>>> What to look at today - 8th of November 2018

After endorsing a Republican-dominated government two years ago, investors decided they also like a divided Washington. Stocks in Asia followed a strong U.S. session overnight, spurred by the narrative that checks and balances bode well for returns.
Equities in Japan led gains, alongside solid rises in Hong Kong and South Korea, and futures indicated the positive risk appetite will flow through to European shares. Earlier, the S&P 500 Index rose more than 2 percent as investors bet a split Congress dimmed chances President Donald Trump’s signature tax cuts will be reversed while reducing the possibility of major fiscal initiatives that might have pushed up interest rates. Treasury yields held gains. The dollar was flat.
US After Hours CVNA +23.5%, ALRM +21%, CYBR / CARG +15%, TRIP +8% are notably higher, while KRO -19%, WYNN -12 / ROKU -12%, DVA / QCOM -5% following earnings/guidance

Nikkei +1.82% Hang Seng +0.12% CSI -0.28% Shanghai -0.22% Shenzen -0.48%

Eur$ 1.1428 CNH 6.9257 CNY 6.9268 JPY 113.71 GBP 1.3122 CHF 1.0021 TRY 5.41850 RUB 66.2224 WTI$ 61.83 +0.26%

S&P -0.15% EuroStoxx +0.25% FTSE +0.44$ Dax +0.43% SMI +0.14%

Macro :
- Italian Bond Futures Drop as EU Set to Warn Deficit Above Target
- U.K. Cabinet Shown Brexit Deal Text as Talks Near Endgame
- Goldman ‘Convinced’ Commodities to Rally Strongly After Drop (2)

Keep an eye on :
- ADD GY : Adler Modemaerkte Lowers FY Ebitda, Revenue Guidance
- AKER NO : Aker 3Q Net Asset Value Per Share NOK852 Vs. NOK769 Q/Q
- AR4 GY : Aurelius Nine Month Revenue EU2.79 Bln
- AUSS NO : Austevoll Seafood Third Quarter Net Income Misses Estimates
- BAMI IM : Banco BPM Third Quarter Net Income 3.6% Above Estimates
- BAMNB NA : BAM Nine Month Adjusted Pretax Profit EU93.6 Mln
- BYW6 GY : Baywa Sees 2018 Ebit Approximately on A Par With 2017
- BG AV : Bawag on Track to Beat Targets After 3Q Exceeds Estimates
- BPOST BB : Bpost Guidance Appears ‘Increasingly Challenging’: Jefferies
- BMW GY : BMW to Decide in Coming Weeks on Building More China SUVs: Rtrs
- GBB FP : Bourbon Says Recovery Underway, Prices to Remain Low
- BRE IM : Brembo Shares Drop as 3Q Ebitda, Net Miss Estimates
- BRBY LN : Burberry First Half Revenue 1.7% Above Estimates
- CGG FP : CGG Base Case Now Becomes the Bull Case, Morgan Stanley Says
- CBK GY : Commerzbank 3Q Revenue in Line, Outlook Unchanged
- COP GY : CompuGroup Third Quarter Revenue 1.2% Above Estimates
- DTE GY : Deutsche Telekom Raises Adj. Ebitda Guidance on U.S. Unit Growth
- DBK GY : Waters Says Democrats Will Examine Deutsche Bank Trump Ties
- DIC GY : DIC Asset Revises Full Year FFO I Forecast
- DUE GY : Duerr Third Quarter Sales 1.8% Above Estimates
- EQNR NO : Equinor Gets 3 New Licenses Offshore Newfoundland
- ERICB SS : Ericsson Sees Net Sales SEK210b–SEK220b by 2020, Est. SEK210b
- EUCAR FP : Europcar Third Quarter Adjusted Ebitda EU450.2 Mln
- FSKRS FH : Fiskars Maintains 2018 Outlook; Targets 12% Ebita Long-Term
- G IM : Generali 9-Month Net Income Climbs by 27%, Helped by Disposals
- GFT GY : GFT Revises Full Year Revenue Forecast
- HAB GY : Hamborner REIT Boosts FY FFO/Share Views, 9-Mo Ebitda Rises
- HLAG GY : Hapag-Lloyd Sees FY Ebit, Ebitda at Upper Part of Guidance Range
- HDD GY : Heidelberger Druck Second Quarter Sales Match Estimates
- HEI GY : HeidelbergCement 3Q RCOBDA in Line, Confirms Guidance
- HMB SS : Interogo Has Bought Additional Shares in H&M, Now Holds 0.7%
- HNR1 GY : Hannover Re Third Quarter Net Income Beats Highest Estimate
- HIK LN : Hikma Boosts Full Year Injectables Rev. Forecast
- IDR SM : Indra Nine Month Net Income EU55 Mln Vs. EU85 Mln Y/Y
- ISAT LN : Inmarsat Sees FY Rev., Ebitda ’at Least’ in Line W/ Market Views
- LR FP : Legrand 9-Month Adj. Profit Rises 11% to EU907.9 Mln Legrand CEO: U.S.-China Tariff Dispute Has Raised Costs in U.S.
- LSE LN : Brexit Equivalence Deal Is Not Good Enough for London’s LCH
- LSG NO : Leroy Third Quarter Adjusted Ebit Misses Estimates
- MDM FP : Maisons du Monde Cuts Sales Forecast as French Market Soft
- MEKO SS : Mekonomen Third Quarter Ebit Misses Lowest Estimate
- TL5 SM : Mediaset Espana Nine Month Net Income EU146.9 Mln
- MEL SM : Melia Hotels 9M Net Income EU119.7 Mln Vs. EU113.7 Mln Y/Y
- NG/ LN : National Grid First Half Adjusted Pretax Profit GBP816 Mln
- PSG SM : Prosegur Estimates and Target Cut at Kepler After ‘Weak’ 3Q
- PSM GY : ProSieben Third Quarter Sales Miss Lowest Estimate
- PST IM : Poste Italiane Third Quarter Revenue Meets Estimates
- RECIB SS : Recipharm Third Quarter Operating Profit 4.6% Above Estimates
- RHM GY : Rheinmetall Cuts Full Year Organic Revenue Forecast
- RRTL GY : RTL 3Q Ebitda Drops on Shrinking TV Ad Sales; Revenue Rises 3.6%
- SBRY LN : Sainsbury First Half Adjusted Pretax Profit Beats Estimates
- AM3D GY : SLM Solutions Nine Month Revenue EU48.3 Mln
- SIE GY : Siemens Power and Gas Slumps as 4Q Profit Beats Estimates
- STM GY : Stabilus Should Bounce Back, Strong FY Results Ahead: Lampe
- SWP FP : Sword Tech subsidiary wins 3 new contracts worth €450M with the Directorate General of Informatics (DIGIT) of the European Commission
- SWECB SS : Sweco Third Quarter Operating Profit 4.2% Below Estimates
- SKAB SS : Skanska 3Q Order Bookings In Construction SEK30.6 Bln
- GLE FP : SocGen 3Q Net Up 32%, Above Estimates; Equities Trading Rebounds
- SW FP : Sodexo Full Year Net Income 2.4% Below Estimates
- SW FP : Sodexo: Sodexo Ventures Announces New Investment in AEYE-GO
- STLN SW : Schmolz + Bickenbach Third Quarter Adjusted Ebitda EU41.8 Mln
- S92 GY : SMA Solar 9M Ebitda Falls Y/y to EU50.5m; Maintains FY View
- SPIE FP : Spie Confirms FY Outlook
- SDRY LN : Superdry First Half Revenue GBP414.6 Mln
- SUBC NO : Subsea 7 Third Quarter Adjusted Ebitda 2.6% Above Estimates
- SRCG SW : Sunrise Third Quarter Adjusted Ebitda Beats Highest Estimate
- SOLB BB : Solvay Third Quarter Adjusted Ebitda 1.1% Above Estimates
- TALK LN : TalkTalk, Infracapital Hit Deadlock Over Joint Venture: Sky
- TOD IM : Tod's Nine Month Sales At Constant Exchange Rates +0.1%
- TRAD SS : Tradedoubler Recommends Shareholders Accept Reworld Cash Offer
- UBSG SW : UBS Expects DOJ to File Civil Complaint Relating to RMBS
- UCG IM : UniCredit Third Quarter Net Income Misses Lowest Estimate, UniCredit Cuts Revenue Forecast; Makes Writedown for Turkey
- VATN SW : Valiant Nine Month Profit CHF85.2 Mln
- WAC GY : Wacker Neuson Third Quarter Ebit EU41.1 Mln
- WIEV AV : Wienerberger Nine Month Net Income EU126 Mln
- ZURN SW : Zurich Ins. Nine Month P&C Gross Written Premiums $25.87 Bln

>>> Europe : Brokers Upgrades & Downgrades - 8th of November 201

>>> Up
* 1&1 Drillisch Upgraded to Buy at Commerzbank; PT 55 Euros
* Campari Upgraded to Neutral at Goldman; PT 7.40 Euros
* Grieg Seafood Upgraded to Accumulate at Fearnley; PT 127 Kroner
* Lundbeck Raised to Buy at SEB Equities; Price Target 320 Kroner
* Stabilus Upgraded to Buy at Bankhaus Lampe
* United Internet Upgraded to Buy at Commerzbank; PT 52 Euros

>>> Down
* Evonik Downgraded to Equal-weight at Barclays; PT 30 Euros
* G4S Downgraded to Sector Perform at RBC; PT 2.10 Pounds
* Illa Downgraded to Neutral at EnVent S.p.A.; PT 1.86 Euros
* Kendrion Downgraded to Hold at ING; PT 26.50 Euros
* Wereldhave Downgraded to Underweight at JPMorgan; PT 32.50 Euros

>>> Initiation
* Funding Circle Holdings Rated New Equal-weight at Morgan Stanley
* Funding Circle Holdings Rated New Neutral at Goldman
* Malin Rated New Buy at Jefferies; PT 5.92 Euros
* SIG Combibloc Rated New Equal-weight at Barclays; PT 12 Francs
* SIG Combibloc Rated New Buy at Citi; PT 12.70 Francs
* SIG Combibloc Rated New Equal-weight at Morgan Stanley
* SIG Combibloc Rated New Buy at Goldman; PT 14 Francs

>>> Call

>>> US After Hours Summary: CVNA +23.5%, ALRM +21%, CYBR / CARG +15%,


After Hours Summary: CVNA +23.5%, ALRM +21%, CYBR / CARG +15%, TRIP +8% are notably higher, while KRO -19%, WYNN -12 / ROKU -12%, DVA / QCOM -5% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: NK +53.1% (also announces 'promising' first in human clinical results in a novel cancer memory vaccine immunotherapy), CVNA +23.5%, ALRM +21.2%, PTLA +16.2%, CYBR +14.7%, CARG +14.6%, AYX +12.6%, FOSL +10.4%, TXMD +8.4%, TRIP +8.1%, VNDA +7.1% (light volume), SNCR +6%, GDOT +5.3%, HOLX +4.6%, MFC +3.9%, LCI +3.5%, ANSS +3.2% (light volume), PEGA +3.2% (light volume), AVLR +3.1%, TTWO +2.9%, EDIT +2.7% (light volume), SUN +2.6% (light volume), NKTR +2.1%, ET +1.8%, NWSA +1.6%

Companies trading higher in after hours in reaction to news: VSTM +11.1% (continued strength following today's 15% move higher on Leukemia & Lymphoma Society collaboration news; also reported earnings after hours), MTZ +6.2% (to join S&P MidCap 400), PAH +3.6% (after EVP and 2 Directors disclosed the purchase of more than 700K shares)

CyberArk (CYBR +15%) earnings/guidance is boosting select Cyber Security names: FEYE +1.6%, FTNT +1%, PANW +0.6%, etf- HACK +0.4%

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: ZAYO -23.3% (also plans to separate into two publicly traded companies), KRO -19%, WYNN -12.4%, ROKU -12.2%, TLND -11%, TIVO -9.3%, FLO -6.2%, SAIL -5.9%, TWNK -5.8%, EVC -5.7% (ticking lower), MNST -5.7%, KGC -5.6%, RUN -5.2%, DVA -4.8%, QCOM -4.6%, KDP -4.5%, RRR -4.5% (ticking lower), AAOI -3.4%, SQ -3.4%, TCX -3.4% (ticking lower), CTRP -3%, PRU -2.7%, ALB -2.3%, MCHP -2.1%, MUR -1.9% (ticking lower), ADT -1.6%

Companies trading lower in after hours in reaction to news: VYGR -12.1% (announces positive longer-term results for Phase 1b trial of VY-AADC and reports earnings), PYX -6.7% (Alliance One International plans to consolidate all its U.S. tobacco processing operations - will report earnings tomorrow), SRPT -4.2% (announces $500 mln common stock offering), TNDM -2.2% (ticking lower; Pres/CEO sold 198K shares worth ~$7.3 mln), NYMT -2.1% (prices 12.5 mln share common stock public offering at $6.11 per share), EQT -1.1% (ticking lower; Jack Henry will replace EQT Corp. in the S&P 500)

Casino/gaming names are under pressure following Wynn Resorts (WYNN) earnings/guidance: LVS -5.4%, MLCO -4.8%, MGM -3.4%, CZR -1.8%

>>> US Close Dow +2.13% S&P +2.12% Nasdaq +2.64% Russell +1.67%


Closing Market Summary: Stocks Jump with Midterm Elections Producing Split Congress

The S&P 500 confidently finished with a gain of 2.1% on Wednesday with the benchmark index now up 6.4% since its close on October 29. Wednesday's advance follows the conclusion of U.S. congressional midterm elections that produced a split Congress. 

The prevailing assumption in the market was that a newly divided Congress would preserve market-friendly policies, namely the tax cut and deregulation efforts. U.S. President Donald Trump also mentioned on Wednesday bipartisan efforts to work with the Democrats in the House on infrastructure, trade, and lowering drug costs.

Meanwhile, the Dow Jones Industrial Average gained 2.1%, the Nasdaq Composite gained 2.6%, and the Russell 2000 gained 1.7%.

All 11 S&P 500 sectors finished in positive territory with the consumer discretionary (+3.1%), health care (+2.9%), and information technology (+2.9%) groups leading the sector standings with strong gains. Health care companies rose with the belief that a split Congress would also make it unlikely that it will fully repeal the Affordable Care Act. On a related note, heavily-weighted health care component Humana (HUM 353.98, +22.17) jumped 6.7% after it reported above-consensus earnings and raised its guidance.

Also, the tech sector welcomed a strong showing from its top-weighted components. Apple (AAPL 209.95, +6.18, +3.0%), Microsoft (MSFT 111.96, +4.24, +3.9%), Visa (V 144.78, +3.99, +2.8%), and MasterCard (MA 208.24, +9.09, +4.6%) all provided the sector a much-needed lift. Within the consumer discretionary group, Amazon (AMZN 1755.49, +112.68) carried the sector with an impressive gain of 6.9%.

Conversely, the defensive-oriented real estate (+1.1%), utilities (+1.1%), and consumer staples (+0.6%) sectors underperformed the broader market, though still finished with healthy gains. Heavyweight utilities component Southern (SO 47.01, +1.34) rose 2.9% after it beat earnings expectations.

In other earnings, some smaller, but well-known, companies that had notable post-earnings performances were Etsy (ETSY 50.01, +9.58, +23.7%), Office Depot (ODP 3.41, +0.66, +24.0%), Michael Kors (KORS 49.05, -8.40, -14.6%), and Groupon (GRPN 2.92, -0.35, -10.6%). Etsy and Office Depot both beat earnings and raised their guidance; Michael Kors beat earnings estimates but lowered its fiscal Q3 guidance below consensus, and Groupon missed earnings expectations.

Of note, pot stocks surged after Attorney General Jeff Sessions resigned his post effective immediately per President Trump's request. Mr. Sessions was an influential critic of legalizing marijuana and served as roadblock to advance the national conversation. Well-known cannabis companies Tilray (TLRY 139.60, +32.74) and Canopy Growth (CGC 46.07, +3.48) rose 30.6% and 8.2%, respectively.

Cannabis stocks were already on the rise after several more states voted to legalize recreational or medical marijuana. Michigan became the 10th state to legalize its recreational use, and Utah and Missouri passed initiatives to join 31 other states that already legalize its medical use. 

In other market, U.S. Treasuries finished roughly flat with 10-yr yield unchanged at 3.21%. Also, the U.S. Dollar decreased 0.2% to 96.10. Separately, WTI crude lost 0.9% to settle at $61.65/bbl, extending its recent decline to nearly 20.0% from its four-year high last month. The Energy Information Administration reported a weekly crude inventory build of 5.8 million barrels last week, marking the seventh consecutive week of stockpile builds.

Reviewing Wednesday's economic data, which included the weekly MBA Mortgage Applications Index and the Consumer Credit report for September:

  • The weekly MBA Mortgage Applications Index showed a decline of 4.0%, a decrease from the prior week's decline of 2.5%.
  • Total outstanding consumer credit increased by $11.0 billion in September after increasing an upwardly revised $22.8 billion (from $20.1 billion) in August.
    • The key takeaway from the report is that it reflects a deceleration in credit expansion that could contribute to concerns about the U.S. economy hitting/nearing peak growth.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report and the FOMC Rate Decision for November on Thursday.

  • Nasdaq Composite +9.7% YTD
  • Dow Jones Industrial Average +5.9% YTD
  • S&P 500 +5.3% YTD
  • Russell 2000 +3.0% YTD