Morning Preview: December 04, 2019

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Early Look

Wednesday, December 4, 2019

Futures

Up/Down

%

Last

DJ Industrials

142.00

0.52%

27,629

S&P 500

14.50

0.47%

3,105

Nasdaq

52.50

0.63%

8,303

 

 

U.S. futures are pushing higher, on track to snap the 3-day losing streak amid new reports the U.S. and China are moving closer to agreeing regarding the number of tariffs that would be rolled back in a phase one trade deal, according to a Bloomberg report. The report said that President Donald Trump’s comments yesterday downplaying the urgency of a deal shouldn’t be understood to mean the talks were stalling, as he was speaking off the cuff. Further, U.S. legislation seeking to sanction Chinese officials over human-rights issues in Hong Kong and Xinjiang are unlikely to impact the talks. U.S. negotiators expect a phase-one deal with China to be completed before American tariffs are set to rise on December 15. The news came after Asian markets were closed, as they finished lower with the Nikkei Index falling -244 points to 23,135, the Shanghai Index slipped -6 points to 2,878 and the Hang Seng Index dropped -328 points to 26,062. In Europe, the German DAX is higher by 125 points to 13,115, while the FTSE 100 is up a few points at 7,170. U.S. equities dropped on Tuesday, falling for a third straight session after touching fresh record highs mid-last week after President Donald Trump said he’d be willing to wait another year before making a trade agreement with China and threatened levies across three continents over the last day. The White House also proposed overnight tariffs against $2.4 billion of French imports in response to the European nation’s new digital-services tax, following the U.S. saying they would revive tariffs on steel and aluminum imports from Brazil and Argentina on Monday. Markets today preparing for a few key data points with private payrolls (ADP) at 8:15 AM and ISM services index data at 10:00 AM.

 

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -20.67 points, or 0.66%, to 3,093.20

·     The Dow Jones Industrial Average fell -280.23 points, or 1.01%, to 27,502.81

·     The Nasdaq Composite sunk -47.34 points, or 0.55%, to 8,520.64

·     The Russell 2000 Index declined -4.95 points, or 0.31% to 1,602.63

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:15 AM EST      ADP Employment Change for November…est. 135K

·     9:45 AM EST      Markit US Services PMI, Nov-F…est. 51.6

·     9:45 AM EST      Markit US Composite PMI, Nov-F…prior 51.9

·     10:00 AM EST    ISM Non-Manufacturing for November…est. 54.5

·     10:30 AM EST    Weekly DOE Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: A LOT, BNED, CPB, GIII, JW/A, REX

·     Earnings After the Close: EMKR, ESTC, FIVE, GEF, HOME, HRB, MIND, PGNY, POWL, RH, SEAC, SMAR, SMTC, SNPS, SPWH, TLYS, VRNT, WORK

 

Other Key Events:

·     Barclay’s Global, Lodging, Leisure & Restaurant Conference, 12/3-12/4, in New York

·     BMO Capital Boston Growth Conference, 12/3-12/4, in Boston, MA

·     Citigroup Basic Material Conference, 12/2-12/4, in New York

·     Credit Suisse 23rd Annual Technology Conference, 12/2-12/5, in Scottsdale, AZ

·     Credit Suisse 7th Annual Industrials Conference, 12/3-12/5, in Palm Beach, FL

·     Fashion Footwear Association of New York, 12/2-12/6, in New York

·     Morgan Stanley Global Consumer & Retail Conference, 12/3-12/4, in New York

·     Piper Jaffray 31st Annual Healthcare Conference, 12/3-12/5, in New York

 

 

Macro

Up/Down

Last

WTI Crude

0.89

56.99

Brent

1.08

61.90

Gold

-2.40

1,482.00

EUR/USD

-0.0011

1.1071

JPY/USD

0.04

108.67

10-Year Note

+0.018

1.734%

 

 

World News

·     Investor Intelligence Poll shows bullishness among equity newsletter slipped from 13-month highs of 54.8% (a five-week low) from 58.1% while bearish sentiment rises to 17.3% from 17.1% and those expecting a correction rises for only the third time in the last 14 weeks, up to 27.9% from 24.8% last week

·     The British pound has risen to its highest level since May against both the dollar (to 1.305) and euro (52-week highs nearing 1.18) this morning, notching a second day of strong gains as traders bank on a Conservative victory in the general election

 

Sector News Breakdown

Consumer

·     GoPro (GPRO) announced a “strong” Black Friday and Cyber Monday shopping period as reported YoY sell-through growth of 30% based on available data from its larger U.S. retail partners and 20% based on available data from its European retail partners; said achieved more than 120% YoY growth in total camera unit sales during the entire Black Friday/Cyber Monday period

·     Cannae Holdings (CNNE) 6.5M share Spot Secondary priced at $33.00

·     Volaris (VLRS) reports revenue passenger miles rose 16.9% to 1.81B in November; domestic RPMs up 14.5% Y/Y and international RPMs expanded 23.3% for the month; capacity increased 16.1% to 2.04B available seat miles; domestic ASMs +15.1%; International ASMs +18.3%

 

Energy, Industrials & Materials

·     The American Petroleum Institute (API) reported that U.S. crude supplies fell by -3.7M barrels for the week ended Nov. 29, while showed stockpile gains of 2.9M barrels for gasoline and 794,000 barrels for distillates.

·     AeroVironment (AVAV) Q2 adjusted EPS 34c/$83.3M vs. est. 29c/$81.01M; reports Q2 funded backlog $146.7M; backs FY20 EPS view of $1.47-$1.67 (vs. est. $1.66) and also backs FY20 revenue view of $350M-$370M vs. est. $360.0M

 

Financials

·     MasterCard (MA) announced that its board has declared a quarterly cash dividend of 40c per share, a 21% increase over the previous dividend of 33c per share and approved a new share repurchase program of up to $8B of its Class A common stock

·     Columbia Property (CXP) widens its normalized FFO per share forecast for the full year as sees FY normalized FFO per share $1.46 to $1.51, compared to prior view $1.47-$1.49 (est. $1.48) and slightly raises quarterly dividend to 21c from 20c

·     MarketAxess Holdings Inc. (MKTX) announced total monthly trading volume for November 2019 of $460.5 billion, consisting of $81.7 billion in U.S. high-grade volume, $78.8 billion in other credit volume, and $300.0 billion in rates volume

 

Healthcare

·     Arrowhead (ARWR) 4M share Secondary priced at $58.00

·     Kodiak Sciences (KOD) 6M share Secondary priced at $46.00

·     Relmada Therapeutics (RLMD) 3.333M share Spot Secondary priced at $30.00

·     ViewRay (VRAY) 41.55M share Secondary priced at $3.13

·     Allscripts (MDRX) announces private offering of $200M of convertible senior notes

·     Immunomedics (IMMU) announces $250M common stock offering

·     HealthEquity (HQY) Q3 EPS 47c/$157.12M vs. est. 22c/$152.38M; guides FY adj EPS $1.46-1.52 up from prior view $1.10-1.16 and sees FY adj EBITDA $182M-186M vs. prior $138M-142M

·     Rapt Therapeutics (RAPT) announced a license and collaboration agreement with Hanmi Pharmaceutical for FLX475 in Asia where RAPT will receive $10 million in an upfront payment and near-term milestone payment

 

Technology, Media & Telecom

·     Marvell (MRVL) Q3 non-GAAP EPS 17c/$662M vs. est. 17c/$664.51M; guides Q4 non-GAAP EPS 15c-19c below consensus 21c while sees Q4 revenue $750M +/-3% vs. est. $699.5M; sees Q4 GAAP gross margin 45.5%; non-GAAP gross margin 62% and GAAP operating expenses $445M-$455M; said Q4 guidance takes into account U.S. government’s export restriction on certain Chinese customers and includes expected results from Aquantia and Avera acquisitions

·     Microchip Technology (MCHP) narrows guidance as now expects consolidated net sales for Q3 to be $1.244B-$1.298B, or down between 3% and 7% sequentially with a mid-point of down 5% vs. previous guidance of $1.204B-$1.311B or down between 2% and 10% sequentially, with a midpoint of down 6%; narrows Q3 adj. EPS view to $1.19-$1.30 from $1.12-$1.32

·     Salesforce (CRM) Q3 adjusted EPS 75c/$4.5B vs. est. 66c/$4.45B; sees Q4 adjusted EPS 54c-55c on revs $4.743B-$4.753B vs. est. 62c/$4.72B; sees FY20 adjusted EPS $2.89-$2.90 on revs $16.99B-$17B vs. est. $2.86/$16.9B; initiates Q1’21 revenue guidance of $4.80B-$4.835B up 28% to 29% year-over-year ; 3Q subscription and support revenue up 34% YoY to $4.24B topping views around $4.15B

·     Workday (WDAY) Q3 EPS 53c/$938.1M vs. est. 37c/$920.78M; co said executed well in Q3 and delivered strong results, with subscription revenue growth of 28% and non-GAAP operating margin of 15%; raises FY20 subscription revenue outlook to $3.085 billion to $3.087 billion while expect fourth-quarter subscription revenue of $828.0 million to $830.0 million; qtr end subscription revenue backlog of $7.19B, up 21.8% YoY

·     Zscaler (ZS) Q1 EPS 3c/$93.59M vs. est. 1c/$89.79M; said Q1 calculated billings grew 37% year-over-year to $88.3M in Q1; sees Q2 EPS approximately 3c on revs $97M-$100M vs. est. 4c/$97.37M; guides FY adj EPS $0.13-0.15 vs. prior $0.12-0.15, vs. est. $0.15

·     Alphabet (GOOGL) CEO Larry Page said in a post titled “Letter from Larry and Sergey” that going forward, Google CEO Sundar Pichai will be the chief executive of both Google and Alphabet

·     Frontier Communications Corporation (FTR) announced that the Company’s Board of Directors has unanimously appointed Bernard L. “Bernie” Han as President and Chief Executive Officer and a member of the Board, effective immediately.

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Content is provided by Hammerstone Inc., which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the Hammerstone content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.

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