Morning Preview: April 16, 2019

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Early Look

Tuesday, April 16, 2019

Futures

Up/Down

%

Last

DJ Industrials

125.00

0.47%

26,498

S&P 500

9.50

0.33%

2,919

Nasdaq

31.50

0.42%

7,679

 

 

Stock futures in the U.S. are pointing to a higher open, rebounding ahead of a busy day of big earnings after U.S. equities slipped on Monday, snapping a three-day advance. After disappointing earnings and/or trading results from JPM, Citi and Wells the last few days in the banking sector (JPM was okay), markets get a look at BAC, BLK and regional bank CMA this morning. In tech earnings, NFLX reports after the close along with IBM. In Asian markets, The Nikkei Index gained 52 points to 22,221, the Shanghai Index surged 75 points (2.39%) to settle at 3,253 and the Hang Seng Index jumped 319 points to settle at 30,129. In Europe, the German DAX is higher by 70 points nearing 12,100, while the FTSE 100 is up around 20 points at 7,460. All eyes are now on Chinese quarterly GDP data due on Wednesday. After a worrying start to the year, Chinese data have been more positive. Currency markets were generally quiet, although the Australian dollar slipped after the Reserve Bank of Australia signaled in policy minutes that an interest rate cut would be appropriate should inflation stay low.

Market Closing Prices Yesterday

·     The S&P 500 Index dropped -1.83 points, or 0.06%, to 2,905.58

·     The Dow Jones Industrial Average fell -27.53 points, or 0.10%, to 26,384.77

·     The Nasdaq Composite dipped -8.15 points, or 0.10%, to 7,976.01

·     The Russell 2000 Index declined -5.63 points, or 0.36% to 1,579.17

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:15 AM EST      Industrial Production MoM for March…est. 0.2%

·     9:15 AM EST      Capacity Utilization for March…est. 79.1%

·     10:00 AM EST    NAHB Housing Market Index for April…est. 63

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: BAC, BLK, CMA, DEST, FHN, JNJ, PGR, PLD, UNH

·     Earnings After the Close: CSX, FULT, HOPE, IBKR, IBM, NFLX, UAL, UBNK, UCFC

 

Macro

Up/Down

Last

WTI Crude

0.13

63.53

Brent

0.07

71.25

Gold

-5.30

1,286.00

EUR/USD

-0.0007

1.1297

JPY/USD

-0.14

111.90

10-Year Note

+0.009

2.56%

 

 

World News

·     German economic expectations improved in April, as a survey’s measure of economic expectations rose to 3.1 points in April from minus 3.6 points in March. The reading remained below the historical average of 22.2 points, but came in above economists’ forecast of 1.5 points

·     U.S. Net Long-Term Portfolio Securities Inflow (TIC) $51.9B in February and U.S. total cross-border investment outflows at $21.6B in February. U.S. net long-term portfolio securities inflows at $51.9B in February. China holds $1.13T of U.S. Treasuries, an increase of $4.2B from last month and Japan holds $1.07T, an increase of $2.2B from last month

·     Boston Fed President Eric Rosengren favors using rates to keep inflation within a given range rather than setting a 2% target, giving the central bank “more policy space to counteract the next recession.” He said the U.S. economy, while slowing, remains strong enough to further reduce unemployment

·     Congressional Democrats issued subpoenas to Deutsche Bank and other banks to obtain records indicating whether foreign nations tried to influence U.S. politics in an escalation of probes into Donald Trump’s finances and any dealings with Russians – Bloomberg

 

Sector News Breakdown

Consumer

·     Lufthansa AG shares fell after saying overcapacity and a high fuel bill would trigger a loss Q1; said it would post an adjusted loss before interest and taxes of 336 million euros ($380 million loss) in the first quarter, compared to a small profit in the same period a year ago.

·     Whirlpool (WHR) shares fell Monday after March Association of Home Appliance Manufacturers (AHAM) shipments fell 6%

 

Energy, Industrials & Materials

·     JB Hunt (JBHT) shares fell -4%; Q1 EPS $1.09/$2.09B vs. est. $1.26/$2.20B; 1Q effective tax rate 22.7%, 1Q Intermodal revenue $1.09 billion; Q1 intermodal revenue per load increased 11%; said “JBI load volumes declined 7% from the same period 2018. Transcontinental loads declined 8% and the Eastern network load volume declined 7% compared to prior year”

·     Rio Tinto Group (RIO) cut annual guidance for iron ore shipments as Q1 cargoes plunged after operations in Australia were hit by fires and a tropical cyclone; lowered annual guidance to a range of 333M-343M tons, after saying earlier this month sales would fall to the low end of a previous range of 338M-350M tons

·     Genesee & Wyoming (GWR) reported traffic volumes for March 201. G&W’s total traffic in March 2019 was 256,647 carloads, a decrease of 23,265 carloads, or 8.3%, compared with March 2018. G&W’s same railroad traffic in March 2019 decreased 10,958 carloads, or 4.1%, compared with G&W’s traffic in March 2018

·     Cummins (CMI) upgraded to Buy from Neutral at Citi

·     DowDuPont (DWDP) downgraded to Sector Perform from Outperform at RBC Capital

·     Marathon Oil (MRO) upgraded to Outperform from Sector Perform at RBC Capital

 

Financials

·     Bank America (BAC) Q1 EPS 70c; Q1 equities trading revs $1.19B vs. est. $1.21B; Q1 FICC trading revs ex-DVA $2.36B and Q1 trading revs ex DVA $3.55B

·     BlackRock (BLK) Q1 adjusted EPS $6.61/$3.35B vs. est. $6.13/$3.34B; Q1 AUM $6.52T, up 3% y/y

·     JBG Smith Properties (JBGS) 10M share Spot Secondary priced at $42.00

·     Comerica (CMA) Q1 EPS $2.08 vs. est. $1.93

·     MasterCard (MA) has acquired Vyze, a business that lets merchants offer financing options from various lenders both online and at the point of sale. Terms of the deal weren’t disclosed.

·     ServisFirst (SFBS) Q1 EPS 65c vs. est. 64c; Q1 net interest income was $68.8M for the first quarter of 2019, compared to $68.9M for the fourth quarter of 2018 and $62.4M for the first quarter of 2018

·     CNB Financial (CCNE) Q1 EPS 62c, reports Q1 book value per share $18.04; Q1 CET1 ratio 9.54%

 

Healthcare

·     UnitedHealth (UNH) Q1 EPS $3.73/$60.3B vs. est. $3.59/ $59.71B; raises FY19 adj. EPS view to $14.50-$14.75 from $14.40-$14.70 (est. $14.65)

·     Johnson & Johnson (JNJ) Q1 EPS $2.10/$20.02B vs. est. $2.04/$19.61B; sees FY EPS $8.53-$8.63 vs. prior view of $8.50-$8.65; still sees FY sales $80.4B-$81.2B vs. est. $81.17B

·     Rocket Pharmaceuticals (RCKT) 4.5M share Spot Secondary priced at $17.50

·     Amgen (AMGN) announced that EVENITY is now available for shipment to wholesalers in the U.S./approved by the FDA for the treatment of osteoporosis in postmenopausal women at high risk for fracture

·     Novartis (NVS) announced that the US FDA accepted the company’s Biologics License Application for brolucizumab, RTH258, for the treatment of wet age-related macular degeneration

·     MediciNova (MNOV) announced that the FDA has completed its review of the protocol and determined that MediciNova may proceed with a Phase 2b/3 clinical trial of MN-166, or ibudilast, in amyotrophic lateral sclerosis

 

Technology, Media & Telecom

·     AT&T’s (T) WarnerMedia has sold its 9.5% stake in Hulu back to the joint venture for $1.43 billion, valuing the streaming service at $15 billion. The arrangement leaves Walt Disney (DIS) with two-thirds ownership of Hulu and Comcast’s (CMCSA) NBCUniversal unit in control of the rest. https://on.mktw.net/2VUrSqU

·     Alphabet (GOOGL) said it will report a separate operating expense line for the $1.7B charge on Google on the income statement due to the European Commission fine, which the company noted is not tax deductible

·     Salesforce.com (CRM) said guidance updates for GAAP EPS are not currently available for the reasons noted below and the company expects to provide the applicable updates following the close of the transaction. The company now expects FY20 non-GAAP EPS of $2.54 to $2.56 (est. $2.76). This estimate reflects the anticipated impact of the one-time, non-cash accounting charge referenced above

·     Cisco Systems’ (CSCO) price target was raised to $62 from $58 at Goldman Sachs but was removed the company from its Conviction List

·     Salesforce.com Inc. (CRM) is buying Salesforce.org — created to distribute Salesforce software at reduced amounts to nonprofits, schools and other organizations — for $300 million.

·     Cumulus Media (CMLS) agreed to sell KLOS-FM in Los Angeles to Meruelo Media for $43 million in cash.

_________________________________________________________________

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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