Morning Preview: August 14, 2019

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Early Look

Wednesday, August 14, 2019

Futures

Up/Down

%

Last

DJ Industrials

-238.00

0.90%

26,076

S&P 500

-25.50

0.88%

2,906

Nasdaq

-77.50

1.00%

7,670

 

 

Stock futures are sharply lower, giving back much of yesterday’s tariff relief big gains amid several factors which are weighing on sentiment to start the day. First, the 2-year vs. 10-year measure of U.S. yield curve inverts for the first time since 2007, which tends to indicate an upcoming recession. Second, European markets fall after data overnight showed Germany’s economy shrank by 0.1% in the second quarter. Lastly, China news with industrial output in China rising 4.8% in July from a year earlier, slowing from the 6.3% increase in June, while the PBoC fixes its daily yuan midpoint at 7.0312 — stronger than expected- China’s central bank set the official midpoint reference for the yuan at 7.0312 per dollar on Wednesday, which is being closely watched by the U.S. In Asian markets, The Nikkei Index rose 199 points to 20,655, the Shanghai Index advanced 11 points to 2,808 and the Hang Seng Index gained 20 points to 25,302. In Europe, the German DAX is lower by -150 points to trade under 11,600 (below its 200-day MA 11,650), while the FTSE 100 is down around -50 points to the 7,200 level. Markets also watching Argentina as the peso weakened a further 4.7% against the U.S. dollar by late Tuesday afternoon, following losses of about 15% on Monday, triggered by opposition candidate Alberto Fernandez’s landslide victory in a primary election on Sunday.

 

Stocks managed to post its best one-day rally in roughly two months Tuesday after the Trump administration delayed some of the planned Sept. 1 tariffs on China to Dec. 15, specifically targeting lap tops, cell phones, toys, footwear and apparel as Trump said he didn’t want the levies to hurt Christmas shopping season. Treasury prices slipped but the main story was the 2- and 10-year yield curve neared inversion, moving to within 2 bps. The U.S. dollar rose, while safe haven assets weakened, emerging-market currencies rebounded and crude futures rallied with anti-government demonstrators shutting down the Hong Kong airport for a second consecutive day.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 42.57 points, or 1.48%, to 2,926.32

·     The Dow Jones Industrial Average rose 372.54 points, or 1.44%, to 26,279.91

·     The Nasdaq Composite surged 152.95 points, or 1.95%, to 8,016.36

·     The Russell 2000 Index advanced 16.30 points, or 1.09% to 1,510.58

 

Events Calendar for Today

·     7:00 AM EST      MBA Mortgage Applications Data

·     8:30 AM EST      Import Prices MoM for July…est. (-0.1%)

·     8:30 AM EST      Export Prices MoM for July…est. (-2.0%)

 

Earnings Calendar:

·     Earnings Before the Open: AMRH, BGG, IDEX, M, PFGC

·     Earnings After the Close: A, CACI, CSCO, LMB, NTAP, OCX, PRSP, SPTN

 

Other Key Events:

·     Needham Industrial Technology 1×1 Conference in New York

·     Wedbush PacGrow Healthcare Conference, 8/13-8/14, in New York

 

 

Macro

Up/Down

Last

WTI Crude

-0.95

56.15

Brent

-0.78

60.52

Gold

4.80

1,518.90

EUR/USD

0.001

1.1181

JPY/USD

-0.52

106.22

10-Year Note

-0.078

1.625%

 

 

World News

·     Germany’s economy shrank by 0.1% in the second quarter, from the previous quarter as global trade conflicts and troubles in the auto industry weighed on Europe’s largest economy.

·     The economy in the eurozone as a whole rose 0.2%, Eurostat reported, with Spain’s economy rising 0.5%, France’s economy improving by 0.2% and Italy’s economy staying flat.

·     Industrial output in China rose 4.8% in July from a year earlier, slowing from the 6.3% increase in June, the National Bureau of Statistics said. July’s rise undershot a median forecast for 5.9%

·     The Italian Senate postponed till next week further debate on an ongoing government crisis, frustrating a push by Matteo Salvini, leader of the far-right League party, for new elections.

 

Sector News Breakdown

Consumer

·     Grocery Outlet (GO) Q2 adjusted EPS 20c vs. 19c YoY; Q2 sales $645.3M vs. est. $626.6M; Q2 adjusted Ebitda $45.0M; Q2 comp sales rose 5.8% while sees year comp sales growth 3%-4%, year EPS 68c-71c (est. 59c) and sales $2.5B-$2.53B (est. $2.51B)

·     RealReal (REAL) Q2 EPS loss (28c)/$71M vs. est. loss (31c)/$70.1M; Q2 adjusted Ebitda loss $20.9M and guides Q3 expected EBITDA margin range negative 28-30% and for year EBITDA margin range negative 24-25%

·     Ferrari (FACE) upgraded to Buy from Neutral at Goldman Sachs

 

Energy, Industrials & Materials

·     The American Petroleum Institute (API) reported that U.S. crude supplies rose by 3.7M barrels for the week ended Aug. 9, showed a stockpile increase of 3.7M barrels in gasoline, while distillate supplies declined by -1.3M barrels

·     PG&E (PCG) has promised to quickly file a chapter 11 exit plan with financial backing, faced with losing control of a multibillion-dollar bankruptcy process, the WSJ reported. Judge Dennis Montali is expected to rule Wednesday in the U.S. Bankruptcy Court in San Francisco on creditors’ requests to present their own restructuring strategies https://on.wsj.com/33t4VQ5

 

Healthcare

·     CorMedix (CRMD) Q2 EPS loss (3c) vs. est. loss (22c); 2Q cash and cash equivalents $26.4M

·     Adaptive Biotechnologies (ADPT) Q2 EPS loss ($1.23) on revs $22.1M; Q2 operating expenses were $38.2M, compared to $24.9M YoY, a 54% increase

·     Deciphera (DCPH) announces $200M common stock offering

·     Change Healthcare (CHNG) Q1 adjusted EPS 56c/$855.6M vs. est. 37c/$805.93M; expects FY 2020 Solutions Revenue growth of 1-2% including the impact of the sale of our extended care business and planned contract exits in our Technology-enabled Services business; adjusted EBITDA growth of 6%-8% and Adjusted Net Income Growth of 9%-11%

·     Portola Pharmaceuticals (PTLA) 8.04M share Secondary priced at $28.00

·     Myriad Genetics (MYGN) shares fell -5% on miss; Q2 EPS 41c on revs $215.4M vs. est. 48c/$221.6M; $MYGN lower guide as well; sees Q1 EPS 30c-32c vs. est. 43c and year $1.80-$1.90 vs. $1.95; sees Q1 revs $200M-$202M vs. est. $217M and year revs $865M-$875M vs. est. $922M

·     Tilray (TLRY) shares fell -10% overnight after loss widens; Q2 EPS adjusted Ebitda loss $17.9M, larger than the est. loss $14.1M; Q2 revs $45.9M vs. $40.3M est.

 

Technology, Media & Telecom

·     Presidio Inc. (PSDO) said it’s going to be bought by BC Partners for $2.1 billion including assumed debt, or $16 per share in cash. Apollo Global Management, which owns approximately 42% of the outstanding shares of Presidio common stock, has entered into a voting agreement with BC Partners. https://on.mktw.net/31Elw1C

·     CDK Global (CDK) Q4 adjusted EPS 88c/$488.6M vs. est. 90c/$585.3M; sees FY20 adj. EPS $3.30-$3.50 on revs $2B-$2.05B vs. est. $4.11/$2.39B

·     Huya (HUYA) Q2 EPS 11c/$292.9M vs. est. 8c/$251.7M; Q2 average mobile MAUs 55.9M, representing an increase of 31.1% from 42.7M last year

·     Snap Inc (SNAP) said it will launch a new version of its Spectacles sunglasses that will have the capability of capturing photos and videos and uploading them directly to its unit Snapchat.

·     Workiva (WK) 1.29M share Secondary priced at $56.25

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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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