>>> Asian Update

Asia Market Update: Dollar weakness continues; China strengthens yuan at more than 2-yr high

***Headlines/Economic Data***
General Trend: Asian equity markets trade mixed, energy companies outperform
- Chinese cities start to issue 2018 GDP targets: Shanghai and Beijing are both targeting around 6.5% growth
- USD/JPY trades below 110 for first time since Sept: PBoC fixed yuan at multi-year high for 4th straight session
- US Dollar (USD) Index moves below 90 for first time since late 2014
- Japan Jan Prelim Manufacturing PMI nears 4-year high
- Japan Dec exports growth at slowest pace since April 2017, yet monthly export amount hits highest since 2008 (exports to Asia and China hit record)
- Japan 2017 Trade Surplus with the US +3.1% y/y (2-year high)

Japan
-Nikkei 225 opened -0.4%; closed -0.8%
- Topix Electric Appliances Index -1.7% (Fanuc -3% due to report earnings on Friday after the close)
- Mega banks trade broadly weaker: Sumitomo Mitsui -2.5%, Mitsubishi UFJ -2.5%, Mizuho Financial -1.5%
- TOPIX Real Estate Index +1.1% (tracked Tuesday’s outperformance in S&P500 Real Estate Index)
- Nidec [6594.JP] -3% (expected to report earnings after the close)
- (JP) JAPAN DEC TRADE BALANCE: ¥359.0B V ¥535.0BE; ADJ ¥86.8B V ¥276.7BE; Exports y/y: 9.3% (13th consecutive rise, slowest growth since April 2017) v 10.0%e; Imports y/y: 14.9% v 12.4%e
- (JP) JAPAN JAN PRELIM PMI MANUFACTURING: 54.4 V 54.0 PRIOR
- (JP) Japan Trade Union Confederation Chief Kozu: Rising monthly wages will boost consumer spending
-(JP) Japan Nov Final Leading Index CI: 108.3 v 108.6 prelim; Coincident Index: 117.9 v 118.1 prelim
- (JP) BOJ announcement related to daily bond buying operation: leaves amounts unchanged
- (JP) Japan Econ Min Motegi: Believes that start date for Trans-Pacific-Partnership will not change; March 8th is the target date for signing the agreement (after the close)
- (JP) Japan Cabinet Office report indicates Japan will not be able to achieve a primary budget surplus until FY27 (2-yrs longer than prior indications) unless it manages to dramatically curb spending - Nikkei

Korea
- Kospi opened -0.1%
- Banks trade generally lower following gains on Tuesday: Hana Financial -3%, KB Financial -1.3%, Woori -1.6%
- LG Household & Health Care [051900.KR] -5.5% (reported FY17 results on Tuesday’s session)
- LG Electronics [066570.KR]: -5.5% (Reported final FY17 results after Tuesday’s close; Trade concerns)
- LG Display +2% (positive broker commentary following Q4 earnings report and guidance)
- (KR) South Korea removed from EU blacklist of tax havens - Korean press
- (KR) Main opposition party has called on North Korea to delay military parade - Korean press
- (KR) S&P: Corporates in South Korea show improvement in creditworthiness; Hyundai Motors rating faces downgrade pressure due to US market; LG Electronics may be 'greatly' impacted by US safeguard issue related to washing machines
Looking Ahead: Q4 Prelim GDP due for release on Thursday

China/Hong Kong
-Hang Seng opened -0.1%, Shanghai Composite +0.2%
- Hang Seng Info Tech Index -0.9%, Materials -0.7%, Consumer Goods -0.8%, Property/Construction -0.7%, Financials -0.3%; Energy +2.2%
- Leshi Internet [300104.CN]: Opens limit down (-10%) after being halted for 9-months
- (CN) China said to be prepared to support stocks after trading resumption for shares of Leshi Internet
- USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3916 V 6.4009 PRIOR (strongest setting since Dec 4th, 2015)
- (CN) China PBOC OMO: Injects CNY220B v CNY170B injected in 7,14 and 63-day reverse repos prior
- (CN) China Official: CNY100B in solar subsidies are unpaid as of 2017; To roll out solar subsidy-free pilot projects in 2018
- (CN) former PBOC vice gov Zhu: Interest rates are likely to remain unchanged given govt's current focus on reducing debt levels, and a stable inflation rate - Chinese press
- (CN) China MoF sells 3-yr bonds, avg yield 3.56%, bid to cover 2.33x; 7-yr upsized bonds at 3.8592% v 3.91%e, bid to cover 2.51x

Australia/New Zealand
-ASX 200 opened flat; closed +0.3%
- ASX 200 Energy Index +0.8%, Utilities +0.6%, Financials +0.4%
- Santos, STO.AU Reports Q4 Rev $861M v $753M y/y; FY17 sales volumes 83.4Mt (record high)
- (AU) Australia Dec Westpac Leading Index M/M: 0.3% v 0.1% prior
- (NZ) New Zealand Dec Credit Card Spending M/M: 0.6% v 0.8% prior; Y/Y: 6.3% v 9.1% prior
-(NZ) New Zealand government delays law banning foreigners from purchasing property - NZ press
-(AU) Australia Treasury is expected to boost its global forecasts in the May budget, due to a surge in confidence across advanced and emerging market economies - AFR
Looking Ahead: New Zealand Q4 CPI to be released on Thursday

Other Asia
- (MY) MALAYSIA DEC CPI Y/Y: 3.5% V 3.5%E [**Note: The data is above Malaysia’s 2-3% inflation target for the 12th straight month]
- (MY) There is press speculation that Malaysia Central Bank (BNM) may raise interest rates by 25bps at Thursday’s meeting – US financial press
- (TW) Taiwan Jan 1-22nd foreign capital flow $3.28B - Taiwan press
- UMC Corp [2303.TW]: -1.5%: expected to report Q4 earnings after close
- AU Optronics [2409.TW] +3.5% (positive broker commentary)
- TSMC [2330.TW] Chairman: Sees negative impact from NT$ gains
- Moody's: Asia high-yield corporate bond covenant quality score declines to weakest level on record
- (VN) Vietnam shut main Ho Chi Minh City stock exchange for second day amid technical malfunction

North America
- US equities closed mostly higher: Dow -0.1%, S&P500 +0.2%, Nasdaq +0.6%, Russell 2000 +0.1%
- S&P500 Real Estate Sector +1.5%, Utilities +1%
- Texas Instruments [TXN] Down over 6% afterhours: Reports Q4 $1.09*(ex $0.75 tax expense) v $1.09e, Rev $3.75B v $3.73Be; Guides Q1 $1.01-1.17 (adj) v $1.07e, Rev $3.49-3.79B v $3.64Be
- United Continental [UAL]: Down over 4% afterhours Guides initial FY18 $6.50-8.50 v $6.63e; Guides initial FY18 non fuel CASM -1% to 0%; FY18 capacity +4-6% - earnings call comments
- (US) Senate confirms Jerome Powell as incoming Fed Chair (as expected)
- (US) Fed nominee Goodfreind: transparency could be improved regarding reference rules for monetary policy
- (US) White House Econ Adviser Cohn: Trump's message at Davos will be to invest in America, not that hes withdrawing the US from the global trade scene – press
- (US) TREASURY SELLS $26B IN 2-YEAR NOTE AUCTION; DRAWS 2.066%; BID-TO-COVER RATIO: 3.22 V 2.52 PRIOR AND 2.82 AVG OVER THE LAST 12 (first 2-year auction above 2.00% since 2008)
- (US) Weekly API Oil Inventories: Crude: +4.8M v -5.1M prior
- (US) US AIA Dec Architecture Billings Index: 52.9 v 55.0 prior; New projects inquiry index 61.9 v 61.1 prior
Looking Ahead: US Dec Existing Home Sales due for release, along with Weekly DoE Crude Oil Inventories
- Corporate earnings are expected out of companies including Comcast, Discover, Ford, General Dynamics, GE, Las Vegas Sands, SL Green, United Technologies, Whirlpool

Europe
- (UK) Conservative MPs have told PM May that the UK must not be bound by EU rules during the Brexit transition period
- (UK) EU Chief Brexit Negotiator Barnier: hope UK will indicate what it wants in Brexit talks by March
- (EU) EURO ZONE JAN ADVANCE CONSUMER CONFIDENCE: 1.3 V 0.6E; *(EU) EURO ZONE JAN ADVANCE CONSUMER CONFIDENCE: 1.3 V 0.6E ( Reading is highest since Aug 2000)
Looking Ahead: Euro Zone Prelim Jan Manufacturing and Services PMIs due for release (Euro Zone, France, German); UK Nov Avg Earnings and Unemployment Rate, Dec Claimant Count Change; France Jobseekers data (US session)

***Levels as of 01:00ET***
- Nikkei225 -0.8%, Hang Seng -0.1%; Shanghai Composite +0.3%; ASX200 +0.3%, Kospi -0.0%
- Equity Futures: S&P500 +0.0%; Nasdaq100 +0.0%, Dax +0.1%; FTSE100 -0.2%
- EUR 1.2335-1.2291; JPY 110.34-109.81; AUD 0.8017-0.7993;NZD 0.7377-0.7349; GBP 1.4049-1.3997
- Feb Gold +0.3% at $1,340/oz; Mar Crude Oil +0.0% at $64.45/brl; Mar Copper +0.6% at $3.14/lb

Blackhawk Network (HAWK) Said to Gauge Interest from Thoma Bravo, InComm - Bloo

Blackhawk Network (HAWK) Said to Gauge Interest from Thoma Bravo, InComm - Bloomberg

January 23, 2018 5:21 pm
(Updated - January 23, 2018 5:30 PM EST)

Blackhawk Network (NASDAQ: HAWK) is sounding out potential counter bidders after agreeing to be acquired by Silver Lake and P2 Capital Partners, according to Bloomberg.

Bloomberg stated that it reached out to possible suitors to gauge interest and the price they might be willing to pay. Thoma Bravo has conducted preliminary due diligence and held talks with lenders about financing a potential bid, though it hasn't made a final decision on whether to proceed.

InComm is monitoring the situation for now, but has decided against making an offer for the time being.

The Bloomberg report followed an article from StreetInsider earlier discussing a potential rival bid.

>>> US Close Dow -0.01% S&P +0.22% Nasdaq +0.71% Russell +0.35%

Closing Market Summary: Gov Reopening, Netflix Fuels Another Record Day

Stocks climbed to new records for the third session in a row on Tuesday, as investors took in the latest batch of fourth quarter earnings and celebrated the reopening of the federal government.

The Nasdaq Composite jumped 0.7% to 7460.29 (a new record), helped by Netflix (NFLX 250.29, +22.71), which spiked 10.0% after wowing investors with its subscriber growth and first quarter guidance. The S&P 500 rose 0.2% to 2839.13 (a new record), while the Dow Jones Industrial Average finished a tick below its flat line at 26210.81.

In other earnings news, Johnson & Johnson (JNJ 141.83, -6.31) and Procter & Gamble (PG 89.05, -2.84) lost 4.3% and 3.1%, respectively, despite beating earnings estimates and issuing positive guidance, and Verizon (VZ 53.23, -0.23) shed 0.4% after reporting worse-than-expected profits.

Conversely, Travelers (TRV 146.26, +6.91) jumped 5.0% after reporting better-than-expected earnings and revenues.

The federal government reopened its doors following a three-day closure after Congress passed a funding bill on Monday evening. The bill, which President Trump quickly signed into law, will keep the government running through February 8 and was agreed to by Democrats in exchange for Republicans' promise that immigration will be addressed in the near future.

On a separate note, President Trump signed an order to impose tariffs on imported washing machines and solar cells on Tuesday and noted that he is considering additional tariffs on steel and aluminum. The president also said that the sixth round of NAFTA talks, which kicked off on Tuesday, "were going well."

Back on Wall Street, the utilities (+1.0%) and real estate (+1.5%) sectors were the strongest groups on Tuesday, trimming their yearly losses to 4.0% and 2.2%, respectively. The technology (+0.6%) and consumer discretionary (+0.9%) sectors also had strong showings.

Within the consumer discretionary space, Amazon (AMZN 1362.54, +35.23) rallied another 2.7% to finish at a new record for the second day in a row.

On the flip side, the telecom services (-1.2%), health care (-0.5%), and consumer staples (-0.3%) sectors were the weakest performers. Their disappointing showings were fueled by post-earnings losses from Verizon, Johnson & Johnson, and Procter & Gamble (as mentioned above).

In the bond market, U.S. Treasuries rallied on Tuesday, sending yields lower across the curve. The yield on the benchmark 10-yr Treasury note tumbled four basis points to 2.62%, while the 2-yr yield slipped two basis points to 2.05%.

Elsewhere, the major European bourses settled mixed; Germany's DAX was strong, jumping 0.7% to a new record high, while the UK's FTSE added 0.2% and France's CAC shed 0.1%. All eyes were on Davos, Switzerland, where global leaders kicked off the World Economic Forum. President Trump is expected to speak in Davos on Friday.

In Asia, equity indices posted solid gains on Tuesday, with Hong Kong's Hang Seng (+1.5%) and India's Sensex (+1.0%) touching new records. The Bank of Japan voted 8-1 to leave its policy rate at -0.1% and to continue its yield curve control policy so that long-term rates remain around 0.0%.

As for economic data, investors did not receive any on Tuesday, but they will receive several reports on Wednesday, including the weekly MBA Mortgage Applications Index at 7:00 AM ET, the FHFA Housing Price Index for November (consensus +0.4%) at 9:00 AM ET, and Existing Home Sales for December (consensus 5.70 million) at 10:00 AM ET.

  • Nasdaq Composite: +8.1% YTD
  • S&P 500: +6.2% YTD
  • Dow Jones Industrial Average: +6.0% YTD
  • Russell 2000: +4.9% YTD

>>> Texas Instruments reports EPS in-line, revs in-line; guides Q1 in-line (120

Texas Instruments reports EPS in-line, revs in-line; guides Q1 in-line
  • Reports Q4 (Dec) earnings of $1.09 per share, excluding $0.75/share tax charge, in-line with the GAAP Capital IQ Consensus of $1.09; revenues rose 9.8% year/year to $3.75 bln vs the $3.74 bln Capital IQ Consensus.
  • Co issues in-line guidance for Q1, sees EPS of $0.98-1.14, excluding a ~$0.03/share or $30 mln tax benefit, vs. $1.04 Capital IQ Consensus; sees Q1 revs $3.49-3.79 bln vs. $3.63 bln Capital IQ Consensus Estimate.
  • "Demand for our products continued to be strong in the industrial and automotive markets. "In our core businesses, Analog revenue grew 11 percent and Embedded Processing grew 20 percent from the same quarter a year ago. Operating margin increased in both businesses. "Gross margin of 65.1 percent for the quarter reflected the quality of our product portfolio, as well as the efficiency of our manufacturing strategy, including the benefit of 300-millimeter Analog production.
  • "Notably, the recently passed tax reform act will reduce our annual operating tax rate from 31 percent in 2017 to an ongoing rate of 18 percent starting in 2019, comprehending the benefit of exports and having manufacturing, R&D and intellectual property in the United States. In 2018, our annual operating tax rate will be 23 percent, 5 percentage points higher, due to transitional expense associated with the reduced U.S. tax rate in 2018."

>>> Cree misses by $0.02, beats on revs; guides Q3 EPS in-line, revs in-line

Cree misses by $0.02, beats on revs; guides Q3 EPS in-line, revs in-line (35.02 -1.67)

Reports Q2 (Dec) loss of $0.01 per share, excluding non-recurring items, $0.02 worse than the Capital IQ Consensus of $0.01; revenues fell 8.3% year/year to $367.87 mln vs the $349.62 mln Capital IQ Consensus.
Co issues in-line guidance for Q3, sees EPS of ($0.03)-$0.03, excluding non-recurring items, vs. $0.00 Capital IQ Consensus Estimate; sees Q3 revs of $335-355 mln vs. $340.73 mln Capital IQ Consensus Estimate.