Morning Preview: October 09, 2019

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Early Look

Wednesday, October 9, 2019

Futures

Up/Down

%

Last

DJ Industrials

195.00

0.75%

26,333

S&P 500

24.50

0.86%

2,917

Nasdaq

77.50

1.02%

7,699

 

 

U.S. futures are rallying following yesterday’s precipitous decline amid reports that China is open to a limited trade resolution with the U.S., despite the recent blacklisting of over 20 Chinese tech companies by the U.S. as the country tries to de-escalate simmering trade tensions (as per Bloomberg). In a separate report from the Financial Times, China has offered to buy 10M more tonnes of soybeans from U.S. farmers (up to 30M from 20M currently). The two reports come a day after the U.S. State Department announced visa restrictions on Chinese government and Communist Party officials who are believed to be involved in abuse of Uighurs and other Muslim minority groups in Xinjiang, China. That announcement came after the U.S. blacklisted some 28 entities for the same alleged violations. The moves also precede new import duties on $250 billion worth of Chinese goods which are set to be raised to a rate of 30% from 25% on Oct. 15. High-level Chinese and U.S. delegates, including China’s No. 2 Liu He, are scheduled to meet with their counterparts in Washington, D.C. on Thursday. In Asian markets, The Nikkei Index fell -131 points to 21,456, the Shanghai Index gained 11 points to 2,924 and the Hang Seng Index dropped -210 points to settle at 25,682. In Europe, the German DAX is up 100 points to 12,075, while the FTSE 100 is up around 25 points at 7,170. Later in the afternoon, minutes from the rate-setting Federal Open Market Committee’s Sept. 17-18 meeting will be released.

Market Closing Prices Yesterday

·     The S&P 500 Index plunged -45.73 points, or 1.56%, to 2,893.06

·     The Dow Jones Industrial Average fell -313.98 points, or 1.19%, to 26,164.04

·     The Nasdaq Composite dropped -132.52 points, or 1.67%, to 7,823.78

·     The Russell 2000 Index declined -25.19 points, or 1.68% to 1,4472.60

 

Events Calendar for Today

·     7:00 AM EST              MBA Mortgage Applications Data

·     10:00 AM EST            JOLTs Job Openings for August…est. 7250

·     10:00 AM EST            Wholesale Inventories MoM, Aug-F…est. 0.4%

·     10:30 AM EST            Weekly DOE Inventory Data

·     2:00 PM EST              FOMC Meeting Minutes from September 18th

 

Earnings Calendar:

·     Earnings Before the Open: None

·     Earnings After the Close: SAR

 

Other Key Events:

·     BMO Capital Canadian High Yield Conference, 10/9-10/10 in Toronto

·     Fed Powell takes place in Kansas City event

 

 

Macro

Up/Down

Last

WTI Crude

0.51

53.14

Brent

0.61

58.85

Gold

3.60

1,507.50

EUR/USD

0.0023

1.098

JPY/USD

0.28

107.37

10-Year Note

+0.027

1.556%

 

 

World News

·     Chinese officials are offering to increase annual purchases of U.S. agricultural products as the two countries seek to resolve their trade dispute, the Financial Times newspaper reported. Vice Premier Liu He, China’s top trade negotiator, is scheduled to travel to Washington for their next round of trade talks on Oct 10-11. The report said China will offer to boost annual purchases of U.S. soybeans to 30 million tonnes from 20 million tonnes currently, adding the increase will be equivalent to about $3.25 billion in additional orders

·     The OECD has proposed a global shake-up of corporate taxation, overturning a century of rules that had allowed digital groups such as Facebook, Apple, Amazon, Netflix and Google to shift profits around

 

Sector News Breakdown

Consumer

·     Levi Strauss (LEVI) Q3 adjusted EPS 31c/$1.45B vs. est. 28c/$1.44B; q3 gross margin 53.0% of net rev vs. 53.2%; sees FY19 revenue growth 5.5%-6% vs. est. $5.8B; sees FY19 CapEx roughly $190M-$200M; sees 100 new store openings in 2019; In Americas, net revs fell 3% YoY due to decline in wholesale business; direct-to-consumer business net revs rose 9%

·     Allegiant Travel (ALGT) reports scheduled service revenue passenger miles rose 5.1% to 639.53M in September; scheduled service load factor up 40 bps to 82.4% for the month; total system capacity down 3.7% to 855.96M available seat miles

 

Energy, Industrials & Materials

·     The American Petroleum Institute (API) reported that U.S. crude supplies rose by 4.1M barrels for the week ended Oct. 4, showed stockpile declines of -5.9M barrels for gasoline and -4M barrels for distillates

·     Chemicals Westlake (WLK), Olin (OLN) and Trinseo (TSE) all downgraded at Citigroup saying third quarter for Chemicals felt like a continuation of the second quarter, with weak autos and construction activity as well as slowing global trade

·     Weatherford International plc (WFTIQ) announced it has been awarded two fully integrated rig contracts and one well service (through-tubing intervention) contract with a multinational operator in one of the world’s largest proven oil fields located in Iraq

·     United States Steel (X) said Kevin Bradley has informed the company of his intention to resign from his position as CFO of U. S. Steel effective Nov. 4. Bradley will remain with the company as Executive Vice President and Adviser to the CEO through year-end

·     PG&E (PCG) said it would begin turning off power to 800,000 customers in 34 counties starting after midnight Wednesday amid forecasts of windy, dry weather that created extreme fire danger.

 

Financials

·     PayPal Holdings, Inc. (PYPL) said it expects to report a pre-tax loss of $228M ($177M on an after-tax basis) on the Company’s strategic investments in the quarter ended September 30, 2019

·     Cohen & Steers (CNS) reports preliminary AUM $70.8B as of September 30; said an increase of $1.3B from assets under management at August 31; increase in assets under management from August 31 was due to market appreciation of $931M and net inflows of $613M, partially offset by distributions of $275M

·     Nasdaq (NDAQ) reported U.S. equity options volume for September of 133 million contracts, +5.6% YoY, September U.S. fixed income traded $899 billion, -14% YoY

 

Healthcare

·     Johnson & Johnson (JNJ) was ordered by a Philadelphia jury to pay $8 billion in damages to a Maryland man who said his use of J&J’s antipsychotic Risperdal as a child caused enlarged breasts and the company failed to properly warn of this risk. It was the biggest award to date among more than 13,000 lawsuits against J&J alleging that Risperdal caused a condition called gynecomastia in boys, which involves enlargement of breast tissue

·     DBV Technologies (DBVT) 15.829M share Spot Secondary priced at $6.59

 

Technology, Media & Telecom

·     FireEye (FEYE) guides Q3 revs above the high end of prior guidance of $217M-$221M (vs. est. $219M) and Q3 billings to be within the Company’s prior guidance range of $245M-$255M

·     Lions Gate (LGF) is weighing splitting off its Starz channel into a separate company, as the studio seeks to reduce its large debt load and let shareholders invest directly in either of the businesses, WSJ reported https://on.wsj.com/2p6UP7S 

·     ChipMOS (IMOS) reports September revenue of $56.3M (-8.5% M/M) (-3.2% Y/Y); Q3 revenue of $173.9M (+10.1% Q/Q) (+7.9% Y/Y), benefited from continued growth led by the addition of new NAND flash business

·     Roku (ROKU) upgraded to Outperform from Neutral at Macquarie

_________________________________________________________________

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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