Mid-Morning Look: August 12, 2019

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Mid-Morning Look

Monday, August 12, 2019

Index

Up/Down

%

Last

 

DJ Industrials

-145.79

0.55%

26,141

S&P 500

-14.22

0.49%

2,904

Nasdaq

-43.73

0.55%

7,915

Russell 2000

-15.03

0.99%

1,498

 

 

U.S. equities are broadly lower, with Small caps down the most as global uncertainties weigh on U.S. markets today, specifically the events in Hong Kong as protests enter their 9th week and in Argentina following a surprise political outcome. The news adds to the already tumultuous ground between the U.S. and China and its trade dispute, the short-range missile launches in North Korea by Kim, the UK Brexit deadline in October and recent weakness in Italy amid political chaos with Deputy Prime Minister Matteo Salvini calling for a snap election/Salvini’s call for a general election sent Italian bond yields soaring. Futures fell overnight as thousands of demonstrators flood Hong Kong’s airport prompting officials there to cancel more than 100 flights. The unrest has raised the specter of military intervention by mainland China after nine-weeks of protests. Argentina’s stocks the biggest premarket losers after Macri’s defeat in primary vote with shares of YPF, GGAL, PAM, LOMA, MELI, ARCO, SUPV among names crushed as opposition candidate Alberto Fernandez and his running mate won by a much larger than expected margin over Macri (who is considered to have market friendly positions) ahead of the Oct. 27 presidential election. Argentine bonds sustained a blow on Monday, while the cost to insure against a debt default swelled. Outside of those two top stories, general market news and data very quiet to start the week, with the bulk of Q2 earnings season behind us (few big retailers/tech names left).

 

Treasuries, Currencies and Commodities

·     In currency markets, the U.S. dollar sank early on with the euro firmly back above the 1.12 level; the greenback dropped again vs. safe haven currencies (yen) given the growing global market, economic, political concerns; the Argentine peso fell as much as 24%, weaker at 60 per us dollar after Macri’s poor performance in Sunday primary election. Commodity prices are mixed, though gold and oil prices edge higher while industrial metals (copper, nickel, aluminum) decline given slowing global growth concerns. Treasury market’s rally as rising U.S. Treasury prices continue to drive down yields, with the benchmark 10-year yield down 5 bps to 1.68% and the two-year yield off 4 bps to 1.59%

 

 

Macro

Up/Down

Last

 

WTI Crude

0.22

54.72

Brent

0.12

58.65

Gold

8.30

1,516.80

EUR/USD

0.0015

1.1215

JPY/USD

-0.34

105.36

10-Year Note

-0.065

1.679%

 

 

Sector Movers Today

·     Biotech movers; AMGN added to Friday’s near 6% gains after winning the favorable court ruling on the validity of Enbrel patents against Sandoz, as many analysts weigh in positively saying as it removes an overhang in shares; EOLS posts Q2 revenue of $2.3M from early sales of Jeuveau, its newly launched rival to AGN’s Botox, which was ahead of its expectations; NVAX announced new data from its Phase 3 clinical trial, Prepare, evaluating maternal immunization with its RSV vaccine ResVax; APTX reported a smaller-than-expected Q2 EPS loss of (36c) vs. est. (52c)

·     Chemicals and Materials; LTHM downgraded to underperform from neutral at Bank America saying electric vehicles, which use lithium hydroxide, may not have enough growth to absorb the new lithium capacity coming over the next 6-12 months; in metals, GOLD boosted its gold production forecast for the full year (to 5.10B-5.60B from 5.1M-5.6M) as profit jumped; metals names continue their recent slide (steel, iron, ore, aluminum) on slowing global growth fears

·     Asset managers; LAZ said preliminary assets under management of $234.8B at July 31, 2019 rose 1% from $237.5B at June 30, 2019/July’s AUM includes $1.5B of market appreciation, $2.0B of net outflows, and foreign exchange depreciation of $2.1B; LM preliminary assets under management (AUM) of $780.5 billion as of July 31, 2019. This month’s AUM included long-term net inflows of $0.1 billion, driven by alternative inflows of $1.6 billion and fixed income; TROW preliminary assets under management of $1.136T at July 31, 2019 increased 1.0% from $1.125T at June 20, 2019.

 

Stock GAINERS

·     AMGN +4%; and adding to Friday’s near 6% gains after winning the favorable court ruling on the validity of Enbrel patents against Sandoz, as many analysts weigh in positively saying as it removes an overhang in shares

·     FTCH +10%; partially rebounds after plunging 44% on Friday after earnings

·     NWSA +3%; was upgraded to outperform at Credit Suisse

·     ROKU +7%; tgt raised to Street high $150 at Needham (from $120) saying vs. NFLX, they have similar valuations but prefer ROKU

·     SYY +4%; Q4 of $1.10 beat by 4c on lighter sales ($15.5B vs. $15.64B) as case volume was up 0.4% in FQ4, driven higher by a 1.3% increase in local organic case volume

 

Stock LAGGARDS

·     CPRI -3%; TPR, RL are among names facing serious backlash from Chinese consumers over defying China’s One-China Policy, according to reports with some boycotts against the brand

·     CTST -25%; received a report from Health Canada notifying the Company that its manufacturing facility in Vaughan, Ontario has been rated non-compliant with certain regulations. CannTrust has accepted Health Canada’s findings and remedial actions are underway.

·     GGAL -54%; as Argentinian banks crushed after major upset in Argentina primary

·     LTHM -10%; downgraded to underperform at Bank America saying electric vehicles, which use lithium hydroxide, may not have enough growth to absorb the new lithium capacity coming over the next 6-12 months

·     MTW -3%; downgraded to underperform at Baird saying the company’s backlog and EPS will be pressured as demand has slowed/Q2 marked the 3rd straight quarter of double-digit order decline

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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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