Morning Preview: March 18, 2019

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Early Look

Monday, March 18, 2019

Futures

Up/Down

%

Last

DJ Industrials

-79.00

0.31%

25,820

S&P 500

0.50

0.01%

2,830

Nasdaq

4.00

0.05%

7,347

 

 

Stock futures are mixed, with Dow futures pressured following more investigations into the Boeing (BA) fatal crash that sunk shares last week, while the Nasdaq looks to a slightly higher open. Top stories to start the week include more developments in the Boeing (BA) 747 Max crash, Lyft sets its IPO size at 30.77M shares with price range between $62-$68 according to reports, Deutsche Bank confirms talks with Commerzbank, and a $43B deal in the consumer finance sector with FIS agreeing to buy Worldpay (WP). Also look to the UK for Brexit developments with the expected break from the EU still on track for next week. In Asian markets, The Nikkei Index rose 133 points to 21,584, the Shanghai Index closed at their highest level in about 10-months, jumping 74 points (2.47%) to settle at 3,096 and the Hang Seng Index gained nearly 400 points (1.37%) to settle at 29,409. In Europe, the German DAX is down a few points at 11,675, while the FTSE 100 is up around 40 points at 7,270. Stocks closed higher on Friday, booking their best weekly gains in several weeks, as the S&P 500 and Nasdaq finished at their highest levels since early October. For the week, the Dow finished up 1.6%, marking its best weekly gain since Feb. 15 (despite problems for Dow component Boeing), the S&P 500 recorded a weekly gain of 2.9%, while the Nasdaq registered a weekly climb of 3.8%.

 

Market Closing Prices Yesterday

·     The S&P 500 Index jumped 14.00 points, or 0.50%, to 2,822.48

·     The Dow Jones Industrial Average rose 138.93 points, or 0.54%, to 25,848.87

·     The Nasdaq Composite spiked 57.62 points, or 0.76%, to 7,688.53

·     The Russell 2000 Index advanced 3.90 points, or 0.25% to 1,553.54

 

Events Calendar for Today

·     10:00 AM EST    NAHB Housing Market Index for March

 

Earnings Calendar:

·     Earnings Before the Open: ACRS, AKBA, GEN, LL, NVAX, OSTK

·     Earnings After the Close: CPRX, HQY, NIHD, TACO

 

Other Key Events:

·     Drug, Chemical, & Associated Tech (DCAT) week, 3/18-3/21, in New York

·     Game Developers Conference (GDC) runs 3/18-3/22, in San Francisco

·     Roth Capital 31st Annual ROTH Conference, 3/17-3/19, in CA

 

 

Macro

Up/Down

Last

WTI Crude

-0.29

58.23

Brent

-0.15

67.00

Gold

2.60

1,305.50

EUR/USD

0.0024

1.1350

JPY/USD

-0.01

111.47

10-Year Note

-0.007

2.585%

 

 

World News

·     U.S. total cross-border (TIC) investment outflows at $143.7B in January, U.S. net long-term portfolio securities outflows at $7.2b in January. China holds $1.13T of U.S. Treasuries, an increase of $3.1B from last month, while Japan holds $1.07T, an increase of $27.5B MoM; foreign net selling of Treasuries at $12B and foreign net selling of equities at $31.2B

·     Japan’s exports fell for a third straight month in February, as the Ministry of Finance data showed on Monday exports fell 1.2% year-on-year in February, more than a 0.9% decrease expected by economists while followed a sharp 8.4% year-on-year drop in January

 

Sector News Breakdown

Consumer

·     Lumber Liquidators (LL) Q4 EPS 17c/$268.9M vs. est. 14c/$272.8M; CFO Martin Agard to resign to accept a new role with a company in Florida; sees FY19 revenue growth in mid-single digits; sees FY19 comparable store sales up in flat to low-single digit percentage range

·     Eldorado Resorts Inc. (ERI) and Caesars Entertainment Corp (CZR) are in the early stages of talks to explore a merger, Reuters reports, citing people familiar with matter. https://reut.rs/2Y698pW

·     Southwest Airlines (LUV) and a union representing its mechanics could be on the verge of ending a bitter, long-running labor dispute that has triggered hundreds of flight cancellations and raised safety concerns. The two sides announced the tentative contract agreement late Saturday after six years of negotiations

·     Altria (MO) and Cronos (CRON) disclosed in a regulatory filing that, in light of future potential investments by Cronos in jurisdictions outside of Canada, the companies have begun to explore creating a new holding company structure for Cronos outside of Canada

 

Energy

·     OPEC and a group of 10 oil-producing nations led by Russia are deepening their crude production cuts, but remain split on whether the curbs should remain in place through the end of the year, officials said Sunday.

·     Barron’s said solar-power stocks had a rough 2018, as U.S. tariffs on imported solar cells and less-generous Chinese policies sapped demand, but clouds should pass soon given solar demand being back on the upswing and solar stocks already responding. With the trend appearing likely to last, First Solar (FSLR) is among the stocks that could benefit from higher solar demand

·     Cactus (WHD) files automatic mixed securities shelf; files to sell 37.3M shares of Class A common stock for holders

 

Financials

·     Fidelity National Information Services Inc., (FIS) said it will buy e-commerce and payments group Worldpay Inc. (WP) in a cash and stock deal that is valued at $43B. Under terms of the deal, which includes the assumption of debt, Worldpay shareholders will receive 0.9287 FIS shares and $11 in cash per share. At the deal’s closing, FIS shareholders will own 53% of the combined company and Worldpay shareholders will own 47%. https://on.mktw.net/2JyVTv5

·     Deutsche Bank (DB) and Commerzbank confirmed on Sunday they were in talks about a merger, prompting labor union concerns about possible job losses and questions from analysts about the merits of a combination.

·     Principal Financial Group (PFG) is in advanced talks to buy Wells Fargo’s retirement plan services unit in a deal that may be worth over $1B, Reuters reports https://reut.rs/2uc4rNA

·     Square (SQ) mentioned in Barron’s noting it was one of 2018’s hottest stocks, but things got ugly last fall when shares were nearly cut in half as investors worried about rising interest rates and suddenly pricey stocks, adding that the stock has since regained much of its losses but are still below the September 2018 high.

 

Healthcare

·     AstraZeneca PLC (AZN) said that the U.S. Food & Drug Administration has granted orphan drug designation for potential lung-disease treatment saracatinib.

·     Edwards Lifesciences (EW) announces results of its randomized PARTNER 3 Trial demonstrated superiority for the SAPIEN 3 transcatheter aortic valve over outcomes with surgery. Trial, which compared treatment with the SAPIEN 3 valve to surgery in patients with severe symptomatic aortic stenosis at low risk of death from surgery, achieved superiority of its primary endpoint at one year. TAVR with the SAPIEN 3 valve achieved superiority, with a 46% reduction in the event rate for the primary endpoint of the trial, which was a composite of all-cause mortality, all stroke and rehospitalization at one year

·     Medtronic (MDT) comments on clinical data from its Evolut Low Risk Trial comparing the minimally invasive Evolut transcatheter aortic valve replacement system to open-heart surgery in characteristically younger, healthier aortic stenosis patients. Randomized trial met its primary non-inferiority endpoint of all-cause mortality or disabling stroke at two years compared to surgery. Company says new data will need to be submitted to government regulators to support the safety and effectiveness of this device for this use

·     Ceridian (CDAY) files to sell 11M shares of common stock for holders

·     Regeneron (REGN) and Sanofi (SNY) announce the European Commission has approved a new indication for Praluent to reduce cardiovascular (CV) risk in adults with established atherosclerotic CV disease (ASCVD).

 

Industrials & Materials

·     Federal prosecutors and Department of Transportation officials are scrutinizing the development of Boeing Co.’s (BA) 737 MAX jetliners, according to people familiar with the matter, the WSJ reported. A grand jury in Washington, D.C., issued a broad subpoena dated March 11 to at least one person involved in the 737 MAX’s development, seeking related documents, including correspondence, emails and other messages

·     Barron’s said while Boeing (BA) investors should not panic as investigators seek a cause for the crash a week ago of an Ethiopian Airlines 737 Max 8, but recovery might be quick. As Boeing now investigates and remedies any defects, it must not only win back regulators and airlines but also soothe skittish customers,

·     Steel stocks U.S. Steel (X) and Nucor (NUE) among those mentioned favorably in Barron’s saying the shares could rally with steel. Tariffs, trade case wins, and President Donald Trump’s pledge to bring back U.S. manufacturing should boost steel’s fortunes

·     The U.S. Department of Transportation is investigating the Federal Aviation Administration’s (FAA) approval of Boeing Co’s 737 MAX jets, the Wall Street Journal said on Sunday, citing people familiar with the inquiry.

 

Technology, Media & Telecom

·     Lyft set its IPO size at 30.77 million shares and the price range at $62-$68 in an amended prospectus, seeking to raise as much as $2.09 billion

·     Synaptics (SYNA) downgraded to Neutral from Buy at Mizuho

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Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P. Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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