Tuesday, December 4, 2018
Global stock markets are lower with U.S. futures also pointing to a weaker open, as market attention once again turns to trade talks and interest rates. U.S. stocks finished sharply higher Monday as global markets reacted favorably to U.S. and China over the weekend calling a temporary truce to their trade dispute. The Dow Jones Industrial Average climbed as much as 442 points before settling higher by 290 points while the S&P 500 index moved back above key technical levels, powered by gains in the energy sector as WTI crude jumped 4% on bullish news. The U.S. 10-year Treasury yield fell to a 3-month low on Monday as investors reign in expectations for a faster pace of interest rate increases by the Fed next year. Treasury yields extend their decline this morning, as the 10-year falls to 2.96%, while gold prices jump to around $1,245 an ounce as the dollar falls further. On a positive note, Senate Majority Leader Mitch McConnell predicted lawmakers would avert a government shutdown when a proposed stopgap measure expires later this month, saying neither party wants the political blame for a lapse in funding. In Asian markets, The Nikkei Index plunged -538 points (2.39%) to settle at 22,036, the Shanghai Index gained 11 points to 2,665 and the Hang Seng Index rose 78 points to 27,260. In Europe, the German DAX is off over -60 points at 11,400, while the FTSE 100 is down around -30 points at 7,025. Note financial markets will be closed tomorrow in the U.S. because of the day of mourning or for President Bush, while Fed Chairman Powell’s testimony to Congress is cancelled (and several economic data points will be delayed until Thursday). Oil prices extend their gains, rising ahead of the OPEC meeting on Thursday.
Market Closing Prices Yesterday
· The S&P 500 Index jumped 30.20 points, or 1.09%, to 2,790.37
· The Dow Jones Industrial Average rose 287.97 points, or 1.13%, to 25,826.43
· The Nasdaq Composite spiked 110.98 points, or 1.51%, to 7,441.51
· The Russell 2000 Index advanced 15.69 points, or 1.02% to 1,548.96
· 7:45 AM EST ICSC Weekly Retail Sales
· 8:55 AM EST Johnson/Redbook Weekly Sales
· 4:30 PM EST API Weekly Inventory Data
· Earnings Before the Open: AVYA, AZO, BMO, BNED, CONN, DCI, DG, HDS, MOV
· Earnings After the Close: GWRE, HOME, HPE, HQY, MDB, MRVL, OLLI, RH, TOL, ZS
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
· Bank America Leveraged Finance Conference, 12/4-12/5, in Boca Raton
· Goldman Financial Services Conference, 124/12-5, in NY
· Wells Fargo Technology Summit, 12/4-12/6
· Saudi Arabian Oil Minister Khalid Al-Falih said it’s too early to say whether the OPEC+ group will cut oil production when it meets in Vienna later this week. “We need to get together and listen to our colleagues, hear about their views on supply and demand and their projections of their own countries’ production,” Al-Falih said in an interview
· The Reserve Bank of Australia held rates yet again at its December meeting, in line with expectations as the central bank kept its cash rate at 1.5%
· French Prime Minister announces the suspension of fuel tax increases
Sector News Breakdown
· RH Corp. (RH) shares rose 17%; Q3 EPS $1.73/$636.6M vs. est. $1.27/$632.18M; raises Q4 EPS view to $2.75-$2.90 from $2.33-$2.54 (est. $2.50) and raises Q4 revenue view to $680M-$690M from $665M-$685M vs. est. $679.35M; raises FY18 EPS view to $8.33-$8.47 from $7.35-$7.75 (est. $7.63) and raises FY18 revenue view to $2.52B-$2.53B from $2.49B-$2.52B (est. $2.51B); Q3 comp sales 4% vs. est. 4.1%
· Toll Brothers (TOL) Q4 EPS $2.08/$2.46B vs. est. $1.83/$2.35B; Q4 net signed contract value down 15% to $1.5B, reports Q4 contract units down 13% to 1,715; backlog value at FYE 2018 rose to $5.52 billion, up 9%; units totaled 6,105, up 4%; sees Q1 deliveries of between 1,350 and 1,550 units with an average price of between $850,000 and $880,000
· HD Supply (HDS) Q3 adjusted EPS $1.00/$1.6B vs. est. 99c/$1.59B; raises FY18 adjusted EPS view to 3.33-$3.38 from $3.22-$3.35 (est. $3.33) and raises FY18 revenue view to $5.976B-$6.026B from $5.9B-$6B (est. $5.99B)
· Tesla Inc. (TSLA) had plans to make the Model Y, a planned compact SUV next on its lineup, at a quick pace, Business Insider reported Monday, citing internal documents given to Tesla employees shortly before the car maker’s Q3 earnings release in October.
· Marriott International (MAR) customers are being given free identity theft monitoring software to keep an eye on accounts after a massive hack exposed the data of more than 500 million people. Marriott also said, “as it relates to passports and potential fraud, we are setting up a process to work with our guests who believe that they have experienced fraud as a result of their passports being involved in this incident” – Marketwatch.com https://on.mktw.net/2PhX5QQ
Energy, Industrials and Materials
· Keane Group (FRAC) 5.25M share Spot Secondary priced at $10.77
· Kinder Morgan (KMI) gives preliminary 2019 financial projections, with company expected to generate about $5B of distributable cash flow, about 10% over its 2018 budgeted DCF; sees 2019 adj. Ebitda $7.8B vs. est. $7.65B
· Sonoco (SON) announced that CFO Barry Saunders to retire after nearly 30 years with the company, effective March 1, 2019.
· Allete Clean Energy, a wholly owned subsidiary of Allete (ALE), approved new 5-year power sale agreements between its Viking wind facilities in southern Minnesota and Xcel Energy (XEL)
· GMS Inc. (GMS) Q2 EPS 89c/$833.8M vs. est. 93c/$831.89M
· Teck Resources Ltd. (TECK) agreed to sell a 30% stake in its Quebrada Blanca copper project in northern Chile, one of the few big copper deals available in the market, for $1.2 billion to Sumitomo Corp.
· Truckers HUB Group (HUBG), Knight-Swift (KNX) and Werner (WERN)downgraded to Neutral from Buy at UBS
· Visa Inc. (V) and MasterCard (MA) offered to reduce fees charged for foreign cards used in Europe in a bid to end an EU antitrust probe. EU comments in emailed statement
· Bank of Montreal (BMO) Q4 EPS C$2.32 vs. C$1.94 last year; Q4 revenue C$5.92B vs. C$5.82B last year; reports Q4 book value per share C$64.73 and reports Q4 CET1 capital ratio 11.3%; raises quarterly dividend by C$0.04 to C$1.00 per share
· A federal judge on Monday sharply questioned the Justice Department’s decision to green-light CVS Health Corp.’s (CVS) nearly $70 billion acquisition of Aetna Inc. (AET) and said he may order CVS to halt its integration of Aetna’s assets while he considers the merger’s implications.
· Fate Therapeutics (FATE) got an exclusive option to an intellectual property portfolio owned by the Max Delbrück Center for Molecular Medicine that covers novel humanized chimeric antigen receptor constructs that uniquely and specifically bind B-cell Maturation Antigen.
· Momenta Pharmaceuticals (MNTA) announced a revised regulatory strategy in the United States for M923, Momenta’s proposed biosimilar to Humira
Technology, Media & Telecom
· Apple Inc. (AAPL) shares slumped again in pre-market trading Tuesday following a report that the tech giant is considering promotional tactics such as promotional discounts and trade-ins to boost iPhone sales over the key holiday shopping period – TheStreet.com
· Bloomberg reported Tuesday that Apple (AAPL) reshuffled some of its global marketing staff in October in order to address disappointing iPhone sales, just weeks after a new suite of models, including the XS and the XR, was launched in late September
· Coupa Software (COUP) Q3 adjusted EPS 8c/$67.5M vs. est. loss (3c)/$62.64; sees Q4 adjusted EPS approximately 0c on revs $67.8M-$68.3M vs. est. loss (9c)/$64.05M; sees FY revenue $253M-$253.5M vs. est. $244.5M
· Smartsheet (SMAR) Q3 adjusted EPS loss (9c)/$46.9M vs. est. loss (16c)/$44.14M; said momentum continued in Q3 with revenue growing 59% year-over-year and dollar-based net retention rate reaching a record 132%; raises FY19 adj. EPS view to (44c)-(42c) from (56c)-(52c) and raises FY19 revenue view to $174.6M-$175.6M vs. est. $168.53M
· Activision Blizzard (ATVI) removed from the Best Ideas List at Wedbush
· Quora, the community question-and-answer website, said Monday that a data breach may have compromised the personal information of about 100 million users.