>>> Texas Instruments: Color on Qtr --> TXN -1% in Pre-Market

Texas Instruments: Color on Qtr
  • Cowen & Co lowers tgt to $77 from $82. While certainly not a thesis changing event, guide was abnormally wide and below seasonal at mid-pt. Autos remain an ongoing concern, but TXN is not MXIM in this regard (e.g. not as over-exposed) and GM still has a lot of headroom - a rarity in semis. With guide, firm cannot help but wonder if TXN is simply being conservative on its outlook, given a book-to-bill >1x, or instead anticipates a cooling off from the very strong growth rates seen YTD in semis. The last time TXN guided Q2 below was 8 quarters ago, but the difference today is that comms infrastructure has held up better, TXN has much better consumer electronics exposure and FX is not the headwind it once was.
  • RBC Capital raises tgt to $95 from $84. TXN reported another impressive beat & raise and firm sees the potential for sustained EPS upside through CY17 driven by -- robust organic growth, AAPL ramps, gross-margin upside and potential tax-reform tailwinds. Not only, is TXN on-track to see 10%+ organic growth in H1 but the company noted that channel inventory and lead-times both remain fairly balanced, suggesting much of the uptick is end-demand driven and not channel driven.
  • Stifel Research notes TI's March q revenue came in at $3.4bn, which was at the high-end of the revenue guidance, with q/q demand again strong for both Automotive and Industrial; Communications was up slightly q/q, Enterprise was roughly flat q/q, and Personal Electronics (PE) was down q/q as expected seasonally. GM's reached 63.0% in the quarter (new record) and EPS beat Street consensus estimates. GM was up 54bps to 63.0% (new record) reflecting mix, manufacturing efficiencies and continued progress towards 300mm transition.

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • CETV +12.3%, TWTR +10.9%, IRBT +9.3%, LOGI +8.6%, ZIXI +8.4%, EW +8.2%, AMX +7%, TEL +5.8%, UVE +4.9%, WYNN +4.8%, OC +4.5%, KMT +4.2%, AUDC +4.1%, TSS +4%, MDCO +3.8%, RES +3.4%, PRGO +3.1%, (Perrigo announces restatement of previously issued forms 10-k and 10-q financial statements; reports Q1 results), WRK +3%, TKR +3%, CS +2.6%,TX +2.5%, NTB +2.5%, ARNC +2.5%, PRAH +2.4%, ANTM +2.1%, PTIE +1.8%, CMG +1.8%, CMG +1.8%, MC +1.7%, MKTX +1.7%, BAX +1.5%, BOFI +1.3%, AVY +1.3%, ROK +1.2%, LEA +1.2%, NOC +1.2%, JNPR +1.2%, HUN +1.1%, MDSO +1%, SC +1%, CRH +1%, NDAQ +0.9%
M&A news:
  • DHT +2.8% (Frontline previously disclosed that it has submitted several proposals to the management and Board of DHT Holdings to effectuate a business combination between Frontline and DHT)
Other news:
  • AKBA +28.1% (Akebia Therapeutics and Otsuka Pharma enter into a collaboration and license agreement for Europe, China and other territories; Akebia will receive $208 million or more in committed capital from Otsuka, including $73 million upon signing)
  • MNOV +16.2% (presented exploratory interim data from MediciNova's ongoing clinical trial of MN-166 )
  • OCN +7.9% (files 2 related motions that seek an early court culing that the CFPB is unconstitutional, and so its enforcement action against Ocwen should be thrown out)
  • PETX +7.6% (ticking higher after confirming it recently met with FDA regarding the proposed manufacturing transfer of ENTYCE)
  • NAVB +5.7% (higher on light volume after confirming it has been invited to present data at two 'major' upcoming conferences)
  • ASYS +5.6% (receives follow-on order for the second phase of a multi-phase 1GW project, in addition to the order for the first phase announced in January 2017)
  • DECK +5.5% (Board of Directors has initiated a process to review a broad range of strategic alternatives)
  • MDCO +3.8% (Co and Alnylam Pharma (ALNY) announce that MDCO has agreed w/ the FDA on plans for the Phase III clinical program for inclisiran)
  • COST +3.1% (reports special cash dividend of $7.00 per share and increase in quarterly cash dividend)
  • ARI +3% (ticking higher; to join S&P SmallCap 600)
  • PBF +2.5% (to join S&P MidCap 400)
  • AMRI +2.1% (on sale related speculation)
  • LVS +1.9% (WYNN sympathy)
  • VRX +1.8% (announces that its Bausch + Lomb unit has received 510(k) clearance from the FDA for Vitesse)
  • MGM +1.7% (WYNN sympathy)
  • DDD +1.3% (3D Systems and United Therapeutics (UTHR) announce plans to develop solid-organ scaffolds for human transplants )
Analyst comments:
  • APRI +16.4% (initiated with a Buy at Rodman & Renshaw)
  • CONN +3.4% (upgraded to Overweight from Sector Weight at KeyBanc Capital Mkts)
  • ATVI +1.2% (resumed with a Overweight at Pacific Crest)
  • ABCB +0.9% (upgraded to Buy from Hold at SunTrust )
  • GCO +0.8% (upgraded to Positive from Neutral at Susquehanna)
  • BTU +0.8% (resumed with a Overweight at JP Morgan)
  • PDS +0.7% (upgraded to Outperform from Mkt Perform at Raymond James)

>>> Hershey Foods beats by $0.06, reports revs in-line; guides FY17 EPS in-line,

Hershey Foods beats by $0.06, reports revs in-line; guides FY17 EPS in-line, expects to increase at high end of 7-9% range (108.46)
  • Reports Q1 (Mar) earnings of $1.31 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus of $1.25; revenues rose 2.8% year/year to $1.88 bln vs the $1.89 bln Capital IQ Consensus.
  • "Net sales increased 2.8%, slightly less than our forecast and reflective of the broader soft U.S. food-industry retail trends to start the year. Gross margin expansion was solid, which contributed to strong operating profit growth. First quarter U.S. retail takeaway was primarily impacted by the timing of Easter, however, our market share gains were solid.
  • Co issues in-line guidance for FY17, sees EPS of $4.72-$4.81 vs. $4.78 Capital IQ Consensus Estimate.
    • Full-year net sales expected to increase around the low end of the 2% to 3% range, including a net benefit from acquisitions of about 0.5 points.

>>> Procter & Gamble beats by $0.02, reports revs in-line; reaffirms FY17 EPS gu

Procter & Gamble beats by $0.02, reports revs in-line; reaffirms FY17 EPS guidance, lowers rev slightly (90.00)
  • Reports Q3 (Mar) earnings of $0.96 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.94; revenues fell 1.0% year/year to $15.61 bln vs the $15.7 bln Capital IQ Consensus, including a negative two percent impact from foreign exchange. Organic sales increased one percent driven by a one percent increase in organic shipment volume. Pricing and mix had no net impact on sales for the quarter. All-in volume was unchanged including the impacts of minor brand divestitures. Core gross margin decreased 40 basis points, including 20 basis points of negative foreign exchange impacts. On a currency-neutral basis, core gross margin decreased 20 basis points as 210 basis points of productivity savings were more than offset by 100 basis points of unfavorable geographic and product mix, 80 basis points of commodity cost increases and 50 basis points of product reinvestments and other impacts.
  • Co reaffirms guidance for FY17, sees EPS mid-single digit EPS growth from $3.67, excluding non-recurring items, vs. $3.85 Capital IQ Consensus. P&G said it is maintaining its guidance for organic sales growth in the range of two to three percent for fiscal 2017. Fiscal year to date, the Company is at the low end of this range. The Company expects the combined headwinds of foreign exchange and minor brand divestitures to reduce sales growth by two to three percentage points. As a result, P&G estimates all-in sales to be down one percent to in-line with the prior fiscal year, down from flat previously.
  • "The third quarter macro environment was characterized by a slowdown in market growth, continued geopolitical disruptions and foreign exchange challenges," said David Taylor, Chairman, President and Chief Executive Officer. "Against this backdrop, we delivered modest organic sales growth and double-digit Core EPS growth, and we increased the quarterly dividend for the 61st consecutive year. Looking forward, we are maintaining our organic sales and Core EPS guidance ranges for the year and increasing our outlook for adjusted free cash flow productivity."

>>> US Early premarket gappers

Early premarket gappers

Gapping up:

  • AKBA +31.4%, ASYS +10.9%, CETV +9.6%, IRBT +9.3%, TWTR +8.8%, LOGI +8.5%, ZIXI +8.4%, EW +8.2%, PETX +7.6%, AMX +7%, DECK +5.7%, NAVB +5.7%, DHT +4.9%, WYNN +4.9%, ARNC +4.9%, UVE +4.9%, MDCO +4.3%, KMT +4.2%, TSS +4%, RES +3.4%, JNPR +3.3%, HUN +3.1%, COST +2.9%, ANTM +2.9%, PRGO +2.6%, TX +2.5%, NTB +2.5%, PBF +2.4%, PRAH +2.4%, CMG +2.2%, CS +2.2%, CMG +2.1%, BAX +2.1%, PTIE +1.8%, MC +1.7%, MKTX +1.7%, TKR +1.7%, NOC +1.6%, ARI +1.5%, BOFI +1.3%, AVY +1.3%, LEA +1.2%, O +1.1%, GLPG +1%, MDSO +1%, SC +1%, CRH +1%, CHDN +0.9%, NDAQ +0.9%, UTX +0.9%

Gapping down: 

  • X -17.7%, FLXN -10.2%, CREE -8%, OESX -7.8%, MTSI -7.3%, STLD -4.9%, NUVA -4.8%, ULTI -4%, NBIX -3.5%, DDR -3.2%, DFS -2.7%, SAN -2.7%, ILMN -2.5%, CHRW -2.2%, CHRW -2.2%, AKS -2%, NUE -1.9%, COF -1.8%, CVA -1.6%, JBT -1.5%, TXN -1.4%, CALI -1.4%, STL -1.3%, BXMT -1.3%, SLAB -1.3%, PG -1.1%, MRCY -1%

(zh) Here We Go Again: Another Futures Fund Is Caught In A "Short Gamma" Trap

Here We Go Again: Another Futures Fund Is Caught In A "Short Gamma" Trap

Remember when the catalyst for the relentless, seemingly inexplicable broad market melt-up in mid-February was revealed to be an overeager short-biased hedge fund, which had been caught in a "short gamma" feedback loop, forced to buy more S&P futures the higher the market went? Well, as RBC's Charlie McElliggott writes, the "short gamma" feedback loop appears to have returned as yet another fund is now caught in the same trap, and the market will soon test just what the fund's point of margin call max pain is, potentially taking the S&P to 2,400 - if not far higher - on short notice.
As McElligott laments, "It’s awkward to write about this…AGAIN" which however won't stop him from doing just that, and explains as follows:
GUESS WHO'S BACK...MORE 'SHORT GAMMA' COCKROACHES, from RBC's Charlie McElliggott
The same dynamic at play during our last equities ‘melt-up’ is seemingly back ‘in-play.’ Remember the hypothetical story on the multi-billion dollar open-ended futures fund which found itself ‘synthetically short’ size SPX due to its strategy where it sells multiple upside calls for every in-the-money long call? Well the macro ‘relief rally’ yesterday reintroduced that very same ‘gap risk’ which this type of strategy hates.
Well, we are now getting closer to ‘launch’ as the same situation is speculated to be ‘out there’ again. There was some covering in 2330s and 2370s yesterday, while most of the size seemingly sits at the 2400 level. As the market is sniffing out the upper strikes that such a strategy might be short, there is a self-fulfilling ‘short gamma’ as we push ever-closer to the pain-points. Of course, today’s +++ earnings run is only further feeding into the anxiety, with strong #’s from CAT, DD, BIIB, MCD etc squeezing futures higher. The fact of the matter is, the closer to actualizing these (short) upper strikes, the more likely we are to see that ‘itchy trigger finger’ on their delta-hedging. I would keep an eye out on 2380 / 85 levels for possible next ‘breakpoints’ which could induce further forced covering.
If we were to then push onward to / through the 2400 level, then it almost seems the whole market will ‘act short’ simply based on stops, as SPX / ES would be making new all-time highs, which could set-off ‘buy stops’ from shorts, or potentially drag new longs into the market on the momentum break. This is OUTSIDE of the potential ‘short gamma’ from the above trade(s). That said, the real chunky OI in both SPX and SPY options sits at 2425 / 2450 levels. A break to those levels would see serious ‘short gamma’ pain.
Mind you, this is all very relevant in relation to my current view that we are realistically still in the midst of a macro ‘range trade,’ especially in regards to rates / ‘reflation,’ as the commodities complexcontinues to really struggle as Crude falters and the Chinese liquidity driver fades. My message has been to watch said “reflation trap” then, as there is still significant basis to short “reflation” at the 2.35/40 level—especially with this US data dynamic of ‘soft’ data rolling and ‘hard’ data now biased towards ‘missing.’

(ZH) US To Test Fire ICBM Tonight That Can Reach North Korea

US To Test Fire ICBM Tonight That Can Reach North Korea

In a 'Crocodile Dundee-esque' show of "that's not a nuclear missile... this is a nuclear missile" one-upmanship, US military personnel will test fire the deadly (unarmed) Minuteman III intercontinental ballistic missile between 12:01 and 6:01 a.m. tonight from the north end of the Vandenberg Air Force Base near Lompoc in California.
Col John Moss, 30th Space Wing commander, will oversee the launch of the long range missile, saying:


"Team V is once again ready to work with Air Force Global Strike Command to successfully launch another Minuteman III missile.

These Minuteman launches are essential to verify the status of our national nuclear force and to demonstrate our national nuclear capabilities.

We are proud of our long history in partnering with the men and women of the 576th Flight Test Squadron to execute these missions for the nation."
Additionally, as The Daily Star reports, after President Trump branded North Korea "a real threat to the world," Col Deane Konowicz, the 625th Strategic Operations Squadron commander, said the test will send a message to enemies of the US...


"The Simulated Electronic Launch of a Minuteman III ICBM is a signal to the American people, our allies, and our adversaries that our ICBM capability is safe, secure, lethal and ready.

“It highlights the ground and airborne command and control elements of an electrically-isolated ICBM, demonstrating that our deployed ICBMs will respond to critical launch commands.”
The apparent hypocrisy of the escalated sabre-rattling is not lost on many, as The LA Times reports, The Nuclear Age Peace Foundation, a nonprofit, nonpartisan organization, criticized the timing of the launch, citing heightened tension between the U.S. and North Korea.


“When it comes to missile testing, the U.S. is operating with a clear double standard: It views its own tests as justified and useful, while it views the tests of North Korea as threatening and destabilizing,” foundation president David Krieger said in a statement.

“What is needed is diplomacy rather than military provocations. Threats, whether in the form of tweets, nuclear-capable aircraft carrier groups, or nuclear-capable missile launches, only increase the dangers to us all.”
The Vandenberg test would be the second missile launched from the base this year.

(Citi) Nets May Be M&A Target for Worldline

Nets shares reach highest price since Feb. 27, gaining as much as 1.3%, with volume at 33% of 3-month daily average after ~1.5 hours of trading.
Citi starts coverage with neutral rating and DKK122 PT
Says M&A analysis gives shares support at current level, sees reasonable chance that Worldline could make takeover bid
Says Wordline tried but failed to buy Nets in 2014, has recently said it wants Nordic expansion so a Nets takeover “would make sense both strategically and financially”
Nets is currently helped by its leading Nordic market position; still, emerging threats could erode some benefits