Morning Preview: May 17, 2019

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Early Look

Friday, May 17, 2019

Futures

Up/Down

%

Last

DJ Industrials

-118.00

0.46%

25,749

S&P 500

-13.50

0.48%

2,864

Nasdaq

-47.50

0.62%

7,553

 

 

Stocks are on track to snap their three-day winning streak, falling on state media reports that China isn’t interested in continuing trade talks without evidence the U.S. is sincere. Beijing is studying the impact of the tariffs and said stimulus will be stepped up. The Nikkei Index rose 187 points to 21,250, the Shanghai Index slumped -73 points (2.48%) to settle at 2,882 and the Hang Seng Index fell -328 points to 27,946. In Europe, the German DAX is off over -100 points to trade at 12,200, while the FTSE 100 is down about -20 points to 7,332. The British Pound is down over -0.3% to 1.275 as Brexit issues remain. Stocks managed to push higher on Thursday despite news of a U.S. ban on Huawei products as trade tensions remain high between the two economic power houses of China and the U.S. Safe haven assets are rising again, led by the yen, gold and Treasuries while the dollar also climbed. The British pound headed towards this year’s low and suffered its worst week in more than a year as cross-party Brexit talks broke down. In stock news, agricultural machinery giant Deere (DE) slides after missing quarterly earnings and cutting its year profit and sales view. In tech, shares of PINS plunged after its first report as a public company disappointed with a yearly revenue forecast that fell short of consensus, while China’s BIDU drops over 10% on its lower Q2 rev outlook. In the chip space, AMAT and NVDA shares push higher following earnings results. In the commodities space, corn is on track for its biggest weekly gain since 2015 as floods and rain stall planting in the Midwest, while copper heads for a fifth weekly decline. Stocks scored broad gains on Thursday, as stronger than expected earnings from Walmart and Cisco Systems lifted investor sentiment along with better economic data, as all 11 S&P sectors advanced.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 25.36 points, or 0.89%, to 2,876.32

·     The Dow Jones Industrial Average rose 214.66 points, or 0.84%, to 25,862.68

·     The Nasdaq Composite gained 75.90 points, or 0.97%, to 7,898.05

·     The Russell 2000 Index advanced 8.97 points, or 0.58% to 1,557.24

 

Events Calendar for Today

·     10:00 AM EST    Leading Index for April…est. 0.2%

·     10:00 AM EST    University of Michigan Sentiment, May-P…est. 97.2

·     11:15 AM EST    Fed’s Williams meets with Community Leaders

·     1:00 PM EST       Baker Hughes Weekly Rig Count

 

 

Macro

Up/Down

Last

WTI Crude

0.66

63.53

Brent

0.46

73.08

Gold

-1.30

1,285.30

EUR/USD

-0.0004

1.117

JPY/USD

-0.18

109.67

10-Year Note

-0.012

2.382%

 

 

World News

·     British Prime Minister Theresa May fended off pressure Thursday from Conservative Party lawmakers demanding that she set a date for her resignation, buying herself a few more weeks to try to unblock Britain’s Brexit impasse. But she agreed to give a timetable next month for her departure, raising the prospect that Britain will get a new prime minister before it leaves the European Union — currently scheduled for Oct. 31. AP

·     Japan’s Economy Minister said Trade chief Robert Lighthizer assured him Washington won’t seek restrictions on auto exports. Toshimitsu Motegi also drew a distinction between import restrictions, such as tariffs, and export restrictions such as quotas, to which Japan was particularly opposed. – Bloomberg

 

Sector News Breakdown

Consumer

·     Boot Barn (BOOT) Q4 EPS 30c/$192.8M vs. est. 27c/$189.19M; Q4 comp store sales increased 8.7%, including an increase in retail store same store sales of 9.8% and an increase in e-commerce sales of 3.3%; sees Q1 EPS 20c-22c on revs $178M-$180M vs. est. 19c/$176.64M; sees FY20 EPS $1.42-$1.50 vs. est. $1.53 and sees FY20 comp sales growth approximately 5%

·     Deliveroo said Friday that Amazon.com Inc. (AMZN) will lead a $575 million investment in the delivery service. The startup will use the money to expand its engineering team in London and delivery reach, along with new products for customers

·     New car registrations in the EU fell -0.4% in the EU compared with a year earlier, to 1.30 million vehicles, the European Automobile Manufacturers’ Association said Friday.

·     Luckin Coffee (LK) 33M share IPO priced at $17.00

·     Philip Morris (PM) upgraded to Neutral from underperform at Bank America and raise tgt to $94 from $81

 

Energy

·     EnerSys (ENS) Q4 non-GAAP EPS $1.43/$796.6M vs. est. $1.41/$816M; said Q4 was adversely impacted by our enterprise resource planning ERP system conversion in Richmond, KY; sees Q1 EPS $1.30-$1.34 vs. est. $1.43

·     Targa Resources (TRGP) files automatic mixed securities shelf

 

Financials

·     LPL Financial (LPLA) reported total brokerage and advisory assets for April of +7.2% and April brokerage, advisory assets $699.3 billion

·     Apollo Investment (AINV) Q4 net asset value per share was $19.06; Q4 net investment income per share 47c vs. est. 45c and Q4 total investment income $61.4M

·     Tremont Mortgage Trust (TRMT) 5M share Spot Secondary priced at $5.65

 

Healthcare

·     Avantor (AVTR) 207M share IPO priced at $14.00

·     MannKind (MNKD) is in an exclusive marketing and distribution agreement with the AMSL Diabetes division of Australasian Medical & Scientific Ltd. for the commercialization of Afrezza Inhalation Powder in Australia. AMSL Diabetes will be responsible for obtaining regulatory and reimbursement approvals to distribute Afrezza in Australia

·     Varian (VAR) said the gross impact on new tariffs due to the U.S. increased tariffs on certain goods imported from China and China’s retaliatory increase in tariffs on certain goods imported from the U.S.

·     Bio-Path Holdings (BPTH) files $125M mixed securities shelf

 

Industrials & Materials

·     Deere (DE) shares down -2%; Q2 EPS $3.52/$11.34B in sales vs. est. $3.62/$10.18B; cut its forecast for full year net income and sales, as well as total views for some industry sales, citing concerns about export-market access and near-term demand for some commodities; sees FY net income $3.3B down from prior view of $3.6Band sees FY sales up about 5% down from prior view of up 7%

·     The US is slashing its tariffs on Turkish steel to 25% from 50%, reversing a decision taken last August by President Donald Trump – FT reports

·     Bloomberg noted that iron ore prices jumped above $100 a ton amid a supply crunch (watch shares of CLF, VALE, BHP)

 

Technology, Media & Telecom

·     Applied Materials (AMAT) shares rose 5%; Q2 EPS 70c/$3.54B vs. est. 66c/$3.48B; sees Q3 EPS 67c-75c on revs $3.38B-$3.68B vs. est. 70c/$3.51B; 2Q adjusted gross margin 43.5%

·     Baidu (BIDU) shares fell -11%; Q1 adjusted profit 2.77 yuan vs., est. 2.94 yuan and Q1 revenue 24.1B yuan vs. est. 24.27B yuan; sees Q2 revenue 25.1B-26.6B yuan below the 29.32B est.; announces $1B share buyback plan; App daily active users in March 2019 reached 174M, growing 28% year over year

·     Nvidia (NVDA) Q1 EPS 88c/$2.22B vs. est. 79c/$2.19B; sees Q2 revenue $2.55B, +/- 2% vs. est. $2.54B and sees Q2 GAAP and non-GAAP gross margins 59.2% and 59.5%, respectively, plus or minus 50 bps

·     Pinterest (PINS) shares fell -14%; Q1 EPS loss (33c)/$201.9M vs. est. loss (11c)/$200.61M; Q1 adjusted EBITDA ($38.4M) vs. ($45.4M) last year; shares fell after year rev guidance fell short of $1.06B-$1.08B, consensus $1.09B; reports Q1 global MAUs up 22% at 291M

·     Hewlett Packard Enterprise (HPE) is in advanced negotiations to buy U.S. supercomputer maker Cray (CRAY) in a deal that could be announced as soon as this week https://bloom.bg/2WO09J3 

·     Fastly (FSLY) 11.25M share IPO priced at $16.00

·     Toshiba Memory and Western Digital (WDC) will jointly invest in the K1 flash memory plant currently under construction in Kitakami, Iwate Prefecture. Production of 96-layer 3D flash memory will begin in 2020, to be used for storage in data centers, smartphones and autonomous cars

·     iQIYI (IQ) Q1 EPS loss (35c)/$1B vs. est. loss (50c)/$1.01B; sees Q2 revenue $1B-$1.1B vs. consensus $1.11B

·     21Vianet (VNET) Q1 revenue $129.9M, Q1 adjusted EBITDA $37.8M, up 29.3% from last year and Q1 adjusted EBITDA margin expanded to 29.1% from 24.5% last year

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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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