Morning Preview: August 15, 2019

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*** This will be the last “Early Look” until Thursday August 22nd

***Service will resume normally at that time.

 

 

 

 

 

 

Early Look

Thursday, August 15, 2019

Futures

Up/Down

%

Last

DJ Industrials

-161.00

0.63%

25,294

S&P 500

-15.50

0.55%

2,825

Nasdaq

-72.50

0.97%

7,416

 

 

Stock futures are sliding, erasing overnight gains and adding on to yesterday’s sell-off after China’s finance ministry said it would take countermeasures to the latest tariffs from President Trump, who had backed off part of the plan to slap 10% tariffs on $300 billion of Chinese goods, delaying some duties until December. Technology stocks are weak after getting another dose of bad news overnight with Cisco (CSCO) posting an in-line quarterly report, but guided next quarter earnings and revenue below consensus views. There’s also a wave of economic data to come this morning, including weekly jobless claims, retail sales and manufacturing sentiment in New York and Philadelphia. In Asian markets, The Nikkei Index fell 249 points to 20,405, the Shanghai Index rose 6 points to 2,815 and the Hang Seng Index rose 193 points to 25,495. In Europe, the German DAX is down over -100 points to 11,380, while the FTSE 100 is down about 75 points to 7.075. In the U.K., retail sales grew a surprisingly strong 3.3% in July compared to a year ago, according to the Office for National Statistics. Tensions remain high between the U.S. and China on tariffs, while inverted bond yields also raising secession fears.

 

Markets took a beating on Wednesday, as only three S&P 500 components finished in positive territory (NEM, VTR, EVRG) with broad based declines led by weakness in financials and banks as an inverted yield curve fueled recession fears. Markets initially turned sharply lower after the U.S. bond market saw the 30-year hitting its lowest yield ever (2.01%) and the 10-year sliding below the 1.60% level. The inversion between the 2-year and 10-year yields yesterday is especially widely viewed as a reliable preview to a recession, while it follows an inversion of the 3-month and 5-year Treasury yields, which first inverted in December, as well as an ongoing inversion of the 3-month and 10-year Treasury yields. Slowing global growth fears also plagued markets after another round of weak economic data in Europe and Asia sent those markets tumbling as well.

Market Closing Prices Yesterday

·     The S&P 500 Index plummeted -85.72 points, or 2.93%, to 2,840.60

·     The Dow Jones Industrial Average fell -800.49 points, or 3.05%, to 25,479.42

·     The Nasdaq Composite plunged -242.42 points, or 3.02%, to 7,773.94

·     The Russell 2000 Index declined -43.05 points, or 2.85% to 1,467.52

 

Events Calendar for Today

·     8:30 AM EST      Weekly Jobless Claims…est. 212K

·     8:30 AM EST      Continuing Claims…est. 1.685M

·     8:30 AM EST      Empire Manufacturing for August…est. 1.9

·     8:30 AM EST      Nonfarm Productivity for Q2-P…est. 1.4%

·     8:30 AM EST      Unit Labor Costs, Q2-P…est. 2.0%

·     8:30 AM EST      Philly Business Survey Outlook for August…est. 9.3

·     8:30 AM EST      Retail Sales MoM for July…est. 0.3%

·     8:30 AM EST      Retail Sales Less Autos for July…est. 0.4%

·     9:15 AM EST      Industrial Production for July…est. 0.1%

·     9:15 AM EST      Capacity Utilization for July…est. 77.8%

·     10:00 AM EST    NAHB Housing Market Index for August…est. 65

·     10:00 AM EST    Business Inventories for June…est. 0.1%

·     10:30 AM EST    Weekly EIA Natural Gas Inventory Data

·     4:00 PM EST       Net Long-term TIC Flows for July…prior $3.5B

 

Earnings Calendar:

·     Earnings Before the Open: IHRT, JCP, SCVL, WMT

·     Earnings After the Close: AMAT, ARAY, CRMT, NVDA, VIAV

 

 

Macro

Up/Down

Last

WTI Crude

-1.00

54.23

Brent

-1.27

58.21

Gold

3.90

1,531.70

EUR/USD

0.0018

1.1157

JPY/USD

-0.08

105.83

10-Year Note

-0.035

1.543%

 

 

Sector News Breakdown

Consumer

·     SpartanNash (SPTN) Q2 adjusted EPS 34c/$2B vs. est. 34c/$2.01B; backs FY19 EPS view $1.20-$1.35 vs. est. $1.27 and also backs FY19 net sales growth view of mid-single digits; sees year cap-ex $86M-$92M

·     Overstock’s (OSTK) stock declined 22.4% Wednesday, the worst single-day percentage decline since 2014, after dropping 17.6% Tuesday. Combined, shares fell 41% in the two trading sessions, after CEO Patrick Byrne claimed to have worked with the Federal Bureau of Investigation on a “political espionage” case involving Russia, Hillary Clinton and Donald Trump.

·     Nio (NIO) announced the departure of co-founder Jack Cheng, a former Ford executive who often served as the company’s international face

 

Energy, Industrials & Materials

·     The United States moved on Thursday to seize an Iranian supertanker detained in Gibraltar for breaching international sanctions on oil shipments, thwarting efforts by authorities in London and the British overseas territory to defuse tensions with Tehran.

·     Canadian Solar (CSIQ) Q2 EPS 77c/$1.04B vs. est. 30c/$990.29M; Q2 total solar module shipments in Q2 were 2,143 MW, compared to 1,575 MW in Q1 and Q2 guidance of 1.95 GW to 2.05 GW; sees FY solar module shipments 8.4 to 8.5 gw, up from prior view 7.4 to 7.8 gw; guides Q3 revenue $780M-$810M vs. est. 1.03B and sees 3Q solar module shipments 2.2 to 2.3 gw; reaffirms year revenue

·     Boeing (BA) has delayed delivery of its ultra-long 777x widebody as it deals with fallout from the 737 MAX crisis and engine issues with the 777x – Reuters reports

 

Financials

·     Capital One (COF) reported charge-offs for July of 4.25% vs. 4.39% YoY while July delinquencies were 3.49% vs. 3.46% YoY

·     CrossFit Bancshares (CFB) 7.011M share IPO priced at $14.50

·     Repay Holdings (RPAY) Q2 adjusted EBITDA $10.4M, up 24% YoY with revenue $36.2M and Q2 card payment volume was $2.2B, up 27% from last year

 

Healthcare

·     Agilent (A) Q3 adjusted EPS 76c/$1.27B vs. est. 72c/$1.24B; sees Q4 adjusted EPS 84c-86c vs. est. 87c and guides Q4 revenue $1.31B-$1.33B vs. est. $1.34B; raises FY19 EPS view to $3.07-$3.09 from $3.03-$3.07 (est. $3.05) and also ups FY19 revenue view to $5.105B-$5.125B from $5.085B-$5.125B

·     Canopy Growth (CGC) Q1 EPS loss (C$3.70) vs. (C$0.40) last year; Q1 revenue C$90.5M vs. C$25.9M last year; in Q1, Canopy Growth harvested 40,960 kg of product, surpassing its previous estimate of 34,000 kilograms

·     Deciphera (DCPH) 10.81M share Secondary priced at $37.00

·     Elanco (ELAN) upgraded to Neutral from Sell at UBS

 

Technology, Media & Telecom

·     Cisco Systems (CSCO) shares fell over 7% on lower guidance; Q4 adjusted EPS 83c/$13.4B vs. est. 82c/$13.39B; guides Q1 EPS 80c-82c vs. est. 83c and revs flat to up 2% vs. est. up 2.5% – implying $13.1B-$13.36B vs. consensus for $13.41B, with gross margin of 64-65%, op margin of 32-33%

·     NetApp (NTAP) Q1 adjusted EPS 65c/$1.24B vs. est. 61c/$1.24B; guides Q2 eps 91c-99c vs. est. 91c and revs $1.33B-$1.43B vs. $1.37B

·     Pivotal Software stock (PVTL) shares surged after hours on news that VMware (VMW) is in talks to buy the company’s Class A shares for $15 apiece. Both Pivotal and VMware are controlled by Dell Technologies (DELL) https://on.mktw.net/2MgSem7

·     Perspecta (PRSP) Q1 adjusted EPS 52c/$1.11B vs. est. 50c/$1.08B; raises 2020 adjusted EPS view to $2.08-$2.18 from $2.05-$2.16 (est. $2.11) and ups 2020 revenue view to $4.4B-$4.5B from $4.35B-$4.45B (est. $4.4B)

·     Vipshop (VIPS) Q2 adjusted EPS 23c/$3.3B vs. est. 14c/$3.06B; number of active customers up 11% y/y, total orders up 33% and guides Q3 revenue growth to 0%-5%

·     CACI Int’l (CACI) Q4 EPS $1.96/$1.37B vs. est. $2.16/$1.38B; backs FY20 EPS view $11.52-$12.30 on revs $5.5B-$5.7B vs. est. $12.02/$5.61B

·     ACM Research (ACMR) 1.79M share Secondary priced at $14.00

_________________________________________________________________

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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