Morning Preview: June 11, 2019

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Early Look

Tuesday, June 11, 2019

Futures

Up/Down

%

Last

DJ Industrials

112.00

0.43%

26,198

S&P 500

13.00

0.45%

2,902

Nasdaq

50.50

0.67%

7,566

 

 

U.S. stock futures are higher, tracking global markets to the upside with reports that China would ease restrictions on the spending of proceeds from special bond sales and encourage banks to offer loans to projects funded by such debt. The announcement has helped boost global markets following the China stimulus measure. The Nikkei Index rose 69 points to 21,204, the Shanghai Index gained 73 points (or 2.58%) to settle at 2,925 and the Hang Seng Index gained 210 points to settle at 27,789. In Europe, the German DAX is up over 150 points as it tops 12,200, while the FTSE 100 is up over 30 points to move back above 7,400. Meanwhile on trade, President Trump yesterday told CNBC that China will make a deal “because they have to”, and threatened to increase tariffs if China’s President Xi Jinping doesn’t attend the G-20 summit. Trump also complained about the weakening Yuan, which fell to year-to-date lows against the U.S. dollar Monday.

 

U.S. stock indexes posted strong results on Monday, as the Dow Industrial Averages reclaimed the 26,000 level and major averages extended their win streak to 6-consecutive sessions (the Dow’s longest such streak since an 8-game stretch mid-May-2018. consecutive gain, which represents its longest win streak since an eight-session period ended May 14, 2018. The S&P 500 index briefly topped the 2,900 before paring gains but was less than 50-points of its April 30 all-time high at one-point Monday. Stocks jumped after the White House’s decided to drop a threat to hit Mexico with tariffs on billions of dollars of goods. Investors also are hoping that the Federal Reserve signals that it will ease monetary policy when it concludes it two-day meeting on June 19.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 13.39 points, or 0.47%, to 2,886.73

·     The Dow Jones Industrial Average rose 78.74 points, or 0.30%, to 26,062.68

·     The Nasdaq Composite jumped 81.07 points, or 1.05%, to 7,823.17

·     The Russell 2000 Index advanced 9.17 points, or 0.61% to 1,523.56

 

Events Calendar for Today

·     6:00 AM EST      NFIB Small Business Optimism for May…est. 102.0

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      Producer Price Index (PPI) Final MoM for May…est. 0.2%

·     8:30 AM EST      PPI Ex: Food & Energy (core) MoM for May…est. 0.2%

·     8:30 AM EST      PPI Ex: Food & Energy (core) YoY for May…est. 2.3%

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: CHS, HDS, HRB, JW/A

·     Earnings After the Close: PLAY

 

Other Key Events:

·     American Diabetes Association (ADA) Scientific Sessions, 6/7-6/11 in San Francisco

·     E3 2019 Conference, 6/10-6/14, in Los Angeles, CA

·     Deutsche Bank Global Consumer Conference, 6/11-6/13, in Paris

·     FBN Silicon Valley Technology Tour, 6/10-6/11, in Silicon Valley

·     Goldman Sachs 40th Annual Global Healthcare Conference, 6/11-6/13, in CA

·     Morgan Stanley 10th Annual Financials Conference, 6/11-6/12, in New York

 

 

Macro

Up/Down

Last

WTI Crude

0.48

53.74

Brent

0.16

62.45

Gold

-5.40

1,322.55

EUR/USD

0.0004

1.1316

JPY/USD

0.25

108.70

10-Year Note

+0.022

2.174%

 

 

World News

·     The U.K. economy shrank 0.4% in April compared with March, the Office for National Statistics said Monday, the largest monthly decline since March 2016. The contraction was driven by the manufacturing sector

·     Hong Kong announced legislation that would allow extraditions to the mainland and getting involved in an issue that’s triggered mass protests

·     U.S. Customs and Border Protection said Monday that photos of travelers and license plates collected at the nation’s borders have been exposed in a malicious cyberattack in what a leading congressman called a “major privacy breach.

 

Sector News Breakdown

Consumer

·     Allegiant Travel (ALGT) reports May total system traffic rose 10.3%, total system available seat miles up 10.7%, load factor 81.8% vs. 82.0% last year

·     Ascena Retail (ASNA) Q3 adjusted EPS loss (26c)/$1.27B vs. est. loss (37c)/$1.43B; sees 4Q net sales $1.18B-$1.22B vs. est. $1.65B and sees 4Q comparable sales -3% to -5%; Q3 Total Premium Fashion comparable sales +5%, Dressbarn comparable sales -4%, Lane Bryant comparable sales -2%, Catherine’s comparable sales -6% and Justice comparable sales -5%

·     Beyond Meat (BYND) downgraded to neutral from overweight at JPMorgan after shares surge over 570% since IPO

·     HD Supply (HDS) Q1 adjusted EPS 84c/$1.5B vs. est. 81c/$1.49B; sees Q2 adjusted EPS $1.04-$1.12 on revs $1.62B-$1.67B vs. est. $1.19/$1.7B; sees FY19 adjusted EPS $3.52-$3.70 on revs $6.25B-$6.35B vs. est. $3.71/$6.36B

·     Casey’s General (CASY) shares rise 10%; Q4 EPS 68c/$2.18B vs. est. $2.11B; boosts quarterly dividend to 32c from 29c; Q4 comp store gallons (-2.8%) vs. est. (-1.5%); Q4 grocery same store sales up 5.7% vs. est. 3%

·     Limoneira (LMNR) Q2 adjusted EPS loss (9c)/$42.04M vs. est. loss (1c)/$45.41M; cuts FY19 EPS view to 25c-45c from 55c-65c (est. 57c)

 

Energy

·     Phillips 66 (PSX) and Bridger Pipeline announced that they have formed a 50/50 joint venture, Liberty Pipeline LLC, and are proceeding with construction of the Liberty Pipeline/project is expected to cost approximately $1.6 billion

·     Chart Industries (GTLS) announces offering of 4.9M shares of common stock

 

Financials

·     Franklin Resources (BEN) reports Assets Under Management (AUM) $695.0B as of May 31 vs. $720.5B last month; said the decrease in assets under management was attributable to market declines and modest net outflows

·     Cohen & Steers, Inc. (CNS) reported preliminary assets under management of $62.9B as of May 31, 2019, a decrease of $171M from April 30, 2019

·     Medallion Financial Corp. (MFIN) announced that, according to a preliminary list of additions posted on June 7, it is set to join the broad-market Russell 3000 Index

 

Healthcare

·     A federal judge appears to be nearing a surprise move to block CVS’ (CVS) $69 billion acquisition of Aetna (AET), according to sources close to the health-industry giants, the NY Post reported. US District Richard Leon, who warned lawyers at a little-noticed hearing last week that they may want to cancel their summer vacation plans — looks like he is setting the stage to reject the mega-merger on concerns that it could raise prices https://nyp.st/2WB56c3

·     Roche (RHHBY) said U.S. regulators approved its antibody drug conjugate Polivy, mixed with other medicines including Rituxan, for relapsed diffuse large B-cell lymphoma

 

Industrials & Materials

·     Airbus (EADSY) and Boeing (BA) are battling for over $10B in wide-body aircraft orders with the Paris Airshow looming next week, according to Reuters, as the two companies have their sights set on Philippines airline Cebu Air as Airbus seeks a buyer for its A330neo airliner, but faces competition from Boeing’s 787 Dreamliner

·     JetBlue (JBLU) upgraded to Buy from Neutral at Citigroup

·     PolyOne (POL) raises Q2 outlook; sees Q2 EPS 72c-74c above prior view of 68c (which is also estimate)

·     YRC Worldwide (YRCW) reported certain operating metrics for the first two months of Q2. At YRC Freight, April 2019 less-than-truckload, or LTL, tonnage per day decreased approximately 5.5% compared to April 2018 and May 2019 LTL tonnage per day decreased approximately 7.6% compared to May 2018

 

Technology, Media & Telecom

·     Shutterfly (SFLY) is being acquired by private equity firm Apollo Global Management for $51 per share, with Apollo paying $1.74 billion for the company https://on.mktw.net/2XKs4dD

·     Broadcom Inc. (AVGO) revealed it has landed a two-year deal with Apple Inc. (AAPL) to supply radio-frequency components for smartphones, tablets and smartwatches, and that Apple said it intends to rely solely on Broadcom for the components as long as the company can meet commitments for quantity and quality

·     Slack (WORK) Q2 adjusted EPS loss (23c) and sees Q2 EPS loss (19c-20c) and year losses (44c-41c); sees 2020 revenue $590M-$600M and adjusted operating loss of $182M-$192M

·     Vonage (VG) announces private offering of $300M of convertible senior notes

·     Lovesac (LOVE) Q1 EPS loss (67c)/$41M vs. est. loss (59c)/$38.91M

·     Western Digital (WDC) the latest company to freeze its partnership with Huawei and halted shipments to the company to comply with the U.S. ban

·     Zynga (ZNGA) announces private offering of $600M of convertible senior notes

_________________________________________________________________

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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