and Canada’s province of Alberta to cut crude production nearly 9% for next year. The highly anticipated G20 meeting concluded this weekend with President Donald Trump and Chinese President Xi Jinping in Buenos Aires coming to a “truce”. The U.S. said it won’t impose 25% tariffs on Chinese goods in January, as it had planned, and China agreed to buy more U.S. agricultural goods. However, the deal opened a 90-day window to negotiate a deal not just on trade but also on protecting intellectual property, ending the forced transfer of technology, and more. Also helping futures, a “tweet” from President Trump last night saying that China had agreed to “reduce and remove” tariffs on U.S. cars, now set at 40% (autos rising early). So between the commentary out of the G20, the positive reaction to oil prices following Canada, Russia, Saudi comments and the continued momentum from Fed Chairman Powell’s dovish tone at the FOMC policy meeting, U.S. stocks are firmly higher. On a somber note, former President George Herbert Walker Bush died at the age of 74 on Friday with services today and tomorrow and funeral on Wednesday (the NYSE and Nasdaq will close stock markets on Wednesday out of respect).
In Asian markets, The Nikkei Index rose 223 points to 22,574, the Shanghai Index gained 66 points (2.5%) to 2,654 and the Hang Seng Index spiked 675 points (2.55%) to settle at 27,182. In Europe, the German DAX is higher by 260 points at 11,525, while the FTSE 100 is up around 150 points (2.1%) at 7,131. Stocks overall jumped last week, with the S&P 500’s 4.8% rise, its biggest in about seven years, was helped in part to Federal Reserve Chairman Jerome Powell’s dovish tone at the FOMC last Wednesday, indicating the Fed may ease on its pace of rising interest rates in 2019. Both the S&P 500 and the Nasdaq logged their best weekly performance since December 2011, while the blue-chip index posted its strongest week since November 2016.
Market Closing Prices Yesterday
· The S&P 500 Index jumped 22.41 points, or 0.82%, to 2,760.17
· The Dow Jones Industrial Average rose 199.62 points, or 0.79%, to 25,538.46
· The Nasdaq Composite gained 57.45 points, or 0.79%, to 7,330.54
· The Russell 2000 Index advanced 7.88 points, or 0.52% to 1,533.27
· 9:45 AM EST Markit US Manufacturing PMI, Nov-F…est. 55.4
· 10:00 AM EST Construction Spending MoM for Oct…est. 0.4%
· 10:00 AM EST ISM Manufacturing for Nov…est. 57.5
· 10:00 AM EST ISM Prices Paid Index for Nov…est. 70.0
· 1:00 PM EST Feds Kaplan speaks at Community Forum
· N/A Total Monthly auto sales for November
· Earnings Before the Open: FNSR
· Earnings After the Close: COUP
Other Key Events:
· Raymond James Technology Conference, 12/3-12/5, in NY
· UBS Global Media and Communications Conference, 12/3-12/4 in NY
· Total Monthly auto sales for November
· Former President George Herbert Walker Bush died on Friday at age 94, as President Donald Trump declared Wednesday a national day of mourning, and U.S. flags will fly at half-staff for 30 days. A state funeral will be held Wednesday at 11 a.m. at Washington National Cathedral, after which the former president will be flown to Houston. The New York Stock Exchange and the Nasdaq Stock Market both said their markets would be closed on Wednesday.
· EU finance ministers will agree on Monday to give the euro zone bailout fund new responsibilities, but they will delay decisions on the euro zone budget and a deposit guarantee scheme after failing to reach agreement, a draft document showed
· Jean-Claude Juncker wants more from Italy. The European Commission chief asked Premier Giuseppe Conte to lower the budget deficit target for next year to 1.95% from the original 2.4%, la Repubblica newspaper reported Sunday
Sector News Breakdown
· Watch shares of Wynn Resorts (WYNN), Las Vegas Sands (LVS), and Melco (MLCO) after gross gaming revenue in Macau rose 8.5% in November to 25 billion patacas ($3.1 billion) from a year earlier, according to data Saturday from the Gaming Inspection & Coordination Bureau. That beat the median analyst estimate for growth of 4% according to Bloomberg
· Amazon (AMZN) is testing its cashierless checkout technology for bigger stores, according to The Wall Street Journal, citing people familiar with the matter. If successful, the strategy would further challenge brick-and-mortar retailers racing to make their businesses more convenient
· Aptiv (APTV) shares mentioned positively in Barron’s saying the stock is worth a look and could reach over $100 in the next two years; notes General Motors (GM) is taking heat from the President over its decision to shutter some facilities; said investors could consider an automotive supplier that sells the key safety technologies to auto makers that will enable a driverless, all-electric future
· Russia and Saudi Arabia have agreed to extend OPEC’s efforts to stabilize oil markets, Russian President Vladimir Putin said over the weekend. Russia has yet to decide on how much production it would cut, Putin said, underscoring the remaining challenges ahead.
· Alberta has ordered oil producers in the province to curtail output by 325,000 barrels a day, an unprecedented step to ease a crisis in the Canadian energy industry. The plan announced Sunday will reduce production of raw crude and bitumen by 8.7 percent starting in January until the levels of excess oil in storage are drawn down. The reduction would then drop to 95,000 barrels a day until the end of next year at the latest
· Qatar will leave OPEC in January to focus on its gas ambitions, Reuters reports. Minister of State for Energy Affairs Saad al-Kaabi said that “We are not saying we are going to get out of the oil business but it is controlled by an organization managed by a country”
· Progressive (PGR) mentioned positively in Barron’s saying the number 3 auto insurer in premium volume has excelled at every major aspect of the business to produce the highest returns of any major publicly traded insurer
· AbbVie’s (ABBV) and Roche (RHHBY) updated data from the Phase III Murano trial of venetoclax in combination with rituximab showed that the majority of patients treated did not experience disease progression or death
· ArQule (ARQL) said anti-tumor activity was seen in 9 of 20 patients receiving ARQ 531 in a Phase 1 study of relapsed or refractory hematologic malignancies
· Bluebird Bio Inc. (BLUE) and Celgene Corp. (CELG) reported positive results in early testing of their next-generation experimental blood-cancer treatment. Ten of 12 patients getting the so-called CAR-T treatment initially responded and nine of them continue to benefit, the companies said in a statement Sunday
· Blueprint Medicines (BPMC) said overall response rate of 83% in EXPLORER clinical trial of avapritinib, 24% patients had complete response with a full or partial recovery of peripheral blood counts but median duration of response was not reached, and the 12-month duration of response rate was 76%.
· Celgene (CELG) said a Phase III clinical trial, BELIEVE, evaluating it and Acceleron Pharma’s (XLRN) luspatercept in adults with beta-thalassemia-associated anemia met the primary endpoint. The results were presented at ASH in San Diego
· Gilead (GILD) said two-year data from the Phase 1/2 ZUMA-1 study evaluating its Yescarta (axicabtagene ciloleucel) in patients with refractory large B-cell lymphoma showed a sustained treatment effect. The results were presented at ASH in San Diego
Industrials & Materials
· Boeing (BA) mentioned positively in Barron’s saying the stock has returned 894% in gains over the past decade, including reinvested dividends, yet the jet maker “appears cheap” with shares trading at 17x next year’s projected earnings, making Boeing a “Barron’s pick.”
· Four ways that General Electric (GE) CEO Larry Culp can turn around the company include being bold at GE Capital, selling parts of GE Healthcare, infuse new life into the culture and switch deal-making priorities, according to Barron’s
Technology, Media & Telecom
· Qualcomm Inc. (QCOM) ruled out any chance of a return to its abandoned bid for NXP Semiconductors NV (NXPI) after U.S. and Chinese political leaders appeared to open the way for possible approval of the transaction. NXPI said “while we were grateful to learn of President Trump and President Xi’s comments about Qualcomm’s previously proposed acquisition of NXP, the deadline for that transaction has expired, which terminated the contemplated deal.”
· Finisar (FNSR) Q2 EPS 26c/$325.4M vs. est. 22c/$326.59M; Q2 adjusted gross margin 28.3% vs. 27.5% in Q1
· ASML Holding N.V. (ASML) said a fire at one of its suppliers will result in the delay of some deliveries early next year. ASML said the fire at Prodrive, one of its suppliers of electronics components and modules, destroyed part of its production capacity and some inventories.
· Nexstar Media Group Inc. (NXST) agreed to buy Tribune Media Co. (TRCO) for $4.1 billion, creating the largest owner of local-TV stations in the U.S., according to reports. Nexstar outbid private equity firm Apollo Global Management LLC with an all-cash offer that values Tribune at about $46.50 a share, according to the reports
· Tegna (TGNA) blacked out Dish (DISH) customers’ access to its 49 local channels in 39 markets across 34 states and the District of Columbia. Tegna is blocking consumers in an effort to gain negotiating leverage as it demands nearly double the monthly rates for its local channels, even as broadcast TV ratings decline
· Disney’s (DIS) “Ralph Breaks the Internet” stayed at the top on its second outing, earning another $25.8M from 4,017 theaters